<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
--------------------------
Volkswagen Credit Auto Receivables Corporation
on behalf of
Volkswagen Credit Auto Master Trust
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(Exact name of registrant as specified in its charter)
Delaware 38-2748796
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3800 Hamlin Road
Auburn Hills, Michigan 48326
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(Address of principal (Zip Code)
executive offices)
SECURITIES TO BE REGISTERED PURSUANT TO
SECTION 12(b) OF THE ACT:
None.
SECURITIES TO BE REGISTERED PURSUANT TO
SECTION 12(g) OF THE ACT:
$375,000,000 aggregate principal amount of the
Volkswagen Credit Auto Master Trust 1996-1
Floating Rate Dealer Loan Backed Certificates
with an expected final payment date of April 15, 2001.
<PAGE>
Item 1. Description of the Registrant's Securities to be Registered
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1.1 For a description of the Volkswagen Credit Auto Master Trust
1996-1 Floating Rate Dealer Loan Backed Certificates (the
"Certificates"), reference is hereby made to the description
of the Certificates contained in the Prospectus and
Prospectus Supplement previously filed pursuant to Rule
424(b) and incorporated herein by reference (see in
particular "Description of the Certificates" in the
Prospectus and "Series Provisions" in the Prospectus
Supplement therein).
Item 2. Exhibits
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2.1 Form of Certificate (included within Exhibit 2.2).
2.2 Form of Pooling and Servicing Agreement.
2.3 Form of Series Supplement.
SIGNATURE
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Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
VOLKSWAGEN CREDIT AUTO
RECEIVABLES CORPORATION
by /s/ John Vermuelen
-----------------------------------
Name: John Vermuelen
Title: Chief Financial Officer
September 13, 1996
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i
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
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<TABLE>
<CAPTION>
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SECTION 1.01. Definitions............................... 1
SECTION 1.02. Other Definitional Provisions............. 29
ARTICLE II
Conveyance of Receivables
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SECTION 2.01. Conveyance of Receivables................. 30
SECTION 2.02. Acceptance by Trustee..................... 32
SECTION 2.03. Representation and Warranties of the
Seller Relating to the Seller and
the Agreement............................. 33
SECTION 2.04. Representations and Warranties of the
Seller Relating to the Receivables........ 37
SECTION 2.05. Addition of Accounts...................... 39
SECTION 2.06. Covenants of the Seller................... 42
SECTION 2.07. Removal of Accounts....................... 44
SECTION 2.08. Sale of Ineligible Receivables............ 46
</TABLE>
ARTICLE III
Administration and Servicing of Receivables
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SECTION 3.01. Acceptance of Appointment and Other....... 46
SECTION 3.02. Servicing Compensation.................... 48
SECTION 3.03. Representations, Warranties and
Covenants of the Servicer................. 49
SECTION 3.04. Reports and Records for the Trustee; Bank
Account Statements........................ 53
SECTION 3.05. Annual Servicer's Certificate............. 53
SECTION 3.06. Annual Independent Public Account......... 54
SECTION 3.07. Tax Treatment............................. 54
SECTION 3.08. Notices to VWCI........................... 55
SECTION 3.09. Adjustments............................... 55
</TABLE>
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ii
ARTICLE IV
Rights of Certificateholders and
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Allocation and Application of Collections
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<TABLE>
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SECTION 4.01. Rights of Certificateholders.............. 56
SECTION 4.02. Establishment of the Collection Account... 57
SECTION 4.03. Allocations and Applications of
Collections and Other Funds.............. 58
SECTION 4.04. Unallocated Principal Collections......... 60
</TABLE>
ARTICLE V
Distributions and Reports to Certificateholders
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Distributions shall be made to, and reports shall be provided to,
Certificateholders as set forth in the applicable Supplement.
ARTICLE VI
The Certificates
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<TABLE>
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SECTION 6.01. The Certificates.......................... 61
SECTION 6.02. Authentication of Certificates............ 62
SECTION 6.03. New Issuances............................. 63
SECTION 6.04. Registration of Transfer and Exchange of
Certificates.............................. 65
SECTION 6.05. Mutilated, Destroyed, Lost or Stolen
Certificates............................. 69
SECTION 6.06. Persons Deemed Owners..................... 69
SECTION 6.07. Access to List of Registered
Certificateholders' Names
and Addresses............................. 70
SECTION 6.08. Book-Entry Certificates................... 71
SECTION 6.09. Notices to Depository..................... 72
SECTION 6.10. Definitive Certificates................... 72
SECTION 6.11. Global Certificate; Exchange Date......... 73
SECTION 6.12. Meetings of Certificateholders............ 75
</TABLE>
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ARTICLE VII
Other Matters Relating to the Seller
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SECTION 7.01. Liability of the Seller................... 78
SECTION 7.02. Limitation on Liability of the Seller..... 78
SECTION 7.03. Liabilities............................... 78
SECTION 7.04. Transfer of Seller's Interest to
Designated Affiliate...................... 79
</TABLE>
ARTICLE VIII
Other Matters Relating to the Servicer
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<TABLE>
<S> <C> <C>
SECTION 8.01. Liability of the Servicer................. 80
SECTION 8.02. Merger or Consolidation of, or
Assumption, of the Obligations of the
Servicer.................................. 80
SECTION 8.03. Limitation on Liability of the
Servicer and Others....................... 81
SECTION 8.04. Servicer Indemnification of the Trust and
the Trustee............................... 81
SECTION 8.05. The Servicer Not To Resign................ 82
SECTION 8.06. Access to Certain Documentation and
Information Regarding the Receivables..... 83
SECTION 8.07. Delegation of Duties...................... 83
SECTION 8.08. Examination of Records.................... 83
</TABLE>
ARTICLE IX
Early Amortization Events
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SECTION 9.01. Early Amortization Events................. 84
SECTION 9.02. Additional Rights Upon the Occurrence of
Certain Events............................ 86
</TABLE>
ARTICLE X
<TABLE>
<S> <C> <C>
SECTION 10.01. Service Defaults.......................... 87
SECTION 10.02. Trustee To Act; Appointment of Successor.. 90
</TABLE>
ARTICLE XI
The Trustee
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<TABLE>
<S> <C> <C>
SECTION 11.01. Duties of Trustee......................... 92
SECTION 11.02. Certain Matters Affecting the Trustee..... 94
</TABLE>
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iv
<TABLE>
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SECTION 11.03. Trustee Not Liable for Recitals in
Certificates.............................. 95
SECTION 11.04. Trustee May Not Extend Credit............. 95
SECTION 11.05. The Servicer To Pay Trustee's Fees and
Expenses.................................. 96
SECTION 11.06. Eligibility Requirements for Trustee...... 96
SECTION 11.07. Resignation or Removal of Trustee......... 97
SECTION 11.08. Successor Trustee......................... 97
SECTION 11.09. Merger or Consolidation of Trustee........ 98
SECTION 11.10. Appointment of Co-Trustee or Separate
Trustee................................... 98
SECTION 11.11. Tax Returns............................... 100
SECTION 11.12. Trustee May Enforce Claims Without
Possession of Certificates................ 100
SECTION 11.13. Suits for Enforcement..................... 100
SECTION 11.14. Representations and Warranties of
Trustee................................... 101
SECTION 11.15. Maintenance of Office or Agency........... 101
</TABLE>
ARTICLE XII
Termination
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<TABLE>
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SECTION 12.01. Termination of Trust...................... 101
SECTION 12.02. Final Distribution........................ 102
SECTION 12.03. Seller's Termination Rights............... 104
</TABLE>
ARTICLE XIII
Miscellaneous Provisions
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<TABLE>
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SECTION 13.01. Amendment................................. 104
SECTION 13.02. Protection of Right, Title and Interest to
Trust..................................... 106
SECTION 13.03. Limitation on Rights of
Certificateholders........................ 107
SECTION 13.04. No Petition............................... 108
SECTION 13.05. GOVERNING LAW............................. 108
SECTION 13.06. Notices................................... 109
SECTION 13.07. Severability of Provisions................ 109
SECTION 13.08. Assignment................................ 110
SECTION 13.09. Certificates Nonassessable and
Fully Paid................................ 110
SECTION 13.10. Further Assurances........................ 110
SECTION 13.11. No Waiver; Cumulative Remedies............ 110
SECTION 13.12. Counterparts.............................. 110
SECTION 13.13. Third-Party Beneficiaries................. 110
SECTION 13.14. Actions by Certificateholders............. 111
</TABLE>
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<TABLE>
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SECTION 13.15. Rule 144A Information..................... 111
SECTION 13.16. Merger and Integration.................... 111
SECTION 13.17. Headings.................................. 111
</TABLE>
<PAGE>
EXHIBIT 2.2
POOLING AND SERVICING AGREEMENT dated as of February 29,
1996, among VOLKSWAGEN CREDIT AUTO RECEIVABLES CORPORATION, a
Delaware corporation, as Seller, VW CREDIT, INC., a Delaware
corporation, as Servicer, and CITIBANK, N.A., a national banking
association, as Trustee.
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties and for the benefit of
the Certificateholders and the other Beneficiaries to the extent provided
herein:
ARTICLE I
Definitions
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SECTION 1.01. Definitions. Whenever used in this Agreement, the
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following words and phrases shall have the following meanings:
"Account" shall mean each Initial Account and, from and after the
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related Addition Date, each Additional Account. The term "Account" shall not
apply to any Removed Accounts reassigned or assigned to the Seller or the
Servicer in accordance with the terms of this Agreement.
"Act" shall mean the Securities Act of 1933.
---
"Addition Date" shall mean, with respect to Additional Accounts, the
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date from and after which such Additional Accounts are to be included as
Accounts pursuant to Section 2.05(c).
"Addition Notice" shall have the meaning specified in Section 2.05(c).
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"Additional Accounts" shall mean each individual wholesale financing
-------------------
account established by VWCI with a Dealer pursuant to a Floorplan Financing
Agreement, which account is designated pursuant to Section 2.05(a) or (b) to be
included as an Account and is identified in the computer file or microfiche or
written list delivered to the Trustee by the Seller pursuant to Sections 2.01
and 2.05(d).
<PAGE>
2
"Additional Cut-Off Date" shall mean, with respect to Additional
-----------------------
Accounts, the day specified in the Addition Notice delivered with respect to
such Additional Accounts pursuant to Section 2.05(c).
"Adjustment Payment" shall have the meaning specified in Section 3.09.
------------------
"Affiliate" shall mean, with respect to any specified Person, any
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other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" shall mean this Pooling and Servicing Agreement, as the
---------
same may from time to time be amended, modified or otherwise supplemented,
including, with respect to any Series or Class, the related Supplement.
"Applicants" shall have the meaning specified in Section 6.07.
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"Appointment Date" shall have the meaning specified in Section 9.02.
----------------
"Assignment" shall have the meaning specified in Section 2.05(d).
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"Assignment and Assumption Agreement" shall mean an agreement among
-----------------------------------
VWCARC, the Designated Affiliate and the Trustee substantially in the form of
Exhibit K.
"Authorized Newspaper" shall mean any newspaper or newspapers of
--------------------
general circulation in New York City customarily published on each Business Day,
whether or not published on Saturdays, Sundays and holidays.
"Available Subordinated Amount" shall mean, with respect to any Series
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at any time of determination, an amount equal to the available subordinated
amount specified in the related Supplement at such time.
"Bearer Certificates" shall have the meaning specified in Section
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6.01.
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3
"Beneficiary" shall mean any of the holders of the Investor
-----------
Certificates and any Enhancement Provider.
"Benefit Plan" shall have the meaning specified in Section 6.04(c).
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"Book-Entry Certificates" shall mean beneficial interests in the
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Investor Certificates, ownership and transfers of which shall be made through
book entries by a Depository as described in Section 6.08.
"Business Day" shall mean any day other than (a) a Saturday or a
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Sunday or (b) another day on which banking institutions or trust companies in
the State of Michigan or in the State of New York generally or New York City are
authorized or obligated by law, executive order or governmental decree to be
closed.
"Cash Management Accounts" shall mean the deposit accounts maintained
------------------------
by VWCI for the benefit of the Dealers.
"Cedel" shall mean Cedel Bank, societe anonyme.
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"Certificate" shall mean any of the Investor Certificates or the
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Seller's Certificates.
"Certificate Owner" shall mean, with respect to a Book-Entry
-----------------
Certificate, the person who is the beneficial owner of a Book-Entry Certificate.
"Certificate Rate" shall mean, with respect to any Series or Class,
----------------
the certificate rate specified therefor in the related Supplement.
"Certificate Register" shall have the meaning specified in Section
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6.04.
"Certificateholder" or "Holder" shall mean an Investor
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Certificateholder or a Person in whose name any one of the Seller's Certificates
is registered.
"Certificateholders' Interest" shall have the meaning specified in
----------------------------
Section 4.01.
"Class" shall mean, with respect to any Series, any one of the classes
-----
of Investor Certificates of that Series.
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4
"Closing Date" shall mean, with respect to any Series, the Closing
------------
Date specified in the related Supplement.
"Collateral Security" shall mean, with respect to any Receivable, all
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collateral security granted by or on behalf of the related Dealer with respect
thereto, including a first priority perfected security interest in the related
Vehicle, and a perfected security interest in certain parts inventory,
equipment, fixtures, service accounts or realty with respect to such Dealer and
all guarantees of any Receivable.
"Collection Account" shall have the meaning specified in Section 4.02.
------------------
"Collection Period" shall mean, with respect to any Distribution Date,
-----------------
the calendar month preceding the month in which such Distribution Date occurs.
"Collections" shall mean, without duplication, all payments by or on
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behalf of Dealers received by the Servicer in respect of the Receivables, in the
form of cash, checks,, wire transfers or any other form of payment, including
amounts paid by Dealers for deposit to such Dealers' Cash Management Account as
provided in such Dealers' Floorplan Financing Agreements.
"Common Depositary" shall mean the Person specified in the applicable
-----------------
Supplement, in its capacity as common depositary for the respective accounts of
any Foreign Clearing Agencies.
"Corporate Trust Office" shall mean the principal office of the
----------------------
Trustee in the Borough of Manhattan, City of New York, at which at any
particular time its corporate trust business shall be administered, which office
at the date of the execution of this Agreement is located at Citibank, N.A., 120
Wall Street, Corporate Agency and Trust, 13th Floor, New York, New York 10043.
"Coupon" shall have the meaning specified in Section 6.01.
------
"Cut-Off Date" shall mean February 29, 1996.
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"Date of Processing" shall mean, with respect to any transaction, the
------------------
date on which such transaction is first
<PAGE>
5
recorded on the Servicer's computer file of accounts (without regard to the
effective date of such recordation).
"Dealer" shall mean a Person engaged generally in the business of
------
purchasing Vehicles from a manufacturer thereof and holding such Vehicles for
sale or lease in the ordinary course of business, and which has an Account the
Receivables in which have been transferred to the Trust.
"Dealer Overconcentration" on any Determination Date shall mean, with
------------------------
respect to any Dealer or group of affiliated Dealers, the excess of (a) the
aggregate amount of Principal Receivables due from such Dealer or group of
affiliated Dealers on the last day of the Collection Period immediately
preceding such Determination Date over (b) 2% of the Pool Balance on the last
day of such immediately preceding Collection Period.
"Defaulted Amount" on any Determination Date shall mean an amount
----------------
(which shall not be less than zero) equal to (a) the sum for all the Accounts of
the amount of Principal Receivables which became Defaulted Receivables during
the immediately preceding Collection Period minus (b) the sum of (i) the full
-----
amount of any such Defaulted Receivables which are subject to reassignment to
the Seller or assignment to the Servicer in accordance with the terms of this
Agreement and (ii) the excess, if any, for the immediately preceding
Determination Date of the amount determined pursuant to clause (b)(i) for such
Determination Date over the amount determined pursuant to clause (a) for such
Determination Date; provided, however, that, if an Insolvency Event occurs with
-------- -------
respect to the Seller, the amounts of such Defaulted Receivables which are
subject to reassignment to the Seller shall not be added to the sum so
subtracted and, if an Insolvency Event occurs with respect to the Servicer, the
amount of such Defaulted Receivables which are subject to assignment to the
Servicer shall not be added to the sum so subtracted.
"Defaulted Receivables" on any Determination Date shall mean (a) all
---------------------
Receivables in an Account which are charged off as uncollectible in respect of
the immediately preceding Collection Period in accordance with the Servicer's
customary and usual servicing procedures for servicing dealer floorplan
receivables comparable to the Receivables which have not been sold to third
parties and (b) all Receivables which were Eligible Receivables when transferred
to the Trust on the initial Closing Date or the related
<PAGE>
6
Addition Date or on their respective Transfer Date, which arose in an Account
that thereafter became an Ineligible Account and which remained outstanding for
any six consecutive Determination Dates (inclusive of the Determination Date on
which such determination is being made) after such Account became an Ineligible
Account.
"Definitive Certificates" shall have the meaning specified in Section
-----------------------
6.10.
"Definitive Euro-Certificates" shall have the meaning specified in
----------------------------
Section 6.11.
"Deposit Date" shall mean each day on which the Servicer deposits
------------
Collections in the Collection Account pursuant to Section 4.03 hereof.
"Depository" shall mean The Depository Trust Company, as initial
----------
Depository, the nominee of which is CEDE & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
"Depository Agreement" shall mean, with respect to any Series or
--------------------
Class, the agreement among the Seller, the Trustee and the initial Depository,
dated as of the related Closing Date, substantially in the form of Exhibit E.
"Depository Participant" shall mean a broker, dealer, bank or other
----------------------
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Designated Affiliate" shall mean a corporation which is (a) a direct
--------------------
or indirect wholly-owned subsidiary of VWA, (b) which is a Delaware corporation
and (c) which is incorporated for limited purposes which shall be similar to the
purposes for which VWCARC is incorporated.
"Designated Affiliate Transfer" shall have the meaning specified in
----------------------------
Section 7.04(a).
"Determination Date" with respect to any Distribution Date shall mean
------------------
the day that is two Business Days prior to such Distribution Date.
<PAGE>
7
"Distribution Date" shall mean the fifteenth day of each month or, if
-----------------
such day is not a Business Day, the next succeeding Business Day.
"Distribution Date Statement" shall mean, with respect to any Series,
---------------------------
a report prepared by the Servicer on each Determination Date for the immediately
preceding Collection Period in substantially the form set forth in the related
Supplement.
"Due Date" shall mean the close of business on the last Business Day
--------
of each month.
"Early Amortization Event" shall have the meaning specified in Section
------------------------
9.01 and, with respect to any Series, shall also mean any Early Amortization
Event specified in the related Supplement.
"Early Amortization Period" shall mean, with respect to any Series,
-------------------------
the period beginning at the close of business on the Business Day immediately
preceding the day on which an Early Amortization Event is deemed to have
occurred and ending upon the earliest to occur of (a) the payment in full to the
Investor Certificateholders of such Series of the Invested Amount with respect
to such Series, (b) the Termination Date with respect to such Series and (c)
such earlier date, if any, as may be specified in or determined pursuant to the
Supplement for such Series.
"Eligible Account" shall mean each individual wholesale financing line
----------------
of credit extended by VWCI to a Dealer pursuant to a Floorplan Financing
Agreement in the ordinary course of business, which, as of the date of
determination with respect thereto: (a) is in favor of a Dealer which is an
Eligible Dealer, (b) is in existence and maintained and serviced by VWCI and (c)
is an Account in respect of which no amounts have been charged off as
uncollectible or are classified, in accordance with the Servicer's customary
servicing procedures, as past due or delinquent.
"Eligible Dealer" shall mean a Dealer, as of the date of determination
---------------
thereof, (a) which is located in the United States of America (including its
territories and possessions), (b) which has not been identified by the Servicer
as being the subject of any voluntary or involuntary bankruptcy proceeding or in
voluntary or involuntary liquidation, (c) in which VWA or any Affiliate thereof
does not
<PAGE>
8
have an equity investment and (d) which is not in "dealer default" as determined
by the Servicer under the Floorplan Financing Guidelines.
"Eligible Deposit Account" shall mean either (a) a segregated account
------------------------
with an Eligible Institution (as described below in clause (b) of the definition
Eligible Institution) or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America, any one of the states thereof or the District of Columbia (or
any domestic branch of a foreign bank), having corporate trust powers and acting
as trustee for funds deposited in such account, so long as any of the securities
of such depository institution shall have a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"Eligible Institution" shall mean (a) the corporate trust department
--------------------
of the Trustee, so long as the Trustee's long-term unsecured debt rating is
Baa/3/ by Moody's, or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof, or the District
of Columbia (or any domestic branch of a foreign bank), which at all times (i)
has either (A) a long-term unsecured debt rating of A2 or better by Moody's and
of AAA by Standard & Poor's or (B) a certificate of deposit rating of P-1 by
Moody's and A-l+ by Standard & Poor's and (ii) whose deposits are insured by the
FDIC. If so qualified, the Trustee may be considered an Eligible Institution
for the purposes of clause (b) of this definition.
"Eligible Investments" shall mean (a) book-entry securities,
--------------------
negotiable instruments or securities represented by instruments in bearer or
registered form having original or remaining maturities of 30 days or less (or
such longer maturity as to which the Rating Agency Condition is satisfied), but
in no event occurring later than the Distribution Date following the Trustee's
acquisition thereof (or such later date as to which the Rating Agency Condition
is satisfied), which evidence:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America;
<PAGE>
9
(ii) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America, any state thereof or the District of Columbia (or
any domestic branch of a foreign bank), and subject to supervision and
examination by Federal or state banking or depository institution
authorities; provided, however, that at the time of the Trust's investment
-------- -------
or contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a person or entity other than
such depository institution or trust company) thereof shall have a credit
rating from each of the Rating Agencies in the highest investment category
granted thereby;
(iii) commercial paper having, at the time of the Trust's investment
or contractual commitment to invest therein, a rating from each of the
Rating Agencies in the highest investment category granted thereby;
(iv) except during any Reinvestment Period, investments in money
market funds, which may be funds subject to Rule 12b-1 under the Investment
Company Act or funds sponsored or distributed by the Trustee, having a
rating from each of the Rating Agencies in the highest investment category
granted thereby or otherwise approved in writing thereby;
(v) bankers' acceptances issued by any depository institution or trust
company referred to in clause (ii) above;
(vi) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (ii); and
(vii) repurchase obligations with respect to any security or whole
loan entered into with (w) a depository institution or trust company
(acting as principal) described in clause (ii) above (except that the
rating referred to in the proviso in such clause
<PAGE>
10
(ii) shall be A-1 or higher in the case of Standard & Poor's) (such
depository institution or trust company being referred to in this
definition as a "Financial Institution"), (x) a broker/dealer (acting as
principal) registered as a broker or dealer under Section 15 of the
Securities Exchange Act of 1934 (a "Broker/Dealer"), the unsecured short-
term debt obligations of which are rated P-1 by Moody's and at least A-1 by
Standard & Poor's at the time of entering into such repurchase obligation
(a "Rated Broker/Dealer"), (y) an unrated Broker/Dealer (an "Unrated
Broker/Dealer"), acting as principal, that is a wholly-owned subsidiary of
a nonbank holding company the unsecured short-term debt obligations of
which are rated P-1 by Moody's and at least A-1 by Standard & Poor's at the
time of entering into such repurchase obligation (a "Rated Holding
Company") or (z) an unrated subsidiary (a "Guaranteed Counterparty"),
acting as principal, that is a wholly-owned subsidiary of a direct or
indirect parent Rated Holding Company, which guarantees such subsidiary's
obligations under such repurchase agreement; provided that the following
--------
conditions are satisfied:
(A) the aggregate amount of funds invested in repurchase
obligations of a Financial Institution, a Rated Broker/Dealer, an
Unrated Broker/Dealer or Guaranteed Counterparty in respect of which
the Standard & Poor's unsecured short-term ratings are A-1 (in the
case of an Unrated Broker/Dealer or Guaranteed Counterparty, such
rating being that of the related Rated Holding Company) shall not
exceed 20% of the sum of the then outstanding principal balance of the
applicable Series of Certificates (there being no limit on the amount
of funds that may be invested in repurchase obligations in respect of
which such Standard & Poor's rating is A-1+ (in the case of an Unrated
Broker/Dealer or Guaranteed Counterparty, such rating being that of
the related Rated Holding Company));
(B) in the case of any Series Account (other than the Collection
Account and any yield supplement account), the rating from Standard &
Poor's in respect of the unsecured short-term debt obligations of the
Financial Institution, Rated Broker/Dealer, Unrated Broker/Dealer or
Guaranteed
<PAGE>
11
Counterparty (in the case of an Unrated Broker/Dealer or Guaranteed
Counterparty, such rating being that of the related Rated Holding
Company) shall be A-1+;
(C) the repurchase obligation must mature within 30 days of the
date on which the Trustee enters into such repurchase obligation;
(D) the repurchase obligation shall not be subordinated to any
other obligation of the related Financial Institution, Rated
Broker/Dealer, Unrated Broker/Dealer or Guaranteed Counterparty;
(E) the collateral subject to the repurchase obligation is held,
in the appropriate form, by a custodial bank on behalf of the Trustee;
(F) the repurchase obligation shall require that the collateral
subject thereto shall be marked to market daily;
(G) in the case of a repurchase obligation of a Guaranteed
Counterparty, the following conditions shall also be satisfied:
(i) the Trustee shall have received an opinion of counsel
(which may be in-house counsel) to the effect that the guarantee
of the related Rated Holding Company is a legal, valid and
binding agreement of the Rated Holding Company, enforceable in
accordance with its terms, subject as to enforceability to
bankruptcy, insolvency, reorganization and moratorium or other
similar laws affecting creditors' rights generally and to general
equitable principles;
(ii) the Trustee shall have received (x)an incumbency
certificate for the signer of such guarantee, certified by an
officer of such Rated Holding Company, and (y) resolutions,
certified by an officer of the Rated Holding Company, of the
board of directors (or applicable committee thereof) of the Rated
Holding Company authorizing the
<PAGE>
12
execution, delivery and performance of such guarantee by the
Rated Holding Company;
(iii) the only conditions to the obligation of such Rated
Holding Company to pay on behalf of the Guaranteed Counterparty
shall be that the Guaranteed Counterparty shall not have paid
under such repurchase obligation when required (it being
understood that no notice to, demand on or other action in
respect of the Guaranteed Counterparty is necessary) and that the
Trustee shall make a demand on the Rated Holding Company to make
the payment due under such guarantee;
(iv) the guarantee of the Rated Holding Company shall be
irrevocable with respect to such repurchase obligation and shall
not be subordinate to other obligations of the Rated Holding
Company; and
(v) each of Standard & Poor's and Moody's has confirmed in
writing to the Trustee that it has reviewed the form of the
guarantee of the Rated Holding Company and has determined that
the Trust's investment in such repurchase obligation, taking into
account the issuance of such guarantee, will not result in the
downgrade or withdrawal of the ratings assigned to any Series or
Class of Certificates; and
(H) the repurchase obligations shall require that the repurchase
obligation be over-collateralized and shall provide that, upon any
failure to maintain such over-collateralization, the repurchase
obligation shall become due and payable, and unless the repurchase
obligation is satisfied immediately, the collateral subject to the
repurchase agreement shall be liquidated and the proceeds applied to
satisfy the unsatisfied portion of the repurchase obligation; and
(b) any other investment consisting of a financial asset that by its
terms converts to cash within a finite period of time; provided that the Rating
--------
Agency Condition shall have been satisfied with respect thereto.
<PAGE>
13
"Eligible Receivable" shall mean each Receivable:
-------------------
(a) which was originated or acquired by VWCI in the ordinary course of
business;
(b) which arose under an Eligible Account and is payable in United
States dollars;
(c) which is owned by VWCI at the time of sale thereof by VWCI to the
Seller;
(d) which represents the obligation of a Dealer to repay an advance
made to such Dealer to finance the acquisition of a Vehicle;
(e) which at the time of creation and at the time of transfer to the
Trust is secured by, inter alia, a first priority perfected security
----------
interest in the Vehicle relating thereto;
(f) which was created in compliance in all respects with all
Requirements of Law applicable thereto and pursuant to a Floorplan
Financing Agreement which complies in all respects with all Requirements of
Law applicable to any party thereto;
(g) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any Governmental
Authority required to be obtained, effected or given by VWCI or the Seller
in connection with the creation of such Receivable or the transfer thereof
to the Trust or the execution, delivery and performance by VWCI of the
Floorplan Financing Agreement pursuant to which such Receivable was
created, have been duly obtained, effected or given and are in full force
and effect;
(h) as to which at all times following the transfer of such Receivable
to the Trust, the Trust will have good and marketable title thereto free
and clear of all Liens arising prior to the transfer or arising at any
time, other than Liens permitted by this Agreement;
(i) which has been the subject of a valid transfer and assignment from
the Seller to the Trust of all the Seller's right, title and interest
therein (including any proceeds thereof);
<PAGE>
14
(j) which will at all times be the legal, valid, binding and assignable
payment obligation of the Dealer relating thereto, enforceable against such
Dealer in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
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);
(k) which at the time of transfer to the Trust is not subject to any
right of rescission, setoff, counterclaim or any other defense (including
defenses arising out of violations of usury laws) of the Dealer;
(l) as to which, at the time of transfer of such Receivable to the
Trust, VWCI and the Seller have satisfied all their respective obligations
with respect to such Receivable required to be satisfied at such time;
(m) as to which, at the time of transfer of such Receivable to the
Trust, neither VWCI nor the Seller has taken nor failed to take any action
which would impair the rights of the Trust or the Certificateholders
therein;
(n) which constitutes "chattel paper" as defined in Article 9 of the
UCC as then in effect in the State of Michigan; and
(o) with respect to which the representations set forth in Sections
2.04(a)(i) and (ii) were correct as of the Transfer Date with respect
thereto.
"Eligible Servicer" shall mean the Trustee or an entity which, at the
-----------------
time of its appointment as Servicer, (a) is legally qualified and has the
capacity to service the Accounts, (b) has demonstrated the ability to
professionally and competently service a portfolio of similar accounts in
accordance with high standards of skill and care and (c) is qualified to use the
software that is then currently being used to service the Accounts or obtains
the right to use or has its own software which is adequate to perform its duties
under this Agreement.
<PAGE>
15
"Enhancement" shall mean the rights and benefits provided to the
-----------
Investor Certificateholders of any Series or Class pursuant to any letter of
credit, surety bond, cash collateral account, spread account, guaranteed rate
agreement, maturity liquidity facility, tax protection agreement, interest rate
swap agreement or other similar arrangement. The subordination of any Series or
Class to any other Series or Class or of the Seller's Interest to any Series or
Class shall be deemed to be an Enhancement.
"Enhancement Agreement" shall mean any agreement, instrument or
---------------------
document governing the terms of any Enhancement or pursuant to which any
Enhancement is issued or outstanding.
"Enhancement Provider" shall mean the Person providing any
--------------------
Enhancement, other than any Certificateholders (including any holders of the
Seller's Certificates) the Certificates of which are subordinated to any Series
or Class.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974.
"Euroclear Operator" shall mean Morgan Guaranty Trust Company of New
------------------
York, Brussels office, as operator of the Euroclear System.
"Excess Principal Collections" shall mean, with respect to any Series
----------------------------
and for any date, an amount equal to the excess principal collections specified
in the related Supplement.
"Exchange Date" shall mean any date that is after the Series Issuance
-------------
Date, in the case of Definitive EuroCertificates in registered form, or upon
presentation of certification of non-United States beneficial ownership (as
described in Section 6.11), in the case of Definitive Euro-Certificates in
bearer form.
"Excluded Series" shall mean any Series designated as such in the
---------------
relevant Supplement.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
----
successor entity thereto.
"Final Maturity Date" shall have the meaning specified in Section
-------------------
12.01.
<PAGE>
16
"Fleet Receivables" shall mean all amounts shown in special accounts
-----------------
on the Servicer's records as amounts payable by any Dealer designated by VWCI as
a "fleet dealer" in respect of advances made by VWCI to such Dealer to finance
the acquisition of Vehicles in lots of five or more for sale to a single Person
or for rental on a daily basis.
"Floorplan Financing Agreement" shall mean, collectively, the group of
-----------------------------
related agreements between VWCI and the Dealer with respect thereto, pursuant to
which (a) VWCI agrees to extend credit to such Dealer to finance the acquisition
of used Vehicles and new Vehicles manufactured by one or more manufacturers, (b)
such Dealer grants to VWCI a security interest in the specific Vehicles financed
by VWCI, certain other Vehicles, certain other collateral and the proceeds
thereof, (c) such Dealer agrees to repay advances made by VWCI on demand, and
(d) the obligations of such Dealer to repay such advances is evidenced by one or
more demand promissory notes of such Dealer.
"Floorplan Financing Guidelines" shall mean VWCI's written policies
------------------------------
and procedures, as such policies and procedures may be amended from time to
time, (a) relating to the operation of its floorplan financing business,
including the written policies and procedures for determining the interest rate
charged to dealers, the other terms and conditions relating to VWCI's wholesale
financing accounts, the creditworthiness of dealers and the extension of credit
to dealers, and (b) relating to the maintenance of accounts and collection of
receivables.
"Foreign Clearing Agency" shall mean Cedel and the Euroclear Operator.
-----------------------
"Global Certificate" shall have the meaning specified in Section 6.11.
------------------
"Governmental Authority" shall mean the United States of America, any
----------------------
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Incremental Default Amount" on any Determination Date shall mean (a)
--------------------------
the sum of (i) all the Ineligible Receivables which became Defaulted Receivables
during the immediately preceding Collection Period and (ii) the Over-
<PAGE>
17
concentration Default Amount on such Determination Date minus (b) the full
amount of any such Defaulted Receivables which are subject to a reassignment to
the Seller or assignment to the Servicer in accordance with the terms of this
Agreement (but not less than zero); provided, however, that, if an Insolvency
-------- -------
Event occurs with respect to the Seller, the amount of such Defaulted
Receivables which are subject to reassignment to the Seller shall not be so
subtracted and, if an Insolvency Event occurs with respect to the Servicer, the
amount of such Defaulted Receivables which are subject to assignment to the
Servicer shall not be so subtracted; provided, further, that the Incremental
-----------------
Default Amount for any Determination Date shall not exceed the sum of the
Overconcentration Amount and the Ineligible Amount, in each case, on such
Determination Date.
"Incremental Subordinated Amount" shall mean, with respect to any
-------------------------------
Series and for any date, an amount equal to the incremental subordinated amount
specified in the related Supplement.
"Ineligible Account" shall mean an Account that at the time of
------------------
determination is not an Eligible Account.
"Ineligible Amount" on any Determination Date shall mean the amount of
-----------------
Ineligible Receivables included in the Trust on such Determination Date pursuant
to Section 2.08.
"Ineligible Receivable" shall mean any Receivable that arises in an
---------------------
Eligible Account, was not an Eligible Receivable at the time of its transfer to
the Trust and was transferred to the Trust in accordance with Section 2.08.
"Initial Account" shall mean each individual wholesale financing
---------------
account established by VWCI with a Dealer pursuant to a Floorplan Financing
Agreement which is identified in the computer file or microfiche or written list
delivered to the Trustee on the first Closing Date by the Seller pursuant to
Section 2.01.
"Initial Invested Amount" shall mean, with respect to any Series and
-----------------------
for any date, an amount equal to the initial invested amount specified in the
related Supplement. The Initial Invested Amount for any Series may be increased
or decreased from time to time as specified in the related Supplement.
<PAGE>
18
"Insolvency Event" shall mean any event specified in Section 9.01(a)
----------------
or 9.01(b).
"Insolvency Proceeds" shall have the meaning specified in Section
-------------------
9.02.
"Insurance Proceeds" with respect to an Account shall mean any amounts
------------------
received by the Servicer pursuant to any policy of insurance which is required
to be paid to VWCI pursuant to a Floorplan Financing Agreement.
"Interest Collections" shall mean Collections of interest and other
--------------------
non-principal charges (including handling fees, Recoveries and Insurance
Proceeds, but excluding insurance service fees).
"Interest Receivables" with respect to any Account shall mean all
--------------------
amounts billed to the related Dealer in respect of interest and all other non-
principal charges, including handling fees but excluding insurance service fees.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
---------------------
as amended.
"Invested Amount" shall mean, with respect to any Series and for any
---------------
date, an amount equal to the invested amount specified in the related
Supplement. The Invested Amount for any Series may be increased or decreased
from time to time as specified in the related Supplement.
"Investment Company Act" shall mean the Investment Company Act of
----------------------
1940.
"Investor Certificateholder" shall mean the Person in whose name a
--------------------------
Registered Certificate is registered in the Certificate Register or the bearer
of any Bearer Certificate (or the Global Certificate, as the case may be) or
Coupon.
"Investor Certificates" shall mean any one of the certificates
---------------------
(including the Bearer Certificates, the Registered Certificates or any Global
Certificate) executed by the Seller and authenticated by or on behalf of the
Trustee, substantially in the form attached to the related Supplement, other
than the Seller's Certificates.
<PAGE>
19
"Investors' Servicing Fee" shall mean the portion of the Servicing Fee
------------------------
allocable to the Investor Certificateholders pursuant to the terms of the
Supplements.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
----
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, participation interest, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing.
"Manager" shall mean the lead manager, manager or co-manager or person
-------
performing a similar function with respect to an offering of Definitive Euro-
Certificates.
"Michigan Tax Opinion" shall mean, with respect to any action, an
--------------------
Opinion of Counsel to the effect that, assuming the Tax Opinion (defined below)
is accurate, for Michigan state income and single business tax purposes, (w)
such action will not adversely affect the characterization of the Certificates
of any outstanding Series or Class as debt, (x) such action will not cause or
constitute a taxable event to any Certificateholders or the Trust, (y) after
giving effect to such action, the Trust should not be subject to the Michigan
Single Business Tax and (z) in the case of Section 6.03(b), the Certificates of
the new Series will be characterized as debt.
"Miscellaneous Payments" shall mean, with respect to any Collection
----------------------
Period, the sum of (a) Adjustment Payments and Transfer Deposit Amounts on
deposit in the Collection Account on the related Distribution Date and (b)
Unallocated Principal Collections available to be treated as Miscellaneous
Payments pursuant to Section 4.04 on such Distribution Date.
"Monthly Servicing Fee" shall mean, with respect to any Series, the
---------------------
amount specified therefor in the related Supplement.
"Moody's" shall mean Moody's Investors Service, Inc., or its
-------
successor.
"Notice Date" shall have the meaning specified in Section 2.05(c).
-----------
<PAGE>
20
"Officers' Certificate" with respect to any corporation shall mean,
---------------------
unless otherwise specified in this Agreement, a certificate signed by (a) the
Chairman of the Board, Vice Chairman of the Board, President, Principal or Chief
Financial Officer or any Vice President and (b) a Treasurer, Assistant
Treasurer, Secretary or Assistant Secretary of such corporation.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
------------------
be counsel of the Seller or VWCI, and who shall be reasonably acceptable to the
Trustee.
"Overconcentration Amount" on any Determination Date shall mean the
------------------------
sum of the Dealer Overconcentrations on such Determination Date.
"Overconcentration Default Amount" on any Determination Date shall
--------------------------------
mean, with respect to each Dealer or group of affiliated Dealers with respect to
which there existed a Dealer Overconcentration during the immediately preceding
Collection Period, the lesser of (a) the aggregate amount of Receivables in the
Accounts of such Dealers which became Defaulted Receivables during such
Collection Period and (b) the aggregate amount of such Dealer Overconcentrations
on such Determination Date.
"Permitted Transaction" shall have the meaning specified in Section
---------------------
2.06(f).
"Person" shall mean any legal person, including any individual,
------
corporation, partnership, association, joint-stock company, trust, limited
liability company, unincorporated organization, governmental entity or other
entity of similar nature.
"Pool Balance" shall mean, as of the time of determination thereof,
------------
the aggregate amount of Principal Receivables in the Trust at such time.
"Prime Rate" shall mean the rate designated as the "prime rate" or
----------
"base rate" from time to time by certain financial institutions selected by
VWCI.
"Principal Collections" shall mean Collections of principal under the
---------------------
Receivables (including deposits in Cash Management Accounts).
<PAGE>
21
"Principal Receivables" with respect to an Account shall mean amounts
---------------------
shown on the Servicer's records as Receivables (other than such amounts which
represent Interest Receivables) payable by the related Dealer. Notwithstanding
anything to the contrary in this Agreement, (i) Fleet Receivables shall not be
deemed to be Principal Receivables for the purposes of this Agreement and (ii)
the amount of Principal Receivables on any date of determination for all
purposes of this Agreement shall be deemed to be the actual amount thereof at
such time minus the aggregate amount on deposit at such time in the Cash
Management Accounts maintained for the benefit of the related Dealers.
"Principal Shortfall" shall mean, with respect to any Series and for
-------------------
any date, an amount equal to the principal shortfall specified in the related
Supplement.
"Principal Terms" shall mean, with respect to any Series: (a) the
---------------
name or designation; (b) the initial principal amount (or method for calculating
such amount); (c) the Certificate Rate (or method for the determination
thereof); (d) the payment date or dates and the date or dates from which
interest shall accrue; (e) the method for allocating collections to Investor
Certificateholders; (f) the designation of any Series Accounts and the terms
governing the operation of any such Series Accounts; (g) the Monthly Servicing
Fee and the Investors' Servicing Fee; (h) the issuer and terms of any form of
Enhancement with respect thereto; (i) the terms on which the Investor
Certificates of such Series may be exchanged for Investor Certificates of
another Series, repurchased by the Seller or remarketed to other investors; (j)
the Termination Date; (k) the number of Classes of Investor Certificates of such
Series and, if more than one Class, the rights and priorities of each such
Class; (1) the extent to which the Investor Certificates of such Series will be
issuable in temporary or permanent global form (and, in such case, the
depositary for such global certificate or certificates, the terms and
conditions, if any, upon which such global certificate may be exchanged, in
whole or in part, for Definitive Certificates, and the manner in which any
interest payable on a temporary or global certificate will be paid); (m) whether
the Investor Certificates of such Series may be issued in bearer form and any
limitations imposed thereon; (n) the priority of such Series with respect to any
other Series; (o) whether such Series will be part of a group; and (p) any other
terms of such Series.
<PAGE>
22
"Purchase Price" shall mean, with respect to any Receivable for any
--------------
date on which such Receivable is to be purchased pursuant to Section 3.03, (a)
an amount equal to the amount payable by the Dealer in respect thereof as
reflected in the records of the Servicer as of the date of purchase plus (b)
----
interest accrued from the end of the last Collection Period in respect of which
interest on such Receivable was billed by the Servicer, at a per annum rate
equal to the per annum rate borne by such Receivable, based on the actual number
of days elapsed over a year of 360 days.
"Rating Agency" shall mean, with respect to any outstanding Series or
-------------
Class, each statistical rating agency selected by the Seller to rate the
Investor Certificates of such Series or Class.
"Rating Agency Condition" shall mean, with respect to any action, that
-----------------------
each Rating Agency shall have notified the Seller, the Servicer and the Trustee
in writing that such action will not result in a reduction or withdrawal of the
rating of any outstanding Series or Class with respect to which it is a Rating
Agency.
"Reassignment" shall have the meaning specified in Section 2.07(c).
------------
"Receivables" shall mean, with respect to an Account, all amounts
-----------
shown on the Servicer's records as amounts payable by the related Dealer, from
time to time in respect of advances made by VWCI to such Dealer to finance the
acquisition of Vehicles by such Dealer, together with the group of writings
evidencing such amounts and the security interest created in connection
therewith. Receivables which become Defaulted Receivables shall not be shown on
the Servicer's records as amounts payable (and will cease to be included as
Receivables) on the day on which they become Defaulted Receivables. Receivables
which VWCI is unable to transfer to the Seller pursuant to the Receivables
Purchase Agreement or which the Seller is unable to transfer to the Trust as
provided in Section 2.06(b) shall not be included in calculating the amount of
Receivables. Notwithstanding anything to the contrary in this Agreement, Fleet
Receivables shall not be deemed to be Receivables for the purposes of this
Agreement.
"Receivables Purchase Agreement" shall mean the agreement between VWCI
------------------------------
and the Seller, in substantially the
<PAGE>
23
form attached hereto as Exhibit I, dated as of the date hereof, governing the
terms and conditions upon which the Seller is acquiring the initial Receivables
transferred to the Trust on the Closing Date and all Receivables acquired
thereafter, as the same may from time to time be amended, modified or otherwise
supplemented.
"Record Date" shall mean, with respect to any Distribution Date, the
-----------
close of business on the day preceding such Distribution Date.
"Recoveries" on any Determination Date shall mean all amounts
----------
received, including Insurance Proceeds, by the Servicer during the Collection
Period immediately preceding such Determination Date with respect to Receivables
which have previously become Defaulted Receivables.
"Registered Certificateholder" shall mean the Holder of a Registered
----------------------------
Certificate.
"Registered Certificates" shall have the meaning specified in Section
-----------------------
6.01.
"Reinvestment Event" shall mean, with respect to any Series or Class,
------------------
any Reinvestment Event specified in the related Supplement.
"Reinvestment Period" shall mean, with respect to any Series, the
-------------------
period beginning at the close of business on the Business Day immediately
preceding the day on which a Reinvestment Event is deemed to have occurred and
ending upon the earliest to occur of (a) the payment in full to the Investor
Certificates of such Series of the Invested Amount with respect to such Series,
(b) the Termination Date with respect to such Series and (c) such earlier date,
if any, as may be specified in or determined pursuant to the Supplement for such
Series.
"Related Documents" shall mean, collectively, the Receivables Purchase
-----------------
Agreement, the Subordinated Note and, with respect to any Series, any applicable
Enhancement Agreement.
"Removal Date" shall have the meaning specified in Section 2.07(b).
------------
"Removal Notice" shall have the meaning specified in Section 2.07(b).
--------------
<PAGE>
24
"Removed Account" shall have the meaning specified in Section 2.07(b).
---------------
"Required Participation Amount" shall mean, at any time of
-----------------------------
determination, an amount equal to (a) the sum of the amounts for each Series
obtained by multiplying the Required Participation Percentage for such Series by
the Initial Invested Amount for such Series at such time plus (b) the Trust
Available Subordinated Amount on the immediately preceding Determination Date
(after giving effect to the allocations, distributions, withdrawals and deposits
to be made on the Distribution Date following such Determination Date).
"Required Participation Percentage" shall mean, with respect to any
---------------------------------
Series, the percentage specified therefor in the related Supplement.
"Requirements of Law" for any Person shall mean the certificate of
-------------------
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or Governmental Authority, in each case applicable to or binding upon
such Person or to which such Person is subject, whether Federal, state or local
(including usury laws and the Federal Truth in Lending Act).
"Responsible Officer" shall mean any Vice President, Assistant Vice
-------------------
President, Senior Trust Officer or Trust Officer, or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Seller" shall mean VWCARC.
------
"Seller's Certificates" shall mean, collectively, the VWCARC
---------------------
Certificate and any outstanding Supplemental Certificates.
"Seller's Interest" shall have the meaning specified in Section 4.01.
-----------------
"Seller's Participation Amount" shall mean, at any time of
-----------------------------
determination, an amount equal to the Pool Balance at such time minus the
aggregate Invested Amounts of the
<PAGE>
25
Investor Certificates for all outstanding Series at such time.
"Series" shall mean any series of Investor Certificates.
------
"Series Account" shall mean any deposit, trust, escrow, reserve or
--------------
similar account maintained for the benefit of the Investor Certificateholders of
any Series or Class, as specified in any Supplement.
"Series Adjusted Invested Amount" shall mean, with respect to any
-------------------------------
outstanding Series and for any Collection Period, the sum of (a) the Initial
Invested Amount of the Investor Certificates of such Series on the Determination
Date occurring in such Collection Period minus the excess, if any, of the
aggregate amount (calculated in accordance with the terms of the related
Supplement) of investor charge-offs for such Series for all Distribution Dates
preceding such Determination Date over the aggregate amount of any
reimbursements of such investor charge-offs for all Distribution Dates preceding
such date, and (b) the Available Subordinated Amount, if any, with respect to
such Series, on the Determination Date occurring in such Collection Period (in
each case after giving effect to the allocations, distributions, withdrawals and
deposits to be made on the Distribution Date following such Determination Date
pursuant to the applicable Supplement) (or the initial Available Subordinated
Amount with respect to any Collection Period occurring prior to the first
Determination Date following the related Series Issuance Date).
"Series Allocable Defaulted Amount" shall mean, with respect to any
---------------------------------
Series and for any Collection Period, the product of the Series Allocation
Percentage and the Defaulted Amount with respect to such Collection Period.
"Series Allocable Interest Collections" shall mean, with respect to
-------------------------------------
any Series and for any Collection Period, the product of the Series Allocation
Percentage and the amount of Interest Collections for such Collection Period.
"Series Allocable Principal Collections" shall mean, with respect to
--------------------------------------
any Series and for any Collection Period, the product of the Series Allocation
Percentage and the amount of Principal Collections for such Collection Period.
<PAGE>
26
"Series Allocable Miscellaneous Payments" shall mean, with respect to
---------------------------------------
any Series and for any Collection Period, the product of the Series Allocation
Percentage and the amount of Miscellaneous Payments for such Collection Period.
"Series Allocation Percentage" shall mean, with respect to any Series
----------------------------
and for any Collection Period, the percentage equivalent of a fraction, the
numerator of which is the Series Adjusted Invested Amount for such Collection
Period and the denominator of which is the Trust Adjusted Invested Amount for
such Collection Period.
"Series Cut-Off Date" shall mean, with respect to any Series, the date
-------------------
specified as such in the related Supplement.
"Series Issuance Date" shall mean, with respect to any Series, the
--------------------
date on which the Investor Certificates of such Series are to be originally
issued in accordance with Section 6.03 and the related Supplement.
"Service Default" shall have the meaning specified in Section 10.01.
---------------
"Service Transfer" shall have the meaning specified in Section 10.01.
----------------
"Servicer" shall initially mean VWCI, in its capacity as Servicer
--------
under this Agreement, and after any Service Transfer, the Successor Servicer.
"Servicing Fee" shall have the meaning specified in Section 3.02.
-------------
"Servicing Officer" shall mean any officer of the Servicer involved
-----------------
in, or responsible for, the administration and servicing of the Receivables
whose name appears on a list of servicing officers furnished to the Trustee by
the Servicer as such list may from time to time be amended.
"Standard & Poor's" shall mean Standard & Poor's Ratings Services or
-----------------
its successor.
"Subordinated Note" shall mean the subordinated note of the Seller,
-----------------
the form of which is attached hereto as Exhibit J.
<PAGE>
27
"Successor Servicer" shall have the meaning specified in Section
------------------
10.02(a).
"Supplement" shall mean, with respect to any Series, a Supplement to
----------
this Agreement, executed and delivered in connection with the original issuance
of the Investor Certificates of such Series pursuant to Section 6.03, and all
amendments thereof and supplements thereto.
"Supplemental Certificate" shall have the meaning specified in Section
------------------------
6.03.
"Tax Opinion" shall mean, with respect to any action, an Opinion of
-----------
Counsel to the effect that, for Federal income tax purposes, (a) such action
will not adversely affect the characterization of the Investor Certificates of
any outstanding Series or Class as debt, (b) such action will not cause or
constitute a taxable event with respect to any Investor Certificateholders or
the Trust, (c) after giving effect to such action, the Trust will not be an
association (or publicly traded partnership) taxable as a corporation and (d) in
the case of Section 6.03(b), the Investor Certificates of the new Series will be
characterized as debt.
