SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest event reported): April 16, 1998
SSB VEHICLE SECURITIES INC.
(Exact name of registrant as specified in its character)
Delaware
(State or other jurisdiction of incorporation or organization)
333-41949 N/A
(Commission File Number) (IRS Employer Identification No.)
Seven World Trade Center
New York, New York 10048
Attention: Secretary
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (212) 783-7000
Not applicable
(Former name or former address, if changed since last report)
Item 5. Other Events.
Filing of certain Agreements
On April 16, 1998, SSB Vehicle Securities Inc. ("SSB") entered into a
sale and servicing agreement dated as of April 1, 1998 (the "Sale and
Servicing Agreement"), by and among SSB, as depositor, Hyundai Auto
Receivables Trust 1998-A (the "Issuer"), as issuer, Hyundai Motor Finance
Company, as seller and servicer and The Chase Manhattan Bank ("Chase") as
indenture Trustee, custodian, administrator and backup servicer. The Sale and
Servicing Agreement is attached hereto as Exhibit 10.1.
On April 16, 1998, the Issuer and Chase entered into an indenture dated
as of April 1, 1998 (the "Indenture"). On April 16, 1998, SSB and Wilmington
Trust Company entered into an amended and restated trust agreement (the "Trust
Agreement"). The Indenture is attached hereto as Exhibit 4.1 and the Trust
Agreement is attached hereto as Exhibit 4.2.
Filing of Note Insurance Policy
The registrant is filing herewith the note guaranty insurance policy
which was issued by MBIA Insurance Corporation (the "Policy") in connection
with the Hyundai Auto Receivables Trust 1998-A. The Policy is attached hereto
as Exhibit 10.2.
Filing of Independent Auditor's Consent
The registrant is filing herewith the consent (the "Consent") of Coopers
& Lybrand L.L.P. ("Coopers") to the use of their name in the prospectus
supplement dated April 9, 1998 for Hyundai Auto Receivables Trust 1998-A (the
"Prospectus Supplement") under the caption "Experts" in the Prospectus
Supplement. The Consent is attached hereto as Exhibit 23.
Incorporation by reference of Financial Statements of MBIA Insurance Corporation
The consolidated financial statements of MBIA Insurance Corporation, a
wholly-owned subsidiary of MBIA Inc., and its subsidiaries as of December 31,
1997 and 1996, and for the three years ended December 31, 1997, prepared in
accordance with generally accepted accounting principles, and the report with
respect thereto of Coopers, included in the Annual Report on Form 10-K of MBIA
Inc. for the year ended December 31, 1997 are hereby incorporated by reference
into this report on Form 8-K as Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
4.1 Indenture
4.2 Trust Agreement
10.1 Sale and Servicing Agreement
10.2 Policy
23 Independent Auditors Consent of Coopers
99 Consolidated Financial Statements of MBIA Insurance
Corporation, and the report with respect thereto of
Coopers (in each case, incorporated by reference to
the Annual Report on Form 10-K of MBIA Inc. for the
year ended December 31, 1997)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
SSB VEHICLE SECURITIES INC.
By: /s/ Ted Yarbrough
_______________________________
Ted Yarbrough
Vice President
Dated: June 25, 1998
EXHIBIT INDEX
Exhibit No.
4.1
4.2
10.1
10.2
23
99
Exhibit 4.1
EXECUTION COPY
INDENTURE
between
HYUNDAI AUTO RECEIVABLES TRUST 1998-A,
as Issuer
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
Dated as of April 1, 1998
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.02. Rules of Construction . . . . . . . . . . . . . . . . . . 8
Section 1.03. Incorporation by Reference of Trust Indenture Act . . . . 8
ARTICLE II
THE NOTES
Section 2.01. Form . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.02. Execution, Authentication and Delivery . . . . . . . . . . 10
Section 2.03. Temporary Notes . . . . . . . . . . . . . . . . . . . . . 10
Section 2.04. Registration; Registration of Transfer and Exchange . . . 11
Section 2.05. (Reserved.) . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes . . . . . . . . 12
Section 2.07. Persons Deemed Owner . . . . . . . . . . . . . . . . . . . 13
Section 2.08. Payment of Principal and Interest; Defaulted Interest . . 13
Section 2.09. Cancellation . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.10. Book-Entry Notes . . . . . . . . . . . . . . . . . . . . . 14
Section 2.11. Notices to Clearing Agency . . . . . . . . . . . . . . . . 15
Section 2.12. Definitive Notes . . . . . . . . . . . . . . . . . . . . . 15
Section 2.13. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest . . . . . . . . . . . . 17
Section 3.02. Maintenance of Office or Agency . . . . . . . . . . . . . 17
Section 3.03. Money for Payments To Be Held in Trust . . . . . . . . . . 17
Section 3.04. Existence . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.05. Protection of Trust Estate . . . . . . . . . . . . . . . . 19
Section 3.06. Opinions as to Trust Estate . . . . . . . . . . . . . . . 19
Section 3.07. Performance of Obligations; Servicing of Receivables . . . 20
Section 3.08. Negative Covenants . . . . . . . . . . . . . . . . . . . . 22
Section 3.09. Annual Statement as to Compliance . . . . . . . . . . . . 22
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms . . . 23
Section 3.11. Successor or Transferee . . . . . . . . . . . . . . . . . 24
Section 3.12. No Other Business . . . . . . . . . . . . . . . . . . . . 25
Section 3.13. No Borrowing . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.14. Servicer's Obligations . . . . . . . . . . . . . . . . . . 25
Section 3.15. Guarantees, Loans, Advances and Other Liabilities . . . . 25
Section 3.16. Capital Expenditures . . . . . . . . . . . . . . . . . . . 25
Section 3.17. Removal of Administrator . . . . . . . . . . . . . . . . . 25
Section 3.18. Restricted Payments . . . . . . . . . . . . . . . . . . . 25
Section 3.19. Notice of Events of Default . . . . . . . . . . . . . . . 26
Section 3.20. Further Instruments and Acts . . . . . . . . . . . . . . . 26
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture . . . . . . . . . 27
Section 4.02. Application of Trust Money . . . . . . . . . . . . . . . . 28
Section 4.03. Repayment of Moneys Held by Paying Agent . . . . . . . . . 28
Section 4.04. Release of Collateral . . . . . . . . . . . . . . . . . . 28
ARTICLE V
REMEDIES
Section 5.01. Events of Default . . . . . . . . . . . . . . . . . . . . 29
Section 5.02. Acceleration of Maturity; Rescission and Annulment . . . . 30
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee; . . . . . . . . . . . . . . . . . . . . 32
Section 5.04. Remedies; Priorities . . . . . . . . . . . . . . . . . . . 34
Section 5.05. Optional Preservation of the Receivables . . . . . . . . . 36
Section 5.06. Limitation of Suits . . . . . . . . . . . . . . . . . . . 36
Section 5.07. Unconditional Rights of Noteholders To Receive
Principal and Interest . . . . . . . . . . . . . . . . . . 37
Section 5.08. Restoration of Rights and Remedies . . . . . . . . . . . . 37
Section 5.09. Rights and Remedies Cumulative . . . . . . . . . . . . . . 37
Section 5.10. Delay or Omission Not a Waiver . . . . . . . . . . . . . . 37
Section 5.11. Control by Noteholders . . . . . . . . . . . . . . . . . . 38
Section 5.12. Waiver of Past Defaults . . . . . . . . . . . . . . . . . 38
Section 5.13. Undertaking for Costs . . . . . . . . . . . . . . . . . . 39
Section 5.14. Waiver of Stay or Extension Laws . . . . . . . . . . . . . 39
Section 5.15. Action on Notes . . . . . . . . . . . . . . . . . . . . . 39
Section 5.16. Performance and Enforcement of Certain Obligations . . . . 39
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee . . . . . . . . . . . . . . . 41
Section 6.02. Rights of Indenture Trustee . . . . . . . . . . . . . . . 42
Section 6.03. Individual Rights of Indenture Trustee . . . . . . . . . . 43
Section 6.04. Indenture Trustee's Disclaimer . . . . . . . . . . . . . . 43
Section 6.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . . 43
Section 6.06. Reports by Indenture Trustee to Holders . . . . . . . . . 43
Section 6.07. Compensation and Indemnity . . . . . . . . . . . . . . . . 43
Section 6.08. Replacement of Indenture Trustee . . . . . . . . . . . . . 44
Section 6.09. Successor Indenture Trustee by Merger . . . . . . . . . . 45
Section 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee . . . . . . . . . . . . . . . . . . . . 46
Section 6.11. Eligibility; Disqualification . . . . . . . . . . . . . . 47
Section 6.12. Pennsylvania Motor Vehicle Sales Finance Act Licenses . . 47
Section 6.13. Preferential Collection of Claims Against Issuer . . . . . 47
Section 6.14. Waiver of Setoffs . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.02. Preservation of Information; Communications to
Noteholders . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.03. Reports by Issuer . . . . . . . . . . . . . . . . . . . . 48
Section 7.04. Reports by Indenture Trustee . . . . . . . . . . . . . . . 49
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money . . . . . . . . . . . . . . . . . . . 50
Section 8.02. Trust Accounts . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.03. General Provisions Regarding Accounts . . . . . . . . . . 51
Section 8.04. Release of Trust Estate . . . . . . . . . . . . . . . . . 52
Section 8.05. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 52
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders . . 53
Section 9.02. Supplemental Indentures with Consent of Noteholders . . . 54
Section 9.03. Execution of Supplemental Indentures . . . . . . . . . . . 55
Section 9.04. Effect of Supplemental Indenture . . . . . . . . . . . . . 56
Section 9.05. Reference in Notes to Supplemental Indentures . . . . . . 56
Section 9.06. Conformity with Trust Indenture Act . . . . . . . . . . . 56
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.02. Form of Redemption Notice . . . . . . . . . . . . . . . . 57
Section 10.03. Notes Payable on Redemption Date . . . . . . . . . . . . 58
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc. . . . . . . . 59
Section 11.02. Form of Documents Delivered to Indenture Trustee . . . . 60
Section 11.03. Acts of Noteholders . . . . . . . . . . . . . . . . . . . 61
Section 11.04. Notices, etc., to Indenture Trustee, Issuer and
Rating Agencies . . . . . . . . . . . . . . . . . . . 62
Section 11.05. Notices to Noteholders; Waiver . . . . . . . . . . . . . 62
Section 11.06. Alternate Payment and Notice Provisions . . . . . . . . . 63
Section 11.07. Effect of Headings and Table of Contents . . . . . . . . 63
Section 11.08. Successors and Assigns . . . . . . . . . . . . . . . . . 63
Section 11.09. Separability . . . . . . . . . . . . . . . . . . . . . . 63
Section 11.10. Benefits of Indenture . . . . . . . . . . . . . . . . . . 63
Section 11.11. Legal Holidays . . . . . . . . . . . . . . . . . . . . . 63
Section 11.12. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 64
Section 11.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . 64
Section 11.14. Recording of Indenture . . . . . . . . . . . . . . . . . 64
Section 11.15. Trust Obligation . . . . . . . . . . . . . . . . . . . . 64
Section 11.16. No Petition . . . . . . . . . . . . . . . . . . . . . . . 64
Section 11.17. Inspection . . . . . . . . . . . . . . . . . . . . . . . 65
Section 11.18. Conflict with Trust Indenture Act . . . . . . . . . . . . 65
SCHEDULE A Schedule of Receivables
EXHIBIT A-1 Form of Class A-1 Note
EXHIBIT A-2 Form of Class A-2 Note
EXHIBIT B Form of the Note Depository Agreement
THIS INDENTURE, dated as of April 1, 1998, is between HYUNDAI AUTO
RECEIVABLES TRUST 1998-A, a Delaware business trust (the "Issuer"), and THE
CHASE MANHATTAN BANK, a New York banking corporation, as trustee and not in
its individual capacity (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer's 5.90% Asset
Backed Notes, Class A-1 (the "Class A-1 Notes") and 6.05% Asset Backed Notes,
Class A-2 (the "Class A-2 Notes" and, together with the Class A-1 Notes, the
"Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date,
as Indenture Trustee for the benefit of the Holders of the Notes and the Note
Insurer, all of the Issuer's right, title and interest in and to (a) the
Initial Receivables listed on Schedule A and all moneys received thereon on
or after March 16, 1998, and the Subsequent Receivables listed on Schedule A
to the Subsequent Transfer Agreement and all moneys received thereon on or
after the Subsequent Cutoff Date (b) the security interests in the Financed
Vehicles and any accessions thereto granted by Obligors pursuant to the
Receivables and any other interest of the Issuer in such Financed Vehicles;
(c) any Liquidation Proceeds and any other proceeds with respect to the
Receivables from claims on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or Obligors, including any
vendor's single interest or other collateral protection insurance policy;
(d) any property that shall have secured a Receivable and that shall have
been acquired by or on behalf of the Seller, the Servicer, or the Issuer; (e)
all documents and other items contained in the Receivable Files; (f) all
funds on deposit from time to time in the Trust Accounts and in all
investments and proceeds thereof (including all income thereon); (g) the
Issuer's rights and benefits, but none of its obligations, under the Sale and
Servicing Agreement (including the Issuer's right to cause the Seller, or the
Servicer, as the case may be, to repurchase Receivables from the Issuer under
the circumstances described therein); (h) any proceeds with respect to any
Receivable repurchased by a Dealer pursuant to a Dealer Agreement; (i) the
Issuer's rights and benefits under the Receivables Purchase Agreement and the
Subsequent Purchase Agreement, including the representations and warranties
and the cure and repurchase obligations of the Seller under the Receivables
Purchase Agreement; (j) all right, title and interest in all funds on deposit
from time to time in the Trust Accounts and all investments and proceeds
thereof (including all investment earnings therein); and (k) all present and
future claims, demands, causes of action and choses in action in respect of
any or all of the foregoing and all payments on or under and all proceeds of
every kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion thereof, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any
and every kind and other forms of obligations and receivables, instruments
and other property that at any time constitute all or part of or are included
in the proceeds of any of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction, and to secure
compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Indenture Trustee, on behalf of the Holders of the Notes and the
Note Insurer, acknowledges such Grant, accepts the trusts under this
Indenture in accordance with the provisions of this Indenture and agrees to
perform its duties required in this Indenture to the best of its ability to
the end that the interests of the Holders of the Notes and the Note Insurer
may be adequately and effectively protected.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
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(a) Definitions. Except as otherwise specified herein or as the
-----------
context may otherwise require, the following terms have the respective
meanings set forth below for all purposes of this Indenture.
"Act" has the meaning specified in Section 11.03(a).
---
"Administration Agreement" means the Administration Agreement, dated
------------------------
as of April 1, 1998, among the Administrator, the Issuer and the Indenture
Trustee.
"Administrator" means The Chase Manhattan Bank, or any successor
-------------
Administrator under the Administration Agreement.
"Affiliate" means, with respect to any specified Person, any other
---------
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used
with respect to any 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.
"Authorized Officer" means, with respect to the Issuer, any officer
------------------
of the Owner Trustee who is authorized to act for the Owner Trustee in
matters relating to the Issuer and who is identified on the list of
Authorized Officers delivered by the Owner Trustee to the Indenture Trustee
and the Note Insurer on the Closing Date (as such list may be modified or
supplemented from time to time thereafter) and, so long as the Administration
Agreement is in effect, any Vice President or more senior officer of the
Administrator who is authorized to act for the Administrator in matters
relating to the Issuer and to be acted upon by the Administrator pursuant to
the Administration Agreement and who is identified on the list of Authorized
Officers delivered by the Administrator to the Indenture Trustee and the Note
Insurer on the Closing Date (as such list may be modified or supplemented
from time to time thereafter).
"Book-Entry Notes" means a beneficial interest in the Notes,
----------------
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10.
"Certificate of Trust" means the certificate of trust of the Issuer
--------------------
substantially in the form of Exhibit A to the Trust Agreement.
"Class A-1 Notes" means the 5.90% Asset Backed Notes, Class A-1,
---------------
substantially in the form of Exhibit A-1.
"Class A-1 Rate" means 5.90% per annum, computed on the basis of a
--------------
360-day year consisting of twelve 30-day months.
"Class A-2 Notes" means the 6.05% Asset Backed Notes, Class A-2,
---------------
substantially in the form of Exhibit A-2.
"Class A-2 Rate" means 6.05% per annum, computed on the basis of a
--------------
360-day year consisting of twelve 30-day months.
"Clearing Agency" means an organization registered as a "clearing
---------------
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means April 16, 1998.
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"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
----------
Indenture.
"Corporate Trust Office" means the principal office of the Indenture
----------------------
Trustee at which at any particular time its corporate trust business is
administered, which office at the date of execution of this Agreement is
located at The Chase Manhattan Bank, 450 West 33rd Street, New York, New York
10001 (facsimile number (212) 946-3916; Attention: Structured Finance
Services, or at such other address as the Indenture Trustee may designate
from time to time by notice to the Noteholders, the Note Insurer and the
Issuer, or the principal corporate trust office of any successor Indenture
Trustee at the address designated by such successor Indenture Trustee by
notice to the Noteholders, the Note Insurer and the Issuer.
"Default" means any occurrence that is, or with notice or the lapse
-------
of time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
----------------
"Event of Default" has the meaning specified in Section 5.01.
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Executive Officer" means, with respect to any corporation, the Chief
-----------------
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; and with respect to any partnership, any
general partner thereof.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
-----
remise, release, convey, assign, transfer, create, and grant a lien upon and
a security interest in and a right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any
other agreement or instrument shall include all rights, powers and options
(but none of the obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give
receipt for principal and interest payments in respect of the Collateral and
all other moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights
and options, to bring Proceedings in the name of the granting party or
otherwise, and generally to do and receive anything that the granting party
is or may be entitled to do or receive thereunder or with respect thereto.
"HMFC" means Hyundai Motor Finance Company, a California corporation,
----
and its successors.
"Holder" or "Noteholder" means (a) a Person in whose name a Note is
------ ----------
registered on the Note Register or (b) if the Note Insurer has made a payment
under the Policy, the Note Insurer to the extent provided in Section 2.08(c)
of this Indenture and the proviso to the definition of "Outstanding".
"Indenture Trustee" means The Chase Manhattan Bank, a New York
-----------------
banking corporation, not in its individual capacity, but as Indenture Trustee
under this Indenture, or any successor Indenture Trustee under this
Indenture.
"Independent" means, when used with respect to any specified Person,
-----------
that such Person (a) is in fact independent of the Issuer, any other obligor
on the Notes, the Seller and any Affiliate of any of the foregoing Persons,
(b) does not have any direct financial interest or any material indirect
financial interest in the Issuer, any such other obligor, the Seller or any
Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, any such other obligor, the Seller or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
-----------------------
delivered to the Indenture Trustee and the Note Insurer under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.01, made by an Independent appraiser or other
expert appointed by an Issuer Order and approved by the Indenture Trustee and
the Note Insurer in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of
"Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
"Interest Rate" means the Class A-1 Rate or the Class A-2 Rate, as
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the context may require.
"Issuer" means Hyundai Auto Receivables Trust 1998-A until a
------
successor replaces it and, thereafter, means the successor and, for purposes
of any provision contained herein and required by the TIA, each other obligor
on the Notes.
"Issuer Order" or "Issuer Request" means a written order or request
------------ --------------
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Note" means a Class A-1 Note or a Class A-2 Note, as the context may
----
require.
"Note Depository Agreement" means the agreement dated April 16, 1998,
-------------------------
among the Issuer, the Administrator, the Indenture Trustee and The Depository
Trust Company, as the initial Clearing Agency, relating to the Class A-1
Notes and the Class A-2 Notes, substantially in the form of Exhibit B.
"Note Owner" means, with respect to a Book-Entry Note, the Person who
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is the beneficial owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings
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specified in Section 2.04.
"Officer's Certificate" means a certificate signed by any Authorized
---------------------
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered
to the Indenture Trustee and the Note Insurer. Unless otherwise specified,
any reference in this Indenture to an Officer's Certificate shall be to an
Officer's Certificate of any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel
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who may, except as otherwise expressly provided in this Indenture, be an
employee of or counsel to the Issuer and who shall be satisfactory to the
Indenture Trustee and to the Note Insurer, and which opinion or opinions
shall be addressed to the Indenture Trustee and the Note Insurer, shall
comply with any applicable requirements of Section 11.01 and shall be in form
and substance satisfactory to the Indenture Trustee and to the Note Insurer.
"Outstanding" means, as of any date of determination, all Notes
-----------
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or
provision for such notice has been made, satisfactory to the Indenture
Trustee); and
(iii) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser;
provided, however, that Notes that have been paid with proceeds of the Policy
shall continue to remain Outstanding for purposes of this Indenture until the
Note Insurer has been paid as subrogee hereunder or reimbursed pursuant to
the Insurance Agreement, as evidenced by a written notice from the Note
Insurer delivered to the Indenture Trustee, and the Note Insurer shall be
deemed to be the Holder of such Notes to the extent of any payments made
thereon by the Note Insurer; provided further, that in determining whether
the Holders of the requisite Outstanding Amount of the Notes have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder or under any Basic Document, Notes owned by the Issuer, any other
obligor on the Notes, the Seller or any Affiliate of any of the foregoing
Persons shall be disregarded and deemed not to be Outstanding, except that,
in determining whether the Indenture Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes that the Indenture Trustee knows to be so owned shall be
so disregarded. Notes so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Indenture Trustee the pledgee's right so to act with respect to such Notes
and that the pledgee is not the Issuer, any other obligor on the Notes, the
Seller or any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means, as of any date of determination and as to
------------------
any Notes, the aggregate principal amount of such Notes Outstanding as of
such date of determination.