"Termination Date" shall mean, with respect to any Series, the
----------------
termination date specified in the related Supplement.
"Termination Notice" shall have the meaning specified in Section
------------------
10.01.
"Termination Proceeds" shall have the meaning specified in Section
--------------------
12.02(c).
"Transfer Agent and Registrar" shall have the meaning specified in
----------------------------
Section 6.04.
"Transfer Date" shall have the meaning specified in Section 2.01.
-------------
"Transfer Deposit Amount" shall mean, with respect to any Receivable
-----------------------
reassigned to the Seller or assigned to the Servicer, as applicable, pursuant to
Section 2.04(c) or Section 3.03, the amounts specified in such Sections.
<PAGE>
28
"Trust" shall mean the Volkswagen Credit Auto Master Trust created by
-----
this Agreement, the corpus of which shall consist of the Trust Assets.
"Trust Adjusted Invested Amount" shall mean, at any time of
------------------------------
determination, the sum of the Series Adjusted Invested Amounts for all
outstanding Series at such time.
"Trust Assets" shall have the meaning specified in Section 2.01.
------------
"Trust Available Subordinated Amount" shall mean, at any time of
-----------------------------------
determination, the sum of the Available Subordinated Amounts, if any, for all
outstanding Series at such time.
"Trustee" shall mean Citibank, N.A., or its successor in interest, or
-------
any successor trustee appointed as herein provided.
"Trust Incremental Subordinated Amount" on any Determination Date
-------------------------------------
shall mean the excess, if any, of (a) the sum of the Overconcentration Amount
and the Ineligible Amount, in each case, on such Determination Date over (b) the
----
Incremental Default Amount for such Determination Date.
"Trust Termination Date" shall have the meaning specified in Section
----------------------
12.01.
"UCC" shall mean the Uniform Commercial Code, as amended from time to
---
time, as in effect in any specified jurisdiction.
"Used Vehicle" shall mean any Vehicle held for sale by a Dealer that
------------
is determined to be a "used" Vehicle in accordance with the Servicer's standard
wholesale servicing practices.
"Vehicle" shall mean an automobile, a light-duty truck, a camper or a
-------
recreational vehicle.
"VWA" shall mean Volkswagen of America, Inc., a New Jersey
---
corporation, and its successors in interest.
"VWCARC" shall mean Volkswagen Credit Auto Receivables Corporation, a
------
Delaware corporation, and its successors in interest to the extent permitted
hereunder.
<PAGE>
29
"VWCARC Certificate" shall mean the certificate executed by the Seller
------------------
and authenticated by the Trustee, substantially in the form of Exhibit A.
"VWCI" shall mean VW Credit, Inc., a Delaware corporation, and its
----
successors in interest.
SECTION 1.02. Other Definitional Provisions. (p) All terms defined
------------------------------
in this Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto unless otherwise defined
therein.
(q) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent
that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(r) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation".
(s) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
<PAGE>
30
ARTICLE II
Conveyance of Receivables
-------------------------
SECTION 2.01. Conveyance of Receivables. By execution of this
--------------------------
Agreement, the Seller does hereby sell, transfer, assign, set over and otherwise
convey, without recourse (except as expressly provided herein), to the Trust for
the benefit of the Certificateholders and the other Beneficiaries on the first
Closing Date, in the case of the Initial Accounts, and on the applicable
Addition Date, in the case of Additional Accounts, (a) all of its right, title
and interest in, to and under the Receivables in each Account and all Collateral
Security with respect thereto owned by the Seller at the close of business on
the Cut-Off Date, in the case of the Initial Accounts, and on the applicable
Additional Cut-Off Date, in the case of Additional Accounts, and all monies due
or to become due and all amounts received with respect thereto and all proceeds
(including "proceeds" as defined in Section 9-306 of the UCC as in effect in the
State of Michigan and Recoveries) thereof and (b) all of the Seller's right,
title and interest in the Receivables Purchase Agreement. As of each Business
Day prior to the earlier of (i) the occurrence of an Early Amortization Event
specified in Section 9.01(a), (b), (c) or (d) and (ii) the Trust Termination
Date, on which Receivables are created in the Accounts (a "Transfer Date"), the
-------------
Seller does hereby sell, transfer, assign, set over and otherwise convey,
without recourse (except as expressly provided herein), to the Trust for the
benefit of the Certificateholders and the other Beneficiaries, all of its right,
title and interest in, to and under the Receivables in each Account (other than
any Receivables in any Account from and after the applicable Removal Date) and
all Collateral Security with respect thereto owned by the Seller at the close of
business on such Transfer Date and not theretofore conveyed to the Trust, all
monies due or to become due and all amounts received with respect thereto and
all proceeds (including "proceeds" as defined in Section 9-306 of the UCC as in
effect in the State of Michigan and Recoveries) thereof. Such property,
together with all monies on deposit in, and Eligible Investments credited to,
the Collection Account or any Series Account, any Enhancements and the
Collateral Security with respect to the Receivables shall collectively
constitute the assets of the Trust (the "Trust Assets"). The foregoing sale,
------------
transfer, assignment, set-over and conveyance and any subsequent sales,
transfers, assignments, set-overs and conveyances do
<PAGE>
31
not constitute, and are not intended to result in, the creation or an assumption
by the Trust, the Trustee, any Agent or any Beneficiary of any obligation of the
Servicer, VWCI, the Seller, VWA or any other Person in connection with the
Accounts, the Receivables or under any agreement or instrument relating thereto,
including any obligation to any dealers and any obligation under the Receivables
Purchase Agreement.
In connection with such sales, the Seller agrees to record and file,
at its own expense, a financing statement on form UCC-1 (and continuation
statements when applicable) with respect to the Receivables now existing and
hereafter created for the sale of "chattel paper" (as defined in Section 9-105
of the UCC as in effect in any state where the Seller's or the Servicer's chief
executive offices or books and records relating to the Receivables are located)
meeting the requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect the sale and assignment of the
Receivables and the Collateral Security to the Trust, and to deliver a file-
stamped copy of such financing statements or other evidence of such filing to
the Trustee on or prior to the first Closing Date, in the case of the Initial
Accounts, and (if any additional filing is so necessary) as soon as practicable
after the applicable Addition Date, in the case of Additional Accounts. The
Trustee shall be under no obligation whatsoever to file such financing
statement, or a continuation statement to such financing statement, or to make
any other filing under the UCC in connection with such sales.
In connection with such sales, the Seller further agrees, at its own
expense, (a) on or prior to the first Closing Date, in the case of the Initial
Accounts, the applicable Addition Date, in the case of Additional Accounts, and
the applicable Removal Date, in the case of Removed Accounts, to indicate in its
computer files and to cause VWCI to indicate in its computer files as required
by the Receivables Purchase Agreement, that the Receivables created in
connection with the Accounts (other than Removed Accounts) have been sold, and
the Collateral Security assigned, by VWCI to the Seller in accordance with the
Receivables Purchase Agreement and sold by the Seller to the Trust pursuant to
this Agreement for the benefit of the Certificateholders and the other
Beneficiaries and (b) on or prior to the first Closing Date, in the case of the
Initial Accounts, the applicable Addition Date, in the case of
<PAGE>
32
Additional Accounts, and the date that is five Business Days after the
applicable Removal Date, in the case of Removed Accounts, to deliver to the
Trustee (or cause VWCI to do so) a computer file or microfiche or written list
containing a true and complete list of all such Accounts (other than Removed
Accounts) specifying for each such Account, as of the Cut-Off Date, in the case
of the Initial Accounts, the applicable Additional Cut-Off Date, in the case of
Additional Accounts, and the Removal Date, in the case of Removed Accounts, (i)
its account number, (ii) the outstanding balance of Receivables in such Account,
and (iii) the aggregate amount of Principal Receivables in such Account. Such
file or list, as supplemented from time to time to reflect Additional Accounts
and Removed Accounts, shall be marked as Schedule 1 to this Agreement and is
hereby incorporated into and made a part of this Agreement. The Trustee shall
be under no obligation whatsoever to verify the accuracy or completeness of the
information contained in Schedule 1 from time to time.
The parties agree that if, and to the extent the foregoing transfer
and conveyance is not deemed to be a sale, the Seller hereby grants to the
Trustee a security interest in all of the Seller's right, title and interest in
and to all Trust Assets to secure all of the Seller's obligations hereunder,
including, without limitation, the Seller's obligation to sell or transfer
Receivables hereafter created to the Trust. This Agreement shall constitute a
security agreement under applicable law, including the UCC.
SECTION 2.02. Acceptance by Trustee. (a) The Trustee hereby
----------------------
acknowledges its acceptance, on behalf of the Trust, of all right, title and
interest previously held by the Seller to the property, now existing and
hereafter created, conveyed to the Trust pursuant to Section 2.01 and declares
that it shall maintain such right, title and interest, upon the trust herein set
forth, for the benefit of the Certificateholders and the other Beneficiaries.
The Trustee further acknowledges that, prior to or simultaneously with the
execution and delivery of this Agreement, the Seller delivered to the Trustee
the computer file, microfiche or written list relating to the Initial Accounts
described in the last paragraph of Section 2.01.
(b) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the
<PAGE>
33
name of the Trust other than as contemplated in this Agreement.
SECTION 2.03. Representation and Warranties of the Seller Relating to
-------------------------------------------------------
the Seller and the Agreement. The Seller hereby represents and warrants to the
- -----------------------------
Trust as of each Closing Date that:
(a) Organization and Good Standing. The Seller is a corporation duly
-------------------------------
organized, validly existing and in good standing under the law of the State
of Delaware and has, in all material respects, full corporate power,
authority and legal right to own its properties and conduct its business as
such properties are presently owned and such business is presently
conducted, and to execute, deliver and perform its obligations under this
Agreement and the applicable Supplement and the Related Documents and to
execute and deliver to the Trustee pursuant hereto the Certificates.
(b) Due Qualification. The Seller is duly qualified to do business
------------------
and, where necessary, is in good standing as a foreign corporation (or is
exempt from such requirement) and has obtained all necessary licenses and
approvals in each jurisdiction in which the conduct of its business
requires such qualification except where the failure to so qualify or
obtain licenses or approvals would not have a material adverse effect on
its ability to perform its obligations hereunder.
(c) Due Authorization. The execution and delivery of this Agreement
------------------
and the applicable Supplement and the Related Documents and the execution
and delivery to the Trustee of the Certificates by the Seller and the
consummation of the transactions provided for or contemplated by this
Agreement and the applicable Supplement and the Related Documents have been
duly authorized by the Seller by all necessary corporate action on the part
of the Seller.
(d) No Conflict. The execution and delivery of this Agreement, the
------------
applicable Supplement, the Related Documents and the Certificates, the
performance of the transactions contemplated by this Agreement and the
applicable Supplement and the Related Documents and the fulfillment of the
terms hereof and thereof will not
<PAGE>
34
conflict with, result in any breach of any of the material terms and
provisions of, or constitute (with or without notice or lapse of time or
both) a material default under, any indenture, contract, agreement,
mortgage, deed of trust, or other instrument to which the Seller is a party
or by which it or its properties are bound.
(e) No Violation. The execution and delivery of this Agreement, the
-------------
applicable Supplement, the Related Documents and the Certificates, the
performance of the transactions contemplated by this Agreement and the
applicable Supplement and the Related Documents and the fulfillment of the
terms hereof and thereof applicable to the Seller will not conflict with or
violate any material Requirements of Law applicable to the Seller.
(f) No Proceedings. There are no proceedings or, to the best
---------------
knowledge of the Seller, investigations pending or threatened against the
Seller before any Governmental Authority (i) asserting the invalidity of
this Agreement, the applicable Supplement, any of the Related Documents or
the Certificates, (ii) seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this
Agreement and the applicable Supplement or the Related Documents, (iii)
seeking any determination or ruling that, in the reasonable judgment of the
Seller, would materially and adversely affect the performance by the Seller
of its obligations under this Agreement and the applicable Supplement or
the Related Documents, (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Agreement and the applicable Supplement, the Related Documents or the
Certificates or (v) seeking to affect adversely the income tax attributes
of the Trust under the United States Federal or any State income, single
business or franchise tax systems.
(g) All Consents Required. All appraisals, authorizations, consents,
----------------------
orders, approvals or other actions of any Person or of any governmental
body or official required in connection with the execution and delivery of
this Agreement, the applicable Supplement, the Related Documents and the
Certificates, the performance of the transactions contemplated by this
Agreement, the applicable Supplement and any of the
<PAGE>
35
Related Documents, and the fulfillment of the terms hereof and thereof have
been obtained.
(h) Enforceability. This Agreement and the applicable Supplement and
---------------
the Related Documents each constitute a legal, valid and binding obligation
of the Seller enforceable against the Seller in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or 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).
(i) Record of Accounts. As of the first Closing Date, in the case of
-------------------
the Initial Accounts, as of the applicable Addition Date, in the case of
the Additional Accounts, and, as of the applicable Removal Date, in the
case of Removal Accounts, Schedule 1 to this Agreement is an accurate and
complete listing in all material respects of all the Accounts as of the
Cut-Off Date, the applicable Additional Cut-Off Date or the applicable
Removal Date, as the case may be, and the information contained therein
with respect to the identity of such Accounts and the Receivables existing
thereunder is true and correct in all material respects as of the Cut-Off
Date, such applicable Additional Cut-off Date or such Removal Date, as the
case may be.
(j) Valid Transfer. This Agreement or, in the case of Additional
---------------
Accounts, the related Assignment constitutes a valid sale, transfer and
assignment to the Trust of all right, title and interest of the Seller in
the Receivables and the Collateral Security now existing or hereafter
created and the proceeds thereof and all of the Seller's right, title and
interest in the Receivables Purchase Agreement and, upon the filing of the
financing statements described in Section 2.01 with the Secretary of State
of the State of Michigan and, in the case of the Receivables hereafter
created and the proceeds thereof, upon the creation thereof, the Trust
shall have a first priority perfected ownership interest in such property.
Except as otherwise provided in this Agreement, neither the Seller nor any
Person claiming through or under the Seller has any claim to or interest in
the Trust Assets.
<PAGE>
36
The representations and warranties set forth in this Section 2.03
shall survive the transfer and assignment of the Receivables to the Trust and
the issuance of the Certificates. Upon discovery by the Seller, the Servicer or
the Trustee of a breach of any of the foregoing representations and warranties,
the party discovering such breach shall give prompt written notice to the other
parties and to any Enhancement Providers.
In the event of any breach of any of the representations and
warranties set forth in this Section 2.03 having a material adverse effect on
the interests of the Investor Certificateholders, then either the Trustee or the
Holders of Investor Certificates evidencing not less than a majority of the
aggregate unpaid principal amount of all outstanding Investor Certificates, by
notice then given in writing to the Seller and the Servicer (and to the Trustee
and any Enhancement Providers if given by the Investor Certificateholders), may
direct the Seller to purchase the Certificateholders' Interest within 60 days of
such notice (or within such longer period as may be specified in such notice),
and the Seller shall be obligated to make such purchase on a Distribution Date
occurring within such 60-day period (or such longer period as may be specified)
on the terms and conditions set forth below; provided, however, that no such
-------- -------
purchase shall be required to be made if, by the end of such 60-day period (or
such longer period as may be specified), the representations and warranties set
forth in this Section 2.03 shall be satisfied in all material respects, and any
material adverse effect on the Certificateholders' Interest caused thereby shall
have been cured.
The Seller shall deposit in the Collection Account in immediately
available funds on the Business Day preceding such Distribution Date, in payment
for such purchase, an amount equal to the sum of the amounts specified therefor
with respect to each outstanding Series in the related Supplement.
Notwithstanding anything to the contrary in this Agreement, such amounts shall
be distributed to the Investor Certificateholders on such Distribution Date in
accordance with Article IV and the terms of each Supplement. If the Trustee or
the Investor Certificateholders give notice directing the Seller to purchase the
Certificateholders' Interest as provided above, the obligation of the Seller to
purchase the Certificateholders' Interest pursuant to this Section 2.03 shall
constitute the sole remedy respecting an event of the type specified in the
first sentence of this Section 2.03 available to the Investor Cer-
<PAGE>
37
tificateholders (or the Trustee on behalf of the Investor Certificateholders).
SECTION 2.04. Representations and Warranties of the Seller Relating
-----------------------------------------------------
to the Receivables. (a) Representations and Warranties. The Seller hereby
- ------------------- -------------------------------
represents and warrants to the Trust that:
(i) Each Receivable and all Collateral Security existing on the first
Closing Date or, in the case of Additional Accounts, on the applicable
Addition Date, and on each Transfer Date, and all the Seller's right, title
and interest in the Receivables Purchase Agreement, has been conveyed to
the Trust free and clear of any Lien.
(ii) With respect to each Receivable and all Collateral Security
existing on the first Closing Date or, in the case of Additional Accounts,
on the applicable Addition Date, and on each Transfer Date, all consents,
licenses, approvals or authorizations of or registrations or declarations
with any Governmental Authority required to be obtained, effected or given
by the Seller in connection with the conveyance of such Receivable or
Collateral Security to the Trust have been duly obtained, effected or given
and are in full force and effect.
(iii) On the Cut-Off Date, in the case of each Initial Account, and
on the applicable Additional Cut-Off Date, in the case of each Additional
Account, each such Account is an Eligible Account and on each Closing Date,
each Account is an Eligible Account.
(iv) On the first Closing Date, in the case of the Initial Accounts,
and, in the case of the Additional Accounts, on the applicable Additional
Cut-Off Date, and on each Transfer Date, each Receivable conveyed to the
Trust on such date is an Eligible Receivable or, if such Receivable is not
an Eligible Receivable, such Receivable is conveyed to the Trust in
accordance with Section 2.08.
(b) Notice of Breach. The representations and warranties set forth
-----------------
in this Section 2.04 shall survive the transfer and assignment of the
Receivables to the Trust and the issuance of the Certificates. Upon discovery
by the Seller, the Servicer or the Trustee of a breach of any of
<PAGE>
38
the representations and warranties set forth in this Section 2.04, the party
discovering such breach shall give prompt written notice to the other parties
and to any Enhancement Providers.
(c) Reassignment. If any representation or warranty under Section
-------------
2.04(a) is not true and correct as of the date specified therein with respect to
any Receivable or Account and such breach has a material adverse effect on the
Certificateholders' Interest in any such Receivable or Account, then, within 30
days (or such longer period as may be agreed to by the Trustee) after the
earlier to occur of the discovery of any such event by the Seller or the
Servicer, or receipt by the Seller or the Servicer of written notice of any such
event given by the Trustee or any Enhancement Providers, the Seller shall accept
a reassignment of such Receivable or, in the case of such an untrue
representation or warranty with respect to an Account, all Receivables in such
Account, on the Determination Date immediately succeeding the day of such
discovery or notice on the terms and conditions set forth in the next succeeding
paragraph; provided, however, that no such reassignment shall be required to be
-------- -------
made with respect to such Receivable if, by the end of such 30-day period (or
such longer period as may be agreed to by the Trustee), the breached
representation or warranty shall then be true and correct in all material
respects and any material adverse effect caused thereby shall have been cured.
The Seller shall accept a reassignment of each such Receivable by
directing the Servicer to deduct, subject to the next sentence, the principal
amount of such Receivables from the Pool Balance on or prior to the end of the
Collection Period in which such reassignment obligation arises. If, following
such deduction, the Seller's Participation Amount would be less than the Trust
Available Subordinated Amount on the immediately preceding Determination Date
(after giving effect to the allocations, distributions, withdrawals and deposits
to be made on the Distribution Date following such Determination Date), then not
later than 12:00 noon on the day on which such reassignment occurs, the Seller
shall deposit in the Collection Account in immediately available funds the
amount (the "Transfer Deposit Amount") by which the Seller's Participation
-----------------------
Amount would be less than such Trust Available Subordinated Amount (up to the
principal amount of such Receivables); provided that if the Transfer Deposit
--------
Amount is not deposited as required by this sentence, then the principal amounts
of such Receiv-
<PAGE>
39
ables shall only be deducted from the Pool Balance to the extent that the
Seller's Participation Amount is not reduced below the Trust Available
Subordinated Amount and the Receivables the principal amounts of which have not
been so deducted shall not be reassigned to the Seller and shall remain part of
the Trust. Upon reassignment of any such Receivable, but only after payment by
the Seller of the Transfer Deposit Amount, if any, the Trust shall automatically
and without further action be deemed to sell, transfer, assign, set over and
otherwise convey to the Seller, without recourse, representation or warranty,
all the right, title and interest of the Trust in and to such Receivable, all
Collateral Security and all moneys due or to become due with respect thereto and
all proceeds thereof. The Trustee shall execute such documents and instruments
of transfer or assignment and take such other actions as shall reasonably be
requested by the Seller to effect the conveyance of such Receivables pursuant to
this Section. The obligation of the Seller to accept a reassignment of any such
Receivable and to pay any related Transfer Deposit Amount shall constitute the
sole remedy respecting the event giving rise to such obligation available to
Certificateholders (or the Trustee on behalf of Certificateholders).
SECTION 2.05. Addition of Accounts. (a) If, as of the close of
---------------------
business on the last day of any Collection Period, (i) the Pool Balance on such
day is less than the Required Participation Amount as of the following
Distribution Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on such Distribution Date), or (ii) the
result obtained by multiplying (x) the Seller's Participation Amount as of the
following Distribution Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on such Distribution Date),
by (y) the percentage equivalent of the portion of the Seller's Interest
represented by the VWCARC Certificate, is less than 2% of the Pool Balance on
such last day, then the Seller shall, within 10 Business Days following the end
of such Collection Period, designate and transfer and assign to the Trust the
Receivables (and the related Collateral Security) of additional Eligible
Accounts of the Seller to be included as Accounts in a sufficient amount such
that after giving effect to such addition (i) the Pool Balance as of the close
of business on the Addition Date is at least equal to such Required
Participation Amount and (ii) the result obtained by multiplying (x) such
Seller's Participation Amount by (y) the percentage equivalent of the portion of
the Seller's
<PAGE>
40
Interest represented by the VWCARC Certificate, is at least equal to 2% of such
Pool Balance. The Seller shall satisfy the conditions specified in Section
2.05(d) in designating such Additional Accounts and conveying the related
Receivables to the Trust. The failure of the Seller to transfer Receivables to
the Trust as provided in this paragraph solely as a result of the unavailability
of a sufficient amount of Eligible Receivables shall not constitute a breach of
this Agreement; provided, however, that any such failure may nevertheless result
-------- -------
in the occurrence of an Early Amortization Event or Reinvestment Event with
respect to any Series or Class as provided in the Supplement therefor.
(b) The Seller may from time to time, at its sole discretion, subject
to the conditions specified in paragraph (d) below, voluntarily designate
additional Eligible Accounts to be included as Accounts and transfer to the
Trust the Receivables (and the related Collateral Security) of such Additional
Accounts.
(c) Receivables and Collateral Security from such Additional Accounts
shall be transferred to the Trust effective on a date (the "Addition Date")
-------------
specified in a written notice provided by the Seller (or the Servicer on its
behalf) to the Trustee, the Rating Agencies and any Enhancement Providers
specifying the Additional Cut-Off Date and the Addition Date for such Additional
Accounts (the "Addition Notice") on or before the first Business Day but not
---------------
more than the 30th day prior to the related Addition Date (the "Notice Date").
-----------
(d) The Seller shall be permitted to transfer to the Trust the
Receivables and all Collateral Security related thereto in any Additional
Accounts designated by the Transferor as such pursuant to Section 2.05(a) or (b)
only upon satisfaction of each of the following conditions on or prior to the
related Addition Date (provided that the Seller shall be automatically permitted
--------
to designate Additional Accounts to be included in the Trust under Section
2.05(b) without regard to clauses (i), (vi), (vii), (viii) and (ix) below if the
percentage derived by dividing the aggregate balance of all Receivables arising
in Additional Accounts added to the Trust during the then-current fiscal year by
the Pool Balance at the beginning of such fiscal year (or, if the initial
Closing Date occurs after the beginning of such fiscal year, the initial Closing
Date) is less than 20% at such time, or if the percentage derived by dividing
the
<PAGE>
41
aggregate balance of all Receivables arising in Additional Accounts added during
the then-current fiscal quarter by the Pool Balance at the beginning of such
quarter (or, if the initial Closing Date occurs after the beginning of such
fiscal quarter, the initial Closing Date) is less than 10% at any time):
(i) the Seller shall have provided the Trustee, any Agent, the Rating
Agencies and any Enhancement providers with a timely Addition Notice;
(ii) such Additional Accounts shall all be Eligible Accounts;
(iii) the Seller shall have delivered to the Trustee a duly executed
written assignment (including an acceptance by the Trustee) in
substantially the form of Exhibit B (the "Assignment") and shall have
----------
amended and delivered to the Trustee Schedule 1 to specify for each
Additional Account (A) its Account number, (B) the outstanding balance of
the Receivables in such Account and (C) the aggregate amount of Principal
Receivables in such Account;
(iv) the Seller shall, to the extent required by Section 4.03, have
deposited in the Collection Account all Collections with respect to such
Additional Accounts since the Additional Cut-Off Date;
(v) (A) no selection procedures reasonably believed by the Seller to
be adverse to the interests of the Beneficiaries were used in selecting
such Additional Accounts; (B) the list of Additional Accounts delivered
pursuant to clause (iii) above is true and correct in all material respects
as of the Additional Cut-Off Date and (C) as of each of the Notice Date and
the Addition Date, neither VWCI nor the Seller was insolvent nor will
either of them have been made insolvent by such transfer nor is either of
them aware of any such pending insolvency;
(vi) unless such addition is required pursuant to Section 2.05(a), the
Rating Agency Condition shall have been satisfied with respect to such
addition;
(vii) the addition of the Receivables arising in such Additional
Accounts shall not result in the
<PAGE>
42
occurrence of an Early Amortization Event or Reinvestment Event with
respect to any Series;
(viii) the Seller shall have delivered to the Trustee and any
Enhancement Providers a certificate of a Vice President or more senior
officer confirming (A) the items set forth in paragraphs (ii) through (vii)
above and (B) that the Seller reasonably believes that the addition of the
Receivables arising in such Additional Accounts will not result in the
occurrence of an Early Amortization Event or Reinvestment Event with
respect to any Series; and
(ix) on or before each Addition Date, the Seller shall have delivered
to the Trustee and any Enhancement Providers who have delivered a written
request therefor, an Opinion of Counsel with respect to the Receivables in
the Additional Accounts substantially in the form of Exhibit G-2.
(e) The Seller hereby represents and warrants as of the applicable
Addition Date as to the matters set forth in Section 2.05(d)(v) and (viii)(B).
Upon discovery by the Seller, the Servicer, the Trustee or any Enhancement
Providers of a breach of the foregoing representations and warranties, the party
discovering the breach shall give prompt written notice to the other parties and
to any Enhancement Providers.
SECTION 2.06. Covenants of the Seller. The Seller hereby covenants
------------------------
that:
(a) No Liens. Except for the conveyances hereunder or as provided in
---------
Section 6.03(c), the Seller will not sell, pledge, assign or transfer to
any other Person, or grant, create, incur, assume or suffer to exist any
Lien on, any Receivable or any Collateral Security, whether now existing or
hereafter created, or any interest therein, or the Seller's rights,
remedies, powers or privileges with respect to the Receivables under the
Receivables Purchase Agreement, or the Seller's Interest or the Seller's
Certificates and the Seller shall defend the right, title and interest of
the Trust in, to and under the Receivables and the Collateral Security,
whether now existing or hereafter created, and such rights, remedies,
powers and privileges, against all claims of third parties claiming through
or under the Seller.
<PAGE>
43
(b) Account Allocations. If the Seller is unable for any reason to
-------------------
transfer Receivables to the Trust, then the Seller agrees that it shall
allocate, after the occurrence of such event, payments on each Account with
respect to the principal balance of such Account first to the oldest
principal balance of such Account and to have such payments applied as
Collections in accordance with the terms of this Agreement. The parties
hereto agree that Interest Receivables, whenever created, accrued in
respect of Principal Receivables which have been conveyed to the Trust
shall continue to be a part of the Trust notwithstanding any cessation of
the transfer of additional Principal Receivables to the Trust and
Collections with respect thereto shall continue to be allocated and paid in
accordance with the terms of this Agreement.
(c) Delivery of Collections. If the Seller, VWCI or any Affiliate
------------------------
thereof receives payments in respect of Receivables, the Seller and VWCI
agree to pay or cause to be paid to the Servicer or any Successor Servicer
all payments received thereby in respect of the Receivables as soon as
practicable after receipt thereof, but in no event later than two Business
Days after the receipt by the Seller, VWCI or any Affiliate thereof.
(d) Notice of Liens. The Seller shall notify the Trustee promptly
----------------
after becoming aware of any Lien on any Receivable other than the
conveyances hereunder.
(e) Compliance with Law. The Seller hereby agrees to comply in all
--------------------
material respects with all Requirements of Law applicable to the Seller.
(f) Activities of the Seller. The Seller will not engage in any
-------------------------
business or activity of any kind or enter into any transaction other than
(x) the businesses, activities and transactions contemplated and authorized
by this Agreement or the Related Documents or (y) the business of
acquiring, selling or financing wholesale receivables and related
activities and transactions (such businesses, activities and transactions,
collectively, "Permitted Transactions").
----------------------
(g) Indebtedness. The Seller will not create, incur or assume any
-------------
indebtedness or issue any securities or sell or transfer any receivables to
a
<PAGE>
44
trust or other Person which issues securities in respect of any such
receivables, unless (i) any such indebtedness or securities have no
recourse to any assets of the Seller other than the specified assets to
which such indebtedness or securities relate and (ii) the Rating Agency
Condition shall have been satisfied in connection therewith prior to the
incurrence or issuance thereof.
(h) Guarantees. The Seller will not become or remain liable,
-----------
directly or contingently, in connection with any indebtedness or other
liability of any other Person, whether by guarantee, endorsement (other
than endorsements of negotiable instruments for deposit or collection in
the ordinary course of business), agreement to purchase or purchase,
agreement to supply or advance funds, or otherwise, except in connection
with Permitted Transactions and unless the Rating Agency Condition shall
have been satisfied with respect thereto.
(i) Investments. The Seller will not make or suffer to exist any
------------
loans or advances to, or extend any credit to, or make any investments (by
way of transfer of property, contributions to capital, purchase of stock or
securities or evidences of indebtedness, acquisition of the business or
assets, or otherwise) in, any Affiliate, unless prior thereto the Rating
Agency Condition shall have been satisfied with respect thereto; provided,
--------
however, that the Seller shall not be prohibited under this Section 2.06(i)
-------
from declaring or paying any dividends in respect of its common stock.
SECTION 2.07. Removal of Accounts. (a) On each Determination Date
--------------------
the Seller shall have the right to remove from the Trust Accounts in the manner
prescribed in Section 2.07(b).
(b) To remove Accounts, including all amounts then held by the Trust
or thereafter received by the Trust in respect of the Accounts being removed,
the Seller (or the Servicer on its behalf) shall take the following actions and
make the following determinations:
(i) not less than five Business Days prior to the Removal Date,
furnish to the Trustee, any Agent, any Enhancement Providers and the Rating
Agencies a written notice (the "Removal Notice") specifying the
--------------
<PAGE>
45
Determination Date on which removal of the Receivables of one or more
Accounts (the "Removed Accounts") will occur (a "Removal Date");
---------------- ------------
(ii) from and after such Removal Date, cease to transfer to the Trust
any and all Receivables arising in such Removed Accounts;
(iii) represent and warrant that the removal of any such Account on
any Removal Date shall not, in the reasonable belief of the Seller, cause
an Early Amortization Event or Reinvestment Event to occur with respect to
any Series or cause the Pool Balance to be less than the Required
Participation Amount;
(iv) represent and warrant that no selection procedures reasonably
believed by the Seller to be adverse to the interests of the Beneficiaries
were utilized in selecting the Accounts to be removed;
(v) represent and warrant that notice of such removal has been
provided to the Rating Agencies and that such removal will not result in a
reduction or withdrawal of the rating of any outstanding Series or Class by
the applicable Rating Agency;
(vi) on or before the related Removal Date, deliver to the Trustee and
any Enhancement Providers an Officers' Certificate confirming the items set
forth in clauses (iii) through (v) above and confirming that the Seller
reasonably believes that the removal of the Removed Accounts will not
result in the occurrence of an Early Amortization Event or Reinvestment
Event with respect to any Series; the Trustee may conclusively rely on such
Officers' Certificate and shall have no duty to make inquiries with regard
to the matters set forth therein and shall incur no liability in so
relying; and
(vii) on or before the fifth Business Day after the Removal Date,
amend Schedule 1 by furnishing to the Trustee a computer file, microfiche
list or other list of the Removed Accounts that were removed on the Removal
Date, specifying for each Removed Account as of the Date (A) its Account
number, (B) the outstanding balance of Receivables in such Account and (C)
the aggregate amount of Principal Receivables in such Account and represent
that such computer file,
<PAGE>
46
microfiche list or other list of the Removed Accounts is true and complete
in all material respects.
No Accounts shall be so removed unless the Rating Agency Condition shall have
been satisfied with respect to such removal.
(c) Subject to Section 2.07(b), on the Removal Date with respect to
any such Removed Account, such Removed Account shall be deemed removed from the
Trust for all purposes. After the Removal Date and upon the written request of
the Servicer, the Trustee shall deliver to the Seller a reassignment in
substantially the form of Exhibit H (the "Reassignment").
------------
SECTION 2.08. Sale of Ineligible Receivables.
-------------------------------
The Seller shall sell to the Trust on each Transfer Date any and all Receivables
arising in any Eligible Accounts that are Ineligible Receivables; provided,
--------
however, that (a) on the Cut-Off Date or, in the case of Receivables arising in
- -------
Additional Accounts, on the related Additional Cut-Off Date, and on the
applicable Transfer Date, the Account in which such Receivables arise is an
Eligible Account; and (b) the Incremental Subordinated Amount is adjusted in
accordance with the definition of Incremental Subordinated Amount.
ARTICLE III
Administration and Servicing
----------------------------
of Receivables
--------------
SECTION 3.01. Acceptance of Appointment and Other Matters Relating to
----------------------------------- -------------------
the Servicer. (a) The Servicer shall service and administer the Receivables,
- -------------
shall collect payments due under the Receivables and shall charge-off as
uncollectible Receivables, all in accordance with its customary and usual
servicing procedures for servicing wholesale receivables comparable to the
Receivables which the Servicer services for its own account and in accordance
with the Floorplan Financing Guidelines. The Servicer shall have full power and
authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing and subject to Section 10.01, the Servicer is hereby
authorized and empowered, unless such power and authority is revoked by the
Trustee on
<PAGE>
47
account of the occurrence of a Service Default pursuant to Section 10.01, (i) to
instruct the Trustee to make withdrawals and payments from the Collection
Account and any Series Account as set forth in this Agreement, (ii) to instruct
the Trustee to take any action required or permitted under any Enhancement,
(iii) to execute and deliver, on behalf of the Trust for the benefit of the
Certificateholders and the other Beneficiaries, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable Requirements of Law, to commence enforcement
proceedings with respect to such Receivables, (iv) to make any filings, reports,
notices, applications, registrations with, and seek any consents or
authorizations from, the Securities and Exchange Commission and any state
securities authority on behalf of the Trust as may be necessary or advisable to
comply with any Federal or state securities laws or reporting requirement, and
(v) to delegate certain of its servicing, collection, enforcement and
administrative duties hereunder with respect to the Accounts and the Receivables
to any Person who agrees to conduct such duties in accordance with the Floorplan
Financing Guidelines and this Agreement, in each case if and to the extent
applicable to the performance of such duties; provided, however, that no
-------- -------
delegation will relieve the Servicer of its liability and responsibility with
respect to such duties. The Trustee shall furnish the Servicer with any powers
of attorney and other documents necessary or appropriate to enable the Servicer
to carry out its servicing and administrative duties hereunder.
(b) In the event that the Seller is unable for any reason to transfer
Receivables to the Trust in accordance with the provisions of this Agreement
(including by reason of the application of the provisions of Section 9.02 or any
court of competent jurisdiction ordering that the Seller not transfer any
additional Principal Receivables to the Trust) then, in any such event, the
Servicer agrees (i) to give prompt written notice thereof to any Enhancement
Providers and each Rating Agency and (ii) that it shall in any such event
allocate after the occurrence of such event, payments on each Account with
respect to the principal balance of such Account first to the oldest principal
balance of such Account and to have such payments applied as Collections in
accordance with Section 4.02. The parties hereto agree that Interest
<PAGE>
48
Receivables, whenever created, accrued in respect of Principal Receivables which
have been conveyed to the Trust shall continue to be a part of the Trust
notwithstanding any cessation of the transfer of additional Principal
Receivables to the Trust and Collections with respect thereto shall continue to
be allocated and paid in accordance with the terms of this Agreement.
(c) The Servicer shall not, and any Successor Servicer shall not be
obligated to, use separate servicing procedures, offices, employees or accounts
for servicing the Receivables from the procedures, offices, employees and
accounts used by the Servicer in connection with servicing other wholesale
receivables.
(d) The Servicer shall comply with and perform its servicing
obligations with respect to the Accounts and Receivables in accordance with the
Floorplan Financing Agreements relating to the Accounts and the Floorplan
Financing Guidelines, except insofar as any failure to so comply or perform
would not materially and adversely affect the rights of the Trust or any of the
Beneficiaries. Subject to compliance with all Requirements of Law, the Servicer
(or VWCI) may change the terms and provisions of the Floorplan Financing
Agreements or the Floorplan Financing Guidelines in any respect (including the
calculation of the amount or the timing of charge-offs and the rate of the
finance charge assessed thereon), only if (i) as a result of such change, in the
reasonable judgment of the Servicer no Early Amortization Event or Reinvestment
Event will occur with respect to any Series at any time and none of the
Enhancement Providers, if any, or the Certificateholders shall be adversely
affected, (ii) such change is made applicable to the comparable segment of
wholesale accounts owned or serviced by the Servicer which have characteristics
the same as, or substantially similar to, the Accounts which are the subject of
such change and (iii) in the case of a reduction in the rate of such finance
charges, the Servicer (or VWCI) does not reasonably expect any such reduction to
result in the Asset Receivables Rate for any Collection Period being less than
the weighted average of the sum of the Certificate Rates and the Servicing Fee
Rates for all outstanding Series for the related Accrual Period (each such term
as defined in the related Supplement).
SECTION 3.02. Servicing Compensation. As full compensation for its
-----------------------
servicing activities hereunder and reimbursement for its expenses as set forth
in the immedi-
<PAGE>
49
ately following paragraph, the Servicer shall be entitled to receive the
Servicing Fee on each Distribution Date on or prior to the Trust Termination
Date payable in arrears. The "Servicing Fee" shall be the aggregate of the
-------------
Monthly Servicing Fees specified in the Supplements. The Servicing Fee shall be
payable to the Servicer solely to the extent amounts are available for payment
in accordance with the terms of the Supplements.
The Servicer's expenses include the amounts due to the Trustee
pursuant to Section 11.05 and the reasonable fees and disbursements of
independent accountants and all other expenses incurred by the Servicer in
connection with its activities hereunder, and including all other fees and
expenses of the Trust not expressly stated herein to be for the account of the
Certificateholders. The Servicer shall be required to pay such expenses for its
own account, and shall not be entitled to any payment therefor other than the
Servicing Fee. The Servicer will be solely responsible for all fees and
expenses incurred by or on behalf of the Servicer in connection herewith and the
Servicer will not be entitled to any fee or other payment from, or claim on, any
of the Trust Assets (other than the Servicing Fee).
SECTION 3.03. Representations, Warranties and Covenants of the
------------------------------------------------
Servicer. (a) VWCI, as Servicer, hereby makes, and any Successor Servicer by
- ---------
its appointment hereunder shall make, on each Closing Date (and on the date of
any such appointment) the following representations, warranties and covenants:
(i) Organization and Good Standing. Such party is a corporation duly
-------------------------------
organized, validly existing and in good standing under the applicable laws
of the state of its incorporation and has, in all material respects, full
corporate power, authority and legal rights to own its properties and
conduct its wholesale receivable servicing business as such properties are
presently owned and as such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement and the
applicable Supplement.
(ii) Due Qualification. Such party is duly qualified to do business
------------------
and is in good standing as a foreign corporation (or is exempt from such
requirements) and has obtained all necessary licenses and approvals in each
jurisdiction in which the servicing of the Receivables as required by this
Agreement
<PAGE>
50
requires such qualification except where the failure to so qualify or
obtain licenses or approvals would not have a material adverse effect on
its ability to perform its obligations hereunder.
(iii) Due Authorization. The execution, delivery, and performance of
------------------
this Agreement and the applicable Supplement has been duly authorized by
such party by all necessary corporate action on the part thereof.
(iv) Binding Obligation. This Agreement and the applicable
-------------------
Supplement constitutes a legal, valid and binding obligation of such party,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereinafter in effect, affecting the enforcement
of creditors' rights and except as such enforceability may be limited by
general principles of equity (whether considered in a proceeding at law or
in equity).
(v) No Violation. The execution and delivery of this Agreement and
-------------
the applicable Supplement by such party, the performance of the
transactions contemplated by this Agreement and the applicable Supplement
and the fulfillment of the terms hereof and thereof applicable to such
party will not conflict with, violate, result in any breach of any of the
material terms and provisions of, or constitute (with or without notice or
lapse of time or both) a material default under, any Requirement of Law
applicable to such party or any indenture, contract, agreement, mortgage,
deed of trust, or other instrument to which such party is a party or by
which it is bound.
(vi) No Proceedings. There are no proceedings or, to the best
---------------
knowledge of such party, investigations, pending or threatened against such
party before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions
contemplated by this Agreement and the applicable Supplement, seeking any
determination or ruling that, in the reasonable judgment of such party,
would materially and adversely affect the performance by such party of its
obligations under this Agreement and the applicable Supplement, or seeking
any
<PAGE>
51
determination or ruling that would materially and adversely affect the
validity or enforceability of this Agreement and the applicable Supplement.
(vii) Compliance with Requirements of Law. Such party shall duly
------------------------------------
satisfy all obligations on its part to be fulfilled under or in connection
with the Receivables and the Accounts, will maintain in effect all
qualifications required under Requirements of Law in order to service
properly the Receivables and the Accounts and will comply in all material
respects with all Requirements of Law in connection with servicing the
Receivables and the Accounts the failure to comply with which would have a
material adverse effect on the interests of Beneficiaries.
(viii) No Rescission or Cancelation. Such party shall not permit any
-----------------------------
rescission or cancelation of a Receivable except as ordered by a court of
competent jurisdiction or other Governmental Authority.
(ix) Protection of Beneficiaries' Rights. Such party shall take no
------------------------------------
action, nor omit to take any action, which would impair the rights of
Beneficiaries in the Receivables nor shall it reschedule, revise or defer
payments due on any Receivable except in accordance with the Floorplan
Financing Guidelines.
(x) Servicer Concentration Account. The Servicer shall maintain
-------------------------------
deposit accounts (collectively, the "Concentration Account") into which it
---------------------
shall deposit all amounts paid by the Dealers under Floorplan Financing
Agreements. The Servicer agrees (i) that it will not change this method of
collection without the prior written consent of any Enhancement Providers;
(ii) with respect to amounts deposited into the Concentration Account in
respect of a particular day, that it will not transfer such amounts from
the Concentration Account until the Servicer has posted all Collections in
respect of the Receivables for such day and (iii) concurrently with the
transfer of amounts from the Concentration Account in respect of a
particular day, the Servicer will make the deposits and transfers required
by the terms of this Agreement for such day.
(xi) Negative Pledge. Except for the conveyance hereunder to the
----------------
Trustee, the Servicer will not sell,
<PAGE>
52
pledge, assign or transfer to any other Person, or grant, create, incur,
assume or suffer to exist any Lien on, any Receivable sold and assigned to
the Trust, whether now existing or hereafter created, or any interest
therein, and the Servicer shall defend the rights, title and interest of
the Trust in, to and under any Receivable sold and assigned to the Trust,
whether now existing or hereafter created, against all claims of third
parties claiming through or under the Seller or the Servicer.
(b) Notice of Breach. The representations and warranties set forth
-----------------
in this Section 3.03 shall survive the transfer and assignment of the
Receivables to the Trust and the issuance of the Certificates. Upon discovery
by the Seller, the Servicer or the Trustee of a breach of any of the
representations and warranties set forth in this Section 3.03, the party
discovering such breach shall give prompt written notice to the other parties
and to any Enhancement Providers.
(c) Purchase. In the event any representation or warranty under
---------
Section 3.03(a) (vii), (viii) or (ix) is not true and correct in any material
respect as of the date specified therein with respect to any Receivable or
Account and such breach has a material adverse effect on the Certificateholders'
Interest in such Receivable, then, within 30 days (or such longer period as may
be agreed to by the Trustee) of the earlier to occur of the discovery of any
such event by the Seller or the Servicer, or receipt by the Seller or the
Servicer of written notice of any such event given by the Trustee or any
Enhancement Providers, the Servicer shall purchase such Receivable or, in the
case of an untrue representation with respect to an Account, all Receivables in
such Account, on the Determination Date immediately succeeding the expiration of
such 30-day period (or such longer period as may be agreed to by the Trustee) on
the terms and conditions set forth in the next succeeding paragraph; provided,
--------
however, that no such purchase shall be required to be made with respect to such
- -------
Receivable if, by the end of such 30-day period (or such longer period as may be
agreed to by the Trustee) the breached representation or warranty shall then be
true and correct in all material respects and any material adverse effect caused
thereby shall have been cured. The Servicer shall effect such purchase by
depositing in the Collection Account in immediately available funds an amount
equal to the Purchase Price of such Receivable. Any such deposit of such
Purchase Price
<PAGE>
53
into the Collection Account shall be considered a Transfer Deposit Amount and
shall be applied in accordance with the terms of this Agreement.
Upon each such payment of such Purchase Price, the Trust shall
automatically and without further action be deemed to sell, transfer, assign,
set over and otherwise convey to the Servicer, without recourse, representation
or warranty, all right, title and interest of the Trust in and to such
Receivables, all monies due or to become due with respect thereto and all
proceeds thereof and the related Collateral Security. The Trustee shall execute
such documents and instruments of transfer or assignment and take such other
actions as shall be reasonably requested by the Servicer to effect the
conveyance of any such Receivables pursuant to this Section. The obligation of
the Servicer to purchase such Receivables, and to make the deposits required to
be made to the Collection Account as provided in the preceding paragraph, shall
constitute the sole remedy respecting the event giving rise to such obligation
available to Certificateholders or the Trustee on behalf of Certificateholders.
SECTION 3.04. Reports and Records for the Trustee; Bank Account
--------------------------- ---------------------
Statements. On or before each Distribution Date, with respect to each
- -----------
outstanding Series, the Servicer shall deliver to any Enhancement Providers, the
Rating Agencies, the Trustee and each Investor Certificateholder a Distribution
Date Statement for such Distribution Date substantially in the form set forth in
the related Supplement.
The Servicer shall provide, at the request of the Rating Agencies,
such additional information regarding the wholesale finance portfolio as the
Rating Agencies may, from time to time, reasonably request.
SECTION 3.05. Annual Servicer's Certificate. The Servicer will
-----------------------------
deliver to the Rating Agencies, the Trustee, any Agent and any Enhancement
Providers on or before April 30 of each calendar year, beginning with April 30,
1997, an Officers' Certificate substantially in the form of Exhibit C stating
that (a) a review of the activities of the Servicer during the preceding
calendar year (or since the initial Closing Date, in the case of the first such
Officers' Certificate) and of its performance under this Agreement was made
under the supervision of the officer signing such certificate and (b) to the
best of such
<PAGE>
54
officer's knowledge, based on such review, the Servicer has performed in all
material respects its obligations under this Agreement throughout such year (or
since the initial Closing Date, in the case of the first such Officers'
Certificate), or, if there has been a material default in the performance of any
such obligation, specifying each such default known to such officer and the
nature and status thereof. A copy of such certificate may be obtained by any
Investor Certificateholder by a request in writing to the Trustee addressed to
the Corporate Trust Office.
SECTION 3.06. Annual Independent Public Accountants' Servicing
------------------------------------------------
Report. The Servicer shall cause a firm of independent certified public
- -------
accountants, who may also render other services to the Servicer or to the
Seller, to deliver to the Trustee, the Rating Agencies and each Enhancement
Provider on or before April 30 of each year, beginning April 30, 1997, a report
addressed to the Board of Directors of the Servicer and to the Trustee, to the
effect that such firm has examined the financial statements of the Servicer or,
if applicable, the parent corporation of the Servicer, and issued its report
thereon and that such examination: (a) was made in accordance with generally
accepted auditing standards, and accordingly included such tests of the
accounting records and such other auditing procedures as such firm considered
necessary in the circumstances, (b) included tests relating to wholesale
receivables (including financing arrangements with automobile dealers to finance
their automobile and light-duty truck inventory) serviced for others in
accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers, to the extent the procedures in such program are applicable to
the servicing obligations set forth in the Agreement, and (c) except as
described in the report, disclosed no exceptions or errors in the records
relating to wholesale receivables (including financing arrangements with
automobile dealers to finance their automobile and light-duty truck inventory)
serviced for others that, in the firm's opinion, paragraph four of such Uniform
Single Audit Program requires such firm to report. A copy of such report may be
obtained by any Investor Certificateholder by a request in writing to the
Trustee addressed to the Corporate Trust Office.
SECTION 3.07. Tax Treatment. The Seller has entered into this
--------------
Agreement and the Investor Certificates have been (or will be) issued with the
intention that the Investor Certificates will qualify under applicable tax law
<PAGE>
55
as indebtedness of VWCARC secured by the Receivables. The Seller, each
Beneficiary and each Certificateholder and Certificate Owner, by the acceptance
of its Certificate or Book-Entry Certificate, as applicable, agrees to treat the
Investor Certificates as indebtedness of VWCARC secured by the Receivables for
Federal income taxes, state and local income and franchise taxes, Michigan
Single Business tax and any other taxes imposed on or measured by income.
SECTION 3.08. Notices to VWCI. In the event VWCI is no longer acting
----------------
as Servicer, any Successor Servicer appointed pursuant to Section 10.02 shall
deliver or make available to VWCI, as the case may be, each certificate and
report required to be prepared, forwarded or delivered thereafter pursuant to
Sections 3.04, 3.05 or 3.06.
SECTION 3.09. Adjustments. (a) If the Servicer adjusts downward the
------------
amount of any Principal Receivable because of a rebate, refund, credit
adjustment or billing error to a Dealer, or because such Receivable was created
in respect of a Vehicle which was refused or returned by a Dealer, then, in any
such case, the Seller's Participation Amount will be automatically reduced by
the amount of the adjustment, subject to the last sentence of this Section.