"Owner Trustee" means Wilmington Trust Company, not in its individual
-------------
capacity but solely as Owner Trustee under the Trust Agreement, or any
successor Owner Trustee under the Trust Agreement.
"Paying Agent" means the Indenture Trustee or any other Person that
------------
is acceptable to the Note Insurer and meets the eligibility standards for the
Indenture Trustee specified in Section 6.11 and is authorized by the Issuer
to make payments to and distributions from the Collection Account, the Note
Distribution Account, the Pre-Funding Account, the Capitalized Interest
Account, the Reserve Account and the Yield Maintenance Account, including
payments of principal of or interest on the Notes on behalf of the Issuer.
"Payment Date" means a Distribution Date.
------------
"Person" means any individual, corporation, estate, partnership,
------
limited liability company, joint venture, association, joint stock company,
trust or business trust (including any beneficiary thereof), unincorporated
organization or government or any agency or political subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
----------------
previous Note evidencing all or a portion of the same debt as that evidenced
by such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.06 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other
----------
judicial or administrative proceeding.
"Record Date" means, with respect to a Distribution Date or
-----------
Redemption Date, the close of business on the day immediately preceding such
Distribution Date or Redemption Date.
"Redemption Date" means, as the context requires, (a) in the case of
---------------
a redemption of the Notes pursuant to Section 10.01(a), the Distribution Date
specified by the Servicer or the Issuer pursuant to Section 10.01(a) or (b)
in the case of a redemption of Notes pursuant to Section 10.01(c), the
Distribution Date on which the Indenture Trustee shall withdraw the remaining
Pre-Funded Amount and deposit the applicable amount thereof payable to any
Class of Notes into the Note Distribution Account as specified in
Section 5.14(b) of the Sale and Servicing Agreement .
"Redemption Price" means in the case of a redemption of the Notes
----------------
pursuant to Section 10.01(a), an amount equal to the unpaid principal amount
of the Notes redeemed plus accrued and unpaid interest thereon at the Class
A-2 Rate for each Note being so redeemed to but excluding the Redemption
Date.
"Registered Holder" means the Person in whose name a Note is
-----------------
registered on the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Indenture Trustee,
-------------------
any officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Assistant Treasurer,
Assistant Secretary or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge
of and familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing
----------------------------
Agreement, dated as of April 1, 1998, among the Issuer, the Depositor, the
Seller, the Servicer and the Indenture Trustee, as Backup Servicer,
Custodian, Administrator and Indenture Trustee.
"Schedule of Receivables" means the list of Receivables set forth in
-----------------------
Schedule A (which Schedule may be in the form of microfiche), as supplemented
as of the Subsequent Transfer Date by the Subsequent Receivables listed on
Schedule A to the Subsequent Transfer Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Seller" means HMFC, in its capacity as seller under the Receivables
------
Purchase Agreement and the Sale and Servicing Agreement and its successors in
interest.
"Servicer" means HMFC, in its capacity as servicer under the Sale and
--------
Servicing Agreement, and any Successor Servicer thereunder.
"State" means any one of the 50 states of the United States of
-----
America, or the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.07(e).
------------------
"Trust Estate" means all money, instruments, rights
------------
and other property that are subject or intended to be subject to the lien and
security interest of this Indenture for the benefit of the Noteholders and the
Note Insurer (including, without limitation, all property and interests Granted
to the Indenture Trustee), including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
------------------- ---
as in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
---
Commercial Code as in effect in the relevant jurisdiction, as amended from
time to time.
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used herein but not otherwise defined
shall have the meanings ascribed thereto in the Sale and Servicing Agreement.
Section 1.02. Rules of Construction. Unless the context otherwise
---------------------
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) definitions are applicable to the singular and plural forms of
such terms and to the masculine, feminine and neuter genders of such
terms; and
(vi) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to
time amended, modified or supplemented and includes (in the case of
agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to its
permitted successors and assigns.
Section 1.03. Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
ARTICLE II
THE NOTES
Section 2.01. Form. The Class A-1 Notes and the Class A-2 Notes, in
----
each case together with the Indenture Trustee's certificate of
authentication, shall be in substantially the form set forth in Exhibit A-1
and Exhibit A-2, respectively, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing the Notes, as
evidenced by their execution of the Notes. Any portion of the text of any
Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of such Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the officers executing such
Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit A-1 and Exhibit A-2 are part of the terms of
this Indenture.
Section 2.02. Execution, Authentication and Delivery. The Notes
--------------------------------------
shall be executed on behalf of the Issuer by any of its Authorized Officers.
The signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not
hold such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Order authenticate and deliver
Class A-1 Notes for original issue in an aggregate principal amount of
$220,000,000 and Class A-2 Notes for original issue in an aggregate principal
amount of $80,150,000. The aggregate principal amount of Class A-1 Notes and
Class A-2 Notes outstanding at any time may not exceed such respective
amounts except as provided in Section 2.06.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in minimum denominations of $1,000 and
in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 2.03. Temporary Notes. Pending the preparation of
---------------
Definitive Notes, the Issuer may execute, and upon receipt of an Issuer Order
the Indenture Trustee shall authenticate and deliver, temporary Notes that
are printed, lithographed, typewritten, mimeographed or otherwise produced,
of the tenor of the Definitive Notes in lieu of which they are issued and
with such variations not inconsistent with the terms of this Indenture as the
officers executing such Notes may determine, as evidenced by their execution
of such Notes.
If temporary Notes are issued, the Issuer shall cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of
Definitive Notes, the temporary Notes shall be exchangeable for Definitive
Notes upon surrender of the temporary Notes at the office or agency of the
Issuer to be maintained as provided in Section 3.02, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes,
the Issuer shall execute, and the Indenture Trustee shall authenticate and
deliver in exchange therefor, a like principal amount of Definitive Notes of
authorized denominations. Until so exchanged, the temporary Notes shall in
all respects be entitled to the same benefits under this Indenture as
Definitive Notes.
Section 2.04. Registration; Registration of Transfer and Exchange.
---------------------------------------------------
The Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe and the
restrictions on transfers of the Notes set forth herein, the Note Registrar
shall provide for the registration of Notes and the registration of transfers
of Notes. The Indenture Trustee initially shall be the "Note Registrar" for
the purpose of registering Notes and transfers of Notes as herein provided.
Upon any resignation of any Note Registrar, the Issuer shall promptly appoint
a successor or, if it elects not to make such an appointment, assume the
duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee and the Note
Insurer prompt written notice of the appointment of such Note Registrar and
of the location, and any change in the location, of the Note Register, and
the Indenture Trustee and the Note Insurer shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and
the Indenture Trustee and the Note Insurer shall have the right to
conclusively rely upon a certificate executed on behalf of the Note Registrar
by an Executive Officer thereof as to the names and addresses of the Holders
of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, if the
requirements of Section 8-401(1) of the UCC are met, the Issuer shall
execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes of the same Class in any
authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, if the requirements of
Section 8-401(1) of the UCC are met, the Issuer shall execute, and the
Indenture Trustee, without having to verify that the requirements of 8-401(1)
have been met, shall authenticate and the Noteholder shall obtain from the
Indenture Trustee, the Notes that the Noteholder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by,
the Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Exchange Act.
No service charge shall be made to a Holder or the Note Insurer for any
registration of transfer or exchange of Notes, but the Issuer may require
payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03, 2.08(c) or
9.05 not involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to the
Note.
Section 2.05. (Reserved.)
-----------
Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes. If
------------------------------------------
(i) any mutilated Note is surrendered to the Indenture Trustee, or the
Indenture Trustee receives evidence to its satisfaction of the destruction,
loss or theft of any Note, and (ii) there is delivered to the Indenture
Trustee and the Note Insurer such security or indemnity as may be required by
it to hold the Issuer and the Indenture Trustee and the Note Insurer
harmless, then, in the absence of notice to the Issuer, the Note Registrar or
the Indenture Trustee that such Note has been acquired by a bona fide
purchaser, and provided that the requirements of Section 8-405 of the UCC are
met, the Issuer shall execute, and upon an Issuer Order the Indenture Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note of the same
Class; provided, however, that if any such destroyed, lost or stolen Note,
but not a mutilated Note, shall have become or within seven days shall be due
and payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when
so due or payable or upon the Redemption Date without surrender thereof. If,
after the delivery of such replacement Note or payment of a destroyed, lost
or stolen Note, a bona fide purchaser of the original Note in lieu of which
such replacement Note was issued presents for payment such original Note, the
Issuer and the Indenture Trustee and the Note Insurer shall be entitled to
recover such replacement Note (or such payment) from the Person to whom it
was delivered or any Person taking such replacement Note from such Person to
whom such replacement Note was delivered or any assignee of such Person,
except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage,
cost or expense incurred by the Issuer, the Note Insurer or the Indenture
Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the Issuer
may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.07. Persons Deemed Owners. Prior to due presentment for
---------------------
registration of transfer of any Note, the Issuer, the Indenture Trustee, the
Note Insurer and any agent of the Issuer, the Indenture Trustee or the Note
Insurer may treat the Person in whose name any Note is registered (as of the
day of determination) as the owner of such Note for the purpose of receiving
payments of principal of and interest, if any, on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and none of the
Issuer, the Indenture Trustee, the Note Insurer or any agent of the Issuer,
the Indenture Trustee or the Note Insurer shall be affected by notice to the
contrary.
Section 2.08. Payment of Principal and Interest; Defaulted Interest.
-----------------------------------------------------
(a) The Class A-1 Notes and the Class A-2 Notes shall accrue interest
at the Class A-1 Rate and the Class A-2 Rate, respectively, as set forth in
Exhibits A-1 and A-2, respectively, and such interest shall be payable on
each Distribution Date as specified therein, subject to Section 3.01. Any
installment of interest or principal payable on a Note that is punctually
paid or duly provided for by the Issuer on the applicable Distribution Date
shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered on the Record Date by check mailed
first-class postage prepaid to such Person's address as it appears on the
Note Register on such Record Date, except that, unless Definitive Notes have
been issued pursuant to Section 2.12, with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially,
such nominee to be Cede & Co.), payment shall be made by wire transfer in
immediately available funds to the account designated by such nominee;
provided, however, that the final installment of principal payable with
respect to such Note on a Distribution Date or on the related Final Scheduled
Distribution Date (including the Redemption Price for any Note called for
redemption pursuant to Section 10.01) shall be payable as provided in
paragraph (b) below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on each
Distribution Date as provided in the forms of the Notes set forth in Exhibit
A-1 and A-2. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes may be declared immediately due and payable, if not
previously paid, in the manner provided in Section 5.02 on the date on which
an Event of Default shall have occurred by the Indenture Trustee or Holders
of Notes representing not less than a majority of the Outstanding Amount;
provided, however, that if on the date any such Event of Default occurs the
Note Insurer is the Controlling Party, the Note Insurer, in its sole
discretion, may determine whether or not to accelerate payments on the Notes.
All principal payments on each Class of Notes shall be made pro rata to the
Noteholders of each Class entitled thereto. Upon written notice thereof, the
Indenture Trustee shall notify the Person in whose name a Note is registered
at the close of business on the Record Date preceding the Distribution Date
on which the Issuer expects the final installment of principal of and
interest on such Note to be paid. Such notice shall specify that such final
installment will be payable only upon presentation and surrender of such Note
and shall specify the place where such Note may be presented and surrendered
for payment of such installment. Notices in connection with redemptions of
Notes shall be mailed to Noteholders as provided in Section 10.02.
(c) Promptly following the date on which all principal of and interest
on the Notes has been paid in full and the Notes have been surrendered to the
Indenture Trustee, the Indenture Trustee shall, if the Note Insurer has paid
any amount in respect of the Notes under the Policy that has not been
reimbursed to the Note Insurer, deliver such surrendered Notes to the Note
Insurer.
(d) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest
to the extent lawful) at the applicable Interest Rate in any lawful manner on
the next Distribution Date.
Section 2.09. Cancellation. Subject to Section 2.08(c), all Notes
------------
surrendered for payment, registration of transfer, exchange or redemption
shall, if surrendered to any Person other than the Indenture Trustee, be
delivered to the Indenture Trustee and shall be promptly cancelled by the
Indenture Trustee. Subject to Section 2.08(c), the Issuer may at any time
deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder that the Issuer may have acquired in
any manner whatsoever, and all Notes so delivered shall be promptly cancelled
by the Indenture Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Indenture. Subject to Section 2.08(c), all
cancelled Notes may be held or disposed of by the Indenture Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed
or returned to it; provided, that such Issuer Order is timely and the Notes
have not been previously disposed of by the Indenture Trustee.
Section 2.10. Book-Entry Notes. The Notes, upon original issuance,
----------------
will be issued in the form of typewritten Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Clearing
Agency, by, or on behalf of, the Issuer. The Book-Entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Owner thereof will receive a
Definitive Note representing such Note Owner's interest in such Note, except
as provided in Section 2.12. Unless and until definitive, fully registered
Notes (the "Definitive Notes") have been issued to such Note Owners pursuant
to Section 2.12:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the
giving of instructions or directions hereunder) as the sole holder of
the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency or the
Clearing Agency Participants pursuant to the Note Depository Agreement.
Unless and until Definitive Notes are issued pursuant to Section 2.12,
the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit payments of
principal of and interest on the Notes to such Clearing Agency
Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Clearing Agency shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect from
Note Owners or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the
Notes and has delivered such instructions to the Indenture Trustee.
Section 2.11. Notices to Clearing Agency. Whenever a notice or
--------------------------
other communication to the Noteholders is required under this Indenture,
unless and until Definitive Notes shall have been issued to such Note Owners
pursuant to Section 2.12, the Indenture Trustee shall give all such notices
and communications specified herein to be given to Holders of the Notes to
the Clearing Agency, and shall have no obligation to such Note Owners.
Section 2.12. Definitive Notes. If (i) the Administrator advises
----------------
the Indenture Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to
the Book-Entry Notes and the Administrator is unable to locate a qualified
successor or (ii) after the occurrence of an Event of Default or a Servicer
Termination Event, Owners of the Book-Entry Notes representing beneficial
interests aggregating at least a majority of the Outstanding Amount of such
Notes advise the Clearing Agency in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best
interests of such Note Owners, then the Clearing Agency shall notify all Note
Owners, the Administrator and the Indenture Trustee of the occurrence of any
such event and of the availability of Definitive Notes to Note Owners
requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Notes representing the Book-Entry Notes by the Clearing Agency,
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee upon an Issuer Order shall authenticate the Definitive
Notes in accordance with the written instructions of the Clearing Agency.
None of the Issuer, the Note Insurer, the Note Registrar, the Administrator
or the Indenture 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 Definitive Notes, the Indenture
Trustee shall recognize the Holders of the Definitive Notes as Noteholders.
Section 2.13. Tax Treatment. The Issuer has entered into this
-------------
Indenture, and the Notes will be issued, with the intention that, for
federal, state and local income, single business and franchise tax purposes,
the Notes will qualify as indebtedness of the Issuer secured by the Trust
Estate. The Issuer, by entering into this Indenture, and each Noteholder, by
its acceptance of a Note (and each Note Owner by its acceptance of an
interest in the applicable Book-Entry Note), agree to treat the Notes for
federal, state and local income and franchise tax purposes as indebtedness.
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest. The Issuer will
---------------------------------
duly and punctually pay the principal, if any, of and the interest, if any,
on the Notes in accordance with the terms of the Notes and this Indenture.
Without limiting the foregoing, subject to Section 8.02(c), on each
Distribution Date, the Issuer shall cause to be distributed all amounts
deposited pursuant to the Sale and Servicing Agreement into the Note
Distribution Account for the benefit of the Notes to the related Noteholders.
Amounts properly withheld under the Code by any Person from a payment to any
Noteholder of interest or principal shall be considered as having been paid
by the Issuer to such Noteholder for all purposes of this Indenture.
Section 3.02. Maintenance of Office or Agency. The Issuer will
-------------------------------
maintain in the Borough of Manhattan, The City of New York, an office or
agency where Notes may be surrendered for registration of transfer or exchange,
and where notices and demands to or upon the Issuer in respect of
the Notes and this Indenture may be served. Such office will initially be
located at 450 West 33rd Street, 8th floor, Attention: Structure Finance
Operations, New York, New York 10001. The Issuer will give prompt written
notice to the Indenture Trustee and the Note Insurer of the location, and of
any change in the location, of any such office or agency. If at any time the
Issuer shall fail to maintain any such office or agency or shall fail to
furnish the Indenture Trustee with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust Office, and
the Issuer hereby appoints the Indenture Trustee as its agent to receive all
such surrenders, notices and demands.
Section 3.03. Money for Payments To Be Held in Trust. All payments
--------------------------------------
of amounts due and payable with respect to any Notes that are to be made from
amounts withdrawn from the Collection Account, the Note Distribution Account,
the Pre-Funding Account, the Reserve Account, the Capitalized Interest
Account and the Yield Maintenance Account shall be made on behalf of the
Issuer by the Indenture Trustee or by another Paying Agent, and no amounts so
withdrawn from the Collection Account, the Note Distribution Account, the
Pre-Funding Account, the Capitalized Interest Account, the Reserve Account or
the Yield Maintenance Account for payments of Notes shall be paid over to the
Issuer except as provided in this Section.
On each Distribution Date and Redemption Date, the Issuer shall deposit
or cause to be deposited into the Note Distribution Account an aggregate sum
sufficient to pay the amounts then becoming due under the Notes, such sum to
be held in trust for the benefit of the Persons entitled thereto, and (unless
the Paying Agent is the Indenture Trustee) shall promptly notify the
Indenture Trustee and the Note Insurer in writing of its action or failure so
to act.
The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee and the Note Insurer an
instrument in which such Paying Agent shall agree with the Indenture Trustee
(and if the Indenture Trustee acts as Paying Agent, it hereby so agrees),
subject to the provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as
herein provided;
(ii) give the Indenture Trustee and the Note Insurer notice of
any default by the Issuer (or any other obligor on the Notes) of which
it has actual knowledge in the making of any payment required to be made
with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met
by a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sum
sheld in trust by such Paying Agent, such sums to be held by the Indenture
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Indenture
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such
trust and be paid either (i) upon Issuer Request and with the consent of the
Note Insurer (if the Note Insurer is at any such time the Controlling Party)
to the Issuer or (ii) if such money or any portion thereof was paid by the
Note Insurer to the Indenture Trustee for the payment of principal of or
interest on such Note to the extent of such unreimbursed amounts, to the Note
Insurer in lieu of the Issuer; and the Holder of such Note shall thereafter,
as an unsecured general creditor, look only to the Issuer for payment thereof
(but only to the extent of the amounts so paid to the Issuer), and all
liability of the Indenture Trustee or such Paying Agent with respect to such
trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such
repayment, shall at the expense and direction of the Issuer cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of
New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be
repaid to the Issuer or the Note Insurer, as applicable. The Indenture
Trustee shall also adopt and employ, at the expense and direction of the
Issuer, any other reasonable means of notification of such repayment
(including, but not limited to, mailing notice of such repayment to Holders
whose Notes have been called but have not been surrendered for redemption or
whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Indenture Trustee or of any Paying
Agent, at the last address of record for each such Holder).
Section 3.04. Existence. The Issuer will keep in full effect its
---------
existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless subject to the prior written consent of the Note
Insurer it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States of
America, in which case the Issuer will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Estate.
Section 3.05. Protection of Trust Estate. The Issuer will from time
--------------------------
to time execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of
further assurance and other instruments, and will take such other action
necessary or advisable to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Trust Estate and the rights
of the Indenture Trustee, the Note Insurer and the Noteholders in such
Trust Estate against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee, as its agent and
attorney-in-fact, to execute upon an Issuer Order any financing statement,
continuation statement or other instrument required to be executed pursuant
to this Section 3.05.
Section 3.06. Opinions as to Trust Estate.
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(a) On the Closing Date, the Issuer shall cause to be furnished to the
Indenture Trustee and the Note Insurer an Opinion of Counsel either stating
that, in the opinion of such counsel, such action has been taken with respect
to the recording and filing of this Indenture, any indentures supplemental
hereto, and any other requisite documents, and with respect to the execution
and filing of any financing statements and continuation statements, as are
necessary to perfect and make effective the lien and security interest of
this Indenture and reciting the details of such action, or stating that, in
the opinion of such counsel, no such action is necessary to make such lien
and security interest effective.
(b) On or before September 30, in each calendar year, beginning in
1998, the Issuer shall furnish to the Indenture Trustee, the Rating Agencies
and the Note Insurer an Opinion of Counsel either stating that, in the
opinion of such counsel, such action has been taken with respect to the
recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and
continuation statements as is necessary to maintain the lien and security
interest created by this Indenture and reciting the details of such action,
or stating that in the opinion of such counsel no such action is necessary to
maintain such lien and security interest. Such Opinion of Counsel shall also
describe the recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
that will, in the opinion of such counsel, be required to maintain the lien
and security interest of this Indenture until September 30 in the following
calendar year.