Furthermore, if following such a reduction the Seller's Participation Amount
would be less than the Trust Available Subordinated Amount on the immediately
preceding Determination Date (after giving effect to the allocations,
distribution, withdrawals and deposits to be made on the Distribution Date
following such Determination Date), then the Seller shall be required to pay an
amount equal to such deficiency (up to the amount of such adjustment) into the
Collection Account on the Business Day on which such adjustment or reduction
occurs (each such payment an "Adjustment Payment"). If the Seller shall fail to
------------------
make any deposit to the Collection Account with respect to such Adjustment
Payment or portion thereof by the Determination Date relating to the Collection
Period with respect to which such Adjustment Payment is payable, the amount of
such Adjustment Payment or portion thereof shall be allocated on such related
Determination Date pro rata among the then outstanding Series based on their
respective Series Allocation Percentages for the Collection Period with respect
to which such deposit should have been made.
(b) If (i) the Servicer makes a deposit into the Collection Account
in respect of a Collection of a Receivable and such Collection was received by
the Servicer
<PAGE>
56
in the form of a check which is not honored for any reason or (ii) the Servicer
makes a mistake with respect to the amount of any Collection and deposits an
amount that is less than or more than the actual amount of such Collection, the
Servicer shall appropriately adjust the amount subsequently deposited into the
Collection Account to reflect such dishonored check or mistake. Any Receivable
in respect of which a dishonored check is received shall be deemed not to have
been paid.
ARTICLE IV
Rights of Certificateholders and
--------------------------------
Allocation and Application of Collections
-----------------------------------------
SECTION 4.01. Rights of Certificateholders. The Investor
-----------------------------
Certificates shall represent fractional undivided interests in the Trust, which,
with respect to each Series, shall consist of the right to receive, to the
extent necessary to make the required payments with respect to the Investor
Certificates of such Series at the times and in the amounts specified in the
related Supplement, the portion of Collections allocable to Investor
Certificateholders of such Series pursuant to this Agreement and such
Supplement, funds on deposit in the Collection Account allocable to
Certificateholders of such Series pursuant to this Agreement and such
Supplement, funds on deposit in any related Series Account and funds available
pursuant to any related Enhancement (collectively, with respect to all Series,
the "Certificateholders' Interest"), it being understood that the Investor
----------------------------
Certificates of any Series or Class shall not represent any interest in any
Series Account or Enhancement for the benefit of any other Series or Class. The
Seller's Certificate shall represent the ownership interest in the remainder of
the Trust Assets not allocated pursuant to this Agreement or any Supplement to
the Certificateholders' Interest, including the right to receive Collections
with respect to the Receivables and other amounts at the times and in the
amounts specified in any Supplement to be paid to the Seller on behalf of all
holders of the Seller's Certificates (the "Seller's Interest"); provided,
----------------- --------
however, that the Seller's Certificates shall not represent any interest in the
- -------
Collection Account, any Series Account or any Enhancement, except as
specifically provided in this Agreement or any Supplement.
<PAGE>
57
SECTION 4.02. Establishment of the Collection Account. The Servicer,
----------------------------------------
for the benefit of the Certificateholders and the other Beneficiaries, shall
cause to be established and maintained in the name of the Trust an Eligible
Deposit Account bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders and the
other Beneficiaries (the "Collection Account"). The Trustee shall possess all
------------------
right, title and interest in all funds from time to time on deposit in, and all
Eligible Investments credited to, the Collection Account and in all proceeds
thereof. The Collection Account shall be under the sole dominion and control of
the Trustee for the benefit of the Certificateholders and the other
Beneficiaries. If, at any time, the Collection Account ceases to be an Eligible
Deposit Account, the Servicer shall establish a substitute Eligible Deposit
Account as the Collection Account, instruct the Trustee to transfer any cash
and/or any Eligible Investments to such new Collection Account and, from the
date any such substitute account is established, such account shall be the
Collection Account. Neither the Seller nor the Servicer, nor any Person or
entity claiming by, through or under the Seller or Servicer, shall have any
right, title or interest in, or any right to withdraw any amount from, the
Collection Account. Pursuant to the authority granted to the Servicer in
Section 3.01, the Servicer shall have the power, revocable by the Trustee, to
instruct the Trustee to make withdrawals and payments from the Collection
Account for the purposes of carrying out the Servicer's or Trustee's duties
specified in this Agreement.
All Eligible Investments shall be held by the Trustee for the benefit
of the Certificateholders and the other Beneficiaries. Funds on deposit in the
Collection Account shall at the written direction of the Servicer (or its
appointment agent) be invested by the Trustee solely in Eligible Investments
that will mature so that such funds will be available at the close of business
on or before the Business Day next preceding the following Distribution Date (or
on or before 10:00 a.m. on such following Distribution Date in the case of
Eligible Investments in respect of which the Trustee is the obligor). As of
each Determination Date, all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit in the Collection Account
received on such Determination Date shall be credited to the Collection Account.
Schedule 2, which is hereby incorporated into and made part of this Agreement,
identifies the Collection Account by setting forth the
<PAGE>
58
account number of such account, the account designation of such account and the
name of the institution with which such account has been established. If a
substitute Collection Account is established pursuant to this Section 4.02, the
Servicer shall provide to the Trustee an amended Schedule 2, setting forth the
relevant information for such substitute Collection Account.
SECTION 4.03. Allocations and Applications of Collections and Other
-----------------------------------------------------
Funds. (a) Except as otherwise provided in Section 4.03(b), the Servicer shall
- ------
deposit Collections into the Collection Account as promptly as possible after
the Date of Processing of such Collections, but in no event later than the
second Business Day after such Date of Processing.
(b) Notwithstanding anything in this Agreement to the contrary, at
any time that (i) VWCI is the Servicer hereunder, (ii) no Service Default has
occurred and is continuing and (iii) (x) VWCI maintains a short-term rating of
at least A-1 by Standard & Poor's and P-1 by Moody's (and for five Business Days
following any reduction of either such rating), (y) VWCI arranges for and
maintains a letter of credit or other form of Enhancement in respect of the
Servicer's obligations to make deposits of collections on the Receivables in the
Collection Account that is acceptable in form and substance to each Rating
Agency or (z) VWCI otherwise obtains the Rating Agency confirmations described
below, then, subject to any limitations in the confirmations described below,
the Servicer need not make the daily deposits of Collections into the Collection
Account as provided in Section 4.02, but may make a single deposit into the
Collection Account in same-day funds not later than 10:00 a.m., New York City
time, on each Distribution Date in a net amount equal to the amount which would
have been on deposit with respect to the immediately preceding Collection Period
in the Collection Account; provided, however, that prior to ceasing such daily
-------- -------
deposits as described above the Seller shall have delivered to the Trustee
written confirmation from each of the Rating Agencies that the failure by VWCI
to make such daily deposits will not result in a reduction or withdrawal of the
rating of any outstanding Series or Class. As of the date hereof, VWCI has
obtained Rating Agency confirmation as described above that the Servicer need
not make the daily deposit of Interest Collections into the Collection Account,
but may make a single deposit of such collections as provided above so long as,
in addition to satisfaction of (i) and (ii)
<PAGE>
59
above, (A) the short-term debt rating of Volkswagen AG is at least A-1 by
Standard & Poor's and P-1 by Moody's, (B) both Standard & Poor's and Moody's are
rating a debt issuance of VWA or VWCI, which issuance is guaranteed by
Volkswagen AG, and (C) VWCI remains a wholly-owned subsidiary of Volkswagen AG
(directly or indirectly).
(c) Subject to Section 4.04, but notwithstanding anything else in
this Agreement to the contrary, with respect to any Collection Period, whether
the Servicer is required to make deposits of Collections pursuant to paragraph
(a) or (b) above, (i) the Servicer will only be required to deposit Collections
into the Collection Account up to the aggregate amount of Collections required
to be deposited into any Series Account or, without duplication, distributed on
the related Distribution Date to Investor Certificateholders, or to any
Enhancement Provider pursuant to the terms of any Supplement or Enhancement
Agreement and (ii) if at any time prior to such Distribution Date the amount of
Collections deposited in the Collection Account exceeds the amount required to
be deposited pursuant to clause (i) above, the Servicer will be permitted to
withdraw the excess from the Collection Account.
(d) Subject to and in accordance with Section 4.03(e), Interest
Collections, Principal Collections, Defaulted Receivables and Miscellaneous
Payments shall be allocated to each Series from and after the related Series
Cut-Off Date on the basis of such Series' Series Allocable Interest Collections,
Series Allocable Principal Collections, Series Allocable Defaulted Amount and
Series Allocable Miscellaneous Payments and amounts so allocated to any Series
will not, except as specified in the related Supplement, be available to the
Investor Certificateholders of any other Series. Allocations thereof between
the Certificateholders' Interest and the Seller's Interest, among the Series in
any group and among the Classes in any Series shall be set forth in the related
Supplement or Supplements.
(e) For purposes of determining each Series' Series Allocation
Percentage in connection with the allocation of Interest Collections, Principal
Collections, Defaulted Receivables and Miscellaneous Payments for the specified
Collection Period:
(i) unless the related Supplement shall provide otherwise, each Series
upon issuance, shall be deemed
<PAGE>
60
to have been created and in existence as of the first day of the Collection
Period in which the related Series Cut-Off Date falls and, as a result,
shall be allocated (based on its Series Allocation Percentage) its
allocable portion of Interest Collections, Principal Collections, Defaulted
Receivables and Miscellaneous Payments for such Collection Period; and
(ii) unless the related Supplement shall provide otherwise, with
respect to any Series, if (x) as of the last day of any Collection Period
the amounts on deposit in the Collection Account and the related Series
Accounts with respect to such Collection Period are sufficient to pay in
full all amounts payable by the Trust on or with respect to such Series'
Certificates on the Distribution Date relating to such Collection Period
(after giving effect to the allocations, distributions, withdrawals and
deposits to be made on such related Distribution Date) then (y) such Series
shall be deemed to have been paid in full on such last day and, as a
result, shall not be allocated any portion of Interest Collections,
Principal Collections, Defaulted Receivables and Miscellaneous Payments for
any subsequent Collection Period. For purposes of making the determination
in clause (x) above, on the date of any such determination it shall be
assumed that any theretofore unpaid Adjustment Payments with respect to the
immediately preceding Collection Period shall be allocated to such Series
on the related Determination Date and shall be payable from amounts
allocated to or available with respect to such Series on the related
Distribution Date.
SECTION 4.04. Unallocated Principal Collections. On each
----------------------------------
Distribution Date, (a) the Servicer shall allocate Excess Principal Collections
(as described below) to each Series as set forth in the related Supplement and
(b) the Servicer shall instruct the Trustee in writing to withdraw from the
Collection Account and pay to the Seller (i) an amount equal to the excess, if
any, of (x) the aggregate amount for all outstanding Series of Principal
Collections which the related Supplements specify are to be treated as "Excess
Principal Collections" with respect to such Distribution Date over (y) the
aggregate amount for all outstanding Series which the related Supplements
specify are "Principal Shortfalls" with respect to such Distribution Date and,
without duplication, (ii) the aggregate amount for
<PAGE>
61
all outstanding Series of that portion of Series Allocable Principal Collections
which the related Supplements specify are to be allocated and paid to the Seller
with respect to such Distribution Date; provided, however, that, in the case of
-------- -------
clauses (i) and (ii), such amounts shall be paid to the Seller only if the
Seller's Participation Amount for such Distribution Date (determined after
giving effect to any Principal Receivables transferred to the Trust on such
date) exceeds the Trust Available Subordinated Amount for the immediately
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on such Distribution Date).
The amount held in the Collection Account as a result of the proviso in the
preceding sentence ("Unallocated Principal Collections") shall be paid to the
Seller at the time the Seller's Participation Amount exceeds the Trust Available
Subordinated Amount for the immediately preceding Determination Date (after
giving effect to the allocations, distributions, withdrawals and deposits to be
made on the Distribution Date immediately following such Determination Date);
provided, however, that any Unallocated Principal Collections on deposit in the
- -------- -------
Collection Account at any time during which any Series is in its amortization
period, accumulation period, Early Amortization Period or Reinvestment Period
shall be deemed to be "Miscellaneous Payments" and shall be allocated and
distributed in accordance with Section 4.03 and the terms of each Supplement.
ARTICLE V
Distributions and Reports to
----------------------------
Certificateholders
------------------
Distributions shall be made to, and reports shall be provided to,
Certificateholders as set forth in the applicable Supplement.
ARTICLE VI
The Certificates
----------------
SECTION 6.01. The Certificates. The Investor Certificates of any
-----------------
Series or Class may be issued in bearer form ("Bearer Certificates") with
attached interest coupons and one or more special coupons (collectively, the
"Coupons") pursuant to Section 6.11, or in fully registered
<PAGE>
62
form ("Registered Certificates") and shall be substantially in the form of the
exhibits with respect thereto attached to the applicable Supplement. The VWCARC
Certificate will be issued in registered form, substantially in the form of
Exhibit A, and shall upon issue, be executed and delivered by the Seller to the
Trustee for authentication and redelivery as provided in Section 6.02. Except
as otherwise provided in any Supplement, Bearer Certificates shall be issued in
minimum denominations of $5,000, $50,000 and $100,000 and Registered
Certificates shall be issued in minimum denominations of $1,000 and in integral
multiples of $1,000 in excess thereof. If specified in any Supplement, the
Investor Certificates of any Series or Class shall be issued upon initial
issuance as a single certificate evidencing the aggregate original principal
amount of such Series or Class as described in Section 6.11. The VWCARC
Certificate shall be a single certificate and shall initially represent the
entire Seller's Interest. Each Certificate shall be executed by manual or
facsimile signature on behalf of the Seller by its President or any Vice
President. Certificates bearing the manual or facsimile signature of the
individual who was, at the time when such signature was affixed, authorized to
sign on behalf of the Seller shall not be rendered invalid, notwithstanding that
such individual ceased to be so authorized prior to the authentication and
delivery of such Certificates or does not hold such office at the date of such
Certificates. No Certificates shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by or on behalf of the Trustee by the manual signature of a duly
authorized signatory, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. Bearer Certificates shall be dated the
Series Issuance Date. All Registered Certificates and Seller's Certificates
shall be dated the date of their authentication.
SECTION 6.02. Authentication of Certificates. The Trustee shall
-------------------------------
authenticate and deliver the Investor Certificates of each Series and Class that
are issued upon original issuance to or upon the order of the Seller against
payment to the Seller of the purchase price therefor. The Trustee shall
authenticate and deliver the VWCARC Certificate to the Seller simultaneously
with its delivery of the Investor Certificates of the first Series to be
<PAGE>
63
issued hereunder. If specified in the related Supplement for any Series or
Class, the Trustee shall authenticate and deliver outside the United States the
Global Certificate that is issued upon original issuance thereof.
SECTION 6.03. New Issuances. (a) The Seller may from time to time
--------------
direct the Trustee, on behalf of the Trust, to issue one or more new Series of
Investor Certificates. The Investor Certificates of all outstanding Series
shall be equally and ratably entitled as provided herein to the benefits of this
Agreement without preference, priority or distinction, all in accordance with
the terms and provisions of this Agreement and the applicable Supplement except,
with respect to any Series or Class, as provided in the related Supplement.
(b) On or before the Series Issuance Date relating to any new Series,
the parties hereto will execute and deliver a Supplement which will specify the
Principal Terms of such new Series (which Principal Terms may differ from the
Principal Terms of any other Series or Class). The terms of such Supplement may
modify or amend the terms of this Agreement solely as applied to such new
Series. The obligation of the Trustee to issue the Investor Certificates of
such new Series and to execute and deliver the related Supplement is subject to
the satisfaction of the following conditions:
(i) on or before the fifth Business Day immediately preceding the
Series Issuance Date, the Seller shall have given the Trustee, the
Servicer, each Rating Agency, any Agent and any Enhancement Provider notice
of such issuance and the Series Issuance Date;
(ii) the Seller shall have delivered to the Trustee the related
Supplement, in form satisfactory to the Trustee, executed by each party
hereto other than the Trustee;
(iii) the Seller shall have delivered to the Trustee any related
Enhancement Agreement executed by each of the parties thereto, other than
the Trustee;
(iv) the Rating Agency Condition shall have been satisfied with
respect to such issuance;
(v) such issuance will not result in the occurrence of an Early
Amortization Event or
<PAGE>
64
Reinvestment Event with respect to any Series and the Seller shall have
delivered to the Trustee and any Enhancement Provider a certificate of the
Vice President or more senior officer, dated the Series Issuance Date, to
the effect that the Seller reasonably believes that such issuance will not
result in the occurrence of an Early Amortization Event or Reinvestment
Event with respect to any Series and is not reasonably expected to result
in the occurrence of an Early Amortization Event or Reinvestment Event with
respect to any Series at any time in the future;
(vi) the Seller shall have delivered to the Trustee and any
Enhancement Provider a Tax Opinion and a Michigan Tax Opinion, each dated
the Series Issuance Date, with respect to such issuance;
(vii) the result obtained by multiplying (x) the Seller's
Participation Amount by (y) the percentage equivalent of the portion of the
Seller's Interest represented by the VWCARC Certificate, shall not be less
than 2% of the Pool Balance, in each case as of the Series Issuance Date,
and after giving effect to such issuance; and
(viii) if such Series pursuant to Section 4.03(e)(i) is to be
allocated Collections with respect to the Collection Period in which the
Series Cut-Off Date falls, the Pool Balance on the first day of such
Collection Period (after giving effect to any Accounts added to the Trust
on or prior to the Series Issuance Date) shall equal or exceed the Required
Participation Amount on the first day of such Collection Period (after
giving effect to each Series (including such Series) theretofore issued
which are to be allocated Collections with respect to such Collection
Period) and the Seller shall have delivered to the Trustee and any
Enhancement Provider a certificate of a Vice President or more senior
officer, dated the Series Issuance Date, to such effect.
Upon satisfaction of the above conditions, the Trustee shall execute the
Supplement and issue to the Seller the Investor Certificates of such Series for
execution and redelivery to the Trustee for authentication.
(c) The Seller may surrender the VWCARC Certificate to the Trustee in
exchange for a newly issued
<PAGE>
65
VWCARC Certificate and a second certificate (a "Supplemental Certificate"), the
------------------------
terms of which shall be defined in a supplement to this Agreement (which
supplement shall be subject to Section 13.01 to the extent that it amends any of
the terms of this Agreement), to be delivered to or upon the order of the Seller
(or the holder of a Supplemental Certificate, in the case of the transfer or
exchange thereof, as provided below), upon satisfaction of the following
conditions:
(i) the result obtained by multiplying (x) the Seller's Participation
Amount by (y) the percentage equivalent of the portion of the Seller's
Interest represented by the VWCARC Certificate, shall not be less than 2%
of the Pool Balance, in each case as of the date of, and after giving
effect to, such exchange;
(ii) the Rating Agency Condition shall have been satisfied with
respect such exchange (or transfer or exchange as provided below); and
(iii) the Seller shall have delivered to the Trustee, any Enhancement
Provider and the Rating Agencies a Tax Opinion and a Michigan Tax Opinion,
each dated the date of such exchange (or transfer or exchange as provided
below), with respect thereto. The VWCARC Certificate will at all times be
beneficially owned by the Seller. Any Supplemental Certificate may be
transferred or exchanged only upon satisfaction of the conditions set forth
in clauses (ii) and (iii) above.
SECTION 6.04. Registration of Transfer and Exchange of Certificates.
------------------------------------------------------
(a) The Trustee shall cause to be kept at the office or agency to be maintained
in accordance with the provisions of Section 11.16 a register (the "Certificate
-----------
Register") in which, subject to such reasonable regulations as it may prescribe,
- --------
a transfer agent and registrar (which shall initially be the Trustee) (the
"Transfer Agent and Registrar") shall provide for the registration of the
- -----------------------------
Registered Certificates and of transfers and exchanges of the Registered
Certificates as herein provided. The Transfer Agent and Registrar shall
initially be the Trustee and any co-transfer agent and co-registrar chosen by
the Seller and acceptable to the Trustee. So long as any Investor Certificates
are outstanding, the Seller shall maintain a co-transfer agent and co-registrar
in New York City. Any reference in this Agreement to the Transfer
<PAGE>
66
Agent and Registrar shall include any co-transfer agent and co-registrar unless
the context requires otherwise.
Subject to paragraph (c) below, upon surrender for registration of
transfer of any Registered Certificate at any office or agency of the Transfer
Agent and Registrar maintained for such purpose, one or more new Registered
Certificates (of the same Series and Class) in authorized denominations of like
aggregate fractional undivided interests in the Certificateholders' Interest
shall be executed, authenticated and delivered, in the name of the designated
transferee or transferees.
At the option of a Registered Certificateholder, Registered
Certificates (of the same Series and Class) may be exchanged for other
Registered Certificates of authorized denominations of like aggregate fractional
undivided interests in the Certificateholders' Interest, upon surrender of the
Registered Certificates to be exchanged at any such office or agency; Registered
Certificates, including Registered Certificates received in exchange for Bearer
Certificates, may not be exchanged for Bearer Certificates. At the option of
the Holder of a Bearer Certificate, subject to applicable laws and regulations,
Bearer Certificates may be exchanged for other Bearer Certificates or Registered
Certificates (of the same Series and Class) of authorized denominations of like
aggregate fractional undivided interests in the Certificateholders' Interest,
upon surrender of the Bearer Certificates to be exchanged at an office or agency
of the Transfer Agent and Registrar located outside the United States. Each
Bearer Certificate surrendered pursuant to this Section shall have attached
thereto all unmatured Coupons; provided that any Bearer Certificate so
--------
surrendered after the close of business on the Record Date preceding the
relevant payment date or distribution date after the expected final payment date
need not have attached the Coupon relating to such payment date or distribution
date (in each case, as specified in the applicable Supplement).
The preceding provisions of this Section notwithstanding, the Trustee
or the Transfer Agent and Registrar, as the case may be, shall not be required
to register the transfer of or exchange any Certificate for a period of 15 days
preceding the due date for any payment with respect to the Certificate.
<PAGE>
67
Whenever any Investor Certificates are so surrendered for exchange,
the Seller shall execute, the Trustee shall authenticate and the Transfer Agent
and Registrar shall deliver (in the case of Bearer Certificates, outside the
United States) the Investor Certificates which the Investor Certificateholder
making the exchange is entitled to receive. Every Investor Certificate
presented or surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in a form satisfactory to the
Trustee or the Transfer Agent and Registrar duly executed by the Investor
Certificateholder or the attorney-in-fact thereof duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Transfer Agent and Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any such transfer or exchange.
All Investor Certificates (together with any Coupons) surrendered for
registration of transfer and exchange or for payment shall be canceled and
disposed of in a manner satisfactory to the Trustee. The Trustee shall cancel
and destroy any Global Certificate upon its exchange in full for Definitive
Euro-Certificates and shall deliver a certificate of destruction to the Seller.
Such certificate shall also state that a certificate or certificates of a
Foreign Clearing Agency to the effect referred to in Section 6.11 was received
with respect to each portion of the Global Certificate exchanged for Definitive
Euro-Certificates.
The Seller shall execute and deliver to the Trustee Bearer
Certificates and Registered Certificates in such amounts and at such times as
are necessary to enable the Trustee to fulfill its responsibilities under this
Agreement and the Certificates.
(b) The Transfer Agent and Registrar will maintain at its expense in
the Borough of Manhattan, The City of New York, an office or agency where
Investor Certificates may be surrendered for registration of transfer or
exchange (except that Bearer Certificates may not be surrendered for exchange at
any such office or agency in the United States).
(c) (i) Registration of transfer of Investor Certificates containing
a legend to the effect set forth on
<PAGE>
68
Exhibit D-1 shall be effected only if such transfer (x) is made pursuant to an
effective registration statement under the Act, or is exempt from the
registration requirements under the Act, and (y) is made to a Person which is
not an employee benefit plan, trust or account, including an individual
retirement account, that is subject to ERISA or that is described in Section
4975(e)(1) of the Code or an entity whose underlying assets include plan assets
by reason of a plan's investment in such entity (a "Benefit Plan"). In the
------------
event that registration of a transfer is to be made in reliance upon an
exemption from the registration requirements under the Act, the transferor or
the transferee shall deliver, at its expense, to the Seller, the Servicer and
the Trustee, an investment letter from the transferee, substantially in the form
attached to the applicable Supplement, and no registration of transfer shall be
made until such letter is so delivered.
Investor Certificates issued upon registration or transfer of, or
Investor Certificates issued in exchange for, Investor Certificates bearing the
legend referred to above shall also bear such legend unless the Seller, the
Servicer, the Trustee and the Transfer Agent and Registrar receive an Opinion of
Counsel, satisfactory to each of them, to the effect that such legend may be
removed.
Whenever an Investor Certificate containing the legend referred to
above is presented to the Transfer Agent and Registrar for registration of
transfer, the Transfer Agent and Registrar shall promptly seek instructions from
the Servicer regarding such transfer and shall be entitled to receive
instructions signed by a Servicing Officer prior to registering any such
transfer. The Seller hereby agrees to indemnify the Transfer Agent and
Registrar and the Trustee and to hold each of them harmless against any loss,
liability or expense incurred without negligence or bad faith on their part
arising out of or in connection with actions taken or omitted by them in
relation to any such instructions furnished pursuant to this clause (i).
(ii) Registration of transfer of Investor Certificates containing a
legend to the effect set forth on Exhibit D-2 shall be effected only if such
transfer is made to a Person which is not a Benefit Plan. By accepting and
holding any such Investor Certificate, an Investor Certificateholder shall be
deemed to have represented and warranted that it is not a Benefit Plan. By
acquiring any interest in a Book-Entry Certificate, a Certificate Owner shall be
<PAGE>
69
deemed to have represented and warranted that it is not a Benefit Plan.
SECTION 6.05. Mutilated, Destroyed, Lost or Stolen Certificates. If
--------------------------------------------------
(a) any mutilated Certificate (together, in the case of Bearer Certificates,
with all unmatured Coupons (if any) appertaining thereto) is surrendered to the
Transfer Agent and Registrar, or the Transfer Agent and Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Transfer Agent and Registrar and
the Trustee such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Seller shall
execute, the Trustee shall authenticate and the Transfer Agent and Registrar
shall deliver (in the case of Bearer Certificates, outside the United States),
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and aggregate fractional undivided
interest. In connection with the issuance of any new Certificate under this
Section, the Trustee or the Transfer Agent and Registrar may require the payment
by the Certificateholder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and Transfer Agent and
Registrar) connected therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership in
the Trust, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
SECTION 6.06. Persons Deemed Owners. The Trustee, the Transfer Agent
----------------------
and Registrar and any agent of any of them may (a) prior to due presentation of
a Registered Certificate for registration of transfer, treat the Person or
Persons in whose name any Registered Certificate is registered as the owner of
such Registered Certificate for the purpose of receiving distributions pursuant
to the terms of the applicable Supplement and for all other purposes whatsoever,
and (b) treat the bearer of a Bearer Certificate or Coupon as the owner of such
Bearer Certificate or Coupon for the purpose of receiving distributions pursuant
to the terms of the applicable Supplement and for all other purposes whatsoever;
and, in any such case, neither the Trustee, the Transfer Agent and Registrar nor
any agent of any of them shall be affected by any notice to
<PAGE>
70
the contrary. Notwithstanding the foregoing, in determining whether the Holders
of the requisite Investor Certificates have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Certificates
owned by the Seller, the Servicer, any other holder of a Seller's Certificate or
any Affiliate thereof, shall be disregarded and deemed not to be outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Certificates which the Trustee knows to be so owned shall be so
disregarded. Certificates so owned which have been pledged in good faith shall
not be disregarded and may be regarded as outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Certificates and that the pledgee is not the Seller, the Servicer, any
other holder of a Seller's Certificate or any Affiliate thereof.
SECTION 6.07. Access to List of Registered Certificateholders' Names
------------------------------------------------------
and Addresses. The Trustee will furnish or cause to be furnished by the
- --------------
Transfer Agent and Registrar to the Servicer, within five business days after
receipt by the Trustee of a request therefor, a list in such form as the
Servicer may reasonably require, of the names and addresses of the Registered
Certificateholders. If three or more holders of Investor Certificates (the
"Applicants") apply to the Trustee, and such application states that the
- -----------
Applicants desire to communicate with other Investor Certificateholders with
respect to their rights under this Agreement or any Supplement or under the
Investor Certificates and is accompanied by a copy of the communication which
such Applicants propose to transmit, then the Trustee, after having been
adequately indemnified by such Applicants for its costs and expenses, shall
afford or shall cause the Transfer Agent and Registrar to afford such Applicants
access during normal business hours to the most recent list of Registered
Certificateholders of such Series or all outstanding Series, as applicable, held
by the Trustee, within five Business Days after the receipt of such application.
Such list shall be as of a date no more than 45 days prior to the date of
receipt of such Applicants' request.
Every Registered Certificateholder, by receiving and holding a
Registered Certificate, agrees with the Trustee that neither the Trustee, the
Transfer Agent and Registrar, nor any of their respective agents, shall be held
<PAGE>
71
accountable by reason of the disclosure of any such information as to the names
and addresses of the Registered Certificateholders hereunder, regardless of the
sources from which such information was derived.
SECTION 6.08. Book-Entry Certificates. Unless otherwise specified in
------------------------
the related Supplement for any Series or Class, the Investor Certificates, upon
original issuance, shall be issued in the form of one or more typewritten
Investor Certificates representing the Book-Entry Certificates, to be delivered
to the Depository, by, or on behalf of, the Seller. The Investor Certificates
shall initially be registered on the Certificate Register in the name of the
Depository or its nominee, and no Certificate Owner will receive a definitive
certificate representing such Certificate Owner's interest in the Investor
Certificates, except as provided in Section 6.10. Unless and until definitive,
fully registered Investor Certificates ("Definitive Certificates") have been
issued to the applicable Certificate Owners pursuant to Section 6.10 or as
otherwise specified in any such Supplement:
(a) the provisions of this Section shall be in full force and effect;
(b) the Seller, the Servicer and the Trustee may deal with the
Depository and the Depository Participants for all purposes (including the
making of distributions) as the authorized representatives of the
respective Certificate Owners;
(c) to the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this Section
shall control; and
(d) the rights of the respective Certificate Owners shall be exercised
only through the Depository and the Depository Participants and shall be
limited to those established by law and agreements between such Certificate
Owners and the Depository and/or the Depository Participants. Pursuant to
the Depository Agreement, unless and until Definitive Certificates are
issued pursuant to Section 6.10, the Depository will make book-entry
transfers among the Depository Participants and receive and transmit
distributions of principal and interest on the related Investor
Certificates to such Depository Participants.
<PAGE>
72
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Investor
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of Investor Certificates, such direction or consent may be
given by Certificate Owners (acting through the Depository and the Depository
Participants) owning Book-Entry Certificates evidencing a beneficial interest in
the requisite percentage of principal amount of Investor Certificates.
SECTION 6.09. Notices to Depository. Whenever any notice or other
----------------------
communication is required to be given to Investor Certificateholders of any
Series or Class with respect to which Book-Entry Certificates have been issued,
unless and until Definitive Certificates shall have been issued to the related
Certificate Owners, the Trustee shall give all such notices and communications
to the applicable Depository.
SECTION 6.10. Definitive Certificates. If Book-Entry Certificates
------------------------
have been issued with respect to any Series or Class and (a) the Seller advises
the Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities under the Depository Agreement with
respect to such Series or Class and the Trustee or the Seller is unable to
locate a qualified successor, (b) the Seller, at its option, advises the Trustee
in writing that it elects to terminate the book-entry system with respect to
such Series or Class through the Depository or (c) after the occurrence of a
Service Default, Certificate Owners of such Series or Class evidencing not less
than 50% of the aggregate unpaid principal amount of such Series or Class advise
the Trustee and the Depository through the Depository Participants in writing
that the continuation of a book-entry system with respect to the Investor
Certificates of such Series or Class through the Depository (or a successor
thereto) is no longer in the best interests of the Certificate Owners with
respect to such Certificates, then the Trustee shall notify all Certificate
Owners of such Certificates, through the Depository, of the occurrence of any
such event and of the availability of Definitive Certificates to Certificate
Owners requesting the same. Upon surrender to the Trustee of any such
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall authenticate and deliver such
Definitive Certificates. Neither the Seller nor the
<PAGE>
73
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of such Definitive Certificates all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of such Definitive Certificates as Investor Certificateholders
hereunder.
SECTION 6.11. Global Certificate; Exchange Date. (a) If specified in
----------------------------------
the related Supplement for any Series or Class, the Investor Certificates will
initially be issued in the form of a single temporary global Certificate (the
"Global Certificate") in bearer form, without interest coupons, in the
- -------------------
denomination of the entire aggregate principal amount of such Series or Class
and substantially in the form set forth in the exhibit with respect thereto
attached to the related Supplement. The Global Certificate will be
authenticated by the Trustee upon the same conditions, in substantially the same
manner and with the same effect as the Definitive Certificates. The Global
Certificate may be exchanged as described below for Bearer or Registered
Certificates in definitive form (the "Definitive EuroCertificates").
(b) The Manager shall, upon its determination of the date of
completion of the distribution of the Investor Certificates of such Series or
Class, so advise the Trustee, the Seller, the Common Depositary, and each
Foreign Clearing Agency forthwith. Without unnecessary delay, but in any event
not prior to the Exchange Date, the Seller will execute and deliver to the
Trustee at its London office or its designated agent outside the United States
definitive Bearer Certificates in an aggregate principal amount equal to the
entire aggregate principal amount of such Series or Class. All Bearer
Certificates so issued and delivered will have Coupons attached. The Global
Certificate may be exchanged for an equal aggregate principal amount of
Definitive Euro-Certificates only on or after the Exchange Date. A United
States institutional investor may exchange the portion of the Global Certificate
beneficially owned by it only for an equal aggregate principal amount of
Registered Certificates bearing the applicable legend set forth in the form of
Registered Certificate attached to the related Supplement and having a minimum
denomination of $500,000, which may be in temporary form if the Seller so
elects. The
<PAGE>
74
Seller may waive the $500,000 minimum denomination requirement if it so elects.
Upon any demand for exchange for Definitive Euro-Certificates in accordance with
this paragraph, the Seller shall cause the Trustee to authenticate and deliver
the Definitive Euro-Certificates to the Holder (x) outside the United States, in
the case of Bearer Certificates, and (y) according to the instructions of the
Holder, in the case of Registered Certificates, but in either case only upon
presentation to the Trustee of a written statement substantially in the form of
Exhibit F-1 with respect to the Global Certificate or portion thereof being
exchanged, signed by a Foreign Clearing Agency and dated on the Exchange Date or
a subsequent date, to the effect that it has received in writing or by tested
telex a certification substantially in the form of (i) in the case of beneficial
ownership of the Global Certificate or a portion thereof being exchanged by a
United States institutional investor pursuant to the second preceding sentence,
the certificate in the form of Exhibit F-2 signed by the Manager which sold the
relevant Certificates or (ii) in all other cases, the certificate in the form of
Exhibit F-3, the certificate referred to in this clause (ii) being dated on the
earlier of the first actual payment of interest in respect of such Certificates
and the date of the delivery of such Certificate in definitive form. Upon
receipt of such certification, the Trustee shall cause the Global Certificate to
be endorsed in accordance with paragraph (d) below. Any exchange as provided in
this Section shall be made free of charge to the holders and the beneficial
owners of the Global Certificate and to the beneficial owners of the Definitive
Euro-Certificates issued in exchange, except that a person receiving Definitive
Euro-Certificates must bear the cost of insurance, postage, transportation and
the like in the event that such person does not receive such Definitive Euro-
Certificates in person at the offices of a Foreign Clearing Agency.
(c) The delivery to the Trustee by a Foreign Clearing Agency of any
written statement referred to above may be relied upon by the Seller and the
Trustee as conclusive evidence that a corresponding certification or
certifications has or have been delivered to such Foreign Clearing Agency
pursuant to the terms of this Agreement.
(d) Upon any such exchange of all or a portion of the Global
Certificate for a Definitive Euro-Certificate or Certificates, such Global
Certificate shall be endorsed by or on behalf of the Trustee to reflect the
reduction of its
<PAGE>
75
principal amount by an amount equal to the aggregate principal amount of such
Definitive Euro-Certificate or Certificates. Until so exchanged in full, such
Global Certificate shall in all respects be entitled to the same benefits under
this Agreement as Definitive Euro-Certificates authenticated and delivered
hereunder except that the beneficial owners of such Global Certificate shall not
be entitled to receive payments of interest on the Certificates until they have
exchanged their beneficial interests in such Global Certificate for Definitive
Euro-Certificates.
SECTION 6.12. Meetings of Certificateholders. (a) If at the time
-------------------------------
any Investor Certificates are issued and outstanding with respect to any Series
or Class to which any meeting described below relates, the Servicer or the
Trustee may at any time call a meeting of Investor Certificateholders and
Certificate Owners of any Series or Class or of all Series, to be held at such
time and at such place as the Servicer or the Trustee, as the case may be, shall
determine, for the purpose of approving a modification of or amendment to, or
obtaining a waiver of any covenant or condition set forth in, this Agreement,
any Supplement or the Investor Certificates or of taking any other action
permitted to be taken by Investor Certificateholders hereunder or under any
Supplement. Notice of any meeting of Investor Certificateholders, setting forth
the time and place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be given in accordance with Section 13.05, the
first mailing and publication to be not less than 20 nor more than 180 days
prior to the date fixed for the meeting. To be entitled to vote at any meeting
of Investor Certificateholders a person shall be (i) a Holder of one or more
Investor Certificates of the applicable Series or Class or (ii) a person
appointed by an instrument in writing as proxy by the Holder of one or more such
Investor Certificates. The only Persons who shall be entitled to be present or
to speak at any meeting of Investor Certificateholders shall be the Persons
entitled to vote at such meeting and their counsel, Certificate Owners and any
representatives of the Seller, the Servicer and the Trustee and their respective
counsel.
(b) At a meeting of Investor Certificateholders, Persons entitled to
vote Investor Certificates evidencing a majority of the aggregate unpaid
principal amount of the applicable Series or Class or all outstanding Series, as
the case may be, shall constitute a quorum. No business shall be transacted in
the absence of a quorum, unless a quorum is
<PAGE>
76
present when the meeting is called to order. In the absence of a quorum at any
such meeting, the meeting may be adjourned for a period of not less than 10
days; in the absence of a quorum at any such adjourned meeting, such adjourned
meeting may be further adjourned for a period of not less than 10 days; at the
reconvening of any meeting further adjourned for lack of a quorum, the Persons
entitled to vote Investor Certificates evidencing at least 25% of the aggregate
unpaid principal amount of the applicable Series or Class or all outstanding
Series, as the case may be, shall constitute a quorum for the taking of any
action set forth in the notice of the original meeting. Notice of the
reconvening of any adjourned meeting shall be given as provided above except
that such notice must be given not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of
an adjourned meeting shall state expressly the percentage of the aggregate
principal amount of the outstanding applicable Investor Certificates which shall
constitute a quorum.
(c) Any Investor Certificateholder who has executed an instrument in
writing appointing a Person as proxy shall be deemed to be present for the
purposes of determining a quorum and be deemed to have voted; provided that such
--------
Investor Certificateholder shall be considered as present or voting only with
respect to the matters covered by such instrument in writing. Subject to the
provisions of Section 13.01, any resolution passed or decision taken at any
meeting of Investor Certificateholders duly held in accordance with this Section
shall be binding on all Investor Certificateholders whether or not present or
represented at the meeting.
(d) The holding of Bearer Certificates shall be proved by the
production of such Bearer Certificates or by a certificate, satisfactory to the
Servicer, executed by any bank, trust company or recognized securities dealer,
wherever situated, satisfactory to the Servicer. Each such certificate shall be
dated and shall state that on the date thereof a Bearer Certificate bearing a
specified serial number was deposited with or exhibited to such bank, trust
company or recognized securities dealer by the Person named in such certificate.
Any such certificate may be issued in respect of one or more Bearer Certificates
specified therein. The holding by the Person named in any such certificate of
any Bearer Certificate specified therein shall be presumed to continue for a
period of one year from the date of such certificate unless at the time of any
<PAGE>
77
determination of such holding (i) another certificate bearing a later date
issued in respect of the same Bearer Certificate shall be produced, (ii) the
Bearer Certificate specified in such certificate shall be produced by some other
Person or (iii) the Bearer Certificate specified in such certificate shall have
ceased to be outstanding. The appointment of any proxy shall be proved by
having the signature of the Person executing the proxy guaranteed by any bank,
trust company or recognized securities dealer satisfactory to the Trustee.
(e) The Trustee shall appoint a temporary chairman of the meeting. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the holders of Investor Certificates evidencing a majority of the
aggregate unpaid principal amount of Investor Certificates of the applicable
Series or Class or all outstanding Series, as the case may be, represented at
the meeting. No vote shall be cast or counted at any meeting in respect of any
Investor Certificate challenged as not outstanding and ruled by the chairman of
the meeting to be not outstanding. The chairman of the meeting shall have no
right to vote except as an Investor Certificateholder or proxy. Any meeting of
Investor Certificateholders duly called at which a quorum is present may be
adjourned from time to time, and the meeting may be held as so adjourned without
further notice.
(f) The vote upon any resolution submitted to any meeting of Investor
Certificateholders shall be by written ballot on which shall be subscribed the
signatures of Investor Certificateholders or proxies and on which shall be
inscribed the serial number or numbers of the Investor Certificates held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record in duplicate of the proceedings of each meeting of Investor
Certificateholders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more Persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was published as provided above. The record shall be
signed and verified by the permanent chairman and secretary of the
<PAGE>
78
meeting and one of the duplicates shall be delivered to the Servicer and the
other to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein stated.
ARTICLE VII
Other Matters Relating
----------------------
to the Seller
-------------
SECTION 7.01. Liability of the Seller. The Seller shall be liable
------------------------
for all obligations, covenants, representations and warranties of the Seller
arising under or related to this Agreement. Except as provided in the preceding
sentence, the Seller shall be liable only to the extent of the obligations
specifically undertaken by it in its capacity as Seller hereunder.
SECTION 7.02. Limitation on Liability of the Seller. Subject to
--------------------------------------
Section 7.01, neither the Seller nor any of the directors or officers or
employees or agents of the Seller in its capacity as Seller shall be under any
liability to the Trust, the Trustee, the Certificateholders or any other Person
for any action taken or for refraining from the taking of any action in the
capacity as Seller pursuant to this Agreement whether arising from express or
implied duties under this Agreement; provided, however, that this provision
-------- -------
shall not protect the Seller or any such Person against any liability which
would otherwise be imposed by reason of wilful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Seller and any director or officer or
employee or agent of the Seller may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder.
SECTION 7.03. Liabilities. Notwithstanding any provisions of this
------------
Agreement (including Sections 7.02, 8.03 and 8.04) to the contrary, by entering
into this Agreement, VWCARC, as Seller, agrees to be liable, directly to the
injured party, for the entire amount of any liabilities of the Trust (other than
those incurred by an Investor Certificateholder in the capacity of an investor
in the Investor Certificates) arising out of or based on the arrangement created
by this Agreement or the actions of the
<PAGE>
79
Servicer taken pursuant thereto as though this Agreement created a partnership
under the New York Uniform Partnership Act in which VWCARC was a general
partner. In the event of the appointment of a Successor Servicer, the Successor
Servicer will (from its own assets and not from the assets of the Trust)
indemnify and hold harmless VWCARC against and from any liabilities of such
Person as described in this Section arising from the actions or omissions of
such Successor Servicer.
SECTION 7.04. Transfer of Seller's Interest to Designated Affiliate.
-------------------------------- ---------------------
(a) Notwithstanding anything to the contrary contained in this Agreement,
VWCARC, as initial Seller, may sell, transfer, assign and otherwise convey all,
but not less than all, of its right, title and interest in the Trust Assets, the
Seller's Interest, the VWCARC Certificate, this Agreement, the Related Documents
and any other agreement, document or instrument relating to this Agreement or
the transactions contemplated hereby and its obligations as Seller hereunder and
thereunder to a Designated Affiliate (such transaction is referred to herein as
the "Designated Affiliate Transfer"); provided that such Designated Affiliate
----------------------------- --------
assumes the performance of every covenant and obligation of VWCARC under this
Agreement, the Related Documents and any such other agreement, document or
instrument. Such assignment and assumption shall automatically occur 10
Business Days following the date notice thereof is given by VWCARC to the
Trustee, the Rating Agencies and any Enhancement Providers or on such later date
as of which the conditions set forth in Section 7.04(b) are satisfied.
(b) The Designated Affiliate Transfer may not be effected unless and
until the following conditions precedent are satisfied:
(i) VWCARC, the Designated Affiliate and the Trustee shall have
executed and delivered an Assignment and Assumption Agreement and the
Designated Affiliate shall have delivered to the Trustee the Opinion of
Counsel substantially in the form attached to the Assignment and Assumption
Agreement;
(ii) VWCARC shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel to the effect that each condition
precedent (including the requirement with respect to all required filings)
<PAGE>
80
provided by this Section 7.04(b) have been complied with;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such Designated Affiliate Transfer;
(iv) VWCARC shall have delivered to the Trustee a Tax Opinion and a
Michigan Tax Opinion with respect to such Designated Affiliate Transfer;
and
(v) all filings required to continue the perfected interest of the
Trustee in the Receivables and the Collateral Security shall have been duly
made by such Designated Affiliate.
(c) Upon such transfer, the Designated Affiliate shall be deemed to
have made all the representations and warranties of the Seller made in this
Agreement as of the date of effectiveness of the Designated Affiliate Transfer.
Upon the effectiveness of the Designated Affiliate Transfer, the Seller shall
surrender the VWCARC Certificate to the Transfer Agent and Registrar for
registration of transfer and, upon the issuance of the new VWCARC Certificate in
the name of the Designated Affiliate, the term "Seller" or "VWCARC" in this
Agreement shall refer to such Designated Affiliate.
ARTICLE VIII
Other Matters Relating
----------------------
to the Servicer
---------------
SECTION 8.01. Liability of the Servicer. The Servicer shall be
--------------------------
liable under this Article VIII only to the extent of the obligations
specifically undertaken by the servicer in its capacity as Servicer.
SECTION 8.02. Merger or Consolidation of, or Assumption, of the
------------------------------ ------------------
Obligations of the Servicer. The Servicer shall not consolidate with or merge
- ----------------------------
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(a) the corporation formed by such consolidation or into which the
Servicer is merged or the Person which acquires by conveyance or transfer
the properties
<PAGE>
81
and assets of the Servicer substantially as an entirety shall be a
corporation organized and existing under the laws of the United States of
America or any state or the District of Columbia and, if the Servicer is
not the surviving entity, such corporation shall assume, without the
execution or filing of any paper or any further act on the part of any of
the parties hereto, the performance of every covenant and obligation of the
Servicer hereunder; and
(b) the Servicer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that such consolidation, merger,
conveyance or transfer comply with this Section 8.02 and that all
conditions precedent herein provided for relating to such transaction have
been complied with and has given notice to the Rating Agencies.
SECTION 8.03. Limitation on Liability of the Servicer and Others.
------------------------------ --------------------
Except as provided in Section 8.04, neither the Servicer nor any of the
directors or officers or employees or agents of the Servicer, shall be under any
liability to the Trust, the Trustee, the Certificateholders or any other Person
for any action taken or for refraining from the taking of any action in its
capacity as servicer pursuant to this Agreement; provided, however, that this
-------- -------
provision shall not protect the Servicer or any such Person against any
liability which would otherwise be imposed by reason of wilful misfeasance, bad
faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Servicer and any director or
officer or employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Receivables in accordance with this
Agreement which in its reasonable opinion may involve it in any expense or
liability.
SECTION 8.04. Servicer Indemnification of the Trust and the Trustee.
------------------------------------------------------
The Servicer shall indemnify and hold harmless the Trust, for the benefit of the
Certificateholders and the other Beneficiaries, and the Trustee, from and
against any loss, liability, expense, damage or injury suffered or sustained by
reason of any acts, omissions or alleged acts or omissions arising out of
activities
<PAGE>
82
of the Servicer, the Trust or the Trustee pursuant to this Agreement, including
any judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim; provided, however, that the Servicer shall not
-------- -------
indemnify the Trust or the Trustee if such acts, omissions or alleged acts or
omissions constitute fraud, gross negligence, breach of fiduciary duty or wilful
misconduct by the Trustee; and provided further that the Servicer shall not
----------------
indemnify the Trust, the Trustee or the Certificateholders or the other
Beneficiaries for any liabilities, cost or expense of the Trust with respect to
any action taken by the Trustee at the request of the Certificateholders or any
other Beneficiaries to the extent the Trustee is indemnified by such
Certificateholders or other Beneficiaries with respect to such action or with
respect to any Federal, state or local income or franchise taxes (or any
interest or penalties with respect thereto) required to be paid by the Trust or
the Certificateholders or the other Beneficiaries in connection herewith to any
taxing authority. Any indemnification under this Article VIII shall survive the
termination of this Agreement and the resignation and removal of the Trustee.
The Servicer shall also indemnify and hold harmless the Trust, for the
benefit of the Certificateholders and the other Beneficiaries, for any state or
local taxes imposed on the Trust as a result of the activities of the Servicer
in such state.
SECTION 8.05. The Servicer Not To Resign. The Servicer shall not
---------------------------
resign from the obligations and duties hereby imposed on it except upon
determination that (a) the performance of its duties hereunder is no longer
permissible under applicable law and (b) there is no reasonable action which the
Servicer could take to make the performance of its duties hereunder permissible
under applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced as to clause (a) above by an Opinion of Counsel to
such effect delivered to the Trustee. No such resignation shall become
effective until the Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section
10.02 hereof. If the Trustee is unable within 120 days of the date of such
determination to appoint a Successor Servicer, the Trustee shall serve as
Successor Servicer hereunder. Notice regarding any Servicer resignation shall
be provided to the Rating Agencies.
<PAGE>
83
SECTION 8.06. Access to Certain Documentation and Information
-----------------------------------------------
Regarding the Receivables. The Servicer shall provide to the Trustee access to
- --------------------------
the documentation regarding the Accounts and the Receivables in such cases where
the Trustee is required in connection with the enforcement of the rights of the
Certificateholders, or by applicable statutes or regulations to review such
documentation, such access being afforded without charge but only (a) upon
reasonable request, (b) during normal business hours, (c) subject to the
Servicer's normal security and confidentiality procedures and (d) at offices
designated by the Servicer. Nothing in this Section 8.06 shall derogate from the
obligation of the Seller, the Trustee or the Servicer to observe any applicable
law prohibiting disclosure of information regarding the Dealers and the failure
of the Servicer to provide access as provided in this Section 8.06 as a result
of such obligation shall not constitute a breach of this Section 8.06.
SECTION 8.07. Delegation of Duties. In the ordinary course of
---------------------
business, the Servicer may at any time delegate any duties hereunder to any
Person who agrees to conduct such duties in accordance with the Floorplan
Financing Guidelines and this Agreement, in each case if and to the extent
applicable to the performance of such duties. Such delegation shall not relieve
the Servicer of its liability and responsibility with respect to such duties,
and shall not constitute a resignation within the meaning of Section 8.05.
SECTION 8.08. Examination of Records. The Seller and the Servicer
-----------------------
shall indicate in its computer files or other records that the Receivables
arising in the Accounts have been conveyed to the Trust pursuant to this
Agreement for the benefit of the Certificateholders and the other Beneficiaries.
The Seller and the Servicer shall, prior to the sale or transfer to a third
party of any receivable held in its custody, examine its computer and other
records to determine that such receivable is not a Receivable.