Section 3.07. Performance of Obligations; Servicing of Receivables.
----------------------------------------------------
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in
the amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any such instrument or agreement,
except as expressly provided in this Indenture, the Sale and Servicing
Agreement or such other instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to the
Controlling Party and with notification to the Rating Agencies to assist it
in performing its duties under this Indenture, and any performance of such
duties by a Person identified to the Indenture Trustee and the Note Insurer
in an Officer's Certificate of the Issuer shall be deemed to be action taken
by the Issuer. Initially, the Issuer has contracted with the Servicer and
the Administrator to assist the Issuer in performing its duties under this
Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents
and in the instruments and agreements included in the Trust Estate, including
but not limited to filing or causing to be filed all UCC financing statements
and continuation statements required to be filed by the terms of this
Indenture and the Sale and Servicing Agreement in accordance with and within
the time periods provided for herein and therein. Except as otherwise
expressly provided therein, the Issuer shall not waive, amend, modify,
supplement or terminate any Basic Document or any provision thereof without
the consent of the Note Insurer and either the Indenture Trustee or the
Holders of at least a majority of the Outstanding Amount of the Notes.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Termination Event under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee, the Note Insurer and the Rating
Agencies thereof, and shall specify in such notice the action, if any, the
Issuer is taking with respect to such default.
(e) (Reserved)
(f) Upon any termination of the Servicer's rights and powers pursuant
to the Sale and Servicing Agreement, the Issuer shall promptly notify the
Indenture Trustee and the Note Insurer thereof. As soon as a Successor
Servicer is appointed, the Issuer shall notify the Indenture Trustee and the
Note Insurer in writing of such appointment, specifying in such notice the
name and address of such Successor Servicer.
(g) Without limitation of the absolute nature of the assignment granted
to the Indenture Trustee under this Indenture or the rights of the Indenture
Trustee hereunder, the Issuer agrees (i) that it will not, without the prior
written consent of the Note Insurer and either the Indenture Trustee or the
Holders of at least a majority in Outstanding Amount of the Notes, amend,
modify, waive, supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination, waiver or surrender of, the terms of
any Collateral (except to the extent otherwise provided in the Sale and
Servicing Agreement) or the Basic Documents, or waive timely performance or
observance by the Servicer or the Seller under the Sale and Servicing
Agreement; and (ii) that any such amendment shall not (A) increase or reduce
in any manner the amount of, or accelerate or delay the timing of,
distributions that are required to be made for the benefit of the Noteholders
or (B) reduce the aforesaid percentage of the Notes that is required to
consent to any such amendment, without the consent of the Holders of all
Outstanding Notes. If the Note Insurer and the Indenture Trustee or such
Holders, as applicable, agree to any such amendment, modification, supplement
or waiver, the Issuer agrees, promptly following a request by the Indenture
Trustee or the Note Insurer to do so, to execute and deliver, in its own name
and at its own expense, such agreements, instruments, consents and other
documents as the Indenture Trustee or the Note Insurer may deem necessary or
appropriate in the circumstances.
Section 3.08. Negative Covenants. So long as any Notes are
------------------
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture, the
Receivables Purchase Agreement or the Sale and Servicing Agreement,
sell, transfer, exchange or otherwise dispose of any of the properties
or assets of the Issuer, including those included in the Trust Estate,
unless directed to do so by the Controlling Party;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust
Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations with respect to
the Notes under this Indenture except as may be expressly permitted
hereby, (B) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture) to
be created on or extend to or otherwise arise upon or burden the Trust
Estate or any part thereof or any interest therein or the proceeds
thereof (other than tax liens, mechanics' liens and other liens that
arise by operation of law, in each case on any of the Financed Vehicles
and arising solely as a result of an action or omission of the related
Obligor) or (C) permit the lien of this Indenture not to constitute a
valid first priority (other than with respect to any such tax,
mechanics' or other lien) security interest in the Trust Estate.
Section 3.09. Annual Statement as to Compliance. The Issuer will
---------------------------------
deliver to the Indenture Trustee, the Rating Agencies and the Note Insurer
(if the Note Insurer is the Controlling Party), within 120 days after the end
of each fiscal year of the Issuer (commencing with the fiscal year 1998), an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year
and of its performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year or, if there has been a
default in its compliance with any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
---------------------------------------------------
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any State and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee and the Note Insurer, in form
satisfactory to the Indenture Trustee and the Note Insurer, the due and
punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee and the
Note Insurer) to the effect that such transaction will not have any
material adverse tax consequence to the Issuer, any Noteholder or any
Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee and
the Note Insurer an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation or merger and such supplemental
indenture comply with this Article III and that all conditions precedent
herein provided for relating to such transaction have been complied with
(including any filing required by the Exchange Act); and
(vii) the Note Insurer has given its prior written consent with
a copy of such consent to the Indenture Trustee.
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which
is hereby restricted (A) shall be a United States citizen or a Person
organized and existing under the laws of the United States of America or
any State, (B) expressly assumes, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee and the Note Insurer, in
form satisfactory to the Indenture Trustee and the Note Insurer, the due
and punctual payment of the principal of and interest on all Notes and
the performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein, (C) expressly agrees by means of such supplemental
indenture that all right, title and interest so conveyed or transferred
shall be subject and subordinate to the rights of Holders of the Notes
and the Note Insurer, (D) unless otherwise provided in such supplemental
indenture, expressly agrees to indemnify, defend and hold harmless the
Issuer and the Indenture Trustee against and from any loss, liability or
expense arising under or related to this Indenture and the Notes and
(E) expressly agrees by means of such supplemental indenture that such
Person (or, if a group of Persons, one specified Person) shall make all
filings with the Commission (and any other appropriate Person) required
by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee and the
Note Insurer) to the effect that such transaction will not have any
material adverse tax consequence to the Issuer, any Noteholder or any
Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee and
the Note Insurer an Officer's Certificate and an Opinion of Counsel each
stating that such conveyance or transfer and such supplemental indenture
comply with this Article III and that all conditions precedent herein
provided for relating to such transaction have been complied with
(including any filing required by the Exchange Act); and
(vii) The Note Insurer has given its prior written consent with
a copy of such consent to the Indenture Trustee.
Section 3.11. Successor or Transferee.
-----------------------
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or
merger (if other than the Issuer) shall succeed to, and be substituted for,
and may exercise every right and power of, the Issuer under this Indenture
with the same effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10(b), Hyundai Auto Receivables Trust 1998-A
will be released from every covenant and agreement of this Indenture to be
observed by or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery of written notice to the Indenture Trustee and
the Note Insurer stating that Hyundai Auto Receivables Trust 1998-A is to be
so released.
Section 3.12. No Other Business. The Issuer shall not engage in any
-----------------
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the Basic
Documents and any activities incidental thereto. After the Funding Period,
the Issuer shall not fund the purchase of any new Receivables.
Section 3.13. No Borrowing. The Issuer shall not issue, incur,
------------
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
Section 3.14. Servicer's Obligations. The Issuer shall cause the
----------------------
Servicer to comply with Sections 4.09, 4.10, 4.11 and Article VII of the Sale
and Servicing Agreement.
Section 3.15. Guarantees, Loans, Advances and Other Liabilities.
-------------------------------------------------
Except as contemplated by the Trust Agreement, the Sale and Servicing
Agreement or this Indenture, the Issuer shall not make any loan or advance or
credit to, or guarantee (directly or indirectly or by an instrument having
the effect of assuring another's payment or performance on any obligation or
capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the
obligations, stocks or dividends of, or own, purchase, repurchase or acquire
(or agree contingently to do so) any stock, obligations, assets or securities
of, or any other interest in, or make any capital contribution to, any
Person.
Section 3.16. Capital Expenditures. The Issuer shall not make any
--------------------
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.17. Removal of Administrator. So long as any Notes are
------------------------
Outstanding, the Issuer shall not remove the Administrator unless the Rating
Agency Condition shall have been satisfied in connection with such removal
and the Indenture Trustee receives written notice of the foregoing and the
Note Insurer has given its prior written consent with a copy of such consent
to the Indenture Trustee.
Section 3.18. Restricted Payments. Except with respect to the
-------------------
proceeds from issuance of the Notes, the Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Servicer, (ii) redeem, purchase,
retire or otherwise acquire for value any such ownership or equity interest
or security or (iii) set aside or otherwise segregate any amounts for any
such purpose; provided, however, that the Issuer may make, or cause to be
made, distributions as contemplated by, and to the extent funds are available
for such purpose under, the Sale and Servicing Agreement, this Indenture or
the Trust Agreement. The Issuer will not, directly or indirectly, make
payments to or distributions from the Note Distribution Account, the
Collection Account, the Capitalized Interest Account, the Yield Maintenance
Account, the Pre-Funding Account or the Reserve Account except in accordance
with this Indenture and the Basic Documents.
Section 3.19. Notice of Events of Default. The Issuer shall give
---------------------------
the Indenture Trustee, the Note Insurer and the Rating Agencies prompt
written notice of each Event of Default hereunder, and of each default on the
part of the Servicer or the Seller of its obligations under the Sale and
Servicing Agreement.
Section 3.20. Further Instruments and Acts. Upon request of the
----------------------------
Indenture Trustee or the Note Insurer (if the Note Insurer is at such time
the Controlling Party), the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper
to carry out more effectively the purpose of this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture. This Indenture
---------------------------------------
shall cease to be of further effect with respect to the Notes except as to
(i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon (including any
such right of the Note Insurer pursuant to Section 2.08(c) or the proviso to
the definition of "Outstanding"), (iv) Sections 3.03, 3.04, 3.05, 3.08, 3.10,
3.11, 3.12, 3.13, 3.15, 3.16 and 3.18, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.07 and the obligations of the Indenture
Trustee under Section 4.02) and (vi) the rights of Noteholders as
beneficiaries hereof with respect to the property so deposited with the
Indenture Trustee payable to all or any of them, and the Indenture Trustee,
on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that
have been replaced or paid as provided in Section 2.06 and
(ii) Notes for the payment of which money has theretofore been
deposited in trust or segregated and held in trust by the Issuer
and thereafter repaid to the Issuer or discharged from such trust,
as provided in Section 3.03) have been delivered to the Indenture
Trustee for cancellation and the Policy has expired and been
returned to the Note Insurer for cancellation; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
a. have become due and payable,
b. will become due and payable at the Class A-2 Final
Scheduled Distribution Date within one year or
c. are to be called for redemption within one year
under arrangements satisfactory to the Indenture Trustee for
the giving of notice of redemption by the Indenture Trustee in
the name, and at the expense, of the Issuer;
and the Issuer, in the case of a., b. or c. above, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture
Trustee cash or direct obligations of or obligations guaranteed by the
United States of America (that will mature prior to the date such
amounts are payable), in trust for such purpose, in an amount sufficient
to pay and discharge the entire indebtedness on (a) such Notes not
theretofore delivered to the Indenture Trustee for cancellation when due
to the applicable Final Scheduled Distribution Date or Redemption Date
(if Notes shall have been called for redemption pursuant to
Section 10.01(a)), as the case may be, and (b) all amounts due to the
Note Insurer pursuant to Section 5.06(b) of the Sale and Servicing
Agreement and as subrogee to the rights of the Holders of the Notes
pursuant to Section 5.12 of the Sale and Servicing Agreement and Section
2.08(c) hereof;
(B) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer including, but not limited to, fees and
expenses due to the Indenture Trustee; and
(C) the Issuer has delivered to the Indenture Trustee and the Note
Insurer an Officer's Certificate, an Opinion of Counsel and (if required
by the TIA or the Indenture Trustee) an Independent Certificate from a
firm of certified public accountants, each meeting the applicable
requirements of Section 11.01(a) and, subject to Section 11.02, each
stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been complied
with.
Section 4.02. Application of Trust Money. All moneys deposited with
---------------------------
the Indenture Trustee pursuant to Section 4.01 hereof shall be held in trust
and applied by it in accordance with the provisions of the Notes and this
Indenture to the payment, either directly or through any Paying Agent,
as the Indenture Trustee may determine, to the Note Insurer and the related
Noteholders for the payment or redemption of which such
moneys have been deposited with the Indenture Trustee, of all sums due and to
become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein, in the Sale
and Servicing Agreement or by law.
Section 4.03. Repayment of Moneys Held by Paying Agent. In connection
----------------------------------------
with the satisfaction and discharge of this Indenture with respect to the
Notes, all moneys then held by any Paying Agent other than the Indenture
Trustee under the provisions of this Indenture with respect to such Notes
shall, upon written demand of the Issuer, be paid to the Indenture Trustee to
be held and applied according to Section 3.03; and thereupon, such Paying
Agent shall be released from all further liability with respect to such
moneys.
Section 4.04. Release of Collateral. Subject to Section 11.01 and the
---------------------
terms of the Basic Documents, the Indenture Trustee shall release property
from the lien of this Indenture only upon receipt by it and the Note Insurer
of an Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and Independent Certificates in accordance with TIA SectionSection
314(c) and 314(d)(1) or an Opinion of Counsel in lieu of such Independent
Certificates to the effect that the TIA does not require any such Independent
Certificates. The Trustee shall surrender the Policy to the Note Insurer
upon the satisfaction of the conditions in Section 4.01).
ARTICLE V
REMEDIES
Section 5.01. Events of Default. "Event of Default", wherever used
-----------------
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(i) default in the payment of any interest on any Note when the
same becomes due and payable, and such default shall continue for a
period of five days (solely for purposes of this clause, a payment on
the Notes funded by the Note Insurer shall be deemed to be a payment
made by the Issuer);
(ii) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable (solely for purposes of this clause, a payment on the Notes
funded by the Note Insurer shall be deemed to be a payment made by the
Issuer);
(iii) a Trigger Event shall have occurred;
(iv) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or condition
in respect of which such misrepresentation or warranty was incorrect
shall not have been eliminated or otherwise cured, for a period of
30 days after there shall have been given, by registered or certified
mail, to the Issuer by the Indenture Trustee or the Note Insurer (so
long as no Note Insurer Default shall have occurred and be continuing)
or to the Issuer and the Indenture Trustee by the Holders of at least
25% of the Outstanding Amount of the Notes, a written notice specifying
such default or incorrect representation or warranty and requiring it to
be remedied and stating that such notice is a notice of Default
hereunder;
(v) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Trust Estate in an involuntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Estate, or the ordering
of the winding-up or liquidation of the Issuer's affairs, and such
decree or order shall remain unstayed and in effect for a period of
60 consecutive days; or
(vi) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by the Issuer to the entry of
an order for relief in an involuntary case under any such law, or the
consent by the Issuer to the appointment of or taking of possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Trust
Estate, or the making by the Issuer of any general assignment for the
benefit of creditors, or the failure by the Issuer generally to pay its
debts as such debts become due, or the taking of any action by the
Issuer in furtherance of any of the foregoing.
The Issuer shall promptly deliver to the Indenture Trustee and, if the Note
Insurer is the Controlling Party, the Note Insurer, written notice in the
form of an Officer's Certificate of any event that with the giving of notice
and the lapse of time would become an Event of Default under clause (iii),
its status and what action the Issuer is taking or proposes to take with
respect thereto.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
(a) If an Event of Default shall occur and the Note Insurer is not the
Controlling Party, then and in every such case the Indenture Trustee may or
the Indenture Trustee as directed in writing by the Holders of Notes
representing not less than a majority of the Outstanding Amount of the Notes
shall declare all the Notes to be then immediately due and payable, by a
notice in writing to the Issuer (and to the Indenture Trustee if given by
Noteholders), and upon any such declaration the Outstanding Amount of such
Notes, together with accrued and unpaid interest thereon through the date of
acceleration, shall become immediately due and payable; provided, however,
that if on the date any such Event of Default occurs or is continuing, the
Note Insurer is the Controlling Party, then the Note Insurer, in its sole
discretion, may determine whether or not to accelerate payment on the Notes.
In the event of any acceleration of the Notes by operation of this Section
5.02, the Indenture Trustee shall continue to be entitled to make claims
under the Policy pursuant to Section 5.09 of the Sale and Servicing
Agreement. Payments under the Policy following acceleration of the Notes
shall be applied by the Indenture Trustee:
FIRST: to the payment of amounts due and unpaid on the Notes
in respect of interest, ratably, without preference or priority of
any kind;
SECOND: to the payment of amounts due and unpaid on the
Class A-1 Notes in respect of principal, ratably, without
preference or priority of any kind, until the Class A-1 Notes are
paid in full; and
THIRD: to the payment of amounts due and unpaid on the Class A-2
Notes in respect of principal, ratably, without preference or priority
of any kind, until the Class A-2 Notes are paid in full.
(b) If an Event of Default occurs at any time when the Note Insurer is
the Controlling Party, the Note Insurer shall have the right, but not the
obligation, to make one or more accelerated payments on the Notes and to
prepay the Notes, in whole or in part, on any date or dates following the
occurrence of such Event of Default if the Note Insurer, in its sole
discretion, shall so elect. This right of the Note Insurer to make
accelerated payments on the Notes is in addition to its obligation to make
payments on the Notes under the Policy, and in no event shall the Note
Insurer make a payment on the Notes to the Indenture Trustee for distribution
to the Noteholders later than the date on which such amount is due under the
terms of the Notes and the Policy.
(c) If an Event of Default under this Indenture shall have occurred and
be continuing at any time when the Indenture Trustee is the Controlling
Party, the Indenture Trustee in its discretion may, or if so requested in
writing by Holders of Notes representing at least a majority of the
Outstanding Amount of the Notes, shall, declare by written notice to the
Issuer all of the Notes to be immediately due and payable, and upon any such
declaration, the Outstanding Amount of the Notes, together with accrued
interest thereon through the date of acceleration, shall become immediately
due and payable as provided in the Notes set forth in Exhibits A-1 and A-2.
Notwithstanding anything to the contrary in this paragraph (c), if an Event
of Default specified in clauses (v) or (vi) of Section 5.01 shall have
occurred and be continuing at any time when the Indenture Trustee is the
Controlling Party, the Notes shall become immediately due and payable at par,
together with accrued interest thereon.
(d) At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has
been obtained by the Indenture Trustee as hereinafter in this Article V
provided, either the Note Insurer (so long as a Note Insurer Default has not
occurred and is continuing) or the Holders of Notes representing a majority
of the Outstanding Amount of the Notes (if a Note Insurer Default has
occurred and is continuing), by written notice to the Issuer and the
Indenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee
a sum sufficient to pay:
(A) all payments of principal of and interest on the Notes
and all other amounts that would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration had
not occurred; and
(B) all sums paid by the Indenture Trustee hereunder plus all
amounts due to the Note Insurer under the Basic Documents and the
reasonable compensation, expenses and disbursements of each of the
Indenture Trustee and the Note Insurer and its agents and counsel
and the reasonable compensation, expenses and disbursements of the
Owner Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
(e) In the event of a sale of the Trust Estate pursuant to Section 9.01
of the Trust Agreement, (i) if, based on offers to purchase the Receivables
accepted by the Indenture Trustee, the Note Insurer would not be reimbursed
in full for all amounts due to it under the Insurance Agreement following the
distribution of the proceeds of such sale pursuant to Section 5.06(b) of the
Sale and Servicing Agreement and (ii) the Certificateholders have been given
prior written notice thereof and five business days to bid thereon, the Note
Insurer shall be permitted in its sole discretion to request an assignment of
Receivables and all other assets of the Trust Estate in lieu of such a
distribution of such sale proceeds. In the event that the Note Insurer
elects to request such an assignment, promptly following receipt by the
Indenture Trustee of notice of such request, the Indenture Trustee shall file
with the Note Insurer a Notice of Claim in accordance with the Policy in
respect of the Outstanding Amount, if any, of the Notes that are unpaid on
the Distribution Date immediately preceding the date of the receipt by the
Indenture Trustee of such notice, plus accrued interest thereon. All amounts
received by the Indenture Trustee from the Note Insurer pursuant to this
Section 5.02 shall be distributed to the Noteholders pursuant to Section
5.02(a). Immediately upon payment by the Note Insurer of all amounts
required to be paid by the Note Insurer pursuant to this Section 5.02, the
Indenture Trustee shall be deemed to have assigned the Receivables and all
other assets of the Trust Estate to the Note Insurer or its designee. To
effect such deemed assignment, the Indenture Trustee shall do and perform any
reasonable acts and execute any further instruments reasonably requested by
the Note Insurer.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Indenture Trustee; Authority of the Controlling Party.