<PAGE>
84
ARTICLE IX
Early Amortization Events
-------------------------
SECTION 9.01. Early Amortization Events. If any
--------------------------
one of the following events shall occur:
(a) the Seller, the Servicer (or VWCI, if it is not the Servicer) or
the Trust shall file a petition commencing a voluntary case under any
chapter of the Federal bankruptcy laws; or the Seller, the Servicer (or
VWCI, as aforesaid) or the Trust shall file a petition or answer or consent
seeking reorganization, arrangement, adjustment, or composition under any
other similar applicable Federal law, or shall consent to the filing of any
such petition, answer, or consent; or the Seller, the Servicer (or VWCI, as
aforesaid) or the Trust shall appoint, or consent to the appointment of, a
custodian, receiver, liquidator, trustee, assignee, sequestrator or other
similar official in bankruptcy or insolvency of it or of any substantial
part of its property; or the Seller, the Servicer (or VWCI, as aforesaid)
or the Trust shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as they
become due;
(b) any order for relief against the Seller, the Servicer (or VWCI, if
it is not the Servicer) or the Trust shall have been entered by a court
having jurisdiction in the premises under any chapter of the Federal
bankruptcy laws, and such order shall have continued undischarged or
unstayed for a period of 60 days; or a decree or order by a court having
jurisdiction in the premises shall have been entered approving as properly
filed a petition seeking reorganization, arrangement, adjustment, or
composition of the Seller, the Servicer (or VWCI, as aforesaid) or the
Trust under any other similar applicable Federal law, and such decree or
order shall have continued undischarged or unstayed for a period of 120
days; or a decree or order of a court having jurisdiction in the premises
for the appointment of a custodian, receiver, liquidator, trustee,
assignee, sequestrator, or other similar official in bankruptcy or
insolvency of the Seller, the Servicer (or VWCI, as aforesaid) or the Trust
or of any substantial part of its property, or for the winding up or
liquidation of its affairs, shall
<PAGE>
85
have been entered, and such decree or order shall have remained in force
undischarged or unstayed for a period of 120 days;
(c) VWA shall file a petition commencing a voluntary case under any
chapter of the Federal bankruptcy laws; or VWA shall file a petition or
answer or consent seeking reorganization, arrangement, adjustment, or
composition under any other similar applicable Federal law, or shall
consent to the filing of any such petition, answer, or consent; or VWA
shall appoint, or consent to the appointment of, a custodian, receiver,
liquidator, trustee, assignee, sequestrator or other similar official in
bankruptcy or insolvency of it or of any substantial part of its property;
or VWA shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become
due;
(d) any order for relief against VWA shall have been entered by a
court having jurisdiction in the premises under any chapter of the Federal
bankruptcy laws, and such order shall have continued undischarged or
unstayed for a period of 60 days; or a decree or order by a court having
jurisdiction in the premises shall have been entered approving as properly
filed a petition seeking reorganization, arrangement, adjustment, or
composition of VWA under any other similar applicable Federal law, and such
decree or order shall have continued undischarged or unstayed for period of
120 days; or a decree or order of a court having jurisdiction in the
premises for the appointment of a custodian, receiver, liquidator, trustee,
assignee, sequestrator, or other similar official in bankruptcy or
insolvency of VWA or of any substantial part of its property, or for the
winding up or liquidation of its affairs, shall have been entered, and such
decree or order shall have remained in force undischarged or unstayed for a
period of 120 days; or
(e) the Trust or the Seller shall become an "investment company"
within the meaning of the Investment Company Act;
then, subject to applicable law, and after the applicable grace period, if any,
an amortization event (an "Early Amortization Event") shall occur without any
------------------------
notice or other
<PAGE>
86
action on the part of the Trustee, the Certificateholders or any other
Beneficiary, immediately upon the occurrence of such event.
SECTION 9.02. Additional Rights Upon the Occurrence of Certain
------------------------------------------------
Events. (a) If an Insolvency Event occurs with respect to the Seller or the
- -------
Seller violates Section 2.06(a) for any reason, the Seller shall on the day such
Insolvency Event or violation occurs (the "Appointment Date") immediately cease
----------------
to transfer Receivables to the Trust and shall promptly give notice to the
Trustee of such Insolvency Event or violation. Notwithstanding any cessation
of the transfer to the Trust of additional Receivables, Receivables transferred
to the Trust prior to the occurrence of such Insolvency Event or violation and
Collections in respect of such Receivables whenever created or accrued in
respect of such Receivables, shall continue to be a part of the Trust. Within
15 days of the Appointment Date, the Trustee shall (i) publish a notice in an
Authorized Newspaper that an Insolvency Event or violation has occurred and that
the Trustee intends to sell, dispose of or otherwise liquidate the Receivables
on commercially reasonable terms and in a commercially reasonable manner and
(ii) give notice to Investor Certificateholders describing the provisions of
this Section and requesting instructions from such Holders. Unless the Trustee
shall have received instructions within 90 days from the date notice pursuant to
clause (ii) above is first given from (x) Holders of Investor Certificates
evidencing more than 50% of the aggregate unpaid principal amount of each Series
or, with respect to any Series with two or more Classes, of each Class, to the
effect that such Investor Certificateholders disapprove of the liquidation of
the Receivables and wish to continue having Principal Receivables transferred to
the Trust as before such Insolvency Event or violation, (y) each Enhancement
Provider, if and to the extent so provided in the related Supplement, to such
effect and (z) each holder of a Supplemental Certificate to such effect, then
the Trustee shall promptly sell, dispose of or otherwise liquidate the
Receivables in a commercially reasonable manner and on commercially reasonable
terms, which shall include the solicitation of competitive bids. The Trustee
may obtain a prior determination from any applicable conservator, receiver or
liquidator that the terms and manner of any proposed sale, disposition or
liquidation are commercially reasonable. The provisions of Sections 9.01 and
9.02 shall not be deemed to be mutually exclusive.
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87
(b) The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to paragraph (a) ("Insolvency Proceeds") shall be
immediately deposited in the Collection Account. The Trustee shall determine
conclusively the amount of the Insolvency Proceeds which are deemed to be
Interest Collections and Principal Collections. The Insolvency Proceeds shall
be allocated and distributed to Investor Certificateholders in accordance with
Article IV and the terms of each Supplement and the Trust shall terminate
immediately thereafter.
ARTICLE X
Service Defaults
----------------
SECTION 10.01. Service Defaults. If any one of the following events
-----------------
(a "Service Default") shall occur and be continuing with respect to the
---------------
Servicer:
(a) any failure by the Servicer to make any payment, transfer or
deposit or to give instructions or to give notice to the Trustee to make
such payment, transfer or deposit or to give notice to the Trustee as to
any action to be taken under any Enhancement Agreement on or before the
date occurring five Business Days after the date such payment, transfer or
deposit or such instruction or notice is required to be made or given, as
the case may be, under the terms of this Agreement;
(b) failure on the part of the Servicer duly to observe or perform any
other covenants or agreements of the Servicer set forth in this Agreement
which has a material adverse effect on the Investor Certificateholders of
any Series, which continues unremedied for a period of 30 days after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee; or the
Servicer shall delegate its duties under this Agreement, except as
permitted by Sections 3.01 and 8.07;
(c) any representation, warranty or certification made by the Servicer
in this Agreement or in any certificate delivered pursuant to this
Agreement shall prove to have been incorrect when made, which has a
material adverse effect on the rights of the Investor
<PAGE>
88
Certificateholders of any Series and which material adverse effect
continues for a period of 60 days after the date on which written notice
thereof, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee;
(d) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator or other similar official in any bankruptcy,
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Servicer or of or relating to all
or substantially all of its property, or a decree or order of a court or
agency or supervisory authority having jurisdiction in the premises for the
appointment of a conservator or receiver or liquidator or other similar
official in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the Servicer and such decree
or order shall have remained in force undischarged or unstayed for a period
of 120 days; or the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage
of any applicable bankruptcy, insolvency or reorganization statute, make
any assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations;
then, in the event of any Service Default, so long as the Service Default shall
not have been remedied, the Trustee, by notice then given in writing to the
Servicer (a "Termination Notice"), may terminate all but not less than all of
------------------
the rights and obligations (other than its obligations that have accrued up to
the time of such termination) of the Servicer as Servicer under this Agreement
and in and to the Receivables and the proceeds thereof. After receipt by the
Servicer of a Termination Notice, and on the date that a Successor Servicer
shall have been appointed by the Trustee pursuant to Section 10.02, all
authority and power of the Servicer under this Agreement shall pass to and be
vested in a Successor Servicer (a "Service Transfer") and, without limitation,
----------------
the Trustee is hereby authorized and empowered (upon the failure of the Servicer
to cooperate) to execute and deliver, on behalf of the Servicer, as attorney-in-
fact or otherwise, all documents and other instruments upon the failure of the
Servicer to execute or deliver such documents or
<PAGE>
89
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such Service Transfer. The Servicer
agrees to cooperate with the Trustee and such Successor Servicer in effecting
the termination of the responsibilities and rights of the Servicer to conduct
servicing hereunder, including the transfer to such Successor Servicer of all
authority of the Servicer to service the Receivables provided for under this
Agreement, including all authority over all Collections which shall on the date
of transfer be held by the Servicer for deposit, or which have been deposited by
the Servicer, in the Collection Account, or which shall thereafter be received
with respect to the Receivables, and in assisting the Successor Servicer. The
Servicer shall promptly transfer its electronic records relating to the
Receivables to the Successor Servicer in such electronic form as the Successor
Servicer may reasonably request and shall promptly transfer to the Successor
Servicer all other records, correspondence and documents necessary for the
continued servicing of the Receivables in the manner and at such times as the
Successor Servicer shall reasonably request. To the extent that compliance with
this Section 10.01 shall require the Servicer to disclose to the Successor
Servicer information of any kind which the Servicer reasonably deems to be
confidential, the Successor Servicer shall be required to enter into such
customary licensing and confidentiality agreements as the Servicer shall deem
necessary to protect its interest.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 10.01(a) for a period of 10 Business Days or under Section
10.01(b) or (c) for a period of 60 Business Days, shall not constitute a Service
Default if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence shall
not relieve the Servicer from using its best efforts to perform its respective
obligations in a timely manner in accordance with the terms of this Agreement
and the Servicer shall provide the Trustee, any Enhancement Providers, the
Rating Agencies, the Seller and the Certificateholders with an Officers'
Certificate giving prompt notice of such failure or delay by it, together with a
description of its efforts so to perform
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90
its obligations. The Servicer shall immediately notify the Trustee in writing
of any Service Default.
SECTION 10.02. Trustee To Act; Appointment of Successor. (a) On and
------------------------------ ----------
after the receipt by the Servicer of a Termination Notice pursuant to Section
10.01, the Servicer shall continue to perform all servicing functions under this
Agreement until the date specified in the Termination Notice or otherwise
specified by the Trustee in writing or, if no such date is specified in such
Termination Notice, or otherwise specified by the Trustee, until a date mutually
agreed upon by the Servicer and Trustee. The Trustee shall as promptly as
possible after the giving of a Termination Notice appoint an Eligible Servicer
as a successor servicer (the "Successor Servicer"), subject to the consent of
------------------
any Enhancement Providers, which consent shall not be unreasonably withheld, and
such Successor Servicer shall accept its appointment by a written assumption in
a form acceptable to the Trustee. In the event that a Successor Servicer has
not been appointed or has not accepted its appointment at the time when the
Servicer ceases to act as Servicer, the Trustee without further action shall
automatically be appointed the Successor Servicer. The Trustee may delegate any
of its servicing obligations to an affiliate or agent in accordance with
Sections 3.01 and 8.07. Notwithstanding the above, the Trustee shall, if it is
unwilling or legally unable so to act, petition a court of competent
jurisdiction to appoint any established institution having a net worth of not
less than $100,000,000 and whose regular business includes the servicing of
wholesale receivables as the Successor Servicer hereunder. The Trustee shall
immediately give notice to the Rating Agencies, any Enhancement Providers and
the Certificateholders upon the appointment of a Successor, any Agents Servicer.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof (except that the Successor Servicer shall not be liable for
any liabilities incurred by the predecessor Servicer), and all references in
this Agreement to the Servicer shall be deemed to refer to the Successor
Servicer. Any Successor Servicer, by its acceptance of its appointment, will
automatically agree to be
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91
bound by the terms and provisions of any Enhancement Agreement.
(c) In connection with any Termination Notice, the Trustee will
review any bids which it obtains from Eligible Servicers and shall be permitted
to appoint any Eligible Servicer submitting such a bid as a Successor Servicer
for servicing compensation not in excess of the Servicing Fee (provided that if
all such bids exceed the Servicing Fee, the Seller at its own expense shall pay
when due the amount of any compensation in excess of the Servicing Fee);
provided, however, that the Seller shall be responsible for payment of the
- -------- -------
Seller's portion of the Servicing Fee as determined pursuant to this Agreement
and all other amounts in excess of the Investors' Servicing Fee, and that no
such monthly compensation paid out of Collections shall be in excess of the
Investors' Servicing Fee permitted to the Servicer. The holders of the Seller's
Certificates agree that if VWCI (or any Successor Servicer) is terminated as
Servicer hereunder, the portion of Collections to be paid to the Seller shall be
reduced by an amount sufficient to pay Seller's share of the compensation of the
Successor Servicer.
(d) All authority and power granted to the Successor Servicer under
this Agreement shall automatically cease and terminate upon termination of the
Trust pursuant to Section 12.01, and shall pass to and be vested in the Seller
and, without limitation, the Seller is hereby authorized and empowered to
execute and deliver, on behalf of the Successor Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Successor Servicer agrees to cooperate with
the Seller in effecting the termination of the responsibilities and rights of
the Successor Servicer to conduct servicing on the Receivables. The Successor
Servicer shall transfer its electronic records relating to the Receivables to
the Seller in such electronic form as the Seller may reasonably request and
shall transfer all other records, correspondence and documents to the Seller in
the manner and at such times as the Seller shall reasonably request. To the
extent that compliance with this Section 10.02 shall require the Successor
Servicer to disclose to the Seller information of any kind which the Successor
Servicer deems to be confidential, the Seller shall be required to enter into
such customary
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licensing and confidentiality agreements as the Successor Servicer shall deem
necessary to protect its interests.
ARTICLE XI
The Trustee
-----------
SECTION 11.01. Duties of Trustee. (a) The Trustee, prior to the
------------------
occurrence of a Service Default of which it has knowledge and after the curing
of all Service Defaults which may have occurred, undertakes to perform such
duties and only such duties as are specifically set forth in this Agreement. If
a Service Default to the knowledge of the Trustee has occurred (which has not
been cured or waived), the Trustee shall exercise such of the rights and powers
vested in it by this Agreement and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
substantially conform to the requirements of this Agreement.
(c) Subject to Section 11.01(a), no provision of this Agreement shall
be construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own misconduct; provided, however, that:
-------- -------
(i) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be charged with knowledge of any Service
Default or the failure by the Servicer to comply with the obligations of
the Servicer referred to in Section 10.01(a) and (b) unless a Responsible
Officer of the Trustee obtains actual knowledge of such failure; and
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93
(iii) the Trustee shall not be charged with knowledge of an Early
Amortization Event or Reinvestment Event unless a Responsible Officer of
the Trustee obtains actual knowledge thereof.
(d) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
obligations of the Servicer under this Agreement except during such time, if
any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement.
(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the interests of the
Trust in any Receivable now existing or hereafter created or to impair the value
of any Receivable now existing or hereafter created.
(f) Except as expressly provided in this Agreement, the Trustee shall
have no power to vary the corpus of the Trust including the power to (i) accept
any substitute obligation for a Receivable initially assigned to the Trust under
Section 2.01 or 2.05, (ii) add any other investment, obligation or security to
the Trust or (iii) withdraw from the Trust any Receivables.
(g) In the event that the Transfer Agent and Registrar shall fail to
perform any obligation, duty or agreement in the manner or on the day required
to be performed by the Transfer Agent and Registrar, as the case may be, under
this Agreement, the Trustee shall be obligated promptly upon its actual
knowledge thereof to perform such obligation, duty or agreement in the manner so
required.
(h) If the Seller has agreed to transfer any of its wholesale
receivables (other than the Receivables) to another Person, then upon the
written request of the Seller, the Trustee will enter into such intercreditor
agreements with the transferee of such receivables as are customary and
necessary to identify separately the rights of the Trust and
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94
such other Person in the Seller's wholesale receivables; provided, however, that
-------- -------
the Trustee shall not be required to enter into any intercreditor agreement
which could adversely affect the interests of the Investor Certificateholders or
the Trustee and, upon the request of the Trustee, the Seller will deliver an
Opinion of Counsel on any matters relating to such intercreditor agreement,
reasonably requested by the Trustee.
(i) Notwithstanding any other provision contained herein, the Trustee
is not acting as, and shall not be deemed to be, a fiduciary for any Enhancement
Provider in its capacity as such or as a Beneficiary, and the Trustee's sole
responsibility with respect to said parties shall be to perform those duties
with respect to said parties as are specifically set forth herein and no implied
duties or obligations shall be read into this Agreement against the Trustee with
respect to any such party.
SECTION 11.02. Certain Matters Affecting the Trustee. Except as
--------------------------------------
otherwise provided in Section 11.01:
(a) the Trustee may rely on and shall be protected in acting on, or in
refraining from acting in accord with, any resolution, Officers'
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented to it pursuant to this Agreement by the proper
party or parties;
(b) the Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation hereunder or in relation hereto, at the request,
order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
<PAGE>
95
(d) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(e) the Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document;
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or
custodian appointed with due care by it hereunder; and
(g) except as may be required by Section 11.01(a) hereof, the Trustee
shall not be required to make any initial or periodic examination of any
documents or records related to the Receivables or the Accounts for the
purpose of establishing the presence or absence of defects, the compliance
by the Seller with its representations and warranties or for any other
purpose.
SECTION 11.03. Trustee Not Liable for Recitals in Certificates. The
------------------------------------------------
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the Certificates (other than the certificate of authentication on
the Certificates). Except as set forth in Section 11.14, the Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates)
or of any Receivable or related document. The Trustee shall not be accountable
for the use or application by the Seller of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Seller in respect of the Receivables or deposited in or withdrawn from
the Collection Account or any Series Account.
SECTION 11.04. Trustee May Not Extend Credit. The Trustee in its
------------------------------
individual or any other capacity (except as a fiduciary) may not extend credit
to the Trust.
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SECTION 11.05. The Servicer To Pay Trustee's Fees and Expenses. The
------------------------------------------------
Servicer covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to receive, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trust
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and, subject to Section 8.04, the Servicer will
pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including the reasonable fees and
expenses of its agents, any co-trustee and counsel) except any such expense,
disbursement or advance as may arise from its gross negligence or bad faith and
except as provided in the second following sentence. The Servicer's covenant to
pay the expenses, disbursements and advances provided for in the preceding
sentence shall survive the termination of this Agreement. If the Trustee is
appointed Successor Servicer pursuant to Section 10.02, the provisions of this
Section 11.05 shall not apply to expenses, disbursements and advances made or
incurred by the Trustee in its capacity as Successor Servicer, which shall be
covered out of the Servicing Fee.
SECTION 11.06. Eligibility Requirements for Trustee. The Trustee
-------------------------------------
hereunder shall at all times be a corporation organized and doing business under
the laws of the United States of America or any state thereof authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
Federal or state authority; provided, however that the Trustee must be rated
-------- -------
investment grade by Moody's Investors Service. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then, for the purpose of
this Section 11.06, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 11.06, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 11.07.
<PAGE>
97
SECTION 11.07. Resignation or Removal of Trustee. (a) The Trustee
----------------------------------
may at any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Seller and the Servicer. Upon receiving such
notice of resignation, the Seller shall promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.06 hereof and shall fail to resign
after written request therefor by the Servicer, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
if a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Servicer may remove the Trustee and promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of
successor trustee pursuant to any of the provisions of this Section 11.07 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 11.08 hereof.
SECTION 11.08. Successor Trustee. (a) Any successor trustee
------------------
appointed as provided in Section 11.07 hereof shall execute, acknowledge and
deliver to the Seller and to its predecessor Trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee herein. The predecessor Trustee shall
deliver to the successor trustee all documents or copies thereof, at the expense
of the Servicer, and statements held by it hereunder; and the
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98
Seller and the predecessor Trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor trustee all such rights, power, duties
and obligations. The Servicer shall immediately give notice to each Rating
Agency and the Certificateholders upon the appointment of a successor trustee.
(b) No successor trustee shall accept appointment as provided in this
Section 11.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 11.06 hereof.
SECTION 11.09. Merger or Consolidation of Trustee. Any Person into
-----------------------------------
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 11.06 hereof, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding. Notice regarding any merger or consolidation of
the Trustee shall be provided to the Rating Agencies.
SECTION 11.10. Appointment of Co-Trustee or Separate Trustee. (a)
----------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee shall have the power and
may execute and deliver all instruments to appoint one or more Persons to act as
a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section 11.10, such
powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
11.06 and no notice to Certificateholders of the appointment of any co-trustee
or separate trustee shall be required under Section 11.08 hereof.
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99
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact
<PAGE>
100
with full power and authority, to the extent not prohibited by law, to do any
lawful act under or in respect of this Agreement on its behalf and in its name.
If any separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.
SECTION 11.11. Tax Returns. In the event the Trust shall be required
------------
to file tax returns, the Servicer shall prepare, or shall cause to be prepared,
and file any tax returns required to be filed by the Trust. The Trustee in
accordance with the terms of the Supplements shall also prepare or shall cause
to be prepared all tax information required by law to be distributed to the
Investor Certificateholders. The Trustee will distribute or cause to be
distributed such information to the Investor Certificateholders. The Servicer,
upon request, will furnish the Trustee with all such information known to the
Servicer as may be reasonably required in connection with the preparation of all
tax returns of the Trust or in connection with the distribution of tax
information to the Investor Certificateholders.
SECTION 11.12. Trustee May Enforce Claims Without Possession of
------------------------------------------------
Certificates. All rights of action and claims under this Agreement or the
- -------------
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
SECTION 11.13. Suits for Enforcement. If a Service Default shall
----------------------
occur and be continuing, the Trustee, in its discretion may, subject to the
provisions of Section 10.01, proceed to protect and enforce its rights and the
rights of the Certificateholders under this Agreement by suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy as
<PAGE>
101
the Trustee, being advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Trustee or the Certificateholders. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Certificateholder any plan of
reorganization, arrangement, adjustment or composition affecting the
Certificates or the rights of any Holder thereof, or authorize the Trustee to
vote in respect of the claim of any Certificateholder in any such proceeding.
SECTION 11.14. Representations and Warranties of Trustee. The
--------------------------------- --------
Trustee represents and warrants that:
(i) the Trustee is a national banking association organized, existing
and in good standing under the laws of the United States;
(ii) the Trustee has full power, authority and right to execute,
deliver and perform this Agreement and each Supplement, and has taken all
necessary action to authorize the execution, delivery and performance by it
of this Agreement and each Supplement; and
(iii) this Agreement and each Supplement has been duly executed and
delivered by the Trustee.
SECTION 11.15. Maintenance of Office or Agency. The Trustee will
--------------------------------
maintain at its expense in the Borough of Manhattan, The City of New York, an
office or offices or agency or agencies where notices and demands to or upon the
Trustee in respect of the Certificates and this Agreement may be served. The
Trustee initially designates its Corporate Trust Office as its office for such
purposes in New York. The Trustee will give prompt written notice to the
Servicer and to Holders of the Certificates of any change in the location of the
Certificate Register or any such office or agency.
ARTICLE XII
-----------
Termination
-----------
SECTION 12.01. Termination of Trust. The Trust and the respective
---------------------
obligations and responsibilities of the Seller, the Servicer and the Trustee
created hereby (other than the obligation of the Trustee to make payments to
<PAGE>
102
Investor Certificateholders as hereafter set forth) shall terminate, except with
respect to the duties described in Sections 7.03, 8.04 and 12.02(b), upon the
earlier of (i) January 31, 2017 (the "Final Maturity Date"), (ii) the day
-------------------
following the Distribution Date on which the Invested Amount for all Series is
zero and (iii) the time provided in Section 9.02(b) (the "Trust Termination
Date"). The Servicer will give the Rating Agencies prompt notice of the
termination of the Trust.
SECTION 12.02. Final Distribution. (a) The Servicer shall give the
-------------------
Trustee at least 30 days prior notice of the Distribution Date on which the
Investor Certificateholders of any Series or Class may surrender their Investor
Certificates for payment of the final distribution on and cancelation of such
Investor Certificates (or, in the event of a final distribution resulting from
the application of Section 2.03 or 9.01, notice of such Distribution Date
promptly after Servicer has determined that a final distribution will occur, if
such determination is made less than 30 days prior to such Distribution Date).
Such notice shall be accompanied by an Officers' Certificate setting forth the
information specified in Section 3.05 covering the period during the then-
current calendar year through the date of such notice. Not later than the fifth
day of the month in which the final distribution in respect of such Series or
Class is payable to Investor Certificateholders, the Trustee shall provide
notice to Investor Certificateholders of such Series or Class specifying (i) the
date upon which final payment of such Series or Class will be made upon
presentation and surrender of Investor Certificates of such Series or Class at
the office or offices therein designated, (ii) the amount of any such final
payment and (iii) that the Record Date otherwise applicable to such payment date
is not applicable, payments being made only upon presentation and surrender of
such Investor Certificates at the office or offices therein specified (which, in
the case of Bearer Certificates, shall be outside the United States). The
Trustee shall give such notice to the Transfer Agent and Registrar and the
Rating Agencies at the time such notice is given to Investor Certificateholders.
(b) Notwithstanding a final distribution to the Investor
Certificateholders of any Series or Class (or the termination of the Trust),
except as otherwise provided in this paragraph, all funds then on deposit in the
Collection Account and any Series Account allocated to such Investor
Certificateholders shall continue to be held in trust for
<PAGE>
103
the benefit of such Investor Certificateholders and the Trustee shall pay such
funds to such Investor Certificateholders upon surrender of their Investor
Certificates (and any excess shall be paid in accordance with the terms of any
Enhancement Agreement). In the event that all such Investor Certificateholders
shall not surrender their Investor Certificates for cancelation within six
months after the date specified in the notice from the Trustee described in
paragraph (a), the Trustee shall give a second notice to the remaining such
Investor Certificateholders to surrender their Investor Certificates for
cancelation and receive the final distribution with respect thereto (which
surrender and payment, in the case of Bearer Certificates, shall be outside the
United States). If within one year after the second notice all such Investor
Certificates shall not have been surrendered for cancelation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining such Investor Certificateholders concerning surrender of
their Investor Certificates, and the cost thereof shall be paid out of the funds
in the Collection Account or any Series Account held for the benefit of such
Investor Certificateholders. The Trustee shall pay to the Seller any monies
held by it for the payment of principal or interest that remain unclaimed for
two years. After payment to the Seller, Investor Certificateholders entitled to
the money must look to the Seller for payment as general creditors unless an
applicable abandoned property law designates another Person.
(c) If the Invested Amount with respect to any Series is greater than
zero on its Termination Date (after giving effect to deposits and distributions
otherwise to be made on such Termination Date), the Trustee will sell or cause
to be sold on such Termination Date Receivables (or interests therein) in an
amount equal to the sum of (i) 110% of the Invested Amount with respect to such
Series on such Termination Date (after giving effect to such deposits and
distributions) and (ii) the Available Subordinated Amount with respect to such
Series on the preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
Distribution Date following such Determination Date); provided, however, that in
-------- -------
no event shall such amount exceed such Series' Series Allocation Percentage (for
the Collection Period in which such Termination Date occurs) of Receivables on
such Termination Date. The proceeds (the "Termination Proceeds") from such sale
--------------------
shall be immediately deposited into the Collection Account for the benefit of
the Investor
<PAGE>
104
Certificateholders of such Series. The Termination Proceeds shall be allocated
and distributed to the Investor Certificateholders of such Series in accordance
with the terms of the applicable Supplement.
SECTION 12.03. Seller's Termination Rights. Upon the termination of
----------------------------
the Trust pursuant to Section 12.01 and the surrender of the Seller's
Certificates, the Trustee shall sell, assign and convey to the Seller or its
designee, without recourse, representation or warranty, all right, title and
interest of the Trust in the Receivables, whether then existing or thereafter
created, all Collateral Security with respect thereto, all monies due or to
become due and all amounts received with respect thereto and all proceeds
thereof, except for amounts held by the Trustee pursuant to Section 12.02(b),
and all of the Seller's right, title and interest in the Receivables Purchase
Agreement. The Trustee shall execute and deliver such instruments of transfer
and assignment, in each case without recourse, as shall be reasonably requested
by the Seller to vest in the Seller or its designee all right, title and
interest which the Trust had in all such property.
ARTICLE XIII
Miscellaneous Provisions
------------------------
SECTION 13.01. Amendment. (a) This Agreement or any Supplement may
----------
be amended from time to time (including in connection with the issuance of a
Supplemental Certificate) by the Servicer, the Seller and the Trustee without
the consent of any of the Certificateholders, provided that the Seller shall
have delivered to the Trustee an Officers' Certificate to the effect that such
action shall not adversely affect in any material respect the interests of any
Investor Certificateholder. Notwithstanding anything contained herein to the
contrary, the Trustee, with the consent of any Enhancement Providers, may at any
time and from time to time amend, modify or supplement the form of Distribution
Date Statement.
(b) This Agreement or any Supplement may also be amended from time to
time (including in connection with the issuance of a Supplemental Certificate)
by the Servicer, the Seller and the Trustee, with the consent of the Holders of
Investor Certificates evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the Investor
<PAGE>
105
Certificates of all adversely affected Series, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or any Supplement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i) reduce
-------- -------
in any manner the amount of or delay the timing of any distributions to be made
to Investor Certificateholders or deposits of amounts to be so distributed or
the amount available under any Enhancement without the consent of each affected
Investor Certificateholder, (ii) change the definition of or the manner of
calculating the interest of any Investor Certificateholder without the consent
of each affected Investor Certificateholder, (iii) reduce the aforesaid
percentage required to consent to any such amendment without the consent of each
Investor Certificateholder or (iv) adversely affect the rating of any Series or
Class by each Rating Agency without the consent of the Holders of Investor
Certificates of such Series or Class evidencing not less than 66-2/3% of the
aggregate unpaid principal amount of the Investor Certificates of such Series or
Class. Any amendment to be effected pursuant to this paragraph shall be deemed
to adversely affect all outstanding Series, other than any Series with respect
to which the Seller shall have delivered to the Trustee an Officers' Certificate
to the effect that such action shall not adversely affect in any material
respect the interests of any Investor Certificateholder of such Series. The
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Trustee's rights, duties or immunities under this Agreement or
otherwise.
(c) Promptly after the execution of any such amendment or consent
(other than an amendment pursuant to paragraph (a)), the Trustee shall furnish
notification of the substance of such amendment to each Investor
Certificateholder, and the Servicer shall furnish notification of the substance
of such amendment to each Rating Agency and each Enhancement Provider.
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
<PAGE>
106
(e) Notwithstanding anything in this Section to the contrary, no
amendment may be made to this Agreement or any Supplement which would adversely
affect in any material respect the interests of any Enhancement Provider without
the consent of such Enhancement Provider.
(f) Any Supplement executed in accordance with the provisions of
Section 6.03 shall not be considered an amendment to this Agreement for the
purposes of this Section.
SECTION 13.02. Protection of Right, Title and Interest to Trust. (a)
-------------------------------------------------
The Servicer shall cause this Agreement, all amendments hereto and/or all
financing statements and continuation statements and any other necessary
documents covering the Certificateholders' and the Trustee's right, title, and
interest in and to the Trust to be promptly recorded, registered and filed, and
at all times to be kept recorded, registered and filed, all in such manner and
in such places as may be required by law fully to preserve and protect the
right, title and interest of the Certificateholders and the Trustee hereunder to
all property comprising the Trust. The Servicer shall deliver to the Trustee
file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Seller shall cooperate fully with the
Servicer in connection with the obligations set forth above and will execute any
and all documents reasonably required to fulfill the intent of this Section
13.02(a).
(b) Within 30 days after the Seller or the Servicer makes any change
in its name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with Section 13.02(a)
seriously misleading within the meaning of Section 9-402(7) of the UCC as in
effect in Michigan (including as a result of a Designated Affiliate Transfer),
the Seller shall give the Trustee and any Agent notice of any such change and
shall file such financing statements or amendments as may be necessary to
continue the perfection of the Trust's security interest in the Receivables and
the proceeds thereof.
(c) The Seller and the Servicer will give the Trustee and any Agent
prompt written notice of any relocation of any office from which it services
Receivables or keeps records concerning the Receivables or of its
<PAGE>
107
principal executive office and whether, 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 file such financing statements or amendments as may be
necessary to perfect or to continue the perfection of the Trust's security
interest in the Receivables and the proceeds thereof. The Seller and the
Servicer will at all times maintain each office from which it services
Receivables and its principal executive officer within the United States of
America.
(d) The Servicer will deliver to the Trustee and any Enhancement
Provider: (i) upon the execution and delivery of each amendment of this
Agreement or any Supplement, an Opinion of Counsel to the effect specified in
Exhibit G-1; and (ii) on or before March 31 of each year, beginning with March
31, 1997, an Opinion of Counsel substantially in the form of Exhibit G-2.
SECTION 13.03. Limitation on Rights of Certificateholders. (a) The
-------------------------------------------
death or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor shall such death or incapacity entitle such
Certificateholders' legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
(b) No Investor Certificateholder shall have any right to vote
(except as expressly provided in this Agreement) or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to constitute the Investor
Certificateholders from time to time as partners or members of an association,
nor shall any Investor Certificateholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.
(c) No Investor Certificateholder shall have any right by virtue of
any provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Investor Certificateholder previously shall have made, and
<PAGE>
108
unless the Holders of Investor Certificates evidencing more than 50% of the
aggregate unpaid principal amount of all Investor Certificates (or, with respect
to any such action, suit or proceeding that does not relate to all Series, 50%
of the aggregate unpaid principal amount of the Investor Certificates of all
Series to which such action, suit or proceeding relates) shall have made, a
request to the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after such request and
offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Investor Certificateholder with every other
Investor Certificateholder and the Trustee, that no one or more Investor
Certificateholders shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb or prejudice the rights of the holders of any other of the Investor
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Investor Certificateholder, or to enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all Investor Certificateholders except as otherwise expressly
provided in this Agreement. For the protection and enforcement of the
provisions of this Section, each and every Investor Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 13.04. No Petition. VWCI and the Trustee, by entering into
------------
this Agreement, each Investor Certificateholder, by accepting an Investor
Certificate, each holder of a Supplemental Certificate by accepting a
Supplemental Certificate and any Successor Servicer and each other Beneficiary,
by accepting the benefits of this Agreement, hereby covenants and agrees that
they will not at any time institute against VWCARC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law.
SECTION 13.05. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
--------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
<PAGE>
109
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 13.06. Notices. (a) All demands, notices, instructions,
--------
directions and communications, collectively, "Notices") under this Agreement
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to (i) in
the case of VWCARC, 3800 Hamlin Road, Auburn Hills, MI 48326, Attention:
Secretary, (ii) in the case of VWCI, 3800 Hamlin Road, Auburn Hills, MI 48326,
Attention: Secretary, and (iii) in the case of the Trustee, Citibank, N.A., 120
Wall Street, 13th Floor, New York, New York, 10043, Attention: Corporate
Agency and Trust Department; or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party.
(b) Any Notice required or permitted to be given to a Holder of
Registered Certificates shall be given by first-class mail, postage prepaid, at
the address of such Holder as shown in the Certificate Register. No Notice
shall be required to be mailed to a Holder of Bearer Certificates or Coupons but
shall be given as provided below. Any Notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Investor Certificateholder receives such Notice. In
addition, in the case of any Series or Class with respect to which any Bearer
Certificates are outstanding, any Notice required or permitted to be given to
Investor Certificateholders of such Series or Class shall be published in an
Authorized Newspaper within the time period prescribed in this Agreement.
(c) Any notice required to be given to the Rating Agencies hereunder
shall be delivered to Moody's Investors Service, Attn: ABS Monitoring
Department, New York, New York 10007, and to Standard & Poor's Ratings Group, 26
Broadway, New York, New York 10004.
SECTION 13.07. Severability of Provisions. If any one or more of the
---------------------------
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be 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 Certificates
or rights of the Certificateholders.
<PAGE>
110
SECTION 13.08. Assignment. Notwithstanding anything to the contrary
-----------
contained herein, except as provided in Section 8.02, this Agreement may not be
assigned by the Servicer.
SECTION 13.09. Certificates Nonassessable and Fully Paid. It is the
------------------------------------------
intention of the parties to this Agreement that the Investor Certificateholders
shall not be personally liable for obligations of the Trust, that the interests
in the Trust represented by the Investor Certificates shall be nonassessable for
any losses or expenses of the Trust or for any reason whatsoever and that
Investor Certificates upon authentication thereof by the Trustee are and shall
be deemed fully paid.
SECTION 13.10. Further Assurances. The Seller 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 Trustee more
fully to effect the purposes of this Agreement, including the execution of any
financing statements or continuation statements relating to the Receivables for
filing under the provisions of the UCC of any applicable jurisdiction.
SECTION 13.11. No Waiver; Cumulative Remedies. No failure to
-------------------------------
exercise and no delay in exercising, on the part of the Trustee or the
Certificateholders, any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided under this
Agreement are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
SECTION 13.12. Counterparts. This Agreement may be executed in two
-------------
or more counterparts (and by different parties on separate counterparts), each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
SECTION 13.13. Third-Party Beneficiaries. This Agreement will inure
--------------------------
to the benefit of and be binding upon the parties hereto, the Certificateholders
and the other Beneficiaries and their respective successors and permitted
assigns. Except as otherwise expressly provided in this
<PAGE>
111
Agreement, no other Person will have any right or obligation hereunder.
SECTION 13.14. Actions by Certificateholders. Any request, demand,
------------------------------
authorization, direction, notice, consent, waiver or other act by a
Certificateholder shall bind such Certificateholder and every subsequent holder
of any Certificate issued upon the registration of transfer of the Certificates
of such Certificateholder or in exchange therefor or in lieu thereof in respect
of anything done or omitted to be done by the Trustee or the Servicer in
reliance thereon, whether or not notation of such action is made upon any such
Certificate.
SECTION 13.15. Rule 144A Information. For so long as any of the
----------------------
Investor Certificates of any Series or Class are "restricted securities" within
the meaning of Rule 144(a)(3) under the Act, each of the Seller, the Trustee,
the Servicer and any Enhancement Providers agree to cooperate with each other to
provide to any Investor Certificateholders of such Series or Class and to any
prospective purchaser of Investor Certificates designated by such an Investor
Certificateholder, upon the request of such Investor Certificateholder or
prospective purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act.
SECTION 13.16. Merger and Integration. Except as specifically stated
-----------------------
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
SECTION 13.17. Headings. The headings herein are for purposes of
---------
reference only and shall not otherwise affect the meaning or interpretation or
any provision hereof.
<PAGE>
112
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Pooling and Servicing Agreement to be duly executed by their
respective officers as of the day and year first above written.
VOLKSWAGEN CREDIT AUTO RECEIVABLES CORPORATION,
Seller,
by
________________________
Name:
Title:
by
________________________
Name:
Title:
VW CREDIT, INC., Servicer,
by
________________________
Name:
Title:
by
________________________
Name:
Title:
CITIBANK, N.A.,
Trustee,
by
________________________
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF FACE OF VWCARC CERTIFICATE
THIS VWCARC CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. NEITHER THIS VWCARC CERTIFICATE NOR ANY PORTION HEREOF MAY BE
OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF SUCH
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS.
THIS VWCARC CERTIFICATE IS NOT PERMITTED TO BE TRANSFERRED, ASSIGNED,
EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE WITH THE TERMS
OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
No. R-1 One Unit
VOLKSWAGEN CREDIT AUTO MASTER TRUST
VWCARC CERTIFICATE
THIS CERTIFICATE REPRESENTS AN INTEREST IN CERTAIN
ASSETS OF THE VOLKSWAGEN CREDIT AUTO MASTER TRUST
Evidencing an interest in a trust, the corpus of which consists
primarily of wholesale (i.e., dealer floorplan) receivables (the "Receivables")
----
generated from time to time in the ordinary course of business in a portfolio of
revolving financing arrangements (the "Accounts") of VW Credit, Inc. meeting
certain eligibility criteria. This certificate (the "VWCARC Certificate") does
not represent an interest in or obligation of Volkswagen Credit Auto Receivables
Corporation (the "Seller" or "VWCARC"), VW Credit, Inc. or any affiliate
thereof.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this VWCARC Certificate shall
not be entitled to any benefit under the Pooling and Servicing Agreement
referred to on the reverse side hereof, or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS.
<PAGE>
2
IN WITNESS WHEREOF, the Seller has caused this VWCARC Certificate to
be duly executed.
VOLKSWAGEN CREDIT AUTO RECEIVABLES CORPORATION,
by
------------------------
Name:
Title:
by
------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the VWCARC Certificate described in the within-mentioned
Pooling and Servicing Agreement.
Citibank, N.A.,
as Trustee,
by
--------------------
Authorized Officer
<PAGE>
3
REVERSE OF VWCARC CERTIFICATE
This certifies that Volkswagen Credit Auto Receivables Corporation
("VWCARC") is the registered owner of a fractional interest in the assets of the
VOLKSWAGEN CREDIT AUTO MASTER TRUST (the "Trust") not allocated to the
Certificateholders' Interest or the interest of any holder of a Supplemental
Certificate, pursuant to the Pooling and Servicing Agreement dated as of
February 29, 1996 (as amended and supplemented, the "Agreement"), by and among
VWCARC, as seller, VW Credit, Inc., as servicer, and Citibank, N.A., as trustee
(the "Trustee"). The corpus of the Trust will include (a) all of the Seller's
right, title and interest in, to and under the Receivables in each Account and
all Collateral Security with respect thereto owned by the Seller at the close of
business on the Cut-Off Date, in the case of the Initial Accounts, and on the
applicable Additional Cut-Off Date, in the case of Additional Accounts, and all
monies due or to become due and all amounts received with respect thereto and
all proceeds (including "proceeds" as defined in Section 9-306 of the UCC as in
effect in the State of Michigan and Recoveries) thereof, (b) all of the Seller's
rights, remedies, powers and privileges with respect to such Receivables under
the Receivables Purchase Agreement, (c) all of the Seller's right, title and
interest in, to and under the Receivables in each Account (other than any
Receivables created in any Account from and after the applicable Removal Date)
and all Collateral Security with respect thereto owned by the Seller at the
close of business of each Transfer Date and not theretofore conveyed to the
Trust, all moneys due or to become due and all amounts received with respect
thereto and all proceeds (including "proceeds" as defined in Section 9-306 of
the UCC as in effect in the State of Michigan and Recoveries) thereof, (d) all
moneys on deposit in, and Eligible Investments credited to, the Collection
Account or any Series Account, (e) any Enhancements and (f) all other assets and
interests constituting the Trust. Although a summary of certain provisions of
the Agreement is set forth below, this Certificate does not purport to summarize
the Agreement and reference is made to the Agreement for information with
respect to the interests, rights, benefits, obligations, proceeds and duties
evidenced hereby and the rights, duties and obligations of the Trustee. A copy
of the Agreement may be requested from the Trustee by writing to the Trustee at
Citibank, N.A., 120 Wall Street, 13th Floor, New York, NY 10043, Attention of
<PAGE>
4
Corporate Agency and Trust Department. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Agreement.
This VWCARC Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended and
supplemented from time to time, the Seller by virtue of the acceptance hereof
assents and is bound.
It is the intent of the Seller and the holder of the VWCARC
Certificate that the Pooling and Servicing Agreement and the Investor
Certificates have been (or will be) issued with the intention that the Investor
Certificates will qualify under applicable tax law as indebtedness of VWCARC
secured by the Receivables. The Seller, each Beneficiary and each
Certificateholder and Certificate Owner, by the acceptance of its Certificate or
Book-Entry Certificate, as applicable, agrees to treat the Investor Certificates
as indebtedness of VWCARC secured by the Receivables for Federal income taxes,
state and local income and franchise taxes, Michigan Single Business tax and any
other taxes imposed on or measured by income.
This Certificate is not permitted to be transferred, assigned,
exchanged or otherwise pledged or conveyed except in accordance with the
Agreement, including Section 6.03(c) and 7.04 of the Agreement.
The Receivables consist of advances made directly or indirectly by VW
Credit, Inc. to domestic automobile dealers franchised by Volkswagen of America,
Inc. and/or other automobile manufacturers. Generally, the principal amount of
an advance is equal to the wholesale purchase price of new automobiles, light
duty trucks and certain other vehicles manufactured or distributed by such
manufacturers and is due upon the retail sale of such vehicles.
This Certificate is the VWCARC Certificate, which represents the
Seller's interest in certain assets of the Trust, including the right to receive
a portion of the Collections and other amounts at the times and in the amounts
specified in the Agreement. The aggregate interest represented by the VWCARC
Certificate at any time in the Receivables in the Trust shall not exceed the
Seller's Interest at such time. In addition to the VWCARC Certificate, (i)
Investor Certificates will be issued to investors
<PAGE>
5
pursuant to the Agreement, which will represent the Certificateholders'
Interest, and (ii) Supplemental Certificates will be issued pursuant to the
Agreement, which will represent that portion of the Seller's Interest not
allocated to the Seller. This VWCARC Certificate shall not represent any
interest in the Collection Account, the Series Accounts or any Enhancements,
except as expressly provided in the Agreement.
The obligations created by the Agreement and the Trust created thereby
shall terminate upon the Trust Termination Date.
Upon the termination of the Trust pursuant to Section 12.01 of the
Agreement and the surrender of the Seller's Certificate, the Trustee shall sell,
assign and convey to the Seller or its designee, without recourse,
representation or warranty, all right, title and interest of the Trust in the
Receivables, whether then existing or thereafter created, all Collateral
Security with respect thereto, all moneys due or to become due and all amounts
received with respect thereto and all proceeds thereof, except for amounts held
by the Trustee pursuant to Section 12.02(b) of the Agreement, and all of the
Seller's rights, remedies, powers and privileges with respect to such
Receivables under the Receivables Purchase Agreement. The Trustee shall execute
and deliver such instruments of transfer and assignment, in each case without
recourse, as shall be reasonably requested by the Seller to vest in the Seller
or its designee all right, title and interest which the Trust had in all such
property.
<PAGE>
EXHIBIT B
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS
(As required by Section 2.05
of the Pooling and Servicing Agreement)
ASSIGNMENT No. OF RECEIVABLES IN ADDITIONAL
ACCOUNTS dated as of , , among Volkswagen Credit Auto Receivables
Corporation, as seller (the "Seller"), VW Credit, Inc. as servicer (the
"Servicer"), and Citibank, N.A., as trustee (the "Trustee"), pursuant to the
Pooling and Servicing Agreement referred to below.
W I T N E S S E T H
WHEREAS the Seller, the Servicer and the Trustee are parties to a
Pooling and Servicing Agreement dated as of February 29, 1996 (as amended or
supplemented, the "Agreement");
WHEREAS, pursuant to the Agreement, the Seller wishes to designate
Additional Accounts to be included as Accounts and to convey the Receivables and
related Collateral Security of such Additional Accounts, whether now existing or
hereafter created, to the Trust as part of the corpus of the Trust (as each such
term is defined in the Agreement); and
WHEREAS the Trustee is willing to accept such designation and
conveyance subject to the terms and conditions hereof.
NOW, THEREFORE, the Seller, the Servicer and the Trustee hereby agree
as follows:
1. Defined Terms. All capitalized terms used herein shall have the
--------------
meanings ascribed to them in the Agreement unless otherwise defined herein.
"Addition Date" shall mean, with respect to the Additional Accounts
-------------
designated hereby, .
2. Designation of Additional Accounts. The Seller hereby delivers
-----------------------------------
herewith a computer file or microfiche or written list containing a true and
complete list of all such Additional Accounts specifying for each such Account,
as of the Additional Cut-Off Date, its account number and the aggregate amount
of Principles Receivables
<PAGE>
2
outstanding in such Account. Such file or list shall, as of the date of this
Assignment, supplement Schedule 1 to the Agreement.
3. Conveyance of Receivables. (a) The Seller does hereby sell,
--------------------------
transfer, assign, set over and otherwise convey, without recourse (except as
expressly provided in the Agreement), to the Trust for the benefit of the
Certificateholders and the other Beneficiaries, all its right, title and
interest in, to and under the Receivables in such Additional Accounts and all
Collateral Security with respect thereto, owned by the Seller and existing at
the close of business on the Additional Cut-Off Date and thereafter created from
time to time until the termination of the Trust, all moneys due or to become due
and all amounts received with respect thereto and all proceeds (including
"proceeds" as defined in Section 9-306 of the UCC as in effect in the State of
Michigan and Recoveries) thereof. The foregoing sale, transfer, assignment,
set-over and conveyance does not constitute and is not intended to result in the
creation or an assumption by the Trust, the Trustee, any Agent or any
Beneficiary of any obligation of the Servicer, VWCI, the Seller, VWA or any
other Person in connection with the Accounts, the Receivables or under any
agreement or instrument relating thereto, including any obligation to any
Dealers.
(b) In connection with such sale, the Seller agrees to record and
file, at its own expense, a financing statement on Form UCC-1 (and continuation
statements when applicable) with respect to the Receivables now existing and
hereafter created for the sale of chattel paper (as defined in Section 9-105 of
the UCC as in effect in any state where the Seller's or the Servicer's chief
executive offices or books and records relating to the Receivables are located)
meeting the requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect the sale and assignment of the
Receivables and the Collateral Security to the Trust, and to deliver a file-
stamped copy of such financing statements or other evidence of such filing to
the Trustee on or prior to the Addition Date. The Trustee shall be under no
obligation whatsoever to file such financing statement, or a continuation
statement to such financing statement, or to make any other filing under the UCC
in connection with such sales.
(c) In connection with such sale, the Seller further agrees, at its
own expense, on or prior to the
<PAGE>
3
Addition Date, to indicate in its computer files that the Receivables created in
connection with the Additional Accounts designated hereby have been sold and the
Collateral Security assigned to the Trust pursuant to this Assignment for the
benefit of the Certificateholders and the other Beneficiaries.
4. Acceptance by Trustee. Subject to the satisfaction of the
----------------------
conditions set forth in Section 6 of this Assignment, the Trustee hereby
acknowledges its acceptance, on behalf of the Trust, of all right, title and
interest previously held by the Seller to the property, now existing and
hereafter created, conveyed to the Trust pursuant to Section 3(a) of this
Assignment, and declares that it shall maintain such right, title and interest,
upon the trust set forth in the Agreement for the benefit of the
Certificateholders and other Beneficiaries. The Trustee further acknowledges
that, prior to or simultaneously with the execution and delivery of this
Assignment, the Seller delivered to the Trustee the computer file or microfiche
or written list relating to the Additional Accounts described in Section 2 of
this Assignment. The Trustee shall be under no obligation whatsoever to verify
the accuracy or completeness of the information contained in such file or list.