- -----------------------------------------------------
(a) The Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such
default continues for a period of five days or, (ii) default is made in the
payment of the principal of or any installment of the principal of any Note
when the same becomes due and payable, the Issuer will, upon demand of the
Indenture Trustee made at the direction of the Note Insurer, pay to it, for
the benefit of the Holders of the Notes and the Note Insurer, the entire
amount then due and payable on such Notes in respect of principal and
interest, with interest on the overdue principal and, to the extent payment
at such rate of interest shall be legally enforceable, on overdue
installments of interest at the related Interest Rate and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses and
disbursements of the Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an
express trust, may, with the written consent of the Note Insurer (so long as
no Note Insurer Default shall have occurred and be continuing), institute a
Proceeding for the collection of the sums so due and unpaid, and may
prosecute such Proceeding to judgment or final decree, and may enforce the
same against the Issuer or other obligor on such Notes and collect in the
manner provided by law out of the Trust Estate or the property of any other
obligor on such Notes, wherever situated, the moneys adjudged or decreed to
be payable. At any time when (i) the Note Insurer is the Controlling Party
or (ii) (A) the Note Insurer is the Holder of Notes pursuant to Section
2.08(c) or Section 5.12 of the Sale and Servicing Agreement and (B) all
amounts due to all other Holders of the Notes pursuant to the Notes and this
Indenture have been paid in full, the Note Insurer may, in its own name,
institute any Proceeding or take any other action permitted under this
Section to collect amounts due hereunder from the Issuer or any other obligor
on the Notes.
(c) If an Event of Default occurs, the Indenture Trustee may, as more
particularly provided in Section 5.04, in its discretion with the prior
written consent of the Controlling Party or shall at the directions of the
Controlling Party proceed to protect and enforce its rights and the rights of
the Noteholders, by such appropriate Proceedings as the Indenture Trustee and
the Controlling Party shall reasonably deem most effective to protect and
enforce any such rights, whether for the specific enforcement of any covenant
or agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right
vested in the Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor on the Notes or any Person having or claiming an ownership interest
in the Trust Estate, Proceedings under Title 11 of the United States Code or
any other applicable federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, or liquidator, sequestrator or similar official shall have
been appointed for or taken possession of the Issuer or its property or such
other obligor or Person, or in case of any other comparable Proceedings
relative to the Issuer or other obligor on the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective
of whether the Indenture Trustee shall have made any demand pursuant to the
provisions of this Section, shall be entitled and empowered (but only at the
written direction of the Note Insurer if the Note Insurer is the Controlling
Party), by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the entire amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim
for reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and their respective agents, attorneys
and counsel, and for reimbursement of all expenses and liabilities
incurred, by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of the
Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law or regulation, to vote
on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or a Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute all amounts received
with respect to the claims of the Noteholders and of the Indenture
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the
Indenture Trustee or the Holders of Notes allowed in any Proceedings
relative to the Issuer, its creditors or its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture
Trustee shall consent to the making of payments directly to such Noteholders,
to pay to the Indenture Trustee such amounts as shall be sufficient to cover
reasonable compensation to the Indenture Trustee, each predecessor Indenture
Trustee and their respective agents, attorneys and counsel, and all other
expenses and liabilities incurred by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf
of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Indenture Trustee without
the possession of any of the Notes or the production thereof in any
Proceedings relative thereto, and any such Proceedings instituted by the
Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes and the Note Insurer.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee shall
be held to represent all the Holders of the Notes, and it shall not be
necessary to make any Noteholder a party to any such Proceedings.
Section 5.04. Remedies; Priorities.
--------------------
(a) If an Event of Default shall have occurred and either (i) a Note
Insurer Default shall also have occurred and is continuing, the Indenture
Trustee may or (ii) if the Note Insurer is the Controlling Party and the Note
Insurer so directs the Indenture Trustee in writing, the Indenture Trustee
shall, do one or more of the following (subject to Section 5.05):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained and collect from
the Issuer and any other obligor on such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee, the Note Insurer and the Holders of
the Notes; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that (x) if a Note Insurer Default shall have occurred and
is continuing, the Indenture Trustee may not sell or otherwise liquidate the
Trust Estate following an Event of Default, other than an Event of Default
described in Section 5.01(i) or (ii), unless (A) the Holders of 100% of the
Outstanding Amount of the Notes consent thereto, (B) the proceeds of such
sale or liquidation distributable to the Noteholders are sufficient to
discharge in full all amounts then due and unpaid on such Notes in respect of
principal and interest or (C) the Indenture Trustee determines that the Trust
Estate will not continue to provide sufficient funds for the payment of
principal of and interest on the Notes as they would have become due if the
Notes had not been declared due and payable, and the Indenture Trustee
obtains the consent of Holders of a majority of the Outstanding Amount of the
Notes, (y) if the Note Insurer is the Controlling Party, the Note Insurer may
not direct the Indenture Trustee, and the Indenture Trustee shall not comply
with any such direction, to sell or otherwise liquidate the Collateral
following an Event of Default unless (1) the conditions set forth in clause
(x) are met or (2) the Note Insurer has paid the Notes in full under the
Policy. In determining such sufficiency or insufficiency with respect to
clause (B) and (C), the Indenture Trustee may, at the Issuer's expense and
paid in the priority set forth in Section 5.06(b) of the Sale and Servicing
Agreement, but need not, obtain and conclusively rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article V, it shall pay out the money or property in the following
order:
FIRST: to the Indenture Trustee for amounts due under
Section 6.07;
SECOND: to Noteholders for amounts due and unpaid on the Notes in
respect of interest (including any premium), ratably, without preference
or priority of any kind, according to the amounts due and payable on the
Notes in respect of interest (including any premium);
THIRD: to Holders of the Class A-1 Notes for amounts due and
unpaid on the Class A-1 Notes in respect of principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class A-1 Notes in respect of principal, until the
Outstanding Amount of the Class A-1 Notes is reduced to zero;
FOURTH: to Holders of the Class A-2 Notes for amounts due and
unpaid on the Class A-2 Notes in respect of principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class A-2 Notes in respect of principal, until the
Outstanding Amount of the Class A-2 Notes is reduced to zero;
FIFTH: to the Note Insurer for any amounts due and unpaid
pursuant to Section 5.06(b) of the Sale and Servicing Agreement and
Section 5.12 of the Sale and Servicing Agreement; and
SIXTH: pursuant to Section 5.06 of the Sale and Servicing
Agreement;
provided, however, that any amounts collected from the Pre-Funding Account or
Capitalized Interest Account shall be paid on the Notes pro rata, based upon
their respective principal balances as of the preceding Distribution Date,
for amounts allocable to principal due and unpaid, prior to the application
of priorities FIRST through FIFTH, above.
The Indenture Trustee may fix a record date and payment date for any payment
to Noteholders pursuant to this Section. At least 15 days before such record
date, the Issuer shall mail to each Noteholder, the Note Insurer and the
Indenture Trustee a notice that states the record date, the payment date and
the amount to be paid.
Section 5.05. Optional Preservation of the Receivables. If the
----------------------------------------
Indenture Trustee is the Controlling Party and the Notes have been declared
to be due and payable under Section 5.02 following an Event of Default, and
such declaration and its consequences have not been rescinded and annulled,
the Indenture Trustee may, but need not, elect to maintain possession of the
Trust Estate. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of
and interest on the Notes, and the Indenture Trustee shall take such desire
into account when determining whether or not to maintain possession of the
Trust Estate. In determining whether or not to maintain possession of the
Trust Estate, the Indenture Trustee may, at the expense of the Issuer and
paid in the priority set forth in Section 5.06(b) of the Sale and Servicing
Agreement, but need not, obtain and conclusively rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
Section 5.06. Limitation of Suits. No Holder of any Note shall have
-------------------
any right to institute any Proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount
of the Notes have made written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its own
name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities that
may be incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings;
(v) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders
of a majority of the Outstanding Amount of the Notes; and
(vi) the Note Insurer has given its prior written consent if it
is the Controlling Party or the Indenture Trustee is the Controlling
Party.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatsoever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of
Notes pursuant to this Section, each representing less than a majority of the
Outstanding Amount of the Notes, the Indenture Trustee in its sole discretion
may determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
Section 5.07. Unconditional Rights of Noteholders To Receive Principal
--------------------------------------------------------
and Interest. Notwithstanding any other provisions in this Indenture, the
- ------------
Holder of any Note shall have the right, which is absolute and unconditional,
to receive payment of the principal of and interest, if any, on such Note on
or after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date)
and to institute suit for the enforcement of any such payment, and such right
shall not be impaired without the consent of such Holder.
Section 5.08. Restoration of Rights and Remedies. If the Indenture
----------------------------------
Trustee, the Note Insurer, or any Noteholder has instituted any Proceeding to
enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to
the Indenture Trustee, the Note Insurer or to such Noteholder, then and in
every such case the Issuer, the Indenture Trustee, the Note Insurer and the
Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee, the Note Insurer
and the Noteholders shall continue as though no such Proceeding had been
instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy
------------------------------
herein conferred upon or reserved to the Indenture Trustee, the Note Insurer
or to the Noteholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
Section 5.10. Delay or Omission Not a Waiver. No delay or omission of
------------------------------
the Indenture Trustee, or any Holder of any Note or the Note Insurer to
exercise any right or remedy accruing upon any Default or Event of Default
shall impair any such right or remedy or constitute a waiver of any such
Default or Event of Default or an acquiescence therein. Every right and
remedy given by this Article V or by law to the Indenture Trustee to the
Noteholders or the Note Insurer may be exercised from time to time, and as
often as may be deemed expedient, by the Indenture Trustee, the Noteholders
or the Note Insurer, as the case may be.
Section 5.11. Control by Noteholders. If the Indenture Trustee is the
----------------------
Controlling Party, the Holders of a majority of the Outstanding Amount of the
Notes shall have the right to direct the time, method and place of conducting
any Proceeding for any remedy available to the Indenture Trustee with respect
to the Notes or exercising any trust or power conferred on the Indenture
Trustee; provided that:
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) subject to the express terms of Section 5.04, any direction
to the Indenture Trustee to sell or liquidate the Trust Estate shall be
by Holders of Notes representing not less than 100% of the Outstanding
Amount of the Notes;
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Indenture Trustee elects to retain the Trust Estate
pursuant to such Section, then any written direction to the Indenture
Trustee by Holders of Notes representing less than 100% of the
Outstanding Amount of the Notes to sell or liquidate the Trust Estate
shall be of no force and effect; and
(iv) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject
to Section 6.01, the Indenture Trustee need not take any action that it
determines might involve it in liability or might materially adversely affect
the rights of any Noteholders not consenting to such action.
Section 5.12. Waiver of Past Defaults. Prior to the declaration of the
-----------------------
acceleration of the maturity of the Notes as provided in Section 5.02, the
Note Insurer may or, at any time when the Note Insurer is not the Controlling
Party, the Holders of Notes of not less than a majority of the Outstanding
Amount of the Notes may, waive any past Default or Event of Default and its
consequences except a Default (a) in payment of principal of or interest on
any of the Notes or (b) in respect of a covenant or provision hereof that
cannot be modified or amended without the consent of the Holder of each Note.
In the case of any such waiver, the Issuer, the Indenture Trustee, the Note
Insurer and the Holders of the Notes shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right
consequent thereto.