5. Representations and Warranties of the Seller. The Seller hereby
---------------------------------------------
represents and warrants to the Trustee, on behalf of the Trust, as of the date
of this Assignment and as of the Addition Date that:
(a) Legal, Valid and Binding Obligation. This Assignment constitutes
------------------------------------
a legal, valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect affecting 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).
(b) Eligible Accounts. Each Additional Account designated hereby is
------------------
an Eligible Account.
(c) Selection Procedures. No selection procedures reasonably
---------------------
believed by the Seller to be adverse to the interests of the Beneficiaries
were
<PAGE>
4
utilized in selecting the Additional Accounts designated hereby.
(d) Insolvency. As of the Notice Date and the Addition Date, neither
-----------
VWCI nor the Seller is insolvent nor, after giving effect to the conveyance
set forth in Section 3 of this Assignment, will either of them have been
made insolvent, nor are either of them aware of any pending insolvency.
(e) Valid Transfer. This Assignment constitutes a valid sale,
---------------
transfer and assignment to the Trust of all right, title and interest of
the Seller in the Receivables and the Collateral Security and the proceeds
thereof and upon the filing of the financing statements described in
Section 3 of this Assignment with the Secretary of State of the State of
Michigan (and other applicable states) and, in the case of the Receivables
and the Collateral Security hereafter created and the proceeds thereof,
upon the creation thereof, the Trust shall have a first priority perfected
ownership interest in such property[, subject to the rights of the
Purchased Receivables Owners with respect to the Collateral Security in
respect of the Partial Accounts (other than the Vehicles relating to any
Principal Receivables arising in the Partial Accounts)], except for Liens
permitted under Section 2.06(a) of the Agreement. Except as otherwise
provided in the Agreement, neither the Seller nor any Person claiming
through or under the Seller has any claim to or interest in the Trust
Assets.
(f) No Conflict. The execution and delivery of this Assignment, the
------------
performance of the transactions contemplated by this Assignment and the
fulfillment of the terms hereof, will not conflict with, result in any
breach of any of the material terms and provisions of, or constitute (with
or without notice or lapse of time or both) a material default under, any
indenture, contract, agreement, mortgage, deed of trust, or other
instrument to which the Seller is a party or by which it or its properties
are bound.
(g) No Violation. The execution and delivery of this Assignment by
-------------
the Seller, the performance of the transactions contemplated by this
Assignment and the fulfillment of the terms hereof applicable to the
<PAGE>
5
Seller will not conflict with or violate any material Requirements of Law
applicable to the Seller.
(h) No Proceedings. There are no proceedings or, to the best
---------------
knowledge of the Seller, investigations pending or threatened against the
Seller before any Governmental Authority (i) asserting the invalidity of
this Assignment, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Assignment, (iii) seeking any
determination or ruling that, in the reasonable judgment of the Seller,
would materially and adversely affect the performance by the Seller of its
obligations under this Assignment, (iv) seeking any determination or ruling
that would materially and adversely affect the validity or enforceability
of this Assignment or (v) seeking to affect adversely the income tax
attributes of the Trust under the United States Federal or any state
income, single business or franchise tax systems.
(i) Record of Accounts. As of the Addition Date Schedule 1 to this
-------------------
Assignment is an accurate and complete listing in all material respects of
all the Additional Accounts as of the Additional Cut-Off Date and the
information contained therein with respect to the identity of such Accounts
and the Receivables existing thereunder is true and correct in all material
respects as of the Additional Cut-Off Date.
(j) No Liens. Each Receivable and all Collateral Security existing
---------
on the Addition Date has been conveyed to the Trust free and clear of any
Lien[, subject to the rights of the Purchased Receivables Owners with
respect to the Collateral Security in respect of the Partial Accounts
(other than the Vehicles relating to any Principal Receivables arising in
the Partial Accounts)].
(k) All Consents Required. With respect to each Receivable and all
----------------------
Collateral Security existing on the Addition Date, all consents, licenses,
approvals or authorizations of or registrations or declarations with any
Governmental Authority required to be obtained, effected or given by the
Seller in connection with the conveyance of such Receivable or Collateral
Security to the Trust, the execution and delivery of this Assignment and
the performance of the transactions
<PAGE>
6
contemplated hereby have been duly obtained, effected or given and are in
full force and effect.
(l) Eligible Receivables. On the Additional Cut-Off Date each
---------------------
Receivable conveyed to the Trust as of such date is an Eligible Receivable
or, if such Receivable is not an Eligible Receivable, such Receivable is
conveyed to the Trust in accordance with Section 2.09 of the Agreement.
6. Conditions Precedent. The acceptance of the Trustee set forth in
---------------------
Section 4 of this Assignment is subject to the satisfaction, on or prior to the
Addition Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
-------------------------------
warranties made by the Seller in Section 5 of this Assignment shall be true
and correct as of the date of this Assignment and as of the Addition Date.
(b) Agreement. Each of the conditions set forth in Section 2.05(d)
----------
of the Agreement applicable to the designation of the Additional Accounts
to be designated hereby shall have been satisfied.
(c) Officer's Certificate. The Seller shall have delivered to the
----------------------
Trustee an Officer's Certificate, dated the date of this Assignment, in
which an officer of the Seller shall state that the representations and
warranties of the Seller under Section 5 hereof are true and correct. The
Trustee may conclusively rely on such Officer's Certificate, shall have no
duty to make inquiries with regard to the matters set forth therein and
shall incur no liability in so relying.
7. Ratification of Agreement. As supplemented by this Assignment,
--------------------------
the Agreement is in all respects ratified and confirmed and the Agreement as so
supplemented by this Assignment shall be read, taken and construed as one and
the same instrument.
8. Counterparts. This Assignment may be executed in two or more
-------------
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
<PAGE>
7
9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
--------------
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Assignment to be duly executed and delivered by their respective
duly authorized officers as of the day and the year first above written.
VOLKSWAGEN CREDIT AUTO
RECEIVABLES COMPANY,
as Seller,
by
----------------------------
Name:
Title:
VW CREDIT, INC.,
as Servicer,
by
----------------------------
Name:
Title:
Citibank, N.A.,
as Trustee,
by
----------------------------
Name:
Title:
<PAGE>
EXHIBIT C
FORM OF ANNUAL SERVICER'S CERTIFICATE
(As required to be delivered on or before
April 30 each calendar year beginning with
April 30, 1997, pursuant to Section 3.05 of the
Pooling and Servicing Agreement)
VW CREDIT, INC.
---------------------------------------------
VOLKSWAGEN CREDIT AUTO MASTER TRUST
---------------------------------------------
The undersigned, duly authorized representatives of VW Credit, Inc.
("VWCI"), as Servicer, pursuant to the Pooling and Servicing Agreement dated as
of February 29, 1996 (as amended and supplemented, the "Agreement"), by and
among Volkswagen Auto Receivables Corporation, as seller, VWCI, as Servicer, and
Citibank, N.A., as trustee, do hereby certify that:
1. VWCI is, as of the date hereof, the Servicer under the Agreement.
2. The undersigned are Servicing Officers and are duly authorized
pursuant to the Agreement to execute and deliver this Certificate to the
Trustee, any Agent and any Enhancement Providers.
3. A review of the activities of the Servicer during [the period from
the initial Closing Date through] [the calendar year ended] December 31,
, and of its performance under the Agreement was conducted under
our supervision.
4. Based on such review, the Servicer has, to the best of our
knowledge, performed in all material respects all of its obligations under
the Agreement throughout such [period] [year] and no default in the
performance of such obligations has occurred or is continuing except as set
forth in paragraph 5 below.
5. The following is a description of each default in the performance
of the Servicer's obligations under the provisions of the Agreement known
to us to have
<PAGE>
2
been made by the Servicer during [the period from the initial Closing Date
through] [the year ended] December 31, , which sets forth in detail the
(a) nature of each default, (b) the action taken by the Servicer, if any,
to remedy each such default and (c) the current status of each such
default: [If applicable, insert "None."]
Capitalized terms used by not defined herein are used as defined in
the Agreement.
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Certificate this day of , .
____________________________
Name:
Title:
____________________________
Name:
Title:
<PAGE>
EXHIBIT D-1
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"). NEITHER THIS CERTIFICATE NOR ANY PORTION
HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE PROVISIONS OF ANY STATE BLUE SKY
OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION
PROVISIONS. THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN CONDITIONS
SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A
BENEFIT PLAN (AS DEFINED BELOW)./*/
- ----------
/*/The following should be inserted in any Certificate bearing such legend:
The [Certificates] may not be acquired by or for the account of any employee
benefit plan, trust or account, including an individual retirement account, that
is subject to the Employee Retirement Income Security Act of 1974, as amended,
or that is described in Section 4975(e)(1) of the Internal Revenue Code of 1986,
as amended, or an entity whose underlying assets include plan assets by reason
of a plan's investment in such entity (a "Benefit Plan"). By accepting and
holding this Certificate, the Holder hereof shall be deemed to have represented
and warranted that it is not a Benefit Plan. By acquiring any interest in this
Certificate, the applicable Certificate Owner or Owners shall be deemed to have
represented and warranted that it or they are not Benefit Plans.
<PAGE>
EXHIBIT D-2
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A
BENEFIT PLAN (AS DEFINED BELOW)./*/
- ----------
/*/The following should be inserted in any Certificate bearing such legend:
The [Certificates] may not be acquired by or for the account of any employee
benefit plan, trust or account, including an individual retirement account, that
is subject to the Employee Retirement Income Security Act of 1974, as amended,
or that is described in Section 4975(e)(1) of the Internal Revenue Code of 1986,
as amended, or an entity whose underlying assets include plan assets by reason
of a plan's investment in such entity (a "Benefit Plan"). By accepting and
holding this Certificate, the Holder hereof shall be deemed to have represented
and warranted that it is not a Benefit Plan. By acquiring any interest in this
Certificate, the applicable Certificate Owner or Owners shall be deemed to have
represented and warranted that it or they are not Benefit Plans.
<PAGE>
EXHIBIT F-1
[FORM OF CLEARANCE SYSTEM CERTIFICATE
TO BE GIVEN TO THE TRUSTEE BE
EUROCLEAR OR CEDEL FOR
DELIVERY OF DEFINITIVE CERTIFICATES
IN EXCHANGE FOR A PORTION OF A
TEMPORARY GLOBAL SECURITY]
VOLKSWAGEN CREDIT AUTO MASTER TRUST
[ ] Dealer Loan
-------------------------
Backed Certificates, Series [ ]
----------------------------------
[Insert title or sufficient description
of Certificates to be delivered]
We refer to that portion of the temporary Global Certificate in
respect of the above-captioned issue which is herewith submitted to be exchanged
for definitive Certificates (the "Submitted Portion") as provided in the Pooling
and Servicing Agreement dated as of February 29, 1996 (as amended and
supplemented, the "Agreement"), in respect of such issue. This is to certify
that (i) we have received a certificate or certificates, in writing or by tested
telex, with respect to each of the persons appearing in our records as being
entitled to a beneficial interest in the Submitted Portion and with respect to
such persons beneficial interest either (a) from such person, substantially in
the form of Exhibit F-2 to the Agreement, or (b) from [ ],
substantially in the form of Exhibit F-3 to the Agreement, and (ii) the
Submitted Portion includes no part of the temporary Global Certificate excepted
in such certificates.
We further certify that as of the date hereof we have not received any
notification from any of the persons giving such certificates to the effect that
the statements made by them with respect to any part of the Submitted Portion
are no longer true and cannot be relied on as of the date hereof.
We understand that this certificate is required in connection with
certain securities and tax laws in the United States of America. If
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we
<PAGE>
2
irrevocably authorize you to produce this certificate or a copy thereof to any
interested party in such proceedings.
Dated: /1/ [Morgan Guaranty Trust, Company
- of New York, Brussels office, as operator of the
Euroclear System]/2/
-
[CEDEL BANK, societe anonyme]2/
------- ------- -
by
______________________________
- ----------
/1/To be dated on the Exchange Date.
-
/2/Delete the inappropriate reference.
-
<PAGE>
EXHIBIT F-2
[FORM OF CERTIFICATE TO BE DELIVERED
TO EUROCLEAR OR CEDEL
BY [ ]
WITH RESPECT TO REGISTERED CERTIFICATES SOLD TO
QUALIFIED INSTITUTIONAL BUYERS]
VOLKSWAGEN CREDIT AUTO MASTER TRUST
[ ] Dealer Loan
--------------------------
Backed Certificates, Series [ ]
----------------------------------
In connection with the initial issuance and placement of the above
referenced Dealer Loan Backed Certificates (the "Certificates"), an
institutional investor in the United States ("institutional investor") is
purchasing U.S. $[ ] aggregate principal amount of the Certificates
held in our account at [Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System] [Cedel Bank S.A.] on behalf of such
investor.
We reasonably believe that such institutional investor is a qualified
institutional buyer as such term is defined under Rule 144A of the Securities
Act of 1933, as amended.
[We understand that this certificate is required in connection with
United States laws. We irrevocably authorize you to produce this certificate or
a copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered by this certificate.]
The Definitive Certificates in respect of this certificate are to be
issued in registered form in the minimum denomination of U.S. $500,000 and such
Definitive Certificates (and, unless the Pooling and Servicing Agreement or
Supplement relating to the Certificates otherwise provides, any Certificates
issued in exchange or substitution for or on registration of transfer of
Certificates) shall bear the following legend:
"THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933. NEITHER THIS CERTIFICATE NOR ANY PORTION HEREOF
MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO
U.S. PERSONS (EACH AS DEFINED HEREIN), EXCEPT IN COMPLIANCE WITH THE
<PAGE>
2
REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM SUCH REGISTRATION PROVISIONS. THE TRANSFER OF THIS CERTIFICATE IS
SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. THIS CERTIFICATE CANNOT BE EXCHANGED FOR A
BEARER CERTIFICATE."
Dated: [ ]
by
______________________________
Authorized Officer
<PAGE>
EXHIBIT F-3
[FORM OF CERTIFICATE TO BE DELIVERED
TO EUROCLEAR OR CEDEL
BY A BENEFICIAL OWNER OF CERTIFICATES,
OTHER THAN A QUALIFIED INSTITUTIONAL BUYER]
VOLKSWAGEN CREDIT AUTO MASTER TRUST
[ ] Dealer Loan
--------------------------
Backed Certificates, Series [ ]
----------------------------------
This is to certify that as of the date hereof and except as provided
in the third paragraph hereof, the above-captioned Certificates held by you for
our account (i) are not owned by a person that is a United States person, (ii)
are owned by a United States person that is (A) the foreign branch of a United
States financial institution (as defined in U.S. Treasury Regulations Section
1.165-12(c)(1)(v)) (a "financial institution") purchasing for its own account or
for resale, or (B) a United States person who acquired the Certificates through
the foreign branch of a financial institution and who holds the Certificates
through the financial institution on the date hereof (and in either case (A) or
(B), the financial institution hereby agrees to comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) are owned by a financial
institution for purposes of resale during the Restricted Period (as defined in
U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)). In addition,
financial institutions described in clause (iii) of the preceding sentence
(whether or not also described in clause (i) or (ii)) certify that they have not
acquired the Certificates for purposes of resale directly or indirectly to a
United States person or to a person within the United States or its possessions.
We undertake to advise you by tested telex if the above statement as
to beneficial ownership is not correct on the date of delivery of the above-
captioned Certificates in bearer form with respect to such of said Certificates
as then appear in your books as being held for our account.
This certificate excepts and does not relate to U.S. $[ ]
principal amount of Certificates held by you for our account, as to which we are
not yet able to certify beneficial ownership. We understand that delivery of
Definitive Certificates in such principal amount cannot be made until we are
able to so certify.
<PAGE>
2
We understand that this certificate is required in connection with
certain securities and tax laws in the United States of America. If
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate or a copy thereof to any interested party in
such proceedings. As used herein, "United States" means the United States of
America (including the States and the District of Columbia), its territories,
its possessions and other areas subject to its jurisdiction; and "United States
Person" means a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States, or any political subdivision thereof, or an estate or trust the
income of which is subject to United States federal income taxation regardless
of its source.
Dated: /1/ By ____________________________
- As, or as agent for, the
beneficial owner(s) of the
interest in the Certificates
to which this certificate
relates.
- ----------
/1/This Certificate must be dated on the earlier of the date of the first actual
-
payment of interest in respect of the Certificates and the date of the delivery
of the Certificates in definitive form.
<PAGE>
EXHIBIT G-1
FORM OF OPINION OF COUNSEL
Provisions to be Included in
----------------------------
Opinion of Counsel Delivered Pursuant
-------------------------------------
to Section 13.02(d)(i)
----------------------
(a) The Amendment to the [Pooling and Servicing Agreement]
[Supplement], attached hereto as Schedule 1 (the "Amendment"), has been duly
authorized, executed and delivered by the Seller and constitutes the legal,
valid and binding agreement of the Seller, enforceable in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally from time to time in effect. The enforceability of the
Seller's obligations is also subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
(b) The Amendment has been entered into in accordance with the terms
and provisions of Section 13.01 of the Pooling and Servicing Agreement.
<PAGE>
EXHIBIT G-2
FORM OF OPINION OF COUNSEL
Provisions to be Included in Opinion of Counsel to be
-----------------------------------------------------
Delivered Pursuant to Section 13.02(d)(ii) and (iii)/*/
-------------------------------------------------------
The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the opinion of counsel
to Volkswagen Credit Auto Receivables Company (the "Seller") delivered on any
Closing Date. Capitalized terms used but not defined herein are used as defined
in the Pooling and Servicing Agreement, dated as of February 29, 1996 (as
amended and supplemented, the "Agreement"), among the Seller, as seller, VW
Credit, Inc., as servicer, and Citibank, N.A., as trustee.
[(a) The Assignment has been duly authorized, executed and delivered
by the Seller, and constitutes the valid and legally binding obligation of the
Seller, enforceable against the Seller in accordance with its terms.]
(b) Assuming the Receivables [in the Additional Accounts] are created
under, and are evidenced solely by, Floorplan Financing Agreements, such
Receivables will constitute "chattel paper" as defined under Section 9-105 of
the UCC. We note that the Seller has given us an Officer's Certificate to the
effect that the Receivables are created under Floorplan Financing Agreements.
(c) If the transfer of the Receivables [in the Additional Accounts]
and all [of the related] Collateral Security to the Trust pursuant to the
Pooling and Servicing Agreement constitutes a true sale of such Receivables and
Collateral Security to the Trust:
(i) with respect to such Receivables and Collateral Security in
existence on the date hereof, such sale transfers all of the right, title
and interest of the Seller in and to such Receivables and Collateral
Security to the Trust, free and clear of any liens now existing or
hereafter created, but subject to
- ----------
/*/Include bracketed language only in the case of additions of Accounts effected
-
pursuant to Section 2.05 of the Pooling and Servicing Agreement which
requires delivery of an Opinion of Counsel to that effect.
<PAGE>
2
the rights of the Seller as holder of the VWCARC Certificate;
(ii) with respect to such Receivables and Collateral Security which
come into existence after the date hereof, upon the creation of such
Receivables and Collateral Security and the subsequent transfer of such
Receivables and Collateral Security to the Trust in accordance with the
Pooling and Servicing Agreement and receipt by the Seller of the
consideration therefor required pursuant to the Pooling and Servicing
Agreement, such sale will transfer all of the right, title and interest of
the Seller in and to such Receivables and Collateral Security to the Trust
free and clear of any liens but subject to the rights of the Seller as
holder of the VWCARC Certificate;
and, in either case, no further action will thereafter be required under
Michigan or federal law to protect the Trust's ownership interest in the
Receivables and the Collateral Security against creditors of, or subsequent
purchasers from, the Seller.
(d) If the transfer of the Receivables and Collateral Security to the
Trust pursuant to the Pooling and Servicing Agreement does not constitute a true
sale of the Receivables and the Collateral Security to the Trust, then the
Pooling and Servicing Agreement as amended and supplemented by the Assignment
creates a valid security interest in favor of the Trustee, for the benefit of
the Certificateholders, in the Seller's right, title and interest in and to the
Receivables and the Collateral Security and the proceeds thereof securing the
obligations of the Seller thereunder. Financing statements on form UCC-1 having
been filed in the offices of the Secretaries of State of the States of Michigan
and [other applicable states] and accordingly, such security interest
constitutes a perfected security interest in such Receivables and Collateral
Security and the proceeds thereof subject to no prior liens, enforceable as such
against creditors of, and subsequent purchasers from, the Seller, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws relating to or affecting creditors' rights generally and to general
equity principles.
<PAGE>
EXHIBIT H
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
(As required by Section 2.07 of the Pooling and
Servicing Agreement referred to below)
REASSIGNMENT NO. OF RECEIVABLES, dated as of ,
, by and between VOLKSWAGEN CREDIT AUTO RECEIVABLES CORPORATION,
a corporation organized under the laws of the State of Delaware
(the "Seller"), and Citibank, N.A., as trustee (the "Trustee"),
pursuant to the Pooling and Servicing Agreement referred to
below.
W I T N E S S E T H:
WHEREAS the Seller, VW Credit, Inc., as servicer (the "Servicer"), and
the Trustee are parties to the Pooling and Servicing Agreement dated as of
February 29, 1996 (as amended or supplemented, the "Agreement");
WHEREAS, pursuant to the Agreement, the Seller wishes to remove all
Receivables from certain Accounts and the Collateral Security thereof (the
"Removed Accounts") and to cause the Trustee to reconvey the Receivables of such
Removed Accounts and such Collateral Security, whether now existing or hereafter
created, from the Trust to the Seller (as each such term is defined in the
Agreement); and
WHEREAS the Trustee is willing to accept such designation and to
reconvey the Receivables in the Removed Accounts and such Collateral Security
subject to the terms and conditions hereof.
NOW, THEREFORE, the Seller and the Trustee hereby agree as follows:
1. Defined Terms. All terms defined in the Agreement and used herein
--------------
shall have such defined meanings when used herein, unless otherwise defined
herein.
"Removal Date" shall mean, with respect to the Removed Accounts
------------
designated hereby, , .
2. Designation of Removed Accounts. On or before the fifth Business
--------------------------------
Day after the Removal Date, the Seller
<PAGE>
2
shall deliver to the Trustee a computer file or microfiche or written list
containing a true and complete list of the Removed Accounts, specifying for each
Account, as of the Removal Date, its account number and the aggregate amount of
Principal Receivables outstanding in such Account. Such list shall be marked as
Schedule 1 to this Reassignment and shall be incorporated into and made a part
of this Reassignment as of the Removal Date and shall amend Schedule 1 to the
Agreement.
3. Conveyance of Receivables and Accounts. (a) The Trustee does
---------------------------------------
hereby transfer, assign, set over and otherwise convey to the Seller, without
recourse, representation or warranty on and after the Removal Date, all right,
title and interest of the Trust in, to and under all Receivables now existing at
the close of business on the Removal Date and thereafter created from time to
time until the termination of the Trust in Removed Accounts designated hereby,
all Collateral Security thereof, all monies due or to become due and all amounts
received with respect thereto (including all Non-Principal Receivables) and all
proceeds (as defined in Section 9-306 of the UCC as in effect in the State of
Michigan and Recoveries) thereof relating thereto.
(b) If requested by the Seller, in connection with such transfer, the
Trustee agrees to execute and deliver to the Seller on or prior to the date of
this Reassignment, a termination statement with respect to the Receivables
existing at the close of business on the Removal Date and thereafter created
from time to time and Collateral Security thereof in the Removed Accounts
reassigned hereby (which may be a single termination statement with respect to
all such Receivables and Collateral Security) evidencing the release by the
Trust of its lien on the Receivables in the Removed Accounts and the Collateral
Security, and meeting the requirements of applicable state law, in such manner
and such jurisdictions as are necessary to remove such lien.
4. Representations and Warranties of the Seller. The Seller hereby
---------------------------------------------
represents and warrants to the Trustee, on behalf of the Trust, as of the date
of this Reassignment and as of the Removal Date:
(a) Legal, Valid and Binding Obligation. This Reassignment
------------------------------------
constitutes a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy,
<PAGE>
3
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights
generally and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in equity);
(b) No Early Amortization Event or Reinvestment Event. The removal
--------------------------------------------------
of the Accounts hereby removed shall not, in the reasonable belief of the
Seller, cause an Early Amortization Event or Reinvestment Event to occur or
cause the Pool Balance to be less than the Required Participation Amount;
(c) Selection Procedures. No selection procedures reasonably
---------------------
believed by the Seller to be adverse to the interests of the Beneficiaries
were utilized in selecting the Accounts removal hereby; and
(d) True and Complete List. The list of Removed Accounts to be
-----------------------
delivered pursuant to Section 2 of this Assignment will be, as of the
Removal Date, true and complete in all material respects;
provided, however, that in the event that the removal on such Removal Date
- -------- -------
relates solely to Ineligible Accounts, the Seller shall be deemed to make only
the representations and warranties contained in paragraph 4(a) above.
5. Conditions Precedent. In addition to the conditions precedent set
---------------------
forth in Section 2.07 of the Agreement, the obligation of the Trustee to execute
and deliver this Reassignment is subject to the satisfaction, on or prior to the
Removal Date, of the following additional condition precedent:
Officers' Certificate. The Seller shall have delivered to the Trustee
----------------------
an Officers' Certificate certifying that (i) as of the Removal Date, all
requirements set forth in Section 2.07 of the Agreement for designating Removed
Accounts and reconveying the Receivables of such Removed Accounts and the
Collateral Security, whether existing at the close of business on the Removal
Date or thereafter created from time to time until the termination of the Trust,
have been satisfied, and (ii) each of the representations and warranties made by
the Seller in Section 4 hereof is true and correct as of the date of this
Reassignment and as of the Removal Date. The Trustee may
<PAGE>
4
conclusively rely on such Officers' Certificate, shall have no duty to make
inquires with regard to the matters set forth therein and shall incur no
liability in so relying.
6. Ratification of Agreement. As supplemented by this Reassignment,
--------------------------
the Agreement is in all respects ratified and confirmed and the Agreement as so
supplemented by this Reassignment shall be read, taken and construed as one and
the same instrument.
7. Counterparts. This Reassignment may be executed in two or more
-------------
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
8. GOVERNING LAW. THIS REASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
--------------
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
<PAGE>
5
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the undersigned have caused this Reassignment to
be duly executed and delivered by their respective duly authorized officers on
the day and year first above written.
VOLKSWAGEN CREDIT AUTO RECEIVABLES CORPORATION,
as Seller,
by
--------------------------------
Name:
Title:
Citibank, N.A., as Trustee,
by
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT I
RECEIVABLES PURCHASE AGREEMENT, dated as of February 29,
1996, between VOLKSWAGEN CREDIT AUTO RECEIVABLES CORPORATION, a
corporation organized under the laws of the State of Delaware
(the "Buyer"), and VW CREDIT, INC., a corporation organized under
the laws of the State of Delaware (the "Seller").
W I T N E S S E T H :
WHEREAS the Seller in the ordinary course of its business finances the
purchase of floorplan inventory by automotive dealers thereby generating certain
payment obligations;
WHEREAS the Seller wishes to sell certain of such existing and future
payment obligations from time to time to the Buyer; and
WHEREAS the Buyer desires to sell such payment obligations to
Volkswagen Credit Auto Master Trust, pursuant to a Pooling and Servicing
Agreement dated as of February 29, 1996 (as the same may from time to time be
amended, supplemented or otherwise modified, the "Pooling and Servicing
Agreement"), among the Buyer, as seller, the Seller, as servicer, and Citibank,
N.A., as trustee (the "Trustee").
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.01. Certain Defined Terms. Capitalized terms used herein
----------------------
but not otherwise defined shall have the meanings set forth in the Pooling and
Servicing Agreement. In addition, the term "Agreement" means this Receivables
Purchase Agreement, as the same may from time to time be amended, supplemented
or otherwise modified.
SECTION 1.02. Other Definitional Provisions. The words "hereof",
------------------------------
"herein" and "hereunder" and words of
<PAGE>
2
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Article,
section, subsection, schedule, and exhibit references are to this Agreement
unless otherwise specified.
ARTICLE II
Conveyance of Receivables
-------------------------
SECTION 2.01. Conveyance of Receivables. By execution of this
--------------------------
Agreement, the Seller does hereby sell, transfer, assign, set over and otherwise
convey, without recourse (except as expressly provided herein), to the Buyer on
the first Closing Date, in the case of Initial Accounts, and on the applicable
Addition Date, in the case of Additional Accounts, all of its right, title and
interest in, to and under the Receivables in each Account and all Collateral
Security with respect thereto owned by the Seller at the close of business on
the Cut-Off Date, in the case of the Initial Accounts, and on the applicable
Additional Cut-Off Date, in the case of Additional Accounts, and all monies due
or to become due and all amounts received with respect thereto and all proceeds
(including "proceeds" as defined in Section 9-306 of the UCC as in effect in the
State of Michigan and Recoveries) thereof. Subject to Article VI, as of each
Business Day prior to the earlier of (x) the occurrence of an Early Amortization
Event specified in Section 9.01(a), (b), (c), or (d) of the Pooling and
Servicing Agreement and (y) the Trust Termination Date, on which Receivables are
created in the Accounts (a "Transfer Date"), the Seller does hereby sell,
-------------
transfer, assign, set over and otherwise convey, without recourse (except as
expressly provided herein), to the Buyer, all of its right, title and interest
in, to and under the Receivables in each Account (other than any Receivables
created in any Account from and after the applicable Removal Date) and all
Collateral Security with respect thereto owned by the Seller at the close of
business on such Transfer Date and not theretofore conveyed to the Buyer, all
monies due or to become due and all amounts received with respect thereto and
all proceeds (including "proceeds" as defined in Section 9-306 of the UCC as in
effect in the State of Michigan and Recoveries) thereof. The foregoing sale,
transfer, assignment, set-over and conveyance and any subsequent sales,
transfers, assignments, set-overs and conveyances do not constitute, and are not
intended to
<PAGE>
3
result in, the creation or an assumption by the Buyer of any obligation of the
Servicer, VWCI, the Seller, VWA or any other Person in connection with the
Accounts, the Receivables or under any agreement or instrument relating thereto,
including any obligation to any Dealers.
In connection with such sales, the Seller agrees to record and file,
at its own expense, a financing statement on form UCC-1 (and continuation
statements when applicable) naming the Seller as "seller" and the Buyer as
"buyer" thereon with respect to the Receivables now existing and hereafter
created for the sale of chattel paper (as defined in Section 9-105 of the UCC as
in effect in any state where the Seller's or the Servicer's chief executive
offices or books and records relating to the Receivables are located) meeting
the requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect the sale and assignment of the
Receivables and the Collateral Security to the Buyer, and to deliver a
filestamped copy of such financing statements or other evidence of such filing
to the Buyer on or prior to the first Closing Date, in the case of Initial
Accounts, and (if any additional filing is so necessary) as soon as practicable
after the applicable Addition Date, in the case of Additional Accounts. In
addition, the Seller shall cause to be timely filed in the appropriate filing
office any UCC-1 financing statement and continuation statement necessary to
perfect any sale of Receivables to the Seller. The Buyer shall be under no
obligation whatsoever to file such financing statement, or a continuation
statement to such financing statement, or to make any other filing under the UCC
in connection with such sales. The parties hereto intend that the transfers of
Receivables effected by this Agreement be sales.
In connection with such sales, the Seller further agrees, at its own
expense, (a) on or prior to the first Closing Date, in the case of Initial
Accounts, the applicable Addition Date, in the case of Additional Accounts, and
the applicable Removal Date, in the case of Removed Accounts, to indicate in its
computer files that the Receivables created in connection with the Accounts
(other than Removed Accounts) have been sold, and the Collateral Security
assigned, by the Seller to the Buyer pursuant to this Agreement and sold by the
Buyer to the Trust pursuant to the Pooling and Servicing Agreement for the
benefit of the Certificateholders and the other Beneficiaries and (b) on or
prior to the first Closing Date, in the case of
<PAGE>
4
Initial Accounts, the applicable Addition Date, in the case of Additional
Accounts, and the date that is five Business Days after the applicable Removal
Date, in the case of Removed Accounts, to deliver to the Buyer a computer file
or microfiche or written list containing a true and complete list of all such
Accounts (other than Removed Accounts) specifying for each such Account, as of
the Cut-Off Date, in the case of Initial Accounts, the applicable Additional
Cut-Off Date, in the case of Additional Accounts, and the Removal Date, in the
case of Removed Accounts (i) its account number, (ii) the outstanding balance of
the Receivables in such Account and (iii) the aggregate amount of Principal
Receivables in such Account. Such file or list, as supplemented from time to
time to reflect Additional Accounts and Removed Accounts, shall be marked as
Schedule 1 to this Agreement and is hereby incorporated into and made a part of
this Agreement.
In consideration for the sale of Receivables, together with the
related Collateral Security, sold to the Buyer on first Closing Date, the Buyer
shall pay to the Seller $370,453,125 in cash. Subject to Article VI, the
purchase price for the Receivables sold by the Seller to the Buyer on each
Addition Date and on each Transfer Date thereafter shall be a price agreed to by
the Buyer and the Seller at the time of acquisition by the Buyer, which price
shall not, in the opinion of the Buyer, be materially less favorable to the
Buyer than prices for transactions of a generally similar character at the time
of the acquisition taking into account the quality of such Receivables and other
pertinent factors; provided that such consideration shall in any event not be
--------
less than reasonably equivalent value therefor.
SECTION 2.02. Representations and Warranties of the Seller Relating
-----------------------------------------------------
to the Seller and the Agreement. The Seller hereby represents and warrants to
- --------------------------------
the Buyer as of each Closing Date that:
(a) Organization and Good Standing. The Seller is a corporation duly
-------------------------------
organized and validly existing and in good standing under the law of the
State of Delaware and has, in all material respects, full corporate power,
authority and legal right to own its properties and conduct its business as
such properties are presently owned and such business is presently
conducted, and to execute, deliver and perform its obligations under this
Agreement.
<PAGE>
5
(b) Due Qualification. The Seller is duly qualified to do business and,
------------------
where necessary, is in good standing as a foreign corporation (or is exempt
from such requirement) and has obtained all necessary licenses and
approvals in each jurisdiction in which the conduct of its business
requires such qualification except where the failure to so qualify or
obtain licenses or approvals would not have a material adverse effect on
its ability to perform its obligations hereunder.
(c) Due Authorization. The execution and delivery of this Agreement
------------------
and the consummation of the transactions provided for or contemplated by
this Agreement have been duly authorized by the Seller by all necessary
corporate action on the part of the Seller.
(d) No Conflict. The execution and delivery of this Agreement, the
------------
performance of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof, will not conflict with, result in any
breach of any of the material terms and provisions of, or constitute (with
or without notice or lapse of time or both) a material default under, any
indenture, contract, agreement, mortgage, deed of trust, or other
instrument to which the Seller is a party or by which it or its properties
are bound.
(e) No Violation. The execution and delivery of this Agreement, the
-------------
performance of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof applicable to the Seller, will not conflict
with or violate any material Requirements of Law applicable to the Seller.
(f) No Proceedings. There are no proceedings or, to the best
---------------
knowledge of the Seller, investigations, pending or threatened against the
Seller, before any Governmental Authority (i) asserting the invalidity of
this Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking any
determination or ruling that, in the reasonable judgment of the Seller,
would materially and adversely affect the performance by the Seller of its
obligations under this Agreement, (iv) seeking any determination or ruling
that would materially and adversely affect the validity or
<PAGE>
6
enforceability of this Agreement or (v) seeking to affect adversely the
income tax attributes of the Trust under the United States Federal or any
state income, single business or franchise tax systems.
(g) All Consents Required. All appraisals, authorizations, consents,
----------------------
orders, approvals or other actions of any Person or of any governmental
body or official required in connection with the execution and delivery of
this Agreement, the performance of the transactions contemplated by this
Agreement, and the fulfillment of the terms hereof, have been obtained.
(h) Enforceability. This Agreement constitutes a legal, valid and
---------------
binding obligation of the Seller enforceable against the Seller in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or 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).
(i) Record of Accounts. As of the first Closing Date, in the case of
-------------------
Initial Accounts and, as of the applicable Addition Date, in the case of
the Additional Accounts, Schedule 1 to this Agreement is an accurate and
complete listing in all material respects of all the Accounts as of the
Cut-Off Date or the applicable Additional Cut-Off Date, as the case may be,
and the information contained therein with respect to the identity of such
Accounts and the Receivables existing thereunder is true and correct in all
material respects as of the Cut-Off Date or such applicable Additional Cut-
Off Date, as the case may be.
(j) Valid Transfer. This Agreement or, in the case of Additional
---------------
Accounts, the related Assignment constitutes a valid sale, transfer and
assignment to the Buyer of all right, title and interest of the Seller in
the Receivables and the Collateral Security and the proceeds thereof. Upon
the filing of the financing statements described in Section 2.01 with the
Secretary of State of the State of Michigan and, in the case of the
Receivables hereafter created and the proceeds thereof, upon the creation
thereof, the Buyer shall have a first priority perfected ownership
<PAGE>
7
interest in such property, except for Liens permitted under Section
2.05(a). Except as otherwise provided in the Pooling and Servicing
Agreement, neither the Seller nor any Person claiming through or under the
Seller has any claim to or interest in the Trust Assets.
The representations and warranties set forth in this Section 2.02
shall survive the transfer and assignment of the Receivables to the Buyer. Upon
discovery by the Seller or the Buyer of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice to the other party.
In the event of any breach of any of the representations and
warranties set forth in this Section 2.02 and if, in connection therewith, the
Buyer shall be obligated to purchase the Certificateholders' Interest pursuant
to Section 2.03 of the Pooling and Servicing Agreement, the Seller shall
repurchase the Receivables and the Collateral Security and shall pay to the
Buyer on the Business Day preceding the Distribution Date on which such purchase
of the Certificateholders' Interest is to be made an amount equal to the
purchase price for the Certificateholders' Interest as specified in the Pooling
and Servicing Agreement. The obligation of the Seller to purchase the
Receivables pursuant to this Section 2.02 shall constitute the sole remedy
against the Seller respecting an event of the type specified in the first
sentence of this Section 2.02 available to the Buyer and to the Investor
Certificateholders (or the Trustee on behalf of the Investor
Certificateholders).
SECTION 2.03. Representations and Warranties of the Seller Relating
-----------------------------------------------------
to the Receivables.
- -------------------
(a) Representations and Warranties. The Seller hereby represents and
-------------------------------
warrants to the Buyer that:
(i) Each Receivable and all Collateral Security existing on the first
Closing Date or, in the case of Additional Accounts, on the applicable
Addition Date, and on each Transfer Date, has been conveyed to the Buyer
free and clear of any Lien.
(ii) With respect to each Receivable and all Collateral Security
existing on the first Closing Date or, in the case of Additional Accounts,
on the applicable Addition Date, and on each Transfer Date,
<PAGE>
8
all consents, licenses, approvals or authorizations of or registrations or
declarations with any Governmental Authority required to be obtained,
effected or given by the Seller in connection with the conveyance of such
Receivable or Collateral Security to the Buyer have been duly obtained,
effected or given and are in full force and effect.
(iii) On the Cut-Off Date and each Closing Date, each Initial Account
is an Eligible Account and, in the case of Additional Accounts, on the
applicable Additional Cut-Off Date and each subsequent Closing Date, each
such Additional Account is an Eligible Account.
(iv) On the first Closing Date, in the case of the Initial Accounts,
and, in the case of the Additional Accounts, on the applicable Additional
Cut-Off Date, and on each Transfer Date, each Receivable conveyed to the
Buyer on such date is an Eligible Receivable or, if such Receivable is not
an Eligible Receivable, such Receivable is conveyed to the Buyer in
accordance with Section 2.07.
(b) Notice of Breach. The representations and warranties set forth
-----------------
in this Section 2.03 shall survive the transfer and assignment of the
Receivables to the Buyer. Upon discovery by the Seller or the Buyer of a
breach of any of the representations and warranties set forth in this
Section 2.03, the party discovering such breach shall give prompt written
notice to the other party.
(c) Repurchase. If any representation or warranty under Section
-----------
2.03(a) is not true and correct as of the date specified therein with
respect to any Receivable or Account and the Buyer is, in connection
therewith, required to purchase such Receivable or all Receivables in such
Account pursuant to Section 2.04(a) of the Pooling and Servicing Agreement,
then, within 30 days (or such longer period as may be agreed to by the
Buyer) of the earlier to occur of the discovery of any such event by the
Seller or the Buyer, or receipt by the Seller or the Buyer of written
notice of any such event given by the Trustee or any Enhancement Providers,
the Seller shall repurchase the Receivable or Receivables of which the
Buyer is required to accept reassignment pursuant to the Pooling and
Servicing
<PAGE>
9
Agreement on the Business Day preceding the Distribution Date on which such
reassignment is to occur.
The Seller shall purchase each such Receivable by making a payment to
the Buyer in immediately available funds on the Business Day preceding the
Distribution Date on which such reassignment is to occur in an amount equal to
the Purchase Price for such Receivable. Upon payment of the Purchase Price, the
Buyer shall automatically and without further action be deemed to sell,
transfer, assign, set over and otherwise convey to the Seller, without recourse,
representation or warranty, all the right, title and interest of the Buyer in
and to such Receivable, all Collateral Security and all monies due or to become
due with respect thereto and all proceeds thereof. The Buyer shall execute such
documents and instruments of transfer or assignment and take such other actions
as shall reasonably be requested by the Seller to effect the conveyance of such
Receivables pursuant to this Section. The obligation of the Seller to
repurchase any such Receivable shall constitute the sole remedy respecting the
event giving rise to such obligation available to the Buyer and to the
Certificateholders (or the Trustee on behalf of Certificateholders).
SECTION 2.04. Addition of Accounts. (a) The Seller may from time to
---------------------
time offer to voluntarily designate additional Eligible Accounts to be included
as Accounts, subject to the conditions specified in paragraph (b) below. If any
such offer is accepted by the Buyer, Receivables and Collateral Security from
such Additional Accounts shall be sold to the Buyer effective on a date (the
"Addition Date") specified in a written notice provided by the Seller (or the
- --------------
Servicer on its behalf) to the Buyer and any Enhancement Providers specifying
the Additional Cut-Off Date and the Addition Date for such Additional Accounts
(the "Addition Notice") on or before the fifth Business Day but not more than
---------------
30th day prior to the related Addition Date (the "Notice Date").
-----------
(b) The Seller shall be permitted to convey to the Buyer the
Receivables and all Collateral Security related thereto in any Additional
Accounts designated by the Seller as such pursuant to Section 2.04(a) only upon
satisfaction of each of the following conditions on or prior to the related
Addition Date (provided that the Seller shall be automatically permitted to
--------
designate Additional Accounts to be conveyed to the Buyer without regard to
clauses (i),
<PAGE>
10
(vi), (vii), (viii) and (ix) below if the percentage derived by dividing the
aggregate balance of all Receivables arising in Additional Accounts added during
the then-current fiscal year by the Pool Balance at the beginning of such fiscal
year (or, if the initial Closing Date after the beginning of such fiscal year,
the initial Closing Date) is less than 20% at such time, or if the percentage
derived by dividing the aggregate balance of all Receivables arising in
Additional Accounts added during the then-current fiscal quarter by the Pool
Balance at the beginning of such quarter (or, if the initial Closing Date occurs
after the beginning of such fiscal quarter, the initial Closing Date) is less
than 10% at any time):
(i) the Seller shall have provided the Buyer and any Enhancement
Providers with a timely Addition Notice;
(ii) such Additional Accounts shall all be Eligible Accounts;
(iii) the Seller shall have delivered to the Buyer a duly executed
written assignment (including an acceptance by the Buyer) in substantially
the form of Exhibit A (the "Assignment") and the computer file microfiche
----------
or written list required to be delivered pursuant to Section 2.01;
(iv) the Seller shall have delivered to the Buyer for deposit in the
Collection Account all Collections with respect to such Additional Accounts
since the Additional Cut-Off Date;
(v) (A) no selection procedures reasonably believed by the Seller to
be adverse to the interests of the Buyer or the Beneficiaries were used in
selecting such Additional Accounts; (B) the list of Additional Accounts
delivered pursuant to clause (iii) above is true and correct in all
material respects as of the Additional Cut-Off Date; and (C) as of each of
the Notice Date and the Addition Date, neither the Seller nor the Buyer was
insolvent nor will either of them have been made insolvent by such transfer
nor are either of them aware of any pending insolvency;
(vi) unless the Buyer is required to transfer Receivables in
Additional Accounts to the Trust pursuant to Section 2.05(a) of the Pooling
and
<PAGE>
11
Servicing Agreement, the Rating Agency Condition shall have been satisfied
with respect to such transfer;
(vii) the addition of the Receivables arising in such Additional
Accounts shall not result in the occurrence of an Early Amortization Event
or Reinvestment Event;
(viii) the Seller shall have delivered to the Buyer and any
Enhancement Providers a certificate of a Vice President or more senior
officer confirming (A) the items set forth in paragraphs (ii) through (vii)
above and (B) that the Seller reasonably believes that the addition of the
Receivables arising in such Additional Accounts will not result in an
occurrence of an Early Amortization Event or Reinvestment Event with
respect to any Series; and
(ix) on or before each Addition Date, the Seller shall deliver to the
Buyer and any Enhancement Providers who have delivered a written request
therefor, an opinion of counsel with respect to the Receivables in the
Additional Accounts substantially in the form of Exhibit B.
(c) The Seller hereby represents and warrants as of the applicable
Addition Date as to the matters set forth in Section 2.04(b)(v). The
representations and warranties set forth in Section 2.04(b)(v) shall survive the
sale and assignment of the respective Receivables and Collateral Security to the
Buyer. Upon discovery by the Seller or the Buyer of a breach of any of the
foregoing representations and warranties, the party discovering the breach shall
give prompt written notice to the other party and to any Enhancement Providers.
SECTION 2.05. Covenants of the Seller. The Seller hereby covenants
------------------------
that:
(a) No Liens. Except for the conveyances hereunder, the Seller will
---------
not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on, any Receivable or any
Collateral Security, whether now existing or hereafter created, or any
interest therein, and the Seller shall defend the right, title and interest
of the Buyer and the Trust in, to and under the Receivables and the
Collateral Security, whether now
<PAGE>
12
existing or hereafter created, against all claims of third parties claiming
through or under the Seller.
(b) Floorplan Financing Agreements and Guidelines. The Seller shall
----------------------------------------------
comply with and perform its servicing obligations with respect to the
Accounts and Receivables in accordance with the Floorplan Financing
Agreements relating to the Accounts and the Floorplan Financing Guidelines,
except insofar as any failure to so comply or perform would not materially
and adversely affect the rights of the Trust or any of the Beneficiaries.
Subject to compliance with all Requirements of Law, the Seller may change
the terms and provisions of the Floorplan Financing Agreement or the
Floorplan Financing Guidelines in any respect (including the calculation of
the amount or the timing of charge-offs and the rate of the finance charge
assessed thereon) only if such change would be permitted pursuant to
Section 3.01(d) of the Pooling and Servicing Agreement.
(c) Account Allocations. If the Seller is unable for any reason to
--------------------
transfer Receivables to the Buyer then the Seller agrees that it shall
allocate, after the occurrence of such event, payments on each Account with
respect to the principal balance of such Account first to the oldest
principal balance of such Account and to have such payments applied as
Collections in accordance with the terms of the Pooling and Servicing
Agreement. The parties hereto agree that Interest Receivables, whenever
created, accrued in respect of Principal Receivables which have been
conveyed to the Buyer and by the Buyer to the Trust shall continue to be a
part of the Trust notwithstanding any cessation of the transfer of
additional Principal Receivables to the Buyer and Collections with respect
thereto shall continue to be allocated and paid in accordance with Article
IV of the Pooling and Servicing Agreement.
(d) Delivery of Collections. If the Seller receives Collections, the
------------------------
Seller agrees to pay the Servicer or any Successor Servicer all payments
received by the Seller in respect of the Receivables as soon as practicable
after receipt thereof by the Seller, but in no event later than two
Business Days after the receipt by the Seller thereof.
<PAGE>
13
(e) Notice of Liens. The Seller shall notify the Buyer and the
----------------
Trustee promptly after becoming aware of any Lien on any Receivable other
than the conveyances hereunder or under the Pooling and Servicing
Agreement.
(f) Compliance with Law. The Seller hereby agrees to comply in all
--------------------
material respects with all Requirements of Law applicable to the Seller.
(g) Other Security Interests. The Seller agrees that it will not
-------------------------
realize upon any security interest in any Vehicle or Non-Vehicle Collateral
Security that it may have in respect of advances or loans to Dealers, other
than the related Receivable, until the Trust has fully realized on its
security interest in such Vehicle or Non-Vehicle Collateral Security and
that it will not exercise any right to set off amounts on deposit in the
Cash Management Account of any Dealer with regard to claims unrelated to
the Receivables of such Dealer.
SECTION 2.06. Removal of Accounts. (a) On each Determination Date on
--------------------
which Accounts are removed from the Trust pursuant to Section 2.07 of the
Pooling and Servicing Agreement, the Buyer shall be deemed to have offered to
the Seller automatically and without notice to or action by or on behalf of the
Buyer, the right to remove Accounts from the operation of this Agreement in the
manner prescribed in Section 2.06(b). To accept such offer and remove Accounts,
the Seller (or the Servicer on its behalf) shall take the following actions and
make the following determinations:
(i) on or before the fifth Business Day prior to the Removal Date,
furnish to the Buyer, the Trustee, any Enhancement Providers and the Rating
Agencies a written notice (the "Removal Notice") specifying the
--------------
Determination Date (which may be the Determination Date on which such
notice is given) on which removal of the Receivables of one or more
Accounts (the "Removed Accounts") will occur (a "Removal Date");
---------------- ------------
(ii) from and after such Removal Date, cease to transfer to the Buyer
any and all Receivables arising in such Removed Accounts;
(iii) represent and warrant that the removal of any such Account on
any Removal Date shall not, in the reasonable belief of the Seller, cause
an Early Amortization Event or Reinvestment Event to occur or
<PAGE>
14
cause the Pool Balance to be less than the Required Participation Amount;
(iv) represent and warrant that no selection procedures reasonably
believed by the Seller to be adverse to the interests of the Beneficiaries
were utilized in selecting the Removed Accounts;
(v) represent and warrant that such removal will not result in a
reduction or withdrawal of the rating of any outstanding Series or Class by
the applicable Rating Agency;
(vi) on or before the related Removal Date, deliver to the Trustee,
any Agent and any Enhancement Providers an Officers' Certificate confirming
the items set forth in clauses (iii) through (v) above and confirming that
the Seller reasonably believes that the removal of the Removed Accounts
will not result in the occurrence of an Early Amortization Event or
Reinvestment Event with respect to any Series; VWCARC may conclusively rely
on such Officers' Certificate and shall have no duty to make inquiries with
regard to the matters set forth therein and shall incur no liability in so
relying.
(vii) on or before the fifth Business Day after the Removal Date,
furnish to the Buyer a computer file, microfiche list or other list of the
Removed Accounts that were removed on the Removal Date, specifying for each
Removed Account as of the Removal Date its account number, the outstanding
balance of Receivables in such Account and the aggregate amount of
Principal Receivables therein and represent that such computer file,
microfiche list or other list of the Removed Accounts is true and complete
in all material respects.
(c) Subject to Section 2.06(b), on the Removal Date with respect to
any such Removed Account, such Removed Account shall be deemed removed from
operation of this Agreement for all purposes. After the Removal Date and upon
the written request of the Servicer, the Buyer shall deliver to the Seller a
reassignment in substantially the form of Exhibit D (the "Reassignment").
------------
SECTION 2.07. Sale of Ineligible Receivables. The Seller shall sell
-------------------------------
to the Buyer on each Transfer Date any and all Receivables arising in any
Eligible Accounts that
<PAGE>
15
are Ineligible Receivables, provided that on the Cut-Off Date or, in the case of
--------
Receivables arising in Additional Accounts, on the related Additional Cut-Off
Date, and on the applicable Transfer Date, the Account in which such Receivables
arise is an Eligible Account.
ARTICLE III
Administration and Servicing
----------------------------
of Receivables
--------------
SECTION 3.01. Acceptance of Appointment and Other Matters Relating to
-------------------------------------------------------
the Servicer. (a) The Seller agrees to act as the Servicer under this
- -------------
Agreement and the Pooling and Servicing Agreement, and the Buyer consents to the
Seller acting as Servicer. The Seller will have ultimate responsibility for
servicing, managing and making collections on the Receivables and will have the
authority to make any management decisions relating to such Receivables, to the
extent such authority is granted to the Servicer under this Agreement and the
Pooling and Servicing Agreement.
(b) The Servicer shall service and administer the Receivables in
accordance with the provisions of the Pooling and Servicing Agreement.
SECTION 3.02. Servicing Compensation. As full compensation for its
-----------------------
servicing activities hereunder and under the Pooling and Servicing Agreement,
the Servicer shall be entitled to receive the Servicing Fee on each Distribution
Date. The Servicing Fee shall be paid in accordance with the terms of the
Pooling and Servicing Agreement.
ARTICLE IV
Rights of Certificateholders and
--------------------------------
Allocation and Application of Collections
-----------------------------------------
SECTION 4.01. Allocations and Applications of Collections and Other
-----------------------------------------------------
Funds. The Servicer will apply all Collections with respect to the Receivables
- ------
and all funds on deposit in the Collection Account as described in Article IV of
the Pooling and Servicing Agreement.
<PAGE>
16
ARTICLE V
Other Matters Relating to the Seller
------------------------------------
SECTION 5.01. Merger or Consolidation of, or Assumption, of the
-------------------------------------------------
Obligations of the Seller. The Seller shall not consolidate with or merge into
- --------------------------
any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(a) the corporation formed by such consolidation or into which the
Seller is merged or the Person which acquires by conveyance or transfer the
properties and assets of the Seller substantially as an entirety shall be a
corporation organized and existing under the laws of the United States of
America or any state thereof or the District of Columbia and, if the Seller
is not the surviving entity, such corporation shall assume, without the
execution or filing of any paper or any further act on the part of any of
the parties hereto, the performance of every covenant and obligation of the
Seller hereunder; and
(b) the Seller has delivered to the Buyer and the Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer comply with this Section 5.01
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
SECTION 5.02. Seller Indemnification of the Buyer. The Seller shall
------------------------------------
indemnify and hold harmless the Buyer, from and against any loss, liability,
expense, claim, damage or injury suffered or sustained by reason of any acts,
omissions or alleged acts or omissions arising out of activities of the Seller
pursuant to this Agreement or arising out of or based on the arrangement created
by this Agreement and the activities of the Seller taken pursuant thereto,
including any judgment, award, settlement, reasonable attorneys' fees and other
costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim; provided, however, that the Seller shall
-------- -------
not indemnify the Buyer if such acts, omissions or alleged acts or omissions
constitute fraud, gross negligence or wilful misconduct by the Buyer; and
provided further, that the Seller shall not indemnify the Buyer for any
- ----------------
liabilities, cost or expense of the Buyer with respect to any Federal, state or
local income or franchise
<PAGE>
17
taxes or the Michigan Single Business tax (or any interest or penalties with
respect thereto) required to be paid by the Buyer in connection herewith to any
taxing authority. Any indemnification under this Article V shall survive the
termination of the Agreement.
ARTICLE VI
Termination
-----------
This Agreement will terminate immediately after the Trust terminates
pursuant to the Pooling and Servicing Agreement. In addition, the Buyer shall
not purchase Receivables nor shall the Seller designate Additional Accounts if
the Seller shall become an involuntary party to (or be made the subject of) any
proceeding provided for by any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Seller or
relating to all or substantially all of its property (an "Involuntary Case") and
such Involuntary Case shall have continued for a period of ten Business Days
from and including the day of receipt by the Seller at its principal corporate
office of notice of such Involuntary Case; provided, that during such ten
-------- ----
Business Day period, the Buyer shall suspend its purchase of Receivables and
shall hold all Collections of Principal Receivables that would have been
available to purchase Receivables in the Collection Account and (a) if by the
first Business Day after such ten Business Day period, the Buyer has not
obtained an order from the court having jurisdiction of such case or filing
which order approves the continuation of the sale of Receivables by the Seller
to the Buyer and which provided that the Buyer and any of its transferees
(including the Trustee) may rely on such order for the validity and nonavoidance
of such transfer (the "Order"), the Buyer shall hold such Collections in the
Collection Account until such time as they may be paid as elsewhere provided
herein and shall not purchase Receivables thereafter or accept Additional
Accounts for transfer from the Seller, or (b) if by such first Business Day, the
Buyer has obtained such Order, the Seller may continue selling Receivables, and
the Buyer may continue purchasing Receivables, pursuant to the terms hereof, as
modified by the immediately succeeding sentence. During the period after the 10
Business Day period described above and before the 60-day period before filing
described below, the purchase price of the Receivables transferred during such
<PAGE>
18
period, notwithstanding anything in this Agreement to the contrary, shall be
paid to the Seller by the Buyer in cash not later than the same Business Day of
any sale of Receivables. During such period, Receivables will be considered
transferred to the Buyer only to the extent that the purchase price therefor has
been paid in cash on the same Business Day. If an Order is obtained but
subsequently is reversed or rescinded or expires, the Seller shall immediately
cease selling Receivables to the Buyer and the Buyer shall immediately cease
buying Receivables. If by the first Business Day after the sixty-day period
after such involuntary filing, such Involuntary Case has not been dismissed, the
Buyer shall not purchase thereafter Receivables or designate Additional Accounts
for transfer to the Trust.
ARTICLE VII
Miscellaneous Provisions
------------------------
SECTION 7.01. Amendment. (a) This Agreement may be amended from
----------
time to time by the Seller and the Buyer; provided, however, that the Seller
-------- -------
shall have delivered to the Trustee an Officers' Certificate to the effect that
such action shall not adversely affect in any material respect the interests of
any Investor Certificateholder.
(b) This Agreement may also be amended from time to time by the Buyer
and Seller with the consent of the Holders of Investor Certificates evidencing
not less than 66-2/3% of the aggregate unpaid principal amount of the Investor
Certificates of all adversely affected Series, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Seller; provided,
--------
however, that no such amendment shall (i) reduce in any manner the amount of or
- -------
delay the timing of any distributions to be made to Investor Certificateholders
or deposits of amounts to be so distributed or the amount available under any
Enhancement without the consent of each affected Investor Certificateholder,
(ii) change the definition of or the manner of calculating the interest of any
Investor Certificateholders without the consent of each Affected
Certificateholder, (iii) reduce the aforesaid percentage required to consent to
any such amendment without the consent of each Investor Certificateholder or
(iv) adversely affect the rating of any Series or Class by
<PAGE>
19
each Rating Agency without the consent of the Holders of Investor Certificates
of such Series or Class evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the Investor Certificates of such Series or Class. Any
amendment to be effected pursuant to this paragraph shall be deemed to adversely
affect all outstanding Series, other than any Series with respect to which the
Seller has delivered an Officers' Certificate to the effect that such action
shall not adversely affect in any material respect the interests of any Investor
Certificateholder of such Series. The Trustee may, but shall not be obligated
to, enter into any such amendment which affects the Trustee's rights, duties or
immunities under this Agreement or otherwise.
(c) Promptly after the execution of any such amendment or consent
(other than an amendment pursuant to paragraph (a)), the Seller shall furnish
notification of the substance of such amendment to each Investor
Certificateholder, any Enhancement Providers and each Rating Agency.
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
(e) Notwithstanding anything in this Section to the contrary, no
amendment may be made to this Agreement which would adversely affect in any
material respect the interests of any Enhancement Provider without the consent
of such Enhancement Provider.
SECTION 7.02. Protection of Right, Title and Interest to Receivables.
-------------------------------------------------------
(a) The Seller shall cause this Agreement, all amendments hereto and/or all
financing statements and continuation statements and any other necessary
documents covering the Buyer's right, title and interest to the Receivables and
Collateral Security relating thereto to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed, all in such
manner and in such places as may be required by law fully to preserve and
protect the right, title and interest of the Buyer hereunder. The Seller shall
deliver to the
<PAGE>
20
Buyer file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Buyer shall cooperate fully with the
Seller in connection with the obligations set forth above and will execute any
and all documents reasonably required to fulfill the intent of this Section
7.02(a).
(b) Within 30 days after the Seller makes any change in its name,
identity or corporate structure which would make any financing statement or
continuation statement filed in accordance with Section 7.02(a) seriously
misleading within the meaning of Section 9-402(7) of the UCC as in effect in
Michigan, the Seller shall give the Buyer notice of any such change and shall
file such financing statements or amendments as may be necessary to continue the
perfection of the Buyer's security interest in the Receivables and the proceeds
thereof.
(c) The Seller will give the Buyer prompt written notice of any
relocation of any office at which it keeps records concerning the Receivables or
of its principal executive office and whether, 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 file such financing statements or amendments as
may be necessary to perfect or to continue the perfection of the Buyer's
security interest in the Receivables and the proceeds thereof. The Seller will
at all times maintain its principal executive officer within the United States
of America.
(d) The Seller will deliver to the Buyer: (i) upon the execution and
delivery of each amendment of this Agreement, an Opinion of Counsel to the
effect specified in Exhibit B; and (ii) on or before March 31 of each year,
beginning with March 31, 1997, an Opinion of Counsel substantially in the form
of Exhibit C.
SECTION 7.03. Limited Recourse. Notwithstanding anything to the
-----------------
contrary contained herein, the obligations of the Buyer hereunder shall not be
recourse to the Buyer (or any person or organization acting on behalf of the
Buyer or any affiliate, officer or director of the Buyer), other than to (a) the
portion of the Seller's Interest on any date of determination which is in excess
of the Required Participation Amount and (b) any other assets of the Buyer
<PAGE>
21
not pledged to third parties or otherwise encumbered in a manner permitted by
the Seller's Certificate of Incorporation; provided, however, that any payment
-------- -------
by the Seller made in accordance with this Section 7.03 shall be made only after
payment in full of any amounts that the Seller is obligated to deposit in the
Collection Account pursuant to this Agreement; provided further that the
----------------
Investor Certificateholders shall be entitled to the benefits of the
subordination of the Collections allocable to the Seller's Interest to the
extent provided in the Supplements.
SECTION 7.04. No Petition. The Seller hereby covenants and agrees
------------
that it will not at any time institute against the Buyer any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeds, or other
proceedings under any United States Federal or state bankruptcy or similar law.
SECTION 7.05. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
--------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 7.06. Notices. All demands, notices and communications
--------
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, return receipt requested,
to the parties at such addresses specified in the Pooling and Servicing
Agreement.
SECTION 7.07. Severability of Provisions. If any one or more of the
---------------------------
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be 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 Certificates
or rights of the Certificateholders.
SECTION 7.08. Assignment. Notwithstanding anything to the contrary
-----------
contained herein, this Agreement may not be assigned by the Seller without the
prior consent of the Buyer and the Trustee. The Buyer may assign this Agreement
to the Trust pursuant to the Pooling and Servicing
<PAGE>
22
Agreement. In addition, the Buyer may assign this Agreement to a Designated
Affiliate pursuant to Section 7.04 of the Pooling and Servicing Agreement.
SECTION 7.09. Further Assurances. The Seller agrees 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 Buyer more fully to effect
the purposes of this Agreement, including the execution of any financing
statements or continuation statements relating to the Receivables for filing
under the provisions of the UCC of any applicable jurisdiction.
SECTION 7.10. No Waiver; Cumulative Remedies. No failure to exercise
-------------------------------
and no delay in exercising, on the part of the Buyer, any right, remedy, power
or privilege under this Agreement shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege under
this Agreement preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
SECTION 7.11. Counterparts. This Agreement may be executed in two or
-------------
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
SECTION 7.12. Third-Party Beneficiaries. This Agreement will inure
--------------------------
to the benefit of and be binding upon the parties hereto, the Certificateholders
and the other Beneficiaries and their respective successors and permitted
assigns. Except as otherwise provided in this Agreement, no other Person will
have any right or obligation hereunder.
SECTION 7.13. Merger and Integration. Except as specifically stated
-----------------------
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
SECTION 7.14. Headings. The headings herein are for purposes of
---------
reference only and shall not otherwise
<PAGE>
23
affect the meaning or interpretation of any provision hereof.
IN WITNESS WHEREOF, the Seller and the Buyer have caused this
Receivables Purchase Agreement to be duly executed by their respective officers
as of the day and year first above written.
VOLKSWAGEN CREDIT AUTO
RECEIVABLES CORPORATION,
Buyer
by
-------------------------------
Name:
Title:
by
-------------------------------
Name:
Title:
VW CREDIT, INC., Seller
by
-------------------------------
Name:
Title:
by
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
TO RPA
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS
(As required by Section 2.04 of
the Receivables Purchase Agreement)
ASSIGNMENT No. OF RECEIVABLES IN ADDITIONAL ACCOUNTS
dated as of , , between Volkswagen Credit Auto
Receivables Corporation, as buyer (the "Buyer"), and VW Credit,
Inc., as seller (the "Seller"), pursuant to the Receivables
Purchase Agreement referred to below.
W I T N E S S E T H:
WHEREAS the Seller and the Buyer are parties to a Receivables Purchase
Agreement, dated as of February 29, 1996 (as amended or supplemented, the
"Receivables Purchase Agreement");
WHEREAS pursuant to the Receivables Purchase Agreement, the Seller
wishes to designate Additional Accounts to be included as Accounts and to convey
the Receivables of such Additional Accounts, whether now existing or thereafter
created, to the Buyer (as each such term is defined in the Receivables Purchase
Agreement); and
WHEREAS, the Buyer is willing to accept such designation and
conveyance subject to the terms and conditions hereof;
NOW,THEREFORE, the Seller and the Buyer hereby agree as follows:
1. Defined Terms. Capitalized terms used herein shall have the
-------------
meanings ascribed to them in the Receivables Purchase Agreement unless otherwise
defined herein.
"Addition Date" shall mean, with respect to the Additional Accounts
-------------
designated hereby .
2. Designation of Additional Accounts. The Seller hereby delivers
----------------------------------
herewith a computer file or microfiche or written list containing a true and
complete list identifying all such Additional Accounts specifying for
<PAGE>
2
each such Account, as of the Additional Cut-Off Date, its account number, the
outstanding balance of Receivables in such Account and the aggregate amount of
Receivables outstanding in such Account. Such file or list shall, as of the
date of this Assignment, supplement Schedule 1 to the Agreement.
3. Conveyance of Receivables. (a) The Seller does hereby sell,
-------------------------
transfer, assign, set over and otherwise convey, without recourse (except as
expressly provided in the Receivables Purchase Agreement), to the Buyer, on the
Addition Date all of its right, title and interest in, to and under the
Receivables in such Additional Accounts and all Collateral Security with respect
thereto owned by the Seller and existing at the close of business on the
Additional Cut-Off Date and all monies due or to become due and all amounts
received with respect thereto and all proceeds (including "proceeds" as defined
in Section 9-306 of the UCC as in effect in the State of Michigan and
Recoveries) thereof. The foregoing sale, transfer, assignment, set-over and
conveyance does not constitute and is not intended to result in the creation or
an assumption by the Buyer of any obligation of the Servicer, VWCI, the Seller,
VWA or any other Person in connection with the Accounts, the Receivables or
under any agreement or instrument relating thereto, including any obligation to
any Dealers.
(b) In connection with such sale, the Seller agrees to record and
file, at its own expense, a financing statement on form UCC-1 (and continuation
statements when applicable) with respect to the Receivables now existing and
hereafter created for the sale of chattel paper (as defined in Section 9-105 of
the UCC as in effect in any state where the Seller's or the Servicer's chief
executive in any state where the Seller's or the Servicer's chief executive
offices or books and records relating to the Receivables are located) meeting
the requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect the sale and assignment of the
Receivables and the Collateral Security to the Buyer, and to deliver a file-
stamped copy of such financing statements or other evidence of such filing to
the Buyer on or prior to the Addition Date. In addition, the Seller shall cause
to be timely filed in the appropriate filing office any UCC-1 financing
statement and continuation statement necessary to perfect any sale of
Receivables to the Seller. The Buyer shall be under no obligation whatsoever to
file such financing
<PAGE>
3
statement, or a continuation statement to such financing statement, or to make
any other filing under the UCC in connection with such sale. The parties hereto
intend that the sales of Receivables effected by this Agreement be sales.
(c) In connection with such sale, the Seller further agrees, at its
own expense, on or prior to the Addition Date to indicate in its computer files
that the Receivables created in connection with the Additional Accounts
designated hereby have been sold and the Collateral Security assigned, to the
Buyer pursuant to this Assignment and sold to the Trust pursuant to the Pooling
and Servicing Agreement for the benefit of the Certificateholders and the other
Beneficiaries.
4. Acceptance by the Buyer. Subject to the satisfaction of the
-----------------------
conditions set forth in Section 6 of this Assignment, the Buyer hereby
acknowledges its acceptance of all right, title and interest to the property,
now existing and hereafter created, conveyed to the Buyer pursuant to Section
3(a) of this Assignment. The Buyer further acknowledges that, prior to or
simultaneously with the execution and delivery of this Assignment, the Seller
delivered to the Buyer the computer file or microfiche or written list described
in Section 2 of this Assignment.
5. Representations and Warranties of the Seller. The Seller hereby
--------------------------------------------
represents and warrants to the Buyer as of the date of this Assignment and as of
the Addition Date that:
(a) Legal, Valid and Binding Obligation. This Assignment constitutes
-----------------------------------
a legal, valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or 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 equity).
(b) Eligible Accounts. Each Additional Account designated hereby is
-----------------
an Eligible Account.
<PAGE>
4
(c) Selection Procedures. No selection procedures reasonably
--------------------
believed by the Seller to be adverse to the interests of the Buyer or the
Beneficiaries were used in selecting the Additional Accounts designated
hereby.
(d) Insolvency. As of the Notice Date and the Addition Date, neither
----------
the Seller nor the Buyer is insolvent nor will either of them have been
made insolvent after giving effect to the conveyance set forth in Section 3
of this Assignment, nor are either of them aware of any pending insolvency.
(e) Valid Transfer. This Assignment constitutes a valid sale,
--------------
transfer and assignment to the Buyer of all right, title and interest of
the Seller in the Receivables and Collateral Security thereof. Upon the
filing of the financing statements described in Section 3 of this
Assignment with the Secretary of State of the State of Michigan [and other
applicable states] and, in the case of the Receivables hereafter created
and the proceeds thereof, upon the creation thereof, the Buyer shall have a
first priority perfected ownership interest in such property, except for
liens permitted under Section 2.06(a) of the Receivables Purchase
Agreement. Except as otherwise provided in the Pooling and Servicing
Agreement, neither the Seller nor any Person claiming through or under the
Seller has any claim to or interest in the Trust Assets.
(f) No Conflict. The execution and delivery of this Assignment, the
-----------
performance of the transactions contemplated by this Assignment and the
fulfillment of the terms hereof and thereof, will not conflict with, result
in any breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a material default under,
any indenture, contract, agreement, mortgage, deed of trust, or other
instrument to which such Seller is a party or by which it or its properties
are bound.
(g) No Violation. The execution and delivery of this Assignment by
------------
the Seller, the performance of the transactions contemplated by this
Assignment and the fulfillment of the terms hereof and thereof, will not
conflict with, result in any breach of any of the material terms ad
provisions of, or constitute (with or
<PAGE>
5
without notice or lapse of time or both) a material default under, any
indenture, contract, agreement, mortgage, deed of trust, or other
instrument to which the Seller is a party or by which it or its properties
are bound.
(h) No Proceedings. There are no proceedings or, to the best
--------------
knowledge of the Seller, investigations pending or threatened against the
Seller, before any Governmental Authority (i) asserting the invalidity of
this Assignment, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Assignment, (iii) seeking any
determination or ruling that, in the reasonable judgment of the Seller,
would materially and adversely affect the performance by the Seller of its
obligations under this Assignment, (iv) seeking any determination or ruling
that would materially and adversely affect the validity or enforceability
of this Assignment, (v) seeking any determination or ruling that would
materially and adversely affect the income tax attributes of the Trust
under the United States Federal or any state income, single business or
franchise tax systems.
(i) Record of Accounts. As of the Addition Date Schedule 1 to this
------------------
Assignment is an accurate and complete listing in all material respects of
all the Additional Accounts as of the Additional Cut-Off Date and the
information contained therein with respect to the identity of such Accounts
and the Receivables existing thereunder is true and correct in all material
respects as of the Additional Cut-Off Date.
(j) No Liens. Each Receivable and all Collateral Security existing
--------
on the Addition Date has been conveyed to the Buyer free and clear of any
Lien.
(k) All Consents Required. With respect to each Receivable and all
---------------------
Collateral Security existing on the Addition Date, all appraisals,
authorizations, consents, orders, approvals or other actions of any Person
or of any governmental body or official required in connection with the
execution and delivery of this Assignment, the conveyance of each
Receivable and Collateral Security, the performance of the transactions
contemplated by this Assignment, and the fulfillment of the terms hereof,
have been obtained, effected or given and are in full force and effect.
<PAGE>
6
(l) Eligible Receivables. On the Additional Cut-Off Date each Receivable
--------------------
conveyed to the Buyer as of such date is an Eligible Receivable or, if such
Receivable is not an Eligible Receivable, such Receivable is conveyed to
the Buyer in accordance with Section 2.07 of the Receivables Purchase
Agreement.
6. Conditions Precedent. The acceptance of the Buyer set forth in
--------------------
Section 4 of this Assignment are subject to the satisfaction, on or prior to the
Addition Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by the Seller in Section 5 of this Assignment shall be true
and correct as of the date of this Assignment and as of the Addition Date;
(b) Agreement. Each of the conditions set forth in Section 2.04(b)
---------
of the Receivables Purchase Agreement applicable to the designation of the
Additional Accounts to be designated hereby shall have been satisfied; and
(c) Additional Information. The Seller shall have delivered to the
----------------------
Buyer such information as was reasonably requested by the Buyer to satisfy
itself as to the accuracy of the representation and warranty set forth in
Section 5(b) of this Assignment.
7. Ratification of Agreement. As supplemented by this Assignment,
-------------------------
the Receivables Purchase Agreement is in all respects ratified and confirmed and
the Receivables Purchase Agreement as so supplemented by this Assignment shall
be read, taken and construed as one and the same instrument.
8. Counterparts. This Assignment may be executed in two or more
------------
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS,
<PAGE>
7
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Seller and the Buyer have caused this
Assignment to be fully executed and delivered by their respective duly
authorized officers as of the day and the year first above written.
VOLKSWAGEN CREDIT AUTO
RECEIVABLES CORPORATION,
as Buyer,
by
--------------------------
Name:
Title:
VW CREDIT, INC.,
as Seller,
by
--------------------------
Name:
Title:
<PAGE>
EXHIBIT B
TO RPA
FORM OF OPINION OF COUNSEL
(As required by Section 7.02(d) of
----------------------------------
the Receivables Purchase Agreement)
-----------------------------------
(a) The Amendment to the Receivables Purchase Agreement, attached
hereto as Schedule 1 (the "Amendment"), has been duly authorized, executed and
delivered by the Seller and constitutes the legal, valid and binding agreement
of the Seller, enforceable in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
from time to time in effect. The enforceability of the Seller's obligations is
also subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(b) The Amendment has been entered into in accordance with the terms
and provisions of Section 7.01 of the Receivables Purchase Agreement.
<PAGE>
EXHIBIT C
TO RPA
FORM OF OPINION OF COUNSEL
Provisions to Be Included in Opinion of
---------------------------------------
Counsel Delivered Pursuant to Section 7.02(d)
---------------------------------------------
of the Receivables Purchase Agreement/1/
----------------------------------------
The opinions set forth below may be subject to all the applicable
qualifications, assumptions, limitations and exceptions taken or made in the
opinion of counsel to VW Credit, Inc. (the "Seller"), delivered on any Closing
Date. Capitalized terms used but not defined herein are used as defined in the
Receivables Purchase Agreement dated as of February 29, 1996 (the "Receivables
Purchase Agreement"), between Volkswagen Credit Auto Receivables Corporation, as
buyer (the "Buyer"), and the Seller.
[(a) The Assignment has been duly authorized, executed and delivered
by the Seller, and constitutes the valid and legally binding obligation of the
Seller, enforceable against the Seller in accordance with its terms.]
(b) Assuming Receivables [in the Additional Accounts] are created
under, and are evidenced solely by, Floorplan Financing Agreements, such
Receivables will constitute "chattel paper" as defined under Section 9-105 of
the UCC.
(c) With respect to Receivables [in the Additional Accounts] in
existence on the date hereof with respect to Receivables [in the Additional
Accounts] that come into existence after the date hereof, upon the creation of
such Receivables and the subsequent transfer of such Receivables to the Buyer
free and clear of any Liens in accordance with the Receivables Purchase
Agreement and receipt by the Seller of the consideration therefor required
pursuant to the Receivables Purchase Agreement, a bankruptcy court having
jurisdiction over the Seller (i) would not be entitled to compel the turnover of
such Receivables or the proceeds thereof to the Seller under Section 542 of the
- ----------
/1/Include bracketed language only in the case of additions of Accounts effected
-
pursuant to Section 2.04 of the Receivables Purchase Agreement in connection
with which an Opinion of Counsel to that effect is required to be delivered.
<PAGE>
2
Bankruptcy Code and (ii) would not be entitled to treat such Receivables or the
proceeds thereof as assets included in the estate of the Seller pursuant to
Section 541 of the Bankruptcy Code or subject to the automatic stay provision of
Section 362(a) of the Bankruptcy Code.
<PAGE>
EXHIBIT D
TO RPA
FORM OF REASSIGNMENT OF RECEIVABLES
(As required by Section 2.06 of the
Receivables Purchase Agreement referred to below)
REASSIGNMENT NO. OF RECEIVABLES, dated as of
, , by and between VOLKSWAGEN CREDIT AUTO RECEIVABLES
CORPORATION, as buyer (the "Buyer"), and VW CREDIT, INC., as
seller (the "Seller"), pursuant to the Receivables Purchase
Agreement referred to below.
W I T N E S S E T H :
WHEREAS the Seller and the Buyer are parties to the Receivables
Purchase Agreement, dated as of February 29, 1996 (as amended or supplemented,
the "Receivables Purchase Agreement");
WHEREAS, pursuant to the Receivables Purchase Agreement, the Seller
wishes to remove all Receivables from certain Accounts and the Collateral
Security thereof (the "Removed Accounts") and to cause the Buyer to reconvey
such Removed Accounts and such Collateral Security, whether now existing or
hereafter created, from the Buyer to the Seller (as each such term is defined in
the Receivables Purchase Agreement); and
WHEREAS the Buyer is willing to accept such designation and to
reconvey the Receivables in the Removed Accounts and such Collateral Security
subject to the terms and conditions hereof.
NOW, THEREFORE, the Seller and the Buyer hereby agree as follows:
1. Defined Terms. All terms defined in the Receivables Purchase
--------------
Agreement and used herein shall have such defined meanings when used herein,
unless otherwise defined herein.
"Removal Date" shall mean, with respect to the Removed Accounts
------------
designated hereby, , .
<PAGE>
2
2. Designation of Accounts to be Removed. On or before the fifth
--------------------------------------
Business Day after the Removal Date the Seller shall deliver to the Buyer and
the Trustee a computer file or microfiche or written list containing a true and
complete list of the Removed Accounts specifying for each such Account, as of
the Removal Date, its account number, the outstanding balance of Receivables in
such Account and the aggregate amount of Principal Receivables outstanding in
such Account. Such list shall be marked as Schedule 1 to this Reassignment and
shall be incorporated into and made a part of this Reassignment as of the
Removal Date and shall amend Schedule 1 to the Receivables Purchase Agreement.
3. Conveyance of Receivables and Accounts. (a) The Buyer does hereby
---------------------------------------
transfer, assign, set over and otherwise convey to the Seller, without recourse,
representation or warranty on and after the Removal Date, all right, title and
interest of the Trust in, to and under all Receivables now existing at the close
of business on the Removal Date and thereafter created from time to time until
the termination of the Trust in Removed Accounts designated hereby, all
Collateral Security thereof, all monies due or to become due and all amounts
received with respect thereto (including all Non-Principal Receivables) and all
proceeds (as defined in Section 9-306 of the UCC as in effect in the State of
Michigan and Recoveries) thereof relating thereto.
(b) If requested by the Buyer, in connection with such transfer, the
Buyer agrees to execute and deliver to the Seller on or prior to the date of
this Reassignment, a termination statement with respect to the Receivables
existing at the close of business on the Removal Date and thereafter created
from time to time and Collateral Security thereof in the Removed Accounts
reassigned hereby (which may be a single termination statement with respect to
all such Receivables and Collateral Security) evidencing the release by the
Trust of its lien on the Receivables in the Removed Accounts and the Collateral
Security, and meeting the requirements of applicable state law, in such manner
and such jurisdiction as are necessary to remove such lien.
<PAGE>
3
4. Representations and Warranties of the Seller. The Seller hereby
---------------------------------------------
represents and warrants to the Buyer as of the Removal Date:
(a) Legal, Valid and Binding Obligation. This Reassignment
------------------------------------
constitutes a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights generally and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity);
(b) No Early Amortization Event or Reinvestment Event. The removal of
--------------------------------------------------
any such Eligible Account hereby removed shall not, in the reasonable
belief of the Seller, cause an Early Amortization Event or Reinvestment
Event to occur or cause the Pool Balance to be less than the Required
Participation Amount;
(c) Selection Procedures. No selection procedures reasonably believed
---------------------
by the Seller to be adverse to the interests of the Beneficiaries were
utilized in selecting the Designated Accounts; and
(d) List of Accounts. The list of Removed Accounts to be delivered
-----------------
pursuant to Section 2 of this Reassignment will be, as of the Removal Date,
true and complete in all material respects.
5. Conditions Precedent. The ratification of the Receivables
---------------------
Purchase Agreement set forth in Section 6 hereof is subject to the satisfaction,
on or prior to the Removal Date, of the following condition precedent:
Officers' Certificate. The Seller shall have delivered to the Buyer,
----------------------
the Trustee and the Enhancement Providers an Officers' Certificate
certifying that each of the representations and warranties made by the
Seller in Section 4 hereof is true and correct as of the Removal Date and
that the Seller reasonably believes that the removal of the Removed
Accounts will not result in the occurrence of an Early Amortization Event
or Reinvestment Event. The Buyer may conclusively rely on such Officers'
Certificate, shall
<PAGE>
4
have no duty to make inquiries with regard to the matters set forth therein
and shall incur no liability in so relying.
6. Ratification of Receivables Purchase Agreement. As supplemented
-----------------------------------------------
by this Reassignment, the Receivables Purchase Agreement is in all respects
ratified and confirmed and the Receivables Purchase Agreement as so supplemented
by this Reassignment shall be read, taken and construed as one and the same
instrument.
7. Counterparts. This Reassignment may be executed in two or more
-------------
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
8. GOVERNING LAW. THIS REASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
--------------
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE>
5
IN WITNESS WHEREOF, the undersigned have caused this Reassignment to
be duly executed and delivered by their respective duly authorized officers on
the day and year first above written.
VOLKSWAGEN CREDIT AUTO
RECEIVABLES CORPORATION,
as Buyer,
by
--------------------------------
Name:
Title:
VW CREDIT, INC., Seller,
by
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT J
FORM OF SUBORDINATED NOTE
New York, New York
March 28, 1996
FOR VALUE RECEIVED, the undersigned, Volkswagen Credit Auto
Receivables Corporation, a Delaware corporation (the "Company"), hereby
unconditionally promises to pay to the order of VW Credit, Inc. ("VWCI") in
lawful money of the United States of America in immediately available funds the
principal amount outstanding on January 31, 2017 (the "Maturity Date"), in
respect of monies borrowed by the Company from VCWI from time to time to fund
the purchase of Receivables by the Company from VWCI pursuant to a Receivables
Purchase Agreement dated as of February 29, 1996, between the Company and VWCI.
The Company may, at its option, prepay this Note in whole or in part at any time
and from time to time from and after the date hereof; provided, however, that in
no event shall the holder hereof have any right to demand any payment of
principal hereunder prior to the Maturity Date.
Capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Pooling and Servicing Agreement dated as of
February 29, 1996 (the "Pooling and Servicing Agreement"), among the Company, as
seller, VWCI, as servicer, and Citibank, N.A., as trustee.
The undersigned further agrees to pay interest in like money on the
unpaid principal amount hereof from time to time from the date hereof at the
rate per annum equal to the weighted average of the Certificate Rates of each
outstanding Series on the Distribution Date on which interest is payable (based
on the Invested Amounts on such preceding Distribution Date (after giving effect
to any changes therein on such preceding Distribution Date)), on the basis of a
365-day year for actual number of days elapsed. Interest shall be payable in
arrears on each Distribution Date commencing on the first such date to occur
after the date hereof and upon final payment of the unpaid principal amount
hereof.
This Note is subordinate and junior in right and time of payment to
all "Senior Debt" of the Company, which is any Indebtedness of the Company and
all renewals, extensions, refinancings and refundings thereof, except any
<PAGE>
such Indebtedness that expressly provides that it is not senior or superior in
right of payment hereto. "Indebtedness" is any indebtedness, whether or not
contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereto) whether any such indebtedness would appear as a
liability upon a balance sheet of the Company prepared on a consolidated basis
in accordance with generally accepted accounting principles.
All scheduled payments of principal and interest in respect of Senior
Debt must be paid before this Note shall be payable, and all scheduled payments
of principal and interest on this Note shall be payable only to the extent that
the Company, after paying all of its accounts payable and other current
expenses, has the funds to make such payments. The Company agrees, and the
holder hereof by accepting this Note agrees, to the subordination provisions
herein contained. Notwithstanding any provisions herein to the contrary, the
obligations of the Company hereunder shall not be recourse to the Volkswagen
Credit Auto Master Trust or any assets thereof formed pursuant to the Pooling
and Servicing Agreement.
The holder of this Note, by its acceptance hereof, hereby covenants
and agrees that it will not at any time institute against the Company any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law.
IN WITNESS WHEREOF, the Company has caused this Subordinated Note to
be duly executed as of the day and year first above written.
VOLKSWAGEN CREDIT AUTO
RECEIVABLES CORPORATION
by
------------------------
Name:
Title:
by
------------------------
Name:
Title:
<PAGE>
EXHIBIT K
ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement") dated
as of [ ], (the "Assumption Date"), by and among
VOLKSWAGEN CREDIT AUTO RECEIVABLES CORPORATION, a Delaware
corporation headquartered in Auburn Hills, Michigan ("VWCARC"),
[ ] (the "Designated Affiliate"), a Delaware corporation
headquartered in [ ], and Citibank, N.A. (the "Trustee"),
pursuant to the Pooling and Servicing Agreement referred to
below.
WHEREAS VWCARC, the Trustee and VW Credit, Inc., as Servicer (the
"Servicer"), are parties to the Pooling and Servicing Agreement dated as of
February 29, 1996 (as amended or supplemented, the "Pooling and Servicing
Agreement");
WHEREAS VWCARC wishes to sell, transfer, assign and otherwise convey
all, but not less than all, of its right, title and interest in the Trust
Assets, the Seller's Interest, the VWCARC Certificate, the Pooling and Servicing
Agreement, the Related Documents and any other agreement, document or instrument
relating to the Pooling and Servicing Agreement or the transactions contemplated
thereby (the "Trust Documents") and its obligations thereunder to the Designated
Affiliate pursuant to a Designated Affiliate Transfer as set forth in Section
7.04 of the Pooling and Servicing Agreement;
WHEREAS the Designated Affiliate agrees to assume the performance of
every covenant and obligation of VWCARC under the Pooling and Servicing
Agreement, the Related Documents and the Trust Documents; and
WHEREAS the Trustee is willing to accept an assignment to and
assumption by the Designated Affiliate subject to the terms and conditions
hereof and of the Pooling and Servicing Agreement;
<PAGE>
2
NOW THEREFORE, VWCARC, the Designated Affiliate and the Trustee hereby
agree as follows:
1. Defined Terms. All terms defined in the Pooling and Servicing
--------------
Agreement and used herein shall have such defined meanings when used herein,
unless otherwise defined herein.
2. Conveyance. By execution of this Agreement, VWCARC does hereby
-----------
sell, transfer, assign and otherwise convey all, but not less than all, of its
right, title and interest in the Trust Assets, the Seller's Interest, the VWCARC
Certificate, the Pooling and Servicing Agreement, the Related Documents and the
Trust Documents, and its obligations as Seller thereunder, to the Designated
Affiliate.
3. Records. The Designated Affiliate agrees, at its own expense, on
--------
or prior to the Assumption Date, to indicate in its computer files and to cause
VWCARC and VW Credit, Inc. to indicate in their computer files that the
Receivables created in connection with the Accounts (other than Removed
Accounts) have been sold, and the Collateral Security assigned, to the
Designated Affiliate in accordance with the Receivables Purchase Agreement and
sold to the Trust pursuant to the Pooling and Servicing Agreement for the
benefit of the Certificateholders and the other Beneficiaries.
4. Assumption of Duties. (a) VWCARC hereby agrees that prior to the
---------------------
date of this Agreement it shall be bound by all the provisions and requirements
of and assume all of the responsibilities under the Pooling and Servicing
Agreement, the Related Documents and the Trust Documents, applicable to VWCARC.
The Designated Affiliate hereby agrees that on and after the date of this
Agreement it shall be bound by all the provisions and requirements of and assume
the performance of every covenant and obligation and all of the responsibilities
and duties under the Pooling and Servicing Agreement, and Related Documents and
the Trust Documents applicable to VWCARC.
(b) In connection with such assumption, the Designated Affiliate
agrees to record and file, at its own expense, a financing statement on form
UCC-1 (and continuation statements when applicable) with respect to (i) the
Receivables now existing and created on or after the Assumption Date in the
Accounts (which may be a single
<PAGE>
3
financing statement with respect to all such Receivables) for the sale of
chattel paper (as defined in Section 9-105 of the UCC as in effect in any state
where VWCARC's, the Designated Affiliate's or the Servicer's chief executive
offices or books and records relating to the Receivables are located) and (ii)
all other Trust Assets as defined in Section 2.01 of the Pooling and Servicing
Agreement now existing and created on or after the Assumption Date, meeting the
requirements of applicable state law in such manner and in such jurisdictions as
are necessary to perfect the sale, transfer and assignment of such Receivables
and other Trust Assets to the Trust, and to deliver a file-stamped copy of such
financing statements or other evidence of such filing (which may, for purposes
of this Section 3, consist of telephone confirmation of such filing, confirmed
within 24 hours in writing) to the Trustee on or prior to the Assumption Date.
5. Acceptance by Trustee. The Trustee hereby acknowledges its
----------------------
acceptance on behalf of the Trust of such assignment and assumption.
The foregoing assignment and assumption does not constitute, and is
not intended to result in the creation or an assumption by the Trust, the
Trustee or any Beneficiary of any obligation of the Servicer, VW Credit, Inc.,
the Seller, the Designated Affiliate or any other Person in connection with the
Accounts, the Receivables or under any agreement or instrument relating thereto,
including any obligation to any Dealers.
6. Representations and Warranties of the Designated Affiliate and
--------------------------------------------------------------
VWCARC. In addition to the representations and warranties deemed to have been
- -------
made by the Designated Affiliate in respect of the Accounts and Receivables
thereunder pursuant to Section 7.04(c) of the Pooling and Servicing Agreement,
the Designated Affiliate and VWCARC hereby also represent and warrant to the
Trust as of the Assumption Date:
(a) Legal, Valid and Binding Obligation. This Agreement constitutes a
------------------------------------
legal, valid, and binding obligation of the Designated Affiliate and VWCARC,
enforceable against the Designated Affiliate and VWCARC in accordance with its
terms;
(b) Insolvency. Neither the Designated Affiliate nor VWCARC is
-----------
insolvent; and, after giving effect to the
<PAGE>
4
transactions contemplated by this Agreement, neither the Designated Affiliate
nor VWCARC will be insolvent; and
(c) Ownership Interest. The ownership interest of the Trustee in the
-------------------
Receivables and other Trust Assets continues to remain in full force and effect
and has not been interrupted or impaired by the signing of this Agreement and
such ownership interest remains prior to all others except as set forth in the
Pooling and Servicing Agreement.
7. Conditions Precedent. The acceptance of the Trustee set forth in
---------------------
Section 5 is subject to the satisfaction, on or prior to the Assumption Date, of
the conditions precedent referred to in Section 7.04(b) of the Pooling and
Servicing Agreement and of the following additional conditions precedent:
(a) VWCARC shall have transferred the VWCARC Certificate to the
Designated Affiliate as set forth in Section 7.04(c) of the Pooling and
Servicing Agreement.
(b) The payment of any other consideration has been completed as
certified by the Designated Affiliate to the Trustee.
(c) The Designated Affiliate shall have delivered to the Trustee an
Officer's Certificate, dated the date of this Agreement, in which an officer of
the Designated Affiliate shall state that, to the best of his knowledge after
reasonable investigation, the representations and warranties of the Designated
Affiliate in its capacities as Seller under Section 2.03 and Section 2.04 of the
Pooling and Servicing Agreement are true and correct.
(d) VWCARC shall have delivered to the Trustee an Opinion of Counsel
dated the Assumption Date in the form attached hereto as Exhibit A.
8. Pooling and Servicing Agreement. The Designated Affiliate, VWCARC
--------------------------------
and the Trustee hereby agree that from and after the Assumption Date the terms
"Seller" and "VWCARC" in the Pooling and Servicing Agreement, the Related
Documents and the Trust Documents shall refer to the Designated Affiliate.
Except as expressly amended hereby, all of the representations, warranties,
terms, covenants and conditions of the Pooling and Servicing Agreement, the
Related Documents and the Trust Documents applicable to
<PAGE>
5
VWCARC shall remain unamended and shall continue to be, and shall remain, in
full force and effect in accordance with their terms and, except as expressly
provided herein, the execution and delivery of this Agreement by the Trustee
shall not constitute or be deemed to constitute a waiver of compliance with or a
consent to non-compliance with any term or provision of the Pooling and
Servicing Agreement, the Related Documents and the Trust Documents.
9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
--------------
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
10. Counterparts. This Agreement may be executed in two or more
-------------
counterparts (and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute but one and the
same instrument.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers on the
day and year first above written.
VOLKSWAGEN CREDIT AUTO RECEIVABLES CORPORATION,
by
------------------------------
[Name]
[Title]
[DESIGNATED AFFILIATE],
by
------------------------------
[Name]
[Title]
<PAGE>
6
Citibank, N.A., as Trustee,
by
------------------------------
[Name]
[Title]
<PAGE>
EXHIBIT A
TO EXHIBIT K TO P&S
FORM OF OPINION OF COUNSEL
(i) VWCARC has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with full
power and authority (corporate and other) to own its properties and conduct its
business, as presently conducted by it, and to enter into and perform its
obligations under the Assignment and Assumption Agreement.
(ii) The Designated Affiliate has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of [ ], with full power and authority (corporate and other) to own its
properties and conduct its business, as presently conducted by it and as
proposed to be conducted by it, and to enter into and perform its obligations
under the Assignment and Assumption Agreement and to assume and to perform the
obligations of VWCARC under the Pooling and Servicing Agreement, the Related
Documents and the Trust Documents.
(iii) The Designated Affiliate is duly qualified to do business and
is in good standing, and has obtained all necessary licenses and approvals, in
each jurisdiction in which the failure to qualify or to obtain such licenses or
approvals would render any Receivable unenforceable by the Designated Affiliate
or the Trustee on behalf of any Certificateholder.
(iv) The Assignment and Assumption Agreement has been duly
authorized, executed and delivered by VWCARC, and is a legal, valid and binding
obligation of VWCARC enforceable against VWCARC in accordance with its terms,
except (y) the enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereafter in effect
relating to creditors' rights, and (z) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(v) The Assignment and Assumption Agreement has been duly authorized,
executed and delivered by the Designated Affiliate, and the Assignment and
Assumption Agreement, the Pooling and Servicing Agreement, the Related
<PAGE>
2
Documents and the Trust documents are the legal, valid and binding obligations
of the Designated Affiliate. The Assignment and Assumption Agreement is
enforceable against the Designated Affiliate in accordance with its terms,
except (y) the enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereafter in effect
relating to creditors' rights, and (z) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(vi) Neither the sale, transfer, assignment and conveyance by VWCARC
of VWCARC's right, title and interest in the Trust Assets, the Seller's
Interest, the VWCARC Certificate, the Pooling and Servicing Agreement, the
Related Documents and the Trust Documents or its obligations as Seller
thereunder to the Designated Affiliate, nor the consummation of any other
transaction contemplated in the Assignment and Assumption Agreement, nor the
execution and delivery of the Assignment and Assumption Agreement by VWCARC,
will conflict with, or result in a breach, violation or acceleration of, or
constitute a default under, any term or provision of the articles of
incorporation or by-laws of VWCARC or VWCI, or of any indenture or other
agreement or instrument to which VWCARC or VWCI is a party or by which either of
them is bound, or result in a violation of, or contravene the terms of any
statute, order or regulation applicable to VWCARC or VWCI of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over either of them.
(vii) Neither the execution and delivery of the Assignment and
Assumption Agreement by the Designated Affiliate, nor the assumption of the
obligations of VWCARC as Seller under the Pooling and Servicing Agreement, the
Related Documents or the Trust Documents, nor the consummation of any other
transaction contemplated in the Assignment and Assumption Agreement, nor the
fulfillment of the terms of the Pooling and Servicing Agreement, the Related
Documents or the Trust Documents by the Designated Affiliate, will conflict
with, or result in a breach, violation or acceleration of, or constitute a
default under, any term or provision of the articles of incorporation or by-laws
of the Designated Affiliate, or of any indenture or other agreement or
instrument to which the Designated Affiliate is a party or by which it is bound,
or result in a
<PAGE>
3
violation of, or contravene the terms of any statute, order or regulation
applicable to the Designated Affiliate of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it.
(viii) There are no actions, proceedings or investigations pending
or, to the best of such counsel's knowledge after due inquiry, threatened before
any court, administrative agency, or other tribunal (1) asserting the invalidity
of the Assignment and Assumption Agreement, (2) seeking to prevent the
consummation of any of the transactions contemplated by the Assignment and
Assumption Agreement or the execution and delivery thereof, or (3) that might
materially and adversely affect the performance by VWCARC or the Designated
Affiliate of its obligations under, or the validity or enforceability of, the
Assignment and Assumption Agreement, the Pooling and Servicing Agreement, the
Related Documents or the Trust Documents.
(ix) No consent, approval, authorization or order of, or notice to or
filing with, any court or governmental agency or body is required for the
consummation of the transactions contemplated in the Assignment and Assumption
Agreement, except the filing of amendments to UCC financing statements to
reflect the change of the "Seller" described in such financing statements to the
Designated Affiliate.
<PAGE>
EXHIBIT 2.3
SERIES 1996-1 SUPPLEMENT dated as of February 29, 1996 (the "Series
Supplement"), among VOLKSWAGEN CREDIT AUTO RECEIVABLES CORPORATION, a Delaware
corporation, as Seller, VW CREDIT, INC., a Delaware corporation, as Servicer,
and CITIBANK, N.A., a national banking association, as Trustee.
Pursuant to the Pooling and Servicing Agreement dated as of February
29, 1996 (as amended and supplemented, the "Agreement"), among the Seller, the
Servicer and the Trustee, the Seller has created the Volkswagen Credit Auto
Master Trust (the "Trust"). Section 6.03 of the Agreement provides that the
Seller may from time to time direct the Trustee to issue, on behalf of the
Trust, one or more new Series of Investor Certificates representing fractional
undivided interests in the Trust. The Principal Terms of any new Series are to
be set forth in a Supplement to the Agreement.
Pursuant to this Series Supplement, the Seller and the Trustee shall
create a new Series of Investor Certificates and specify the Principal Terms
thereof.
ARTICLE I
Creation of the Series 1996-1 Certificates
------------------------------------------
SECTION 1.01. Designation. (a) There is hereby created a Series of
------------
Investor Certificates to be issued pursuant to the Agreement and this Series
Supplement to be known as the "Floating Rate Dealer Loan Backed Certificates,
Series 1996-1".
(b) In the event that any term or provision contained herein shall
conflict with or be inconsistent with any term or provision contained in the
Agreement, the terms and provisions of this Series Supplement shall govern.
<PAGE>
2
ARTICLE II
Definitions
-----------
SECTION 2.01. Definitions. (a) Whenever used in this Series
------------
Supplement the following words and phrases shall have the following meanings.
"Accrual Period" shall mean, with respect to any Distribution Date,
--------------
the period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the Initial Distribution Date, the Closing
Date) to but excluding such Distribution Date.
"Additional Carryover Amount" shall have the
---------------------------
meaning specified in Section 4.02(b).
"Additional Interest" shall have the meaning
-------------------
specified in Section 4.02(a).
"Adjusted Invested Amount" shall mean, with respect to Series 1996-1
------------------------
for any Collection Period, an amount equal to the sum of (a) the Initial
Invested Amount of the Series 1996-1 Certificates on the Determination Date
occurring in such Collection Period, minus the excess, if any, of the aggregate
amount of Investor Charge-Offs for all Distribution Dates preceding such date
over the aggregate amount of any reimbursements of Investor Charge-Offs for all
Distribution Dates preceding such date and (b) the applicable Available
Subordinated Amount, if any, on the Determination Date occurring in such
Collection Period (in each case, after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Distribution Date
following the Determination Date during the Collection Period in which such date
occurs).
"Adjustment Date" shall mean the second London
---------------
Business Day preceding the first day of each Accrual Period.
"Allocable Defaulted Amount" shall mean, with respect to any
--------------------------
Collection Period, the product of (a) the Series 1996-1 Allocation Percentage
with respect to such Collection Period and (b) the Defaulted Amount with respect
to such Collection Period.
"Allocable Interest Collections" shall mean, with respect to any
------------------------------
Deposit Date, the product of (a) the
<PAGE>
3
Series 1996-1 Allocation Percentage for the related Collection Period and (b)
the aggregate amount of Interest Collections relating to such Deposit Date.
"Allocable Miscellaneous Payments" shall mean, with respect to any
--------------------------------
Distribution Date, the product of (a) the Series 1996-1 Allocation Percentage
for the related Collection Period and (b) Miscellaneous Payments with respect to
the related Collection Period.
"Allocable Principal Collections" shall mean, with respect to any
-------------------------------
Deposit Date, the product of (a) the Series 1996-1 Allocation Percentage for the
related Collection Period and (b) the aggregate amount of Principal Collections
relating to such Deposit Date.
"Assets Receivables Rate" shall mean, with respect to any Accrual
-----------------------
Period, an amount equal to the product of (a) the quotient obtained by dividing
(i) 360 by (ii) the actual number of days elapsed in such Accrual Period and (b)
a percentage, expressed as a fraction, (i) the numerator of which is the sum of
(A) Investor Interest Collections for the Collection Period immediately
preceding the last day of such Accrual Period (which, for the purposes of this
definition only, shall be determined based on the interest and fee amounts
billed to the Dealers which are due during such Collection Period) minus, unless
the Monthly Servicing Fee has been waived by the Servicer, the
Certificateholders Monthly Servicing Fee with respect to such immediately
preceding Collection Period and (B) the Investment Proceeds to be applied on the
Distribution Date related to such Accrual Period and (ii) the denominator of
which is the sum of (A) the product of (I) the Floating Allocation Percentage,
(II) the Series 1996-1 Series Allocation Percentage and (III) the average Pool
Balance (after giving effect to charge-offs) for such immediately preceding
Collection Period, (B) the principal balance on deposit in the Excess Funding
Account on the first day of such Accrual Period (after giving effect to all
deposits to and withdrawals therefrom on such first day) and (C) the principal
balance on deposit in the Principal Funding Account on the first day of such
Accrual Period (after giving effect to all deposits to and withdrawals therefrom
on such first day).
"Available Investor Principal Collections" shall mean, with respect to
----------------------------------------
any Distribution Date, the sum of
<PAGE>
4
(a) an amount equal to Investor Principal Collections for such Distribution
Date, (b) Allocable Miscellaneous Payments with respect to such Distribution
Date, (c) Series 1996-1 Excess Principal Collections on deposit in the
Collection Account for such Distribution Date and (d) on the Termination Date,
any funds in the Reserve Fund after giving effect to Section 4.08, except for
Section 4.08(d).
"Available Seller's Collections" shall mean, with respect to any
------------------------------
Deposit Date, the sum of (a) the Available Seller's Interest Collections for
such Deposit Date and (b) the Available Seller's Principal Collections for such
Deposit Date; provided, however, that the Available Seller's Collections shall
-------- -------
be zero for any Collection Period with respect to which the Available
Subordinated Amount is zero on the Determination Date immediately following the
end of such Collection Period.
"Available Seller's Interest Collections" shall mean, with respect to
---------------------------------------
any Deposit Date, an amount equal to the result obtained by multiplying (a) the
excess of (i) the Seller's Percentage for the related Collection Period over
(ii) the Excess Seller's Percentage for such Collection Period by (b) Allocable
Interest Collections for such Deposit Date.
"Available Seller's Principal Collections" shall mean, with respect to
----------------------------------------
any Deposit Date, an amount equal to the result obtained by multiplying (a) the
excess of (i) the Seller's Percentage for the related Collection Period over
(ii) the Excess Seller's Percentage for such Collection Period by (b) Allocable
Principal Collections for such Deposit Date.
"Available Subordinated Amount" for the first Determination Date shall
-----------------------------
mean an amount equal to the Required Subordinated Amount. The Available
Subordinated Amount for any subsequent Determination Date shall mean an amount
equal to: (a) the lesser of (i) the Available Subordinated Amount for the
preceding Determination Date, minus (A) the Required Subordination Draw Amount
with respect to the preceding Distribution Date to the extent provided in
Section 4.08, minus (B) withdrawals from the Reserve Fund pursuant to Section
4.08 on the preceding Distribution Date to make distributions pursuant to
Section 4.06(a)(iv) (but excluding any other withdrawals from the Reserve Fund),
plus (C) the portion of Excess Servicing for such preceding Distribution Date
distributed
<PAGE>
5
to the Seller pursuant to Section 4.10(c) and (ii) the product of the fractional
equivalent of the Subordinated Percentage and the Invested Amount on such
Determination Date; minus (b) in the case of clause (a)(i), the Incremental
Subordinated Amount for such preceding Determination Date; plus (c) the
Incremental Subordinated Amount for the current Determination Date; plus (d) the
Subordinated Percentage of funds to be withdrawn from the Excess Funding Account
on the succeeding Distribution Date and paid to the Seller or allocated to one
or more Series; provided, however, that the Available Subordinated Amount may be
-------- -------
increased on any Determination Date by the Seller, in its sole discretion, by
notice to the Trustee on or before such Determination Date, so long as the
cumulative amount of such increases does not exceed the lesser of (x) $5,362,500
or (y) 1.43% of the Invested Amount on such date; provided, further, that, once
-------- -------
the Expected Accumulation Period, any Early Amortization Period (other than an
Early Amortization Period which has ended as described in clause (c) or (d) of
the definition thereof in this Series Supplement) or the Initial Accumulation
Period shall have commenced, the Available Subordinated Amount shall be
calculated based on the Invested Amount as of the close of business on the last
day of the Revolving Period.
"Calculation Agent" shall mean the Trustee or any other Calculation
-----------------
Agent selected by the Seller which is reasonably acceptable to the Trustee.
"Carryover Amount" shall mean, for any Distribution Date with respect
----------------
to which the related Certificate Rate is calculated on the basis of the Asset
Receivables Rate, the excess of (a) Monthly Interest for such Distribution Date
determined as if such Certificate Rate were calculated on the basis of the LIBOR
formula set forth in clause (a) of the definition of Certificate Rate over (b)
the actual Monthly Interest for such Distribution Date.
"Carryover Shortfall" shall have the meaning
-------------------
specified in Section 4.02(b).
"Certificate Rate" shall mean, with respect to any Accrual Period, the
----------------
lesser of (a) LIBOR for such Accrual Period plus 0.16% and (b) the Asset
Receivables Rate for the immediately preceding Accrual Period.
<PAGE>
6
"Certificateholders Monthly Servicing Fee" shall
----------------------------------------
have the meaning specified in Section 3.01.
"Closing Date" shall mean March 28, 1996.
------------
"Deficiency Amount" shall have the meaning
-----------------
specified in Section 4.05.
"Early Amortization Event" shall mean any Early Amortization Event
------------------------
specified in Section 9.01 of the Agreement, together with any additional Early
Amortization Event specified in Section 6.01 of this Series Supplement.
"Early Amortization Period" shall mean a period beginning on the day
-------------------------
on which an Early Amortization Event specified in Section 9.01 of the Agreement
or Section 6.01 of this Series Supplement shall have occurred with respect to
Series 1996-1 and terminating on the earliest of (a) the payment in full of the
outstanding principal balance of the Series 1996-1 Certificates; (b) the
Termination Date; (c) if such Early Amortization Period has resulted from the
occurrence of an Early Amortization Event described in Section 6.01(a), the end
of the first Collection Period during which an Early Amortization Event would no
longer be deemed to exist pursuant to such Section 6.01(a), so long as no other
Early Amortization Event (other than an Early Amortization Event which has
resulted in an Early Amortization Period which has terminated as described in
this clause (c) or clause (d) below) shall have occurred and the scheduled
termination of the Revolving Period shall not have occurred; and (d) if such
Early Amortization Period has resulted from the occurrence of an Early
Amortization Event described in Section 6.01, other than Section 6.01(d), of
this Series Supplement, the end of the first Collection Period after which the
Trustee has received written confirmation from Standard & Poor's that
termination of such Early Amortization Period will not result in the downgrading
or withdrawal of such Rating Agency's then current rating of the Series 1996-1
Certificates, provided that (X) no other Early Amortization Event (other than an
-------- ----
Early Amortization Event which has resulted in an Early Amortization Period
which has terminated as described in this clause (d) or clause (c) above) shall
have occurred, (Y) the Expected Accumulation Period shall not have commenced and
(Z) the Initial Accumulation Period shall not have commenced.
"Excess Funding Account" shall have the meaning
----------------------
specified in Section 4.04(d)(i).
<PAGE>
7
"Excess Reserve Fund Required Amount" shall mean, for any Distribution
-----------------------------------
Date with respect to an Early Amortization Period, an amount equal to the
greater of (a) 5.0% of the initial principal balance of the Series 1996-1
Certificates and (b) the excess of (i) the sum of (x) the Available Subordinated
Amount on the preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on such
Distribution Date) and (y) an amount equal to (A) the excess of the Required
Participation Percentage over 100%, multiplied by (B) the outstanding principal
balance of the Series 1996-1 Certificates on such Distribution Date (after
giving effect to any changes therein on such Distribution Date) over (ii) the
excess of (x) the Series 1996-1 Allocation Percentage of the Pool Balance on the
last day of the immediately preceding Collection Period over (y) the Invested
Amount on such Distribution Date (after giving effect to changes therein on such
Distribution Date); provided, however, that the Excess Reserve Fund Required
-------- -------
Amount shall not exceed such Available Subordinated Amount.
"Excess Seller's Percentage" shall mean, with respect to any
--------------------------
Collection Period, a percentage (which percentage shall never be less than 0%
nor more than 100%) equal to (a) 100% minus, when used with respect to Interest
Collections and Defaulted Receivables and with respect to Principal Collections
during the Revolving Period, the sum of (i) the Floating Allocation Percentage
with respect to such Collection Period and (ii) the percentage equivalent of a
fraction, the numerator of which is the Available Subordinated Amount as of the
Determination Date occurring in such Collection Period (after giving effect to
the allocations, distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date) and the
denominator of which is the product of (x) the Pool Balance as of the last day
of such immediately preceding Collection Period and (y) the Series 1996-1
Allocation Percentage for the Collection Period in respect of which the Excess
Seller's Percentage is being calculated or (b) 100% minus, when used with
respect to Principal Receivables during the Expected Accumulation Period, any
Early Amortization Period or any Initial Accumulation Period, the sum of (i) the
Fixed Allocation Percentage with respect to such Collection Period and (ii) the
percentage equivalent of a fraction, the numerator of which is the Available
Subordinated Amount as of the Determination Date occurring in such Collection
Period (after giving effect to the allocations, distributions,
<PAGE>
8
withdrawals and deposits to be made on the Distribution Date immediately
following such Determination Date) and the denominator of which is the product
of (x) the Pool Balance as of the last day of such immediately preceding
Collection Period and (y) the Series 1996-1 Allocation Percentage for the
Collection Period in respect of which the Excess Seller's Percentage is being
calculated.
"Excess Servicing" shall mean, with respect to any Distribution Date,
----------------
the amount, if any, specified pursuant to Section 4.06(a)(vii) with respect to
such Distribution Date.
"Expected Accumulation Period" shall mean, unless an Early
----------------------------
Amortization Event (other than an Early Amortization Event which has resulted in
an Early Amortization Period which has ended as described in clause (c) or (d)
of the definition thereof in this Series Supplement) or the Principal Payment
Date Establishment Date shall have occurred prior thereto, the period commencing
on the Expected Accumulation Period Commencement Date and ending upon the first
to occur of (a) the commencement of an Early Amortization Period (other than an
Early Amortization Period which has ended as described in clause (c) or (d) of
the definition thereof in this Series Supplement), and (b) the payment in full
to Series 1996-1 Certificateholders of the outstanding principal amount of the
Series 1996-1 Certificates.
"Expected Accumulation Period Commencement Date" shall mean the first
----------------------------------------------
day of the Collection Period upon which the number of full Collection Periods
remaining until the Expected Payment Date first equals the Expected Accumulation
Period Length; provided, however, that, if at any time after the October 2000
-------- -------
Distribution Date, any other outstanding Series (other than any Excluded Series)
shall have entered into a reinvestment period or an early amortization period,
the Expected Accumulation Period Commencement Date shall be the earlier of (i)
the date that such outstanding Series shall have entered into its reinvestment
period or early amortization period and (ii) the Expected Accumulation Period
Commencement Date as previously determined. Subject to the proviso to the
preceding sentence, if the Expected Accumulation Period Length is one month, two
months, three months, four months or five months, the Expected Accumulation
Period Commencement Date shall mean the first day of the March 2001 Collection
Period, the February 2001 Collection Period, the January 2001 Collection Period,
the
<PAGE>
9
December 2000 Collection Period or the November 2000 Collection Period,
respectively.
"Expected Accumulation Period Length" shall mean a period which is
-----------------------------------
one, two, three, four or five month(s) long and is calculated as of the October
2000 Distribution Date and each Distribution Date thereafter that occurs prior
to the Expected Accumulation Period Commencement Date, as the lesser of (i) the
number of full Collection Periods between such Distribution Date and the
Expected Payment Date and (ii) the product, rounded upwards to the nearest
integer not greater than five, of (a) one divided by the lowest Monthly Payment
Rate during the last 12 months and (b) a fraction, the numerator of which is the
sum of (i) the Invested Amount as of such Distribution Date (after giving effect
to all changes therein on such date) and (ii) the invested amounts of all other
Series (other than any Excluded Series) currently in their amortization or
accumulation periods or scheduled to be in their amortization or accumulation
periods by the Expected Payment Date as of such Distribution Date (after giving
effect to all changes therein on such date) and the denominator of which is the
sum of such Invested Amount and the invested amounts as of such Distribution
Date (after giving effect to all changes therein on such date) of all other
outstanding Series (other than any Excluded Series) which are scheduled to be
outstanding on the Expected Payment Date.
"Expected Controlled Accumulation Amount" shall mean an amount equal
---------------------------------------
to the Invested Amount as of the October 2000 Distribution Date (after giving
effect to any changes therein on such date), divided by the Expected
Accumulation Period Length.
"Expected Controlled Deposit Amount" shall mean, with respect to any
----------------------------------
Distribution Date, the excess, if any, of (a) the sum of (i) the product of the
Expected Controlled Accumulation Amount and the number of Distribution Dates
from and including the first Distribution Date with respect to the Expected
Accumulation Period through and including such Distribution Date (but not in
excess of the Expected Accumulation Period Length) and (ii) the amount on
deposit in the Excess Funding Account as of the October 2000 Distribution Date
(after giving effect to any withdrawals from or deposits to such account on such
date (other than the transfer to the Principal Funding Account of the amounts on
deposit therein on such date)), over (b) the sum of amounts on deposit in the
Excess Funding Account and the
<PAGE>
10
Principal Funding Account, in each case before giving effect to any withdrawals
from or deposits to such accounts on such Distribution Date.
"Expected Payment Date" shall mean the April 2001
---------------------
Distribution Date.
"Final Payment Date" shall mean the first Distribution Date on which,
------------------
after giving effect to all payments to be made on that Distribution Date, the
outstanding principal amount of the Series 1996-1 Certificates will be paid in
full.
"Fixed Allocation Percentage" shall mean, with respect to any
---------------------------
Collection Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Invested Amount as of
the last day of the Revolving Period and the denominator of which is the product
of (a) the Pool Balance as of the last day of the immediately preceding
Collection Period and (b) the Series 1996-1 Allocation Percentage with respect
to the Collection Period in respect to which the Fixed Allocation Percentage is
being calculated; provided, however, that, with respect to that portion of any
-------- -------
Collection Period that falls after the date on which any Early Amortization
Event occurs (other than an Early Amortization Event which has resulted in an
Early Amortization Period which has ended as described in clause (c) or (d) of
the definition thereof in this Series Supplement), the Fixed Allocation
Percentage shall be reset using the Pool Balance as of the close of business on
the date on which such Early Amortization Event shall have occurred and
Principal Collections shall be allocated for such portion of such Collection
Period using such reset Fixed Allocation Percentage.
"Floating Allocation Percentage" shall mean, with respect to any
------------------------------
Collection Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Invested Amount as of
the last day of the immediately preceding Collection Period (after giving effect
to the reinvestment to occur on the next Distribution Date) and the denominator
of which is the product of (a) the Pool Balance as of such last day and (b) the
Series 1996-1 Allocation Percentage for the Collection Period in respect of
which the Floating Allocation Percentage is being calculated; provided, however,
-------- -------
that, with respect to the first Collection Period, the Floating Allocation
Percentage shall mean the percentage
<PAGE>
11
equivalent of a fraction, the numerator of which is the Initial Invested Amount
and the denominator of which is the product of (x) the Pool Balance on the
Series Cut-Off Date and (y) the Series 1996-1 Allocation Percentage with respect
to the Series Cut-Off Date.
"Incremental Subordinated Amount" shall mean, with respect to any
-------------------------------
Determination Date, the result obtained by multiplying (a) a fraction, the
numerator of which is the sum of (i) (A) the Invested Amount on the last day of
the immediately preceding Collection Period or (B) with respect to the first
Determination Date, the Invested Amount on the Closing Date and (ii) (A) the
Available Subordinated Amount for such Determination Date (calculated without
adding the Incremental Subordinated Amount for such Distribution Date as
described in clause (c) of the definition thereof) or (B) with respect to the
first Determination Date, the product of the Invested Amount on the Closing Date
and the Subordinated Percentage and the denominator of which is the Pool Balance
on such last day, by (b) the Trust Incremental Subordinated Amount.
"Initial Accumulation Period" shall mean, unless an Early Amortization
---------------------------
Event (other than an Early Amortization Event which has resulted in an Early
Amortization Period which has ended as described in clause (c) or (d) of the
definition thereof in this Series Supplement) shall have occurred prior thereto,
the period commencing on the Initial Accumulation Period Commencement Date and
ending upon the first to occur of (a) the commencement of an Early Amortization
Period (other than an Early Amortization Period which has ended as described in
clause (c) or (d) of the definition thereof in this Series Supplement) and (b)
the payment in full to Series 1996-1 Certificateholders of the outstanding
principal amount of the Series 1996-1 Certificates.
"Initial Accumulation Period Commencement Date" shall mean: (x) if
---------------------------------------------
the Principal Payment Date Establishment Date occurs on the October 1997
Distribution Date, the first day of the Collection Period upon which the number
of full Collection Periods remaining until the Initial Scheduled Payment Date
first equals the Initial Accumulation Period Length; and (y) if the Principal
Payment Date Establishment Date occurs after the October 1997 Distribution Date,
the first day of the Collection Period which begins in the month following the
month in which the Principal Payment Date Establishment Date occurs; provided,
--------
however, that, if at
- -------
<PAGE>
12
any time after the Principal Payment Date Establishment Date, any other
outstanding Series (other than any Excluded Series) shall have entered into a
reinvestment period or an early amortization period, the Initial Accumulation
Period Commencement Date shall be the earlier of (i) the date that such
outstanding Series shall have entered into its reinvestment period or early
amortization period and (ii) the Initial Accumulation Period Commencement Date
as previously determined.
"Initial Accumulation Period Length" shall mean a period which is one,
----------------------------------
two, three, four or five month(s) long and is calculated as of the Principal
Payment Date Establishment Date and each Distribution Date thereafter that
occurs prior to the Initial Accumulation Period Commencement Date, as the lesser
of (i) the number of full Collection Periods between such Distribution Date and
the Initial Scheduled Payment Date and (ii) the product, rounded upwards to the
nearest integer not greater than five, of (a) one divided by the lowest Monthly
Payment Rate during the last 12 months and (b) a fraction, the numerator of
which is the sum of (i) the Invested Amount as of such Distribution Date (after
giving effect to all changes therein on such date) and (ii) the invested amounts
of all other Series (other than any Excluded Series) currently in their
amortization or accumulation periods or scheduled to be in their amortization or
accumulation periods by the Initial Scheduled Payment Date as of such
Distribution Date (after giving effect to all changes therein on such date) and
the denominator of which is the sum of such Invested Amount and the invested
amounts as of such Distribution Date (after giving effect to all changes therein
on such date) of all other outstanding Series (other than any Excluded Series)
which are scheduled to be outstanding on the Initial Scheduled Payment Date.
"Initial Controlled Accumulation Amount" shall mean an amount equal to
--------------------------------------
the Invested Amount as of the Principal Payment Date Establishment Date (after
giving effect to any changes therein on such date), divided by the Initial
Accumulation Period Length.
"Initial Controlled Deposit Amount" shall mean, with respect to any
---------------------------------
Distribution Date, the excess, if any, of (a) the sum of (i) the product of the
Initial Controlled Accumulation Amount and the number of Distribution Dates from
and including the first Distribution Date with respect to the Initial
Accumulation Period through and including
<PAGE>
13
such Distribution Date (but not in excess of the Initial Accumulation Period
Length) and (ii) the amount on deposit in the Excess Funding Account as of the
Principal Payment Date Establishment Date (after giving effect to any
withdrawals from or deposits to such account on such date (other than the
transfer to the Principal Funding Account of the amounts on deposit therein on
such date)), over (b) the sum of amounts on deposit in the Excess Funding
Account and the Principal Funding Account, in each case before giving effect to
any withdrawals from or deposits to such accounts on such Distribution Date.
"Initial Distribution Date" shall mean April 15,
-------------------------
1996.
"Initial Invested Amount" shall mean the portion of the initial
-----------------------
principal amount of the Series 1996-1 Certificates which is invested in
Principal Receivables on the Closing Date, which is $375,000,000, plus (a) the
amount of any withdrawals from the Excess Funding Account in connection with the
purchase of an additional interest in Principal Receivables of the Trust since
the Closing Date, minus (b) the amount of any additions to the Excess Funding
Account in connection with a reduction in the Principal Receivables in the Trust
since the Closing Date.
"Initial Principal Amount" shall mean
------------------------
$375,000,000.
"Initial Principal Determination Date" shall have
------------------------------------
the meaning specified in Section 4.14.
"Initial Reserve Fund Deposit Amount" shall mean
-----------------------------------
$1,875,000.
"Initial Scheduled Payment Date" shall mean the sixth Distribution
------------------------------
Date after the Principal Payment Date Establishment Date.
"Initial Yield Supplement Account Deposit Amount"
-----------------------------------------------
shall mean $1,875,000.
"Interest Shortfall" shall have the meaning
------------------
specified in Section 4.02(a).
"Invested Amount" shall mean, when used with respect to any date, an
---------------
amount equal to (a) the Initial Invested Amount, minus (b) the amount, without
duplication,
<PAGE>
14
of principal payments (except principal payments made from the Excess Funding
Account and any transfers from the Excess Funding Account to the Principal
Funding Account) made to Series 1996-1 Certificateholders or deposited to the
Principal Funding Account prior to such date, minus (c) the excess, if any, of
the aggregate amount of Investor Charge-Offs prior to such date over Investor
Charge-Offs reimbursed pursuant to Section 4.08 prior to such date. In
addition, for purposes of the definition of "Early Amortization Period", and
Section 12.01 of the Agreement, the Invested Amount shall be an amount equal to
the outstanding principal amount of the Series 1996-1 Certificates.
"Investment Proceeds" shall mean, with respect to any Determination
-------------------
Date, all interest and other investment earnings (net of losses and investment
expenses) on funds on deposit in the Series 1996-1 Accounts, together with an
amount equal to the Series 1996-1 Allocation Percentage of the interest and
other investment earnings on funds held in the Collection Account credited to
the Collection Account pursuant to Section 4.02 of the Agreement.
"Investor Charge-Offs" shall have the meaning
--------------------
specified in Section 4.09.
"Investor Default Amount" shall mean, with respect to any Distribution
-----------------------
Date, an amount equal to the product of (a) the Allocable Defaulted Amount for
the related Collection Period and (b) the Floating Allocation Percentage for the
related Collection Period.
"Investor Interest Collections" shall mean, with respect to any
-----------------------------
Distribution Date, an amount equal to the product of (a) the Floating Allocation
Percentage for the related Collection Period and (b) Allocable Interest
Collections deposited in the Collection Account for the related Collection
Period.
"Investor Principal Collections" shall mean, with respect to any
------------------------------
Distribution Date, the sum of (a) the product of (i) the Floating Allocation
Percentage, with respect to the Revolving Period, or the Fixed Allocation
Percentage, with respect to the Expected Accumulation Period, an Early
Amortization Period or an Initial Accumulation Period, for the related
Collection Period (or any partial Collection Period which occurs as the first
Collection Period during an Early Amortization Period) and (ii) Allocable
Principal Collections deposited in the Collection Account for the
<PAGE>
15
related Collection Period (or any partial Collection Period which occurs as the
first Collection Period during an Early Amortization Period) and (b) the amount,
if any, of Interest Collections, Excess Servicing, Investment Proceeds and
Available Seller's Collections to be distributed pursuant to Section
4.06(a)(iv), 4.08(b) or 4.10(a) on such Distribution Date.
"LIBOR" shall mean, with respect to any Accrual Period, the offered
-----
rates for deposits in United States dollars having a maturity of one month (the
"Index Maturity") commencing on the related Adjustment Date which appear on the
Telerate Page 3750 as of approximately 11:00 a.m., London time, on such date of
calculation. If at least two such offered rates appear on the Telerate Page
3750, LIBOR will be the arithmetic mean (rounded, if necessary, to the nearest
one-hundred thousandth of a percent (.0000001), with five one-millionths of a
percentage point rounded upward) of such offered rates. If fewer than two such
quotations appear, LIBOR with respect to such Accrual Period will be determined
at approximately 11:00 a.m., London time, on such Adjustment Date on the basis
of the rate at which deposits in United States dollars having the Index Maturity
are offered to prime banks in the London interbank market by four major banks in
the London interbank market selected by the Calculation Agent and in a principal
amount equal to an amount of not less than U.S. $1,000,000 and that is
representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each of such banks
to provide a quotation of its rate. If at least two such quotations are
provided, LIBOR will be the arithmetic mean (rounded as aforesaid) of such
quotations. If fewer than two quotations are provided, LIBOR with respect to
such Accrual Period will be the arithmetic mean (rounded as aforesaid) of the
rates quoted at approximately 11:00 a.m., New York City time, on such Adjustment
Date by three major banks in New York, New York, selected by the Calculation
Agent for loans in United States dollars to leading European banks having the
Index Maturity and in a principal amount equal to an amount of not less than
U.S. $1,000,000 and that is representative for a single transaction in such
market at such time; provided, however, that if the banks selected as aforesaid
-------- -------
are not quoting as mentioned in this sentence, LIBOR in effect for the
applicable period will be LIBOR in effect for the previous period. For purposes
of the foregoing definition, "Telerate Page 3750" means the display page so
designated on The Dow
<PAGE>
16
Jones Telerate Service (or such other page as may replace that page on that
service or such other service or services that may be nominated by the British
Banker's Association for the purpose of displaying London interbank offered
rates for U.S. dollars deposits).
"London Business Day" shall mean any business day on which dealings in
-------------------
deposits in United States dollars are transacted in the London interbank market.
"Monthly Interest" shall have the meaning
----------------
specified in Section 4.02.
"Monthly Payment Rate" shall mean, for any Collection Period, the
--------------------
percentage derived from dividing the Principal Collections for such Collection
Period by the average daily Pool Balance for such Collection Period.
"Monthly Principal" shall have the meaning
-----------------
specified in Section 4.03.
"Monthly Servicing Fee" shall have the meaning
---------------------
specified in Section 3.01.
"Pool Factor" shall mean, with respect to any Determination Date, a
-----------
number carried out to 11 decimals representing the ratio of the Invested Amount
as of such Determination Date (determined after taking into account any
increases or decreases in the Invested Amount which will occur on the following
Distribution Date) to the Initial Invested Amount.
"Principal Funding Account" shall have the meaning
-------------------------
specified in Section 4.04(c)(i).
"Principal Payment Date" shall mean (x) if the Principal Payment Date
----------------------
Establishment Date occurs on the October 1997 Distribution Date, the Initial
Scheduled Payment Date and (y) if the Principal Payment Date Establishment Date
occurs after the October 1997 Distribution Date, the earlier of (i) the first
Distribution Date on or after the April 1998 Distribution Date on which the
balance in the Principal Funding Account, after giving effect to any deposits
and distributions to be made on such Distribution Date (other than distributions
to Series 1996-1 Certificateholders in respect of principal), equals or exceeds
the excess of the outstanding principal balance of the Series 1996-1
Certificates over the unreimbursed
<PAGE>
17
Investor Charge-Offs and (ii) the Distribution Date that is six months after the
Principal Payment Date Establishment Date.
"Principal Payment Date Establishment Date" shall
-----------------------------------------
have the meaning specified in Section 4.14.
"Reassignment Amount" shall mean, with respect to any Distribution
-------------------
Date, after giving effect to any deposits and distributions otherwise to be made
on such Distribution Date, the sum of (a) the Invested Amount on such
Distribution Date, (b) accrued and unpaid interest on the unpaid balance of the
Series 1996-1 Certificates (calculated on the basis of the outstanding principal
balance of the Series 1996-1 Certificates at the Certificate Rate as in effect
during the applicable Accrual Periods) through the day preceding such
Distribution Date, (c) the amount of Additional Interest, if any, for such
Distribution Date and any Additional Interest previously due but not distributed
to the Series 1996-1 Certificateholders on a prior Distribution Date, (d) any
Carryover Amount for such Distribution Date and any Carryover Amount previously
due but not distributed to the Series 1996-1 Certificateholders on a prior
Distribution Date and (e) any Additional Carryover Amount for such Distribution
Date and any Additional Carryover Amount previously due but not distributed to
the Series 1996-1 Certificateholders on a prior Distribution Date.
"Required Participation Percentage" shall mean, with respect to Series
---------------------------------
1996-1, 104%; provided, however, that if at the close of business on the last
-------- -------
day of any Collection Period with respect to which a determination is being made
pursuant to Section 10.03 the aggregate amount of Principal Receivables due from
each Dealer and each group of affiliated Dealers is equal to or less than 1.5%
of the Pool Balance on such last day, the Required Participation Percentage
shall mean, as of such last day and with respect to such Collection Period only,
103%; provided, further, that the Seller may, upon 10 days' prior notice to the
-------- -------
Trustee, each Rating Agency and any Enhancement Provider, reduce the Required
Participation Percentage to a percentage which shall not be less than 100% so
long as no Rating Agency shall have notified the Seller or the Servicer that any
such reduction will result in a reduction or withdrawal of the then current
rating of any outstanding Series or Class with respect to which it is a Rating
Agency.
<PAGE>
18
"Required Subordinated Amount" shall mean, as of any date of
----------------------------
determination, the sum of (a) the product of (i) the Subordinated Percentage and
(ii) the Invested Amount on such date and (b) the Incremental Subordinated
Amount.
"Required Subordination Draw Amount" shall have
----------------------------------
the meaning specified in Section 4.05.
"Reserve Fund" shall have the meaning specified in
------------
Section 4.04(a)(i).
"Reserve Fund Deposit Amount" shall mean, with respect to any
---------------------------
Distribution Date, the amount, if any, by which (a) the Reserve Fund Required
Amount for such Distribution Date exceeds (b) the amount of funds in the Reserve
Fund after giving effect to any withdrawals therefrom on such Distribution Date.
"Reserve Fund Required Amount" shall mean, with respect to any
----------------------------
Distribution Date, an amount equal to the product of (a) 0.5% and (b) the
outstanding principal balance of the Series 1996-1 Certificates on such
Distribution Date (after giving effect to any changes therein on such
Distribution Date).
"Revolving Period" shall mean the period beginning at the open of
----------------
business on the Series Cut-Off Date and terminating on the earliest of (a) the
close of business on the day immediately preceding the Expected Accumulation
Period Commencement Date, (b) the close of business on the day immediately
preceding the Initial Accumulation Period Commencement Date and (c) the close of
business on the day an Early Amortization Period commences; provided, however,
-------- -------
that, if any Early Amortization Period ends as described in clause (c) or (d) of
the definition thereof in this Series Supplement, the Revolving Period will
recommence as of the close of business on the day such Early Amortization Period
ends.
"Seller's Collections" shall mean, with respect to any Collection
--------------------
Period, the sum of (a) the Seller's Percentage of Allocable Interest Collections
for the related Collection Period, plus (b) the Seller's Percentage of Allocable
Principal Collections for the related Collection Period.
"Seller's Percentage" shall mean 100% minus (a) the Floating
-------------------
Allocation Percentage, when used with
<PAGE>
19
respect to Interest Collections and Defaulted Receivables and with respect to
Principal Collections during the Revolving Period, and (b) the Fixed Allocation
Percentage, when used with respect to Principal Collections during the Expected
Accumulation Period, the Initial Accumulation Period and an Early Amortization
Period.
"Series 1996-1" shall mean the Series of Investor Certificates, the
-------------
Principal Terms of which are specified in this Series Supplement.
"Series 1996-1 Accounts" shall have the meaning
----------------------
specified in Section 4.04(e)(i).
"Series 1996-1 Allocation Percentage" shall mean
-----------------------------------
the Series Allocation Percentage with respect to Series 1996-1.
"Series 1996-1 Certificateholders" shall mean the
--------------------------------
Holders of Series 1996-1 Certificates.
"Series 1996-1 Certificateholders' Interest" shall mean that portion
------------------------------------------
of the Certificateholders' Interest evidenced by the Series 1996-1 Certificates.
"Series 1996-1 Certificates" shall mean any one of the certificates
--------------------------
executed by the Seller and authenticated by the Trustee, substantially in the
form of Exhibit A.
"Series 1996-1 Excess Principal Collections" shall mean that portion
------------------------------------------
of Excess Principal Collections allocated to Series 1996-1 pursuant to Section
4.11.
"Series 1996-1 Principal Shortfall" shall have the
---------------------------------
meaning specified in Section 4.11.
"Series Cut-off Date" shall mean February 29,
-------------------
1996.
"Servicing Fee Rate" shall mean, with respect to Series 1996-1, 1% or,
------------------
for any Distribution Date in respect of which the Monthly Servicing Fee has been
waived, 0%.
"Special Payment Date" shall mean each Distribution Date with respect
--------------------
to any Early Amortization Period (other than an Early Amortization Period which
has ended as described in clause (c) or (d) of the definition thereof in this
Series Supplement).
<PAGE>
20
"Subordinated Percentage" will equal the percentage equivalent of a
-----------------------
fraction, the numerator of which is 12.5% and the denominator of which will be
the excess of 100% over 12.5%.
"Termination Date" shall mean the April 2003
----------------
Distribution Date.
"Termination Proceeds" shall mean any Termination Proceeds with
--------------------
respect to Series 1996-1 arising out of a sale of Receivables (or interests
therein) pursuant to Section 12.02(c) of the Agreement.
"Trust Available Subordinated Amount" means the sum of the Available
-----------------------------------
Subordinated Amount and the sum of the aggregate available subordinated amounts
for all other outstanding Series.
"Yield Supplement Account" shall have the meaning
------------------------
specified in Section 4.04(b)(i).
"Yield Supplement Account Deposit Amount" shall mean, with respect to
---------------------------------------
any Distribution Date, the amount, if any, by which the Yield Supplement Account
Required Amount exceeds the amount on deposit in the Yield Supplement Account
after giving effect to any deposits thereto and withdrawals therefrom otherwise
to be made on such Distribution Date.
"Yield Supplement Account Required Amount" shall mean, with respect to
----------------------------------------
any Distribution Date, an amount equal to the product of (a) 0.5% and (b) the
outstanding principal balance of the Series 1996-1 Certificates on such
Distribution Date (after giving effect to any changes therein on such
Distribution Date).
(b) Notwithstanding anything to the
contrary in this Series Supplement or the Agreement, the term "Rating Agency"
shall mean, whenever used in this Series Supplement or the Agreement with
respect to Series 1996-1, Moody's and Standard & Poor's. As used in this Series
Supplement and in the Agreement with respect to Series 1996-1, "highest
investment category" shall mean (i) in the case of Standard & Poor's, A-l+ or
AAA, as applicable, and (ii) in the case of Moody's, P-1 or Aaa, as applicable.
Any notice required to be given to a Rating Agency pursuant to the Agreement or
this Series Supplement shall also be given to Fitch Investors Service, Inc. and
Duff & Phelps, Inc.,
<PAGE>
21
although neither shall be deemed to be a Rating Agency for any purposes of the
Agreement or this Series Supplement with respect to Series 1996-1.
(c) All capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to them in the Agreement. The definitions in
Section 2.01 are applicable to the singular as well as to the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders of
such terms.
(d) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Series Supplement shall refer to this Series Supplement
as a whole and not to any particular provision of this Series Supplement;
references to any Article, Section or Exhibit are references to Articles,
Sections and Exhibits in or to this Series Supplement unless otherwise
specified; and the term "including" means "including without limitation".
ARTICLE III
Servicing Fee
-------------
SECTION 3.01. Servicing Compensation. The monthly servicing fee (the
-----------------------
"Monthly Servicing Fee") shall be payable to the Servicer, in arrears, on each
Distribution Date in respect of any Collection Period (or portion thereof)
occurring prior to the earlier of the first Distribution Date following the
Series 1996-1 Termination Date and the first Distribution Date on which the
Invested Amount is zero, in an amount equal to one-twelfth of the product of (a)
the Servicing Fee Rate, (b) the Pool Balance as of the last day of the
Collection Period second preceding such Distribution Date and (c) the Series
1996-1 Allocation Percentage with respect to the immediately preceding
Collection Period. The share of the Monthly Servicing Fee allocable to the
Series 1996-1 Certificateholders with respect to any Distribution Date (the
"Certificateholders Monthly Servicing Fee") shall be equal to one-twelfth of the
product of (a) the Servicing Fee Rate and (b) the Invested Amount as of the last
day of the Collection Period second preceding such Distribution Date. The
remainder of the Monthly Servicing Fee shall be paid by the Seller and in no
event shall the Trust, the Trustee or the Series 1996-1 Certificateholders be
liable for the share of the Monthly Servicing Fee to be paid by the Seller; and
the remainder of
<PAGE>
22
the Servicing Fee shall be paid by the Seller and the Investor
Certificateholders of other Series and the Series 1996-1 Certificateholders
shall in no event be liable for the share of the Servicing Fee to be paid by the
Seller or the Investor Certificateholders of other Series. The
Certificateholders Monthly Servicing Fee shall be payable to the Servicer solely
to the extent amounts are available for distribution therefor in accordance with
the terms of this Series Supplement.
The Servicer will be permitted, in its sole discretion, to waive the
Monthly Servicing Fee for any Distribution Date by notice to the Trustee on or
before the related Determination Date; provided that the Servicer believes that
--------
sufficient Interest Collections will be available on any future Distribution
Date to pay the Certificateholders Monthly Servicing Fee relating to the waived
Monthly Servicing Fee. If the Servicer so waives the Monthly Servicing Fee for
any Distribution Date, the Monthly Servicing Fee and the Certificateholders
Monthly Servicing Fee for such Distribution Date shall be deemed to be zero for
all purposes of this Series Supplement and the Agreement; provided, however,
-------- -------
that such Certificateholders Monthly Servicing Fee shall be paid on a future
Distribution Date solely to the extent amounts are available therefor pursuant
to Section 4.10(b); and provided, further, that, to the extent any such waived
-------- -------
Certificateholders Monthly Servicing Fee is so paid, the related portion of the
Monthly Servicing Fee to be paid by the Seller shall be paid by the Seller to
the Servicer.
ARTICLE IV
Rights of Series 1996-1 Certificateholders and
----------------------------------------------
Allocation and Application of Collections
-----------------------------------------
SECTION 4.01. Allocations; Payments to Seller; Excess Principal
-------------------------------------------------
Collections and Unallocated Principal Collections. (a) Interest Collections,
- --------------------------------------------------
Principal Collections, Miscellaneous Payments and Defaulted Amounts allocated to
Series 1996-1 pursuant to Article IV of the Agreement shall be allocated and
distributed as set forth in this Article.
<PAGE>
23
(b) Subject to Section 4.01(d) below, the Servicer shall instruct the
Trustee in writing to withdraw from the Collection Account and pay to the Seller
on the dates set forth below the following amounts:
(i) on each Deposit Date:
(A) an amount equal to the Excess Seller's Percentage for the
related Collection Period of Allocable Interest Collections deposited
in the Collection Account for such Deposit Date; and
(B) an amount equal to the Excess Seller's Percentage for the
related Collection Period of Allocable Principal Collections deposited
in the Collection Account for such Deposit Date, if the Seller's
Participation Amount (determined after giving effect to any Principal
Receivables transferred to the Trust on such Deposit Date) exceeds the
Trust Available Subordinated Amount for the immediately preceding
Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Distribution
Date immediately following such Determination Date); and
(ii) on each Deposit Date with respect to the Revolving Period, an
amount equal to the Available Seller's Principal Collections for such
Deposit Date, if the Seller's Participation Amount (determined after giving
effect to any Principal Receivables transferred to the Trust on such
Deposit Date) exceeds the Trust Available Subordinated Amount for the
immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date); provided,
--------
however, that Available Seller's Principal Collections shall be paid to the
-------
Seller with respect to any Collection Period only after an amount equal to
the sum of (A) the Deficiency Amount, if any, relating to the immediately
preceding Collection Period and (B) the excess, if any, of the Reserve Fund
Required Amount over the amount in the Reserve Fund on the immediately
preceding Distribution Date (after giving effect to the allocations of,
distributions from, and deposits in, the Reserve Fund on such Distribution
Date), has been
<PAGE>
24
deposited in the Collection Account from such Available Seller's Principal
Collections.
The withdrawals to be made from the Collection Account pursuant to
this Section 4.01(b) do not apply to deposits into the Collection Account that
do not represent Collections, including Miscellaneous Payments, payment of the
purchase price for the Certificateholders' Interest pursuant to Section 2.03 of
the Agreement, payment of the purchase price for the Series 1996-1
Certificateholders' Interest pursuant to Section 7.01 of this Series Supplement
and proceeds from the sale, disposition or liquidation of Receivables pursuant
to Section 9.02 or 12.02 of the Agreement.
(c) The Servicer shall instruct the Trustee to withdraw from the
Collection Account and deposit into the Reserve Fund on Deposit Dates with
respect to the Revolving Period, Available Seller's Principal Collections for
such Deposit Date, up to the amount of the excess, if any, determined pursuant
to Section 4.01(b)(ii)(B).
(d) Notwithstanding the provisions of Section 4.01(b)(i), on each
Deposit Date during any Collection Period on which any amount is on deposit in
the Excess Funding Account or the Principal Funding Account, the Servicer shall
instruct the Trustee to withdraw from the Collection Account and deposit in the
Yield Supplement Account the amounts otherwise distributable to the Seller
pursuant to Section 4.01(b)(i) until the amount on deposit in the Yield
Supplement Account is equal to the Yield Supplement Account Required Amount.
SECTION 4.02. Monthly Interest. (a) The amount of monthly interest
-----------------
("Monthly Interest") with respect to the Series 1996-1 Certificates on any
Distribution Date, shall be an amount equal to the product of (i) the
Certificate Rate, (ii) the outstanding principal balance of the Series 1996-1
Certificates as of the close of business on the preceding Distribution Date
(after giving effect to all repayments of principal made to Series 1996-1
Certificateholders on such preceding Distribution Date, if any) and (iii) a
fraction, the numerator of which is the actual number of days elapsed in the
related Accrual Period and the denominator of which is 360; provided, however,
-------- -------
that with respect to the first such Distribution Date, Monthly Interest shall be
equal to $1,044,405.00.
<PAGE>
25
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Interest Shortfall"), of (x)
the aggregate Monthly Interest for the Accrual Period applicable to such
Distribution Date over (y) the amount which will be available to be distributed
to Series 1996-1 Certificateholders on such Distribution Date in respect thereof
pursuant to this Series Supplement. If the Interest Shortfall with respect to
any Distribution Date is greater than zero, an additional amount ("Additional
Interest") equal to the product of (i) the Certificate Rate for the Accrual
Period commencing on the related Distribution Date plus 2.0% per annum (or, for
subsequent Accrual Periods, the Certificate Rate for such subsequent Accrual
Period plus 2.0% per annum), (ii) such Interest Shortfall (or the portion
thereof which has not been paid to Series 1996-1 Certificateholders) and (iii) a
fraction, the numerator of which is the amount of days elapsed in such Accrual
Period (or in a subsequent Accrual Period) and the denominator of which is 360,
shall be payable as provided herein with respect to the Series 1996-1
Certificates on each Distribution Date following such Distribution Date to and
including the Distribution Date on which such Interest Shortfall is paid to
Series 1996-1 Certificateholders. Notwithstanding anything to the contrary
herein, Additional Interest shall be payable or distributed to Series 1996-1
Certificateholders only to the extent permitted by applicable law.
(b) On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Carryover Shortfall"), of (x)
the Carryover Amount, if any, for such Distribution Date over (y) the amount
which will be available to be distributed to Series 1996-1 Certificateholders in
respect thereof on such Distribution Date pursuant to this Series Supplement.
If the Carryover Shortfall with respect to any Distribution Date is greater than
zero, an additional amount ("Additional Carryover Amount") equal to the product
of (i) the Certificate Rate (calculated pursuant to clause (a) of the definition
thereof) for the Accrual Period commencing on the related Distribution Date plus
2.0% per annum (or, for subsequent Accrual Periods, the Certificate Rate
(calculated pursuant to clause (a) of the definition thereof) for such
subsequent Accrual Periods plus 2.0% per annum), (ii) such Carryover Shortfall
(or the portion thereof which has not been paid to Series 1996-1
Certificateholders) and (iii) a fraction, the numerator of which is the amount
of days elapsed in such Accrual Period (or in a subsequent Accrual
<PAGE>
26
Period) and the denominator of which is 360, shall be payable as provided herein
with respect to the Series 1996-1 Certificates on each Distribution Date
following such Distribution Date to the Distribution Date on which such
Carryover Shortfall is paid to Series 1996-1 Certificateholders.
Notwithstanding anything to the contrary herein, any Additional Carryover Amount
shall be payable or distributed to Series 1996-1 Certificateholders only to the
extent permitted by applicable law.
SECTION 4.03. Determination of Monthly Principal. The amount of
-----------------------------------
monthly principal ("Monthly Principal") distributable with respect to the Series
1996-1 Certificates on each Distribution Date with respect to an Early
Amortization Period, the Expected Accumulation Period and the Initial
Accumulation Period shall be equal to the Available Investor Principal
Collections with respect to such Distribution Date; provided, however, that, (i)
-------- -------
for each Distribution Date with respect to the Expected Accumulation Period,
Monthly Principal shall not exceed the Expected Controlled Deposit Amount for
such Distribution Date and (ii) if the Principal Payment Date occurs on the
October 1997 Distribution Date, for each Distribution Date with respect to the
Initial Accumulation Period, Monthly Principal shall not exceed the Initial
Controlled Deposit Amount for such Distribution Date; and provided, further,
-------- -------
that Monthly Principal shall not exceed the Invested Amount of the Series 1996-1
Certificates.
SECTION 4.04. Establishment of Reserve Fund and Funding Accounts.
---------------------------------------------------
(a) (i) The Servicer, for the benefit of the Series 1996-1 Certificateholders,
shall cause to be established and maintained in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account (the "Reserve Fund") which
shall be identified as the "Reserve Fund for the Volkswagen Credit Auto Master
Trust, Series 1996-1" and shall bear a designation clearly indicating that the
funds deposited therein are held for the benefit of the Series 1996-1
Certificateholders. On the Closing Date, the Seller shall cause to be deposited
in the Reserve Fund the Initial Reserve Fund Deposit Amount.
(ii) At the written direction of the Servicer, funds on deposit in
the Reserve Fund shall be invested by the Trustee in Eligible Investments
selected by the Servicer that will mature so that such funds will be available
at the close of business on or before the Business Day preceding the following
Distribution Date. All Eligible Investments
<PAGE>
27
shall be held by the Trustee for the benefit of the Series 1996-1
Certificateholders. On each Distribution Date, all interest and other
investment earnings (net of losses and investment expenses) on funds on deposit
in the Reserve Fund received prior to such Distribution Date shall be applied as
set forth in Section 4.06(a) of this Series Supplement. Funds deposited in the
Reserve Fund on a Business Day (which immediately precedes a Distribution Date)
upon the maturity of any Eligible Investments are not required to be invested
overnight.
(b) (i) The Servicer, for the benefit of the Series 1996-1
Certificateholders, shall establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account (the "Yield Supplement
Account"), which shall be identified as the "Yield Supplement Account for the
Volkswagen Credit Auto Master Trust Series 1996-1" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Series 1996-1 Certificateholders. On the Closing Date, the Seller shall
cause to be deposited into the Yield Supplement Account the Initial Yield
Supplement Account Deposit Amount.
(ii) At the written direction of the Servicer, funds on deposit in
the Yield Supplement Account shall be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Series 1996-1 Certificateholders. On
each Distribution Date, all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit in the Yield Supplement
Account shall be applied as set forth in Section 4.06(a) of this Series
Supplement. Funds deposited in the Yield Supplement Account on any Distribution
Date shall be invested at the direction of the Servicer in Eligible Investments
that will mature so that such funds will be available on or before the close of
business on the Business Day preceding the following Distribution Date. Funds
deposited in the Yield Supplement Account on a Business Day (which immediately
precedes a Distribution Date) upon the maturity of any Eligible Investments are
not required to be invested overnight.
(iii) If on any Distribution Date there is a Carryover Amount, the
Servicer shall cause the Trustee to apply the amounts on deposit in the Yield
Supplement Account up to the amount of such Carryover Amount to satisfy such
Carryover Amount.
<PAGE>
28
(iv) If on any Distribution Date the amount on deposit in the Yield
Supplement Account (after giving effect to any withdrawals to be made from the
Yield Supplement Account on such Distribution Date) is greater than the Yield
Supplement Account Required Amount, the Servicer shall cause the Trustee to pay
to the Seller on such Distribution Date the excess of such amount on deposit in
the Yield Supplement Account over the Yield Supplement Account Required Amount.
(c) (i) The Servicer, for the benefit of the Series 1996-1
Certificateholders, shall establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account (the "Principal Funding
Account"), which shall be identified as the "Principal Funding Account for
Volkswagen Credit Auto Master Trust, Series 1996-1" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Series 1996-1 Certificateholders.
(ii) At the written direction of the Servicer, funds on deposit in
the Principal Funding Account shall be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Series 1996-1 Certificateholders. On
each Distribution Date all interest and other investment earnings (net of losses
and investment expenses) on funds on deposit therein shall be applied as set
forth in Section 4.06(a) of this Series Supplement. Funds on deposit in the
Principal Funding Account shall be invested at the direction of the Servicer in
Eligible Investments that will mature so that such funds will be available on or
before the close of business on the Business Day preceding the Expected Payment
Date or, if the Principal Payment Date Establishment Date shall have occurred,
the Business Day next preceding the following Distribution Date. Funds
deposited in the Principal Funding Account on a Business Day (which immediately
precedes the Expected Payment Date or a Distribution Date, as applicable), upon
the maturity of any Eligible Investments are not required to be invested
overnight.
(d) (i) The Servicer, for the benefit of the Series 1996-1
Certificateholders, shall establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account (the "Excess Funding Account"),
which shall be identified as the "Excess Funding Account for Volkswagen Credit
Auto Master Trust, Series 1996-1" and shall bear a designation clearly
indicating that the funds
<PAGE>
29
deposited therein are held for the benefit of the Series 1996-1
Certificateholders. On the Closing Date, the Seller shall cause to be deposited
in the Excess Funding Account an amount equal to the excess of the Initial
Principal Amount of the Series 1996-1 Certificates, if any, over the Initial
Invested Amount on the Closing Date, which excess is equal to zero.
(ii) At the written direction of the Servicer, funds on deposit in
the Excess Funding Account shall be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Series 1996-1 Certificateholders. On
each Distribution Date, all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit in the Excess Funding
Account shall be applied as set forth in Section 4.06(a) of this Series
Supplement.
Funds deposited in the Excess Funding Account on any Distribution Date
shall be invested at the direction of the Servicer in Eligible Investments that
will mature so that such funds will be available on or before the close of
business on the Business Day next preceding the following Distribution Date.
Funds deposited in the Excess Funding Account on a Business Day (which
immediately precedes a Distribution Date) upon the maturity of any Eligible
Investments are not required to be invested overnight.
(e) (i) The Trustee shall possess all right, title and interest in
and to all funds on deposit from time to time in, and all Eligible Investments
credited to, the Reserve Fund, the Yield Supplement Account, the Principal
Funding Account and the Excess Funding Account (collectively the "Series 1996-1
Accounts") and in all proceeds thereof. The Series 1996-1 Accounts shall be
under the sole dominion and control of the Trustee for the benefit of the Series
1996-1 Certificateholders. If, at any time, any of the Series 1996-1 Accounts
ceases to be an Eligible Deposit Account, the Trustee (or the Servicer on its
behalf) shall within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent) establish a new
Series 1996-1 Account meeting the conditions specified in paragraph (a)(i),
(b)(i), (c)(i) or (d)(i) above, as applicable, as an Eligible Deposit Account
and shall transfer any cash and/or any investments to such new Series 1996-1
Account. Neither the Seller, the Servicer nor any Person claiming by, through
or under the Seller, the
<PAGE>
30
Servicer or any such Person shall have any right, title or interest in, or any
right to withdraw any amount from, any Series 1996-1 Account, except as
expressly provided herein. Schedule 1, which is hereby incorporated into and
made part of this Series Supplement, identifies each Series 1996-1 Account by
setting forth the account number of each such account, the account designation
of each such account and the name of the institution with which such account has
been established. If a substitute Series 1996-1 Account is established pursuant
to this Section, the Servicer shall provide to the Trustee an amended Schedule
1, setting forth the relevant information for such substitute Series 1996-1
Account.
(ii) Pursuant to the authority granted to the Servicer in Section
3.01(a) of the Agreement, the Servicer shall have the power, revocable by the
Trustee, to make withdrawals and payments or to instruct the Trustee to make
withdrawals and payments from the Series 1996-1 Accounts for the purposes of
carrying out the Servicer's of Trustee's duties hereunder.
SECTION 4.05. Deficiency Amount. With respect to each Distribution
------------------
Date, on the related Determination Date, the Servicer shall determine the amount
(the "Deficiency Amount"), if any, by which (a) the sum of (i) Monthly Interest
for such Distribution Date, (ii) any Monthly Interest previously due but not
distributed to the Series 1996-1 Certificateholders on a prior Distribution
Date, (iii) Additional Interest, if any, for such Distribution Date and any
Additional Interest previously due but not distributed to the Series 1996-1
Certificateholders on a prior Distribution Date, (iv) the Certificateholders
Monthly Servicing Fee for such Distribution Date, (v) the Investor Default
Amount, if any, for such Distribution Date, (vi) the Series 1996-1 Allocation
Percentage of the amount of any Adjustment Payment required to be deposited in
the Collection Account pursuant to Section 3.09(a) of the Agreement with respect
to the related Collection Period that has not been so deposited as of such
Determination Date and (vii) if such Distribution Date constitutes the Final
Payment Date the sum of (A) the amount of any Carryover Amount for such
Distribution Date, (B) the amount of any Carryover Amount previously due but not
distributed to Series 1996-1 Certificateholders on a prior Distribution Date,
(C) the amount of any Additional Carryover Amount for such Distribution Date and
(D) the amount of any Additional Carryover Amount previously due but not
distributed to
<PAGE>
31
Series 1996-1 Certificateholders on a prior Distribution Date, in each case that
will not be satisfied on such date by application, pursuant to Section
4.04(b)(iii), of amounts on deposit in the Yield Supplement Account, exceeds (b)
the sum of (i) Investor Interest Collections for such Distribution Date plus any
Investment Proceeds with respect to such Distribution Date and (ii) the amount
of funds in the Reserve Fund which are available pursuant to Section 4.08(a) to
cover any portion of the Deficiency Amount. The lesser of the Deficiency Amount
and the Available Subordinated Amount shall be the "Required Subordination Draw
---------------------------
Amount".
- ------
SECTION 4.06. Application of Investor Interest Collections,
---------------------------------------------
Investment Proceeds and Available Investor Principal Collections. The Servicer
- -----------------------------------------------------------------
shall cause the Trustee to apply, on each Distribution Date, Investor Interest
Collections, Investment Proceeds and Available Investor Principal Collections to
make the following distributions:
(a) On each Distribution Date, an amount equal to the sum of Investor
Interest Collections and any Investment Proceeds deposited in the Collection
Account for the related Collection Period will be distributed in the following
priority:
(i) first, an amount equal to Monthly Interest for such Distribution
-----
Date, plus the amount of any Monthly Interest previously due but not
distributed to the Series 1996-1 Certificateholders on a prior Distribution
Date, plus the amount of any Additional Interest for such Distribution Date
and any Additional Interest previously due but not distributed to the
Series 1996-1 Certificateholders on a prior Distribution Date shall be
distributed to the Series 1996-1 Certificateholders;
(ii) second, an amount equal to the Certificateholders Monthly
------
Servicing Fee for such Distribution Date shall be distributed to the
Servicer (unless such amount has been netted against deposits to the
Collection Account or waived);
(iii) third, an amount equal to the Reserve Fund Deposit Amount, if
-----
any, for such Distribution Date shall be deposited in the Reserve Fund;
<PAGE>
32
(iv) fourth, an amount equal to the Investor Default Amount for such
------
Distribution Date shall be treated as a portion of Investor Principal
Collections for such Distribution Date;
(v) fifth, an amount equal to the Carryover Amount (after giving
-----
effect to any withdrawals from the Yield Supplement Account on such
Distribution Date), if any, for such Distribution Date, plus the amount of
any Carryover Amount previously due but not previously distributed to the
Series 1996-1 Certificateholders on a prior Distribution Date, plus the
amount of any Additional Carryover Amount for such Distribution Date and
any Additional Carryover Amount previously due but not previously
distributed to the Series 1996-1 Certificateholders on a prior Distribution
Date shall be distributed to the Series 1996-1 Certificateholders;
(vi) sixth, an amount equal to the Yield Supplement Account Deposit
-----
Amount, if any, for such Distribution Date shall be deposited in the Yield
Supplement Account; and
(vii) seventh, the balance, if any, shall constitute Excess Servicing
-------
and shall be allocated and distributed as set forth in Section 4.10.
(b) On each Distribution Date with respect to the Revolving Period,
an amount equal to Available Investor Principal Collections deposited in the
Collection Account for the related Collection Period shall be allocated first to
-----
make a deposit to the Excess Funding Account if the sum of (i) the Invested
Amount and (ii) the amount on deposit in the Excess Funding Account (other than
any Investment Proceeds) prior to the allocation on such Distribution Date is
less than the outstanding principal balance of the Series 1996-1 Certificates
and second treated as Excess Principal Collections and applied in accordance
------
with Section 4.04 of the Agreement.
(c) On each Distribution Date with respect to the Expected
Accumulation Period, the Initial Accumulation Period or an Early Amortization
Period, an amount equal to Available Investor Principal Collections shall be
distributed in the following priority:
(i) first, an amount equal to Monthly Principal for such Distribution
-----
Date shall be deposited by the
<PAGE>
33
Servicer or the Trustee into the Principal Funding Account, in the case of
the Expected Accumulation Period or the Initial Accumulation Period, or
distributed to Series 1996-1 Certificateholders, in the case of any Early
Amortization Period; and
(ii) second, for each Distribution Date with respect to the Expected
------
Accumulation Period or the Initial Accumulation Period unless an Early
Amortization Event (other than an Early Amortization Event which has
resulted in an Early Amortization Period which has ended as described in
clause (c) or (d) of the definition thereof in this Series Supplement) has
occurred, after giving effect to the transactions referred to in clause (i)
above, an amount equal to the balance, if any, of such Available Investor
Principal Collections shall be treated as Excess Principal Collections and
applied in accordance with Section 4.04 of the Agreement and Section 4.11.
SECTION 4.07. Distributions to Series 1996-1 Certificateholders.
---------------------------------------------------
(a) The Servicer shall cause the Trustee to make the following distributions at
the following times from the Collection Account, the Reserve Fund, the Principal
Funding Account and the Excess Funding Account:
(i) on each Distribution Date, all amounts on deposit in the
Collection Account and the Reserve Fund, that are payable to the Series
1996-1 Certificateholders with respect to accrued interest shall be
distributed to the Series 1996-1 Certificateholders; and
(ii) on each Special Payment Date and on the Expected Payment Date or
Principal Payment Date, as applicable, all amounts on deposit in the
Principal Funding Account and the Excess Funding Account and all amounts on
deposit in the Collection Account that are payable to the Series 1996-1
Certificateholders with respect to principal, up to a maximum amount on any
such day equal to the excess of the outstanding principal balance of the
Series 1996-1 Certificates over the unreimbursed Investor Charge-Offs,
shall be distributed to the Series 1996-1 Certificateholders.
(b) On each Distribution Date on which there is any Carryover Amount
or Additional Carryover Amount, the Servicer shall instruct the Trustee to
distribute to the
<PAGE>
34
Certificateholders the amounts payable with respect thereto pursuant to Section
4.04(b)(iii) and Section 4.06(a).
(c) The distributions to be made pursuant to this Section are subject
to the provisions of Sections 2.03, 9.02, 10.01 and 12.02 of the Agreement and
Sections 8.01 and 8.02 of this Series Supplement.
SECTION 4.08. Application of Reserve Fund and Available Subordinated
------------------------------------------------------
Amount. (a) If the portion of Investor Interest Collections and Investment
- -------
Proceeds allocated to Series 1996-1 Certificateholders on any Distribution Date
pursuant to Section 4.06(a) is not sufficient to make the entire distribution
required on such Distribution Date by Sections 4.06(a)(i), (ii) and (iv), the
Servicer shall cause the Trustee to withdraw funds from the Reserve Fund to the
extent available therein, and apply such funds to complete the distributions
pursuant to Section 4.06(a)(i), (ii) and (iv).
(b) If there is a Required Subordination Draw Amount for such
Distribution Date and such Distribution Date is not the Final Payment Date, the
Servicer shall apply or cause the Trustee to apply the Available Seller's
Collections on deposit in the Collection Account on such Distribution Date, but
only up to the amount of the Required Subordination Draw Amount, to make the
distributions required by Sections 4.06(a)(i), (ii) and (iv) that have not been
made through the application of funds from the Reserve Fund in accordance with
the preceding paragraph. If there is a Required Subordination Draw Amount for
such Distribution Date and such Distribution Date is the Final Payment Date, the
Servicer shall apply or cause the Trustee to apply the Available Seller's
Collections on deposit in the Collection Account on such Distribution Date, but
only up to the amount of the Required Subordination Draw Amount, to make the
distributions required by Sections 4.06(a)(i), (ii), (iv) and (v) that have not
been made through the application of funds from the Reserve Fund in accordance
with Section 4.08(d). Any such Available Seller's Collections remaining after
the application thereof pursuant to the first or second preceding sentence, as
applicable, shall be treated as a portion of Investor Principal Collections for
such Distribution Date, but only up to the amount of unpaid Adjustment Payments
allocated to Series 1996-1 as described in Section 4.05(a)(vi). The amount of
the Available Seller's Collections applied in accordance with the three
preceding sentences shall reduce the
<PAGE>
35
Available Subordinated Amount in all other cases as described in clause (A) of
the definition thereof. If the Required Subordination Draw Amount exceeds
Available Seller's Collections for such Distribution Date, the Available
Subordinated Amount shall be further reduced by the amount of such excess, but
not by more than the sum of (x) the Investor Default Amount and (y) the amount
of unpaid Adjustment Payments allocated to Series 1996-1 as described in Section
4.05(a)(vi).
(c) If, after giving effect to the allocations of, distributions
from, and deposits in, the Reserve Fund made pursuant to Sections 4.01(c), 4.04,
4.06(a), 4.08(a) and 4.08(e), (i) the amount in the Reserve Fund is greater than
the Reserve Fund Required Amount (or, for any Distribution Date with respect to
an Early Amortization Period, the Excess Reserve Fund Required Amount) for such
Distribution Date, the Servicer shall cause the Trustee to distribute such
excess amount to the Seller, subject to the proviso contained in Section 4.08(f)
or (ii) the amount in the Reserve Fund is less than such Reserve Fund Required
Amount, then the Trustee shall deposit any remaining Available Seller's
Collections on deposit in the Collection Account for such Distribution Date
after giving effect to Section 4.08(b) into the Reserve Fund until the amount in
the Reserve Fund is equal to such Reserve Fund Required Amount. On the
Termination Date, any funds in the Reserve Fund will be treated as Available
Investor Principal Collections.
(d) If, on the Final Payment Date, after giving effect to (c) above,
there is a Carryover Amount or Additional Carryover Amount after giving effect
to withdrawals from the Yield Supplement Account on such date, the Servicer
shall cause the Trustee to withdraw funds in the amount of such Carryover Amount
or Additional Carryover Amount from the Reserve Fund (to the extent available
therein), and distribute such funds to the Series 1996-1 Certificateholders.
Any funds remaining on deposit in the Reserve Fund after the earlier of (i)
payment in full of the outstanding principal balance of the Series 1996-1
Certificates and (ii) the Series Termination Date shall be paid to the Seller.
(e) If, for any Distribution Date with respect to an Early
Amortization Period, after giving effect to the allocations of, distributions
from, and deposits in, the Reserve Fund made pursuant to Sections 4.01(c), 4.04,
<PAGE>
36
4.06(a) and 4.08(a), the amount in the Reserve Fund is less than the Excess
Reserve Fund Required Amount for such Distribution Date, the Trustee shall
deposit any remaining Available Seller's Collections on deposit in the
Collection Account for such Distribution Date into the Reserve Fund until the
amount in the Reserve Fund is equal to such Excess Reserve Fund Required Amount.
(f) The balance of Available Seller's Collections on any Distribution
Date, after giving effect to any distributions thereof pursuant to Section
4.08(a), (b), (c) or (e), shall be distributed to the Seller on such
Distribution Date; provided, however, that, in the case of any remaining
-------- -------
Available Seller's Principal Collections, if the Trust Available Subordinated
Amount for the immediately preceding Determination Date exceeds the Seller's
Participation Amount on such date (determined after giving effect to any
Principal Receivables transferred to the Trust on such Distribution Date),
Section 4.08(c)(i) shall not apply and the amount of such excess shall be
deposited into the Reserve Fund, with any remaining Available Seller's Principal
Collections paid to the Seller.
SECTION 4.09. Investor Charge-Offs. If, on any Distribution Date on
---------------------
which the Available Subordinated Amount on the preceding Determination Date
(after giving effect to the allocations, distributions, withdrawals and deposits
to be made on such Distribution Date) is zero and the Deficiency Amount for such
Distribution Date is greater than zero, the Invested Amount shall be reduced by
the amount of the excess of such Deficiency Amount over any remaining Available
Subordinated Amount on such Determination Date, but not by more than the
Investor Default Amount (an "Investor Charge-Off"). Investor Charge-Offs shall
thereafter be reimbursed and the Invested Amount increased (but not by an amount
in excess of the aggregate unreimbursed Investor Charge-Offs on any Distribution
Date) by the sum of (a) Allocable Miscellaneous Payments with respect to such
Distribution Date and (b) the amount of Excess Servicing allocated and available
for that purpose pursuant to Section 4.10(a).
SECTION 4.10. Excess Servicing. The Servicer shall cause the Trustee
-----------------
to apply, on each Distribution Date, Excess Servicing with respect to the
Collection Period immediately preceding such Distribution Date, to make the
following distributions in the following priority:
<PAGE>
37
(a) an amount equal to the aggregate amount of Investor Charge-Offs
which have not been previously reimbursed as provided in Section 4.09
(after giving effect to the allocation on such Distribution Date of any
amount for that purpose pursuant to Section 4.09) shall be treated as a
portion of Available Investor Principal Collections with respect to such
Distribution Date;
(b) an amount equal to the aggregate outstanding amounts of the
Certificateholders Monthly Servicing Fee which have been previously waived
pursuant to Section 3.01 shall be distributed to the Servicer; and
(c) the balance, if any, shall be distributed to the Seller.
SECTION 4.11. Excess Principal Collections.
-----------------------------
(a) That portion of Excess Principal Collections for any Distribution Date
equal to the amount of Series 1996-1 Excess Principal Collections for such
Distribution Date shall be allocated to Series 1996-1 and shall be distributed
as set forth in this Series Supplement.
(b) Series 1996-1 Excess Principal Collections, with respect to any
Distribution Date, shall mean an amount equal to the Series 1996-1 Principal
Shortfall for such Distribution Date; provided, however, that, if the aggregate
-------- -------
amount of Excess Principal Collections for all Series for such Distribution Date
is less than the aggregate amount of Principal Shortfalls for all Series for
such Distribution Date, then Series 1996-1 Excess Principal Collections for such
Distribution Date shall equal the product of (x) Excess Principal Collections
for all Series for such Distribution Date and (y) a fraction, the numerator of
which is the Series 1996-1 Principal Shortfall for such Distribution Date and
the denominator of which is the aggregate amount of Principal Shortfalls for all
Series for such Distribution Date. The Series 1996-1 Principal Shortfall, with
respect to any Distribution Date, shall equal the excess of (i) (x) for any
Distribution Date with respect to the Expected Accumulation Period, the Expected
Controlled Deposit Amount, (y) for any Distribution Date with respect to the
Initial Accumulation Period, provided that the Principal Payment Date
--------
Establishment Date occurs on the October 1997 Distribution Date, the Initial
Controlled Deposit Amount, or (z) for any Distribution Date with respect to an
Early Amortization Period or any Distribution Date with respect to
<PAGE>
38
the Initial Accumulation Period, provided that the Principal Payment Date
--------
Establishment Date occurs after the October 1997 Distribution Date, the Invested
Amount over (ii) Available Investor Principal Collections for such Distribution
Date (excluding any portion thereof attributable to Excess Principal
Collections) plus, in the case of a Distribution Date with respect to the
Initial Accumulation Period, provided that the Principal Payment Date occurs
--------
after the October 1997 Distribution Date, the balance in the Principal Funding
Account on such Distribution Date, before giving effect to any deposits and
distributions to be made on such Distribution Date.
SECTION 4.12. Excess Funding Account. (a) Any funds on deposit in
-----------------------
the Excess Funding Account on the earlier of October 2000 Distribution Date or,
if earlier, the Principal Payment Date Establishment Date will be deposited in
the Principal Funding Account on such date. In addition, no funds will be
deposited in the Excess Funding Account during any Early Amortization Period or
with respect to any Collection Period following the September 2000 Collection
Period or, if earlier, the Collection Period ending in the month immediately
preceding the month in which the Principal Payment Date Establishment Date
occurs.
(b) On each Determination Date during the Revolving Period, the
Seller shall determine whether the sum of the Invested Amount and the amount on
deposit in the Excess Funding Account (other than any Investment Proceeds) is
greater than the outstanding principal balance of the Series 1996-1
Certificates. If on any such Determination Date such sum is greater than the
outstanding principal balance of the Series 1996-1 Certificates and thus there
are sufficient Principal Receivables in the Trust to permit an increase in the
Invested Amount without causing an early amortization event or reinvestment
event to occur with respect to any outstanding Series, the Seller shall notify
the Trustee of the amount of the increase in the Invested Amount. Subject to
the provisions set forth below in this Section 4.12(b) and to Sections 4.12(c)
and (d) below, upon receipt of such notice the Invested Amount shall be
increased by the amount specified, and the Servicer shall instruct the Trustee
to withdraw from the Excess Funding Account and pay to the Seller or allocate to
one or more other Series, on the next Distribution Date, an amount equal to the
amount of the increase in the Invested Amount. Such payment shall be in payment
or partial payment pursuant to the Receivables Purchase Agreement for additional
Principal
<PAGE>
39
Receivables transferred to the Trust or allocated to Series 1996-1. To the
extent that the Invested Amount is increased by any payment to the Seller or any
allocation to one or more other Series, the Seller's Interest or such other
Series' invested amount, as applicable, shall be reduced by the amount of such
payment. In addition, any increase in the Invested Amount is subject to the
condition that after giving effect to such increase (i) the Pool Balance equals
or exceeds (ii) the sum of (A) the Required Participation Amount, (B) the sum of
the Required Subordinated Amount and the required subordinated amounts for all
other Series (or, if such other Series shall have no required subordinated
amount, the available subordinated amount with respect to such Series) and (C)
the sum of any subordinated amounts supporting any Enhancement for all other
Series. In connection with the foregoing, the Seller shall endeavor (taking
into account any seasonality experienced in the Accounts in the Trust) to
minimize the amounts on deposit, from time to time, in the Excess Funding
Account.
(c) If other Series issued by the Trust provide for excess funding
accounts or other arrangements similar to the Excess Funding Account involving
fluctuating levels of investments in Principal Receivables, (i) the allocation
of additional Principal Receivables to increase the Invested Amount and the
invested amounts of such other Series (and the related withdrawals from the
Excess Funding Account and the other excess funding or similar accounts) will be
based on the proportion that the amount on deposit in the Excess Funding Account
bears to amounts on deposit in the excess funding accounts of all Series
providing for excess funding accounts or such similar arrangements or to amounts
otherwise similarly available and (ii) the deposit of amounts into the Excess
Funding Account and the excess funding accounts of such other Series will be pro
rata based on the proportion that the Adjusted Invested Amount bears to the
adjusted invested amounts of all Series providing for excess funding accounts or
such similar arrangements.
(d) If any other Series is in an amortization, early amortization,
accumulation period or reinvestment period, the amounts of any withdrawals from
the Excess Funding Account shall be applied first to satisfy in full any then
-----
applicable funding or payment requirements of such Series and second to make a
------
payment to the Seller. If more than one other Series is in an amortization,
early amortization, accumulation or reinvestment period, the amounts of any
withdrawals from the Excess Funding Account shall be
<PAGE>
40
allocated (and, if necessary, reallocated) among such Series as specified in the
related Series Supplement to meet the funding or payment requirements of each
such Series first to satisfy in full all then applicable funding or payment
-----
requirements of each such Series and second to make a payment to the Seller.
------
SECTION 4.13. Accumulation Period Lengths; Accumulation Period
------------------------------------------------
Commencement Dates. (a) Beginning on the October 2000 Distribution Date, and
- -------------------
on each Distribution Date thereafter that occurs prior to the Expected
Accumulation Period Commencement Date, the Servicer shall calculate the Expected
Accumulation Period Length and, if applicable, determine the Expected
Accumulation Period Commencement Date. Once the Servicer has determined the
Expected Accumulation Period Commencement Date, the Servicer shall promptly
notify the Trustee in writing of such determination. Immediately upon receipt
of such notice, the Trustee shall notify the Seller, the Series 1996-1
Certificateholders and each Rating Agency of the Expected Accumulation Period
Commencement Date.
(b) If the Principal Payment Date Establishment Date is the October
1997 Distribution Date, beginning on such date, and on each Distribution Date
thereafter that occurs prior to the Initial Accumulation Period Commencement
Date, the Servicer shall calculate the Initial Accumulation Period Length and,
if applicable, determine the Initial Accumulation Period Commencement Date.
Once the Servicer has determined the Initial Accumulation Period Commencement
Date, the Servicer shall promptly notify the Trustee in writing of such
determination. Immediately upon receipt of such notice, the Trustee shall
notify the Seller, the Series 1996-1 Certificateholders and each Rating Agency
of the Initial Accumulation Period Commencement Date.
(c) In connection with the foregoing provisions of this Section 4.13,
the Seller hereby agrees not to cause the Trust to issue any new Series during
the period from the date hereof until the date that the Series 1996-1
Certificates shall have been paid in full, if such issuance would have an
adverse effect on the results obtained by application of the formula used to
compute the Expected Accumulation Period Length or the Initial Accumulation
Period Length, as the case may be.
SECTION 4.14. Initial Principal Determination Date. The "Initial
-------------------------------------
Principal Determination Date" for Series 1996-1 is the October 1997 Distribution
Date;
<PAGE>
41
provided, however, that the Initial Principal Determination Date shall
- -------- -------
automatically be extended to the next succeeding Distribution Date (but not
later than the October 2000 Distribution Date) unless the Servicer, at least 30
days prior to the then-current Initial Principal Determination Date, notifies
the Trustee that the Initial Principal Determination Date shall not be extended,
in which case the Initial Principal Determination Date shall be fixed on the
then-current Initial Principal Determination Date (such date, the "Principal
Payment Date Establishment Date"). The Servicer shall provide notice of such
election to the Trustee not more than 60 days and not less than 30 days prior to
the then-current Initial Principal Determination Date. Immediately upon receipt
of such notice, the Trustee shall notify the Seller, the Series 1996-1
Certificateholders and each Rating Agency of the Servicer's election not to
extend the Initial Principal Determination Date.
ARTICLE V
Distributions and Reports
-------------------------
to Series 1996-1 Certificateholders
-----------------------------------
SECTION 5.01. Distributions. (a) On each Distribution Date, the
--------------
Trustee shall distribute to each Series 1996-1 Certificateholder of record on
the preceding Record Date (other than as provided in Section 12.02 of the
Agreement respecting a final distribution) such Certificateholder's pro rata
share (based on the aggregate fractional undivided interests represented by the
Series 1996-1 Certificates held by such Certificateholder) of the amounts on
deposit in the Series 1996-1 Accounts or the Collection Account as is payable to
the Series 1996-1 Certificateholders on such Distribution Date pursuant to
Section 4.07.
(b) Except as provided in Section 12.02 of the Agreement with respect
to a final distribution, distributions to Series 1996-1 Certificateholders
hereunder shall be made by check mailed to each Series 1996-1 Certificateholder
at such Certificateholder's address appearing in the Certificate Register
without presentation or surrender of any Series 1996-1 Certificate or the making
of any notation thereon; provided, however, that, with respect to Series 1996-1
-------- -------
Certificates registered in the name
<PAGE>
42
of a Depository, such distributions shall be made to such Depository in
immediately available funds.
SECTION 5.02. Reports and Statements to Series 1996-1
---------------------------------------
Certificateholders. (a) At least two Business Days prior to each Distribution
- -------------------
Date, the Servicer will provide to the Trustee, and on each such Distribution
Date, the Trustee shall forward to each Series 1996-1 Certificateholder, a
statement substantially in the form of Exhibit B prepared by the Servicer
setting forth certain information relating to the Trust and the Series 1996-1
Certificates.
(b) A copy of each statement provided pursuant to paragraph (a) will
be made available for inspection at the Corporate Trust Office.
(c) On or before January 31 of each calendar year, beginning with
calendar year 1997, the Trustee shall furnish or cause to be furnished to each
Person who at any time during the preceding calendar year was a Series 1996-1
Certificateholder (or Certificate Owner), a statement prepared by the Servicer
containing the information which is required to be contained in the statement to
Series 1996-1 Certificateholders as set forth in paragraph (a) above, aggregated
for such calendar year or the applicable portion thereof during which such
Person (or any related Certificate Owner) was a Series 1996-1 Certificateholder
(or Certificate Owner), together with other information as is required to be
provided by an issuer of indebtedness under the Internal Revenue Code and such
other customary information as is necessary to enable the Series 1996-1
Certificateholders (or Certificate Owners) to prepare their tax returns. Such
obligation of the Trustee shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Trustee
pursuant to any requirements of the Internal Revenue Code as from time to time
in effect.
<PAGE>
43
ARTICLE VI
Amortization Events
-------------------
SECTION 6.01. Additional Amortization Events. The occurrence of any
-------------------------------
of the following events shall be deemed to be an Early Amortization Event solely
with respect to Series 1996-1:
(a) a failure by the Seller to convey Receivables in Additional
Accounts to the Trust within five Business Days after the day on which it
is required to convey such Receivables pursuant to the Agreement;
(b) failure on the part of the Seller, the Servicer or VWCI, as
applicable, (i) to make any payment or deposit (including any Transfer
Deposit Amount or Adjustment Payment) required by the terms of the
Agreement or the Receivables Purchase Agreement on or before the date
occurring two Business Days after the date such payment or deposit is
required to be made therein, or (ii) to deliver a Distribution Date
Statement with respect to Series 1996-1 within five Business Days of the
day such item is due to be delivered under this Series Supplement, or (iii)
duly to observe or perform in any material respect the covenant of the
Seller set forth in Section 2.06(a) of the Agreement or (iv) duly to
observe or perform in any material respect any other covenants or
agreements of the Seller or the Servicer, as the case may be, set forth in
the Agreement or the Receivables Purchase Agreement, which failure in the
case of this clause (iv) continues unremedied for a period of 45 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Seller by the Trustee or any
Enhancement Provider;
(c) any representation or warranty made by VWCI in the Receivables
Purchase Agreement or the Seller in the Agreement or any information
contained in a computer file or microfiche or written list required to be
delivered by the Seller pursuant to Section 2.01, 2.05, 2.07 or 2.08 of the
Agreement, (i) shall prove to have been incorrect in any material respect
when made or when delivered, and shall continue to be incorrect in any
material respect for a period of 60 days after the date on which written
notice of such failure, requiring
<PAGE>
44
the same to be remedied, shall have been given to the Seller by the Trustee
and (ii) as a result of such incorrectness the interests of the Holders of
the Series 1996-1 Certificates are materially and adversely affected;
provided, however, that an Early Amortization Event shall not be deemed to
-------- -------
have occurred under this paragraph if the Seller has repurchased the
related Receivable or all such Receivables, if applicable, during such
period in accordance with the provisions of the Agreement;
(d) the outstanding principal amount of the Series 1996-1 Certificates
is not repaid by the Expected Payment Date or, if the Principal Payment
Date Establishment Date has occurred, the Principal Payment Date;
(e) on any Determination Date, the average of the Monthly Payment
Rates for the three preceding Collection Periods is less than 22.5%;
(f) on any Determination Date, the Available Subordinated Amount for
the next Distribution Date will be less than the Required Subordinated
Amount on such Determination Date, after giving effect to the distributions
to be made on the next Distribution Date;
(g) any Service Default with respect to Series 1996-1 occurs;
(h) on any Determination Date, as of the last day of each of the two
preceding Collection Periods, the aggregate amount of Principal Receivables
relating to Used Vehicles exceeds 20% of the Pool Balance on such last
day; or
(i) any Carryover Amount or Additional Carryover Amount is outstanding
on six consecutive Distribution Dates.
The Trustee agrees that upon gaining actual knowledge of the
occurrence of any event described in Section 9.01 of the Agreement or Section
6.01 of this Series Supplement it shall (a) promptly provide notice to the
Rating Agencies of the occurrence of such event and (b) notify the Series 1996-1
Certificateholders of the occurrence of such event within 45 days of the
expiration of the applicable grace period, if any. In the case of any
<PAGE>
45
event described in Section 6.01(b), (c) or (g) of this Series Supplement, an
Early Amortization Event with respect to Series 1996-1 will be deemed to have
occurred only if, after the applicable grace period described in such Section,
if any, either the Trustee or Series 1996-1 Certificateholders evidencing more
than 50% of the aggregate unpaid principal amount of the Series 1996-1
Certificates by written notice to the Seller and the Servicer (and the Trustee,
if given by Series 1996-1 Certificateholders) declare that an Early Amortization
Event has occurred as of the date of such notice. In the case of any other
Early Amortization Event, such Early Amortization Event will be deemed to have
occurred immediately upon the occurrence of such event, without any notice or
other action on the part of the Trustee or the Series 1996-1 Certificateholders.
In the case of any Early Amortization Event described in Section 6.01,
other than Section 6.01(d), provided that (i) no other Early Amortization Event
(other than an Early Amortization Event which has resulted in an Early
Amortization Period which has terminated as described in clause (c) or (d) of
the definition thereof in this Series Supplement) has occurred and (ii) the
Revolving Period has not otherwise terminated, the Trustee agrees that it shall
request written confirmation from Standard & Poor's that the termination of the
Early Amortization Period caused by the occurrence of such Early Amortization
Event will not result in the downgrading or withdrawal of such entity's then
current rating of the Series 1996-1 Certificates.
ARTICLE VII
Optional Repurchase
-------------------
SECTION 7.01. Optional Repurchase. (a) On any Distribution Date
--------------------
occurring after the date on which the Invested Amount is reduced to $37,500,000
or less, the Seller shall have the option, subject to the condition set forth in
paragraph (c), to purchase the entire Series 1996-1 Certificateholders'
Interest, at a purchase price equal to the Reassignment Amount for such
Distribution Date.
(b) The Seller shall give the Servicer and the Trustee at least 10
days' prior written notice of the Distribution Date on which the Seller intends
to exercise such purchase option. Not later than the close of business on the
day before the Distribution Date, New York City time,
<PAGE>
46
on such Distribution Date the Seller shall deposit the Reassignment Amount into
the Collection Account in immediately available funds. Such purchase option is
subject to payment in full of the Reassignment Amount. The Reassignment Amount
shall be distributed as set forth in Section 8.01(b).
ARTICLE VIII
Final Distributions
-------------------
SECTION 8.01. Sale of Certificateholders' Interest Pursuant to
------------------------------------------------
Section 2.03 of the Agreement; Distributions Pursuant to Section 7.01 of this
- -----------------------------------------------------------------------------
Series Supplement or Section 2.03 or 12.02(c) of the Agreement.
- ---------------------------------------------------------------
(a) The amount to be paid by the Seller to the Collection Account with respect
to Series 1996-1 in connection with a purchase of the Certificateholders'
Interest pursuant to Section 2.03 of the Agreement shall equal the Reassignment
Amount for the Distribution Date on which such repurchase occurs.
(b) With respect to the Reassignment Amount deposited into the
Collection Account pursuant to Section 7.01 or 8.01 of this Series Supplement or
Section 2.03 of the Agreement or any Termination Proceeds deposited into the
Collection Account pursuant to Section 12.02(c) of the Agreement, the Trustee
shall, not later than 12:00 noon, New York City time, on the Distribution Date
on which such amounts are deposited (or, if such date is not a Distribution
Date, on the immediately following Distribution Date) (in the priority set forth
below): (A) first, (x) deposit an amount equal to the Invested Amount on such
-----
date into the Principal Funding Account and (y) deposit an amount equal to the
sum of (i) Monthly Interest for such Distribution Date, (ii) any Monthly
Interest previously due but not distributed on a prior Distribution Date, (iii)
the amount of Additional Interest, if any, for such Distribution Date and any
Additional Interest previously due but not distributed on a prior Distribution
Date, (iv) any Carryover Amount previously due but not distributed to the Series
1996-1 Certificateholders on a prior Distribution Date and (v) the amount of any
Additional Carryover Amount for such Distribution Date and any Additional
Carryover Amount previously due but not distributed to the Series 1996-1
Certificateholders on a prior Distribution Date, in the
<PAGE>
47
Collection Account with such funds designated by the Trustee as being held for
the benefit of the Series 1996-1 Certificateholders, up to the Reassignment
Amount and (B) second, pay the remainder of any Termination Proceeds to the
------
Seller.
(c) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the Principal
Funding Account and the Collection Account pursuant to Section 7.01 or 8.01 and
all other amounts on deposit therein that are allocable to the Series 1996-1
Certificateholders shall be distributed in full to the Series 1996-1
Certificateholders on such date and any distribution made pursuant to paragraph
(b) above shall be deemed to be a final distribution pursuant to Section 12.02
of the Agreement with respect to Series 1996-1.
SECTION 8.02. Distribution of Proceeds of Sale, Disposition or
------------------------------------------------
Liquidation of the Receivables Pursuant to Section 9.02 of the Agreement. (a)
- ------------------------------------------ ------------------------------
Not later than 12:00 noon, New York City time, on the Distribution Date
following the date on which the Insolvency Proceeds are deposited into the
Collection Account pursuant to Section 9.02(b) of the Agreement, the Trustee
shall first (in each case, after giving effect to any deposits and distributions
otherwise to be made on such Distribution Date) deduct an amount equal to the
Invested Amount on such Distribution Date from the portion of the Insolvency
Proceeds allocated to Allocable Principal Collections and deposit such amount in
the Principal Funding Account; provided that the amount of such deposit shall
--------
not exceed the product of (x) the portion of the Insolvency Proceeds allocated
to Allocable Principal Collections and (y) 100% minus the Excess Seller's
Percentage with respect to the related Collection Period. The remainder of the
portion of the Insolvency Proceeds allocated to Allocable Principal Collections
shall be allocated to the Seller's Interest and shall be released to the Seller
on such Distribution Date.
(b) Not later than 12:00 noon, New York City time, on such
Distribution Date, the Trustee shall first (in each case, after giving effect to
any deposits and distributions otherwise to be made on such Distribution Date)
deduct an amount equal to the sum of (i) Monthly Interest for such Distribution
Date, (ii) any Monthly Interest previously due but not distributed on a prior
Distribution Date, (iii) the amount of Additional Interest,
<PAGE>
48
if any, for such Distribution Date and any Additional Interest previously due
but not distributed on a prior Distribution Date, (iv) any Carryover Amount for
such Distribution Date and any Carryover Amount previously due but not
distributed to the Series 1996-1 Certificateholders on a prior Distribution Date
and (v) the amount of any Additional Carryover Amount for such Distribution Date
and any Additional Carryover Amount previously due but not distributed to the
Series 1996-1 Certificateholders on a prior Distribution Date from the portion
of the Insolvency Proceeds allocated to Allocable Interest Collections and
deposit such amount in the Collection Account with such funds designated by the
Trustee as being held for the benefit of the Series 1996-1 Certificateholders;
provided, however, that the amount of such distribution shall not exceed (x) the
- -------- -------
product of (A) the portion of the Insolvency Proceeds allocated to Allocable
Interest Collections and (B) 100% minus the Excess Seller's Percentage. The
remainder of the portion of the Insolvency Proceeds allocated to Allocable
Interest Collections shall be allocated to the Seller's Interest and shall be
released to the Seller on such Distribution Date.
(c) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the Principal
Funding Account and the Collection Account pursuant to this Section and all
other amounts on deposit therein that are allocable to the Series 1996-1
Certificateholders shall be distributed in full to the Series 1996-1
Certificateholders on the Distribution Date on which funds are deposited
pursuant to this Section (or, if not so deposited on a Distribution Date, on the
immediately following Distribution Date) and any distribution made pursuant to
this Section shall be deemed to be a final distribution pursuant to Section
12.02 of the Agreement with respect to Series 1996-1.
ARTICLE IX
Other Series Provisions
-----------------------
SECTION 9.01. Additional Covenants. Except for the conveyance
---------------------
hereunder to the Trustee, the Seller will not sell, pledge, assign or transfer
to any other Person any rights it might have to funds on deposit in the Reserve
Fund, the Principal Funding Account, the Excess Funding
<PAGE>
49
Account or the Yield Supplement Account or Investment Proceeds with respect
thereto.
SECTION 9.02. Tax Treatment. The Seller has entered into the
--------------
Agreement and this Series Supplement and the Series 1996-1 Certificates have
been issued with the intention that the Series 1996-1 Certificates will qualify
under applicable tax law as indebtedness of the Seller secured by the Trust
assets attributable to the Series 1996-1 Certificates. The Seller, each
Beneficiary and each Series 1996-1 Certificateholder and Certificate Owner, by
the acceptance of its Series 1996-1 Certificate or Book-Entry Certificate, as
applicable, agrees to treat the Series 1996-1 Certificates as indebtedness of
the Seller secured by the Trust assets attributable to the Series 1996-1
Certificates, for Federal income taxes, state and local income and franchise
taxes, Michigan Single Business tax and any other taxes imposed on or measured
by income in whole or in part.
ARTICLE X
Miscellaneous Provisions
------------------------
SECTION 10.01. Ratification of Agreement. As supplemented by this
--------------------------
Series Supplement, the Agreement is in all respects ratified and confirmed and
the Agreement as so supplemented by this Series Supplement shall be read, taken
and construed as one and the same instrument.
SECTION 10.02. Counterparts. This Series Supplement may be executed
-------------
in two or more counterparts (and by different parties on separate counterparts)
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
SECTION 10.03. Dealer Concentrations. So long as this Series 1996-1
----------------------
shall be outstanding, on the last day of each Collection Period, the Servicer
shall determine if the aggregate amount of Principal Receivables due from each
Dealer and each group of affiliated Dealers on such date is less than or equal
to 1.5% of the Pool Balance on such date. The Servicer shall promptly provide
the Trustee a report setting forth the basis for such determination. The
Trustee upon request from any Rating Agency will make such report available to
such Rating Agency.
<PAGE>
50
SECTION 10.04. GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE
--------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
<PAGE>
51
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Series Supplement to be duly executed by their respective officers
as of the day and year first above written.
VOLKSWAGEN CREDIT AUTO RECEIVABLES CORPORATION,
Seller,
by
----------------------------------------
Name:
Title:
by
----------------------------------------
Name:
Title:
VW CREDIT, INC., Servicer,
by
----------------------------------------
Name:
Title:
by
----------------------------------------
Name:
Title:
CITIBANK, N.A.,
Trustee,
by
----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF FACE OF CERTIFICATE
Initial
REGISTERED Invested Amount: /1/
$200,000,000 -
Certificate No. R-
CUSIP NO.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
VOLKSWAGEN CREDIT AUTO MASTER TRUST
FLOATING RATE DEALER LOAN
BACKED CERTIFICATES, SERIES 1996-1
evidencing a fractional undivided interest in certain
assets of the
VOLKSWAGEN CREDIT AUTO MASTER TRUST
the corpus of which consists primarily of wholesale (i.e., dealer floorplan)
----
receivables (the "Receivables") generated from time to time in the ordinary
course of business in a portfolio of revolving financing arrangements (the
"Accounts") of VW Credit, Inc. meeting certain eligibility criteria. This
certificate (a "Certificate") does not represent an interest in, or obligation
of, Volkswagen Credit Auto Receivables Corporation (the "Seller" or "VWCARC"),
VW Credit, Inc. or any affiliate thereof.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any
- ----------
/1/Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
<PAGE>
2
benefit under the Pooling and Servicing Agreement referred to on the reverse
side hereof or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Seller has caused this Certificate to be duly
executed.
VOLKSWAGEN CREDIT AUTO
RECEIVABLES CORPORATION,
by
_________________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates described in the within-mentioned Pooling and
Servicing Agreement.
Citibank, N.A.
as Trustee,
by
________________________
Authorized Officer
<PAGE>
3
REVERSE OF CERTIFICATE
This certifies that Cede & Co. (the "Series 1996-1
Certificateholder"), is the registered owner of a fractional undivided interest
in certain assets of the VOLKSWAGEN CREDIT AUTO MASTER TRUST (the "Trust")
created pursuant to a Pooling and Servicing Agreement dated as of February 29,
1996 (the "P&S"), as supplemented by the Series 1996-1 Supplement dated as of
February 29, 1996, (the "Series Supplement"), among the Seller, VW Credit, Inc.,
as servicer, and Citibank, N.A., as trustee (the "Trustee") that are allocated
to the Series 1996-1 Certificateholders' Interest pursuant to the P&S and the
Series Supplement. The P&S and the Series Supplement are hereinafter
collectively referred to as the Pooling and Servicing Agreement. The corpus of
the Trust will include (a) all of the Seller's right, title and interest in, to
and under the Receivables in each Account and all Collateral Security with
respect thereto owned by the Seller at the close of business on the Cut-Off
Date, in the case of the Initial Accounts, and on the applicable Additional Cut-
Off Date, in the case of Additional Accounts, and all monies due or to become
due and all amounts received with respect thereto and all proceeds (including
"proceeds" as defined in Section 9-306 of the UCC as in effect in the State of
Michigan and Recoveries) thereof, (b) all of Seller's rights, remedies, powers
and privileges with respect to such Receivables under the Receivables Purchase
Agreement, (c) all of the Seller's right, title and interest in, to and under
the Receivables in each Account and all Collateral Security with respect thereto
owned by the Seller at the close of business on each Transfer Date and not
theretofore conveyed to the Trust, all monies due or to become due and all
amounts received with respect thereto and all proceeds (including "proceeds" as
defined in Section 9-306 of the UCC as in effect in the State of Michigan and
Recoveries) thereof, (d) all monies on deposit in, and Eligible Investments
credited to, the Collection Account or any Series Account, (e) any Enhancements
and (f) all other assets and interests constituting the Trust. In addition to
the Certificates, the Seller's Certificate will be issued pursuant to the
Pooling and Servicing Agreement which will represent the Seller's Interest in
the Trust. The Seller's Certificate will represent the interest in the Trust
Assets not represented by the Investor Certificates.
<PAGE>
4
The Receivables consist of advances made directly or indirectly by VW
Credit, Inc. to domestic automobile dealers franchised by Volkswagen of America,
Inc. or any other automobile manufacturers.
Subject to the terms and conditions of the Agreement, the seller may
from time to time direct the Trustee, on behalf of the Trust, to issue one or
more new Series of Investor Certificates, which will represent fractional
undivided interests in certain of the Trust Assets.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement to which, as
amended and supplemented from time to time, the Series 1996-1 Certificateholder
by virtue of the acceptance hereof assents and is bound. Although a summary of
certain provisions of the Pooling and Servicing Agreement is set forth below,
this Certificate does not purport to summarize the Pooling and Servicing
Agreement and reference is made to the Pooling and Servicing Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Pooling and Servicing Agreement (without schedules
and exhibits) may be requested from the Trustee by writing to the Trustee at
Citibank, N.A., 120 Wall Street, 13th Floor, New York, NY 10043, Attention:
Corporate Agency and Trust Department. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the Pooling
and Servicing Agreement.
The Seller has entered into the Pooling and Servicing Agreement and
the Series 1996-1 Certificates have been (or will be) issued with the intention
that the Series 1996-1 Certificates will qualify under applicable tax law as
indebtedness of the Seller secured by the Receivables. The Seller, each
Beneficiary and each Certificateholder and Certificate Owner, by the acceptance
of its Certificate or Book-Entry Certificate, as applicable, agrees to treat the
Series 1996-1 Certificates as indebtedness of VWCARC secured by the Receivables
for Federal income taxes, state and local income and franchise taxes, Michigan
Single Business tax and any other taxes imposed on or measured by income.
<PAGE>
5
On each Distribution Date, the Trustee shall distribute to each Series
1996-1 Certificateholder of record at the close of business on the day preceding
such Distribution Date (each a "Record Date") such Certificateholder's pro rata
share (based on the aggregate fractional undivided interest represented by the
Series 1996-1 Certificates held by such Certificateholder, except as otherwise
provided in the Pooling and Servicing Agreement) of such amounts on deposit in
the Collection Account and any Series Account that are payable in respect of the
Series 1996-1 Certificates pursuant to the Pooling and Servicing Agreement.
Distributions with respect to this Certificate will be made by the Trustee by
check mailed to the address of the Certificateholder of record appearing in the
Certificate Register without the presentation or surrender of this Certificate
or the making of any notation thereon (except for the final distribution in
respect of this Certificate) except that with respect to Series 1996-1
Certificates registered in the name of a Depository, including Cede & Co., the
nominee for The Depository Trust Company, distributions will be made in
immediately available funds. Final payment of this Certificate will be made
only upon presentation and surrender of this Certificate at the office or agency
specified in the notice of final distribution delivered by the Trustee to the
Certificateholder in accordance with the Pooling and Servicing Agreement.
On the Distribution Date occurring after the Invested Amount is
reduced to $37,500,000 or less, the Seller has the option, subject to the
condition set forth in Section 7.01 of the Series Supplement, to the purchase
the entire Series 1996-1 Certificateholders' Interest in the Trust. The
purchase price will be equal to the Reassignment Amount (as defined in the
Series Supplement).
This Certificate does not represent an obligation of, or an interest
in Volkswagen of America, Inc., the Seller, the Servicer, or any affiliate of
any of them and is not insured or guaranteed by any governmental agency or
instrumentality. This Certificate is limited in right of payment to certain
Collections with respect to the Receivables (and certain other amounts), all as
more specifically set forth herein and in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement may be amended from time to time
(including in connection with the issuance
<PAGE>
6
of a Supplemental Certificate) by the Servicer, the Seller and the Trustee,
without the consent of any of the Series 1996-1 Certificateholders, so long as
any such action shall not, as evidenced by an Officers' Certificate, adversely
affect in any material respect the interests of the Certificateholders of any
outstanding Series. The Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Trustee's rights, duties or immunities
under the Pooling and Servicing Agreement or otherwise. Notwithstanding
anything contained therein to the contrary, the Trustee, with the consent of any
Enhancement Providers, may at any time and from time to time amend, modify or
supplement the form of Distribution Date Statement.
The Pooling and Servicing Agreement may also be amended from time to
time (including in connection with the issuance of a Supplemental Certificate)
by the Servicer, the Seller and the Trustee with the consent of the Holders of
Investor Certificates evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the certificates of the Investor Certificates of all
adversely affected Series, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the Investor
Certificateholders; provided, however, that no such amendment to the Pooling and
-------- -------
Servicing Agreement shall (i) reduce in any manner the amount of or delay the
timing of distributions to be made to the Investor Certificateholders or
deposits of amounts to be so distributed without the consent of such each
affected Investor Certificateholder; (ii) change the definition or the manner of
calculating any certificateholders' interest without the consent of each
affected Investor Certificateholder; (iii) reduce the amount available under any
Enhancement without the consent of each affected Investor Certificateholder;
(iv) adversely affect the rating of any Series or class by each Rating Agency
without the consent of the holders of certificates of such Series or class
evidencing not less than 66-2/3% of the aggregate unpaid principal amount of the
Investor Certificates of such Series or Class or (v) reduce the aforesaid
percentage required to consent to any such amendment without the consent of all
Investor Certificateholders. The Pooling and Servicing Agreement may not be
amended in any manner which adversely affects the interests of any Enhancement
Provider without its prior consent.
<PAGE>
7
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registrable in the Certificate Register of the Trustee upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee in New York, New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the Holder hereof
or such Holder's attorney duly authorized, and thereupon one or more new Series
1996-1 Certificates of authorized denominations evidencing the same aggregate
fractional undivided interest will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Series 1996-1 Certificates are
exchangeable for new Series 1996-1 Certificates evidencing like aggregate
fractional undivided interests as requested by the Certificateholder
surrendering such Certificates. No service charge may be imposed for any such
exchange but the Trustee may require payment of sum sufficient to cover any tax
or other governmental charge that may be imposed in connection therewith.
The Servicer, the Trustee, the Transfer Agent and Registrar and any
agent of any of them, may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Servicer nor
the Trustee, the Transfer Agent and Registrar, nor any agent of any of them,
shall be affected by notice to the contrary except in certain circumstances
described in the Pooling and Servicing Agreement.
<PAGE>
8
ASSIGNMENT
Social Security or other identifying number of assignee
- ----------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
-----------------------------------------------------------------
- --------------------------------------------------------------------------------
(name and address of assignee)
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ________________,
attorney, to transfer said certificate on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: -------------------------
------------ Signature Guaranteed:
-------------------------
__________________
(*) NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the reverse of the within Certificate in every
particular, without alternation, enlargement or any change whatsoever.