Section 5.13. Undertaking for Costs. All parties to this Indenture
---------------------
agree, and each Holder of a Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Indenture Trustee for any action taken, suffered or
omitted by it as Indenture Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to (a) any suit instituted
by the Indenture Trustee or the Note Insurer, (b) any suit instituted by any
Noteholder, or group of Noteholders, in each case holding in the aggregate
more than 10% of the Outstanding Amount of the Notes or (c) any suit
instituted by any Noteholder for the enforcement of the payment of principal
of or interest on any Note on or after the respective due dates expressed in
such Note and in this Indenture (or, in the case of redemption, on or after
the Redemption Date).
Section 5.14. Waiver of Stay or Extension Laws. The Issuer covenants
--------------------------------
(to the extent that it may lawfully do so) that it will not at any time
insist upon, or plead or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law wherever enacted, now or at any
time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Issuer (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Indenture Trustee or the Note Insurer, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
Section 5.15. Action on Notes. The Indenture Trustee's right to seek
---------------
and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under
or with respect to this Indenture. Neither the lien of this Indenture nor
any rights or remedies of the Indenture Trustee, the Note Insurer or the
Noteholders shall be impaired by the recovery of any judgment by the
Indenture Trustee or the Note Insurer against the Issuer or by the levy of
any execution under such judgment upon any portion of the Trust Estate or
upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.04(b).
Section 5.16. Performance and Enforcement of Certain Obligations.
--------------------------------------------------
(a) Promptly following a request from the Indenture Trustee or the Note
Insurer to do so and at the Administrator's expense, the Issuer shall take
all such lawful action as the Indenture Trustee may request to compel or
secure the performance and observance by the Seller or the Servicer, as
applicable, of each of their obligations to the Issuer under or in connection
with the Sale and Servicing Agreement or the Receivables Purchase Agreement,
as applicable, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the
Sale and Servicing Agreement or the Receivables Purchase Agreement to the
extent and in the manner directed by the Indenture Trustee or the Note
Insurer, including the transmission of notices of default on the part of the
Seller or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Seller or the Servicer of each of their obligations under the Sale and
Servicing Agreement or the Receivables Purchase Agreement.
(b) If an Event of Default has occurred at any time when the Note
Insurer is not the Controlling Party, the Indenture Trustee may, and at the
direction (which direction shall be in writing) of the Holders of not less
than a majority of the Outstanding Amount of the Notes shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the
Seller or the Servicer under or in connection with the Sale and Servicing
Agreement and the Receivables Purchase Agreement including the right or power
to take any action to compel or secure performance or observance by the
Seller or the Servicer, as the case may be, of each of their obligations to
the Issuer thereunder and to give any consent, request, notice, direction,
approval, extension or waiver under the Sale and Servicing Agreement and the
Receivables Purchase Agreement, as the case may be, and any right of the
Issuer to take such action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee.
---------------------------
(a) If an Event of Default has occurred and is continuing of which a
Responsible Officer of the Indenture Trustee has actual knowledge, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and
(ii) in the absence of bad faith or negligence on its part, the
Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
the face value of the certificates or opinions furnished to the
Indenture Trustee and conforming to the requirements of this Indenture;
however, the Indenture Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section.
(e) The Indenture Trustee shall not be liable for indebtedness
evidenced by or arising under any of the Basic Documents, including principal
of or interest on the Notes, or interest on any money received by it except
as the Indenture Trustee may agree in writing with the Issuer.
(f) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee
to advance, 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 it shall have reasonable grounds
to believe that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of
the TIA.
(i) In no event shall the Trustee be required to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer or any other party under the Sale and Servicing Agreement, except
that The Chase Manhattan Bank, solely in its capacity as Backup Servicer,
shall perform and be responsible for such obligations during such time, if
any, as the Backup Servicer shall be the successor to, and be vested with the
rights, powers, duties and privileges of, the Servicer in accordance with the
terms of the Sale and Servicing Agreement.
(j) The Indenture Trustee shall, and hereby agrees that it will, hold
the Policy in trust, and will hold any proceeds of any claim on the Policy in
trust solely for the use and benefit of the Noteholders. The Indenture
Trustee will deliver to the Rating Agency notice of any change made to the
Policy.
For purposes of this Section 6.01 and Section 8.03(c), the Indenture
Trustee, or a Responsible Officer thereof, shall be charged with actual
knowledge of any default or an Event of Default if a Responsible Officer
knows of such default or an Event of Default or the Indenture Trustee
receives written notice of such default or Event of Default from the Issuer,
the Servicer, the Backup Servicer, the Note Insurer or Noteholders owning
Notes aggregating not less than 10% of the Outstanding Amount of the Notes.
Notwithstanding the foregoing, the Indenture Trustee shall not be required to
take notice and in the absence of such actual notice and knowledge, the
Indenture Trustee may conclusively assume that there is no such default or
Event of Default.
Section 6.02. Rights of Indenture Trustee.
---------------------------
(a) The Indenture Trustee may conclusively rely on the face value of
any document believed by it to be genuine and to have been signed or
presented by the proper person. The Indenture Trustee need not investigate
any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel from the
appropriate party. The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith in reliance on an Officer's
Certificate or Opinion of Counsel from the appropriate party.
The right of the Indenture Trustee to perform any discretionary act
enumerated in this Indenture or in any Basic Document shall not be construed
as a duty of the Indenture Trustee and the Indenture Trustee shall not be
answerable for other than its negligence or willful misconduct in the
performance of such discretionary act.
(c) The Indenture 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 or nominee appointed with due care by it
hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith that it believes to be authorized or within
its rights or powers; provided, that the Indenture Trustee's conduct does not
constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult, at the Issuer's expense and paid
in the priority set forth in Section 5.06(b) of the Sale and Servicing
Agreement, with counsel, and the written advice or opinion of counsel with
respect to legal matters relating to this Indenture and the Notes shall be
full and complete authorization and protection from liability in respect to
any action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) In the event that the Indenture Trustee is also acting as Paying
Agent, Note Registrar or collateral agent, the rights and protections
afforded to the Indenture Trustee pursuant to this Article 6 shall be
afforded to such Paying Agent, Note Registrar or collateral agent.
Section 6.03. Individual Rights of Indenture Trustee. The Indenture
--------------------------------------
Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Issuer or its Affiliates
with the same rights it would have if it were not Indenture Trustee. Any
Paying Agent, Note Registrar, co-registrar or co-paying agent may do the same
with like rights. However, the Indenture Trustee must comply with Sections
6.11 and 6.12.
Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee
------------------------------
shall not be responsible for and makes no representation as to the validity
or adequacy of this Indenture or the Notes, it shall not be accountable for
the Issuer's use of the proceeds from the Notes, and it shall not be
responsible for any statement of the Issuer in the Indenture or in any
document issued in connection with the sale of the Notes or in the Notes
other than the Indenture Trustee's certificate of authentication.
Section 6.05. Notice of Defaults. If a Default occurs and if it is
------------------
known to a Responsible Officer of the Indenture Trustee, the Indenture
Trustee shall mail to each Noteholder notice of the Default within 30 days
after it occurs and to the Note Insurer notice of such Default promptly after
it occurs. Except in the case of a Default in payment of principal of or
interest on any Note (including payments pursuant to the mandatory redemption
provisions of such Note), the Indenture Trustee may withhold the notice to
Noteholders if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of
Noteholders.
Section 6.06. Reports by Indenture Trustee to Holders. The Indenture
---------------------------------------
Trustee shall deliver to each Noteholder such information as may be required
to enable such holder to prepare its federal and state income tax returns.
Section 6.07. Compensation and Indemnity. The Issuer shall cause the
--------------------------
payment to the Indenture Trustee from time to time reasonable compensation
for its services to the extent of and in the priority set forth in Section
5.06(b) of the Sale and Servicing Agreement and as outlined in the Fee
Letter. The Indenture Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Issuer shall cause the
reimbursement to the Indenture Trustee for all reasonable out-of-pocket
expenses incurred or made by it, including costs of collection, in addition
to the compensation for its services out of the Trust to the extent of and in
accordance with the priority in Section 5.06(b) of the Sale and Servicing
Agreement. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Indenture Trustee's agents,
counsel, accountants and experts. Notwithstanding anything in the Basic
Documents to the contrary, but subject to Section 6.01, the Indenture Trustee
shall not be required to incur any legal fees if in its sole judgment the
Indenture Trustee shall not have adequate indemnity or assurance of suitably
prompt reimbursement; provided, however that prior to such occurrence the
Indenture Trustee shall consult with the Note Insurer. The Trust shall
indemnify the Indenture Trustee against any and all loss, liability or
expense (including attorneys' fees and expenses) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder or under the Sale and Servicing Agreement to the extent of and in
accordance with the priority in Section 5.06(b) of the Sale and Servicing
Agreement. The Indenture Trustee shall notify the Issuer and the Note
Insurer promptly of any claim for which it may seek indemnity. Failure by
the Indenture Trustee to so notify the Issuer shall not relieve the Issuer of
its obligations hereunder. The Issuer shall not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own willful misconduct, negligence or
bad faith.
The Issuer's payment obligations and indemnities to the Indenture
Trustee pursuant to this Section shall survive the discharge of this
Indenture or the earlier resignation or removal of the Indenture Trustee.
When the Indenture Trustee incurs expenses after the occurrence of a Default
specified in Section 5.01(v) or (vi) with respect to the Issuer, the expenses
are intended to constitute expenses of administration under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law.
Section 6.08. Replacement of Indenture Trustee. No resignation or
--------------------------------
removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.08. The Indenture
Trustee may resign at any time by so notifying the Issuer, each Rating Agency
and (if the Note Insurer is the Controlling Party) the Note Insurer. The
Note Insurer or the Holders of a majority in Outstanding Amount of the Notes
may, with the consent of the Controlling Party, remove the Indenture Trustee
by so notifying the Indenture Trustee and may appoint a successor Indenture
Trustee acceptable to the Note Insurer. The Issuer shall, with the consent
of the Controlling Party, and at the request of the Controlling Party, remove
the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property;
(iv) the Indenture Trustee otherwise becomes incapable of acting;
or
(v) the Indenture Trustee breaches any representation, warranty
or covenant made by it under any Basic Document.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the
office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Note
insurer may and if it fails to, the Issuer shall promptly appoint a successor
Indenture Trustee acceptable (if the Note Insurer is the Controlling Party)
to the Note Insurer.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, the Note Insurer and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture
Trustee shall become effective, and the successor Indenture Trustee shall
have all the rights, powers and duties of the Indenture Trustee under this
Indenture. The retiring Indenture Trustee shall be paid all amounts owed to
it upon its resignation or removal. The successor Indenture Trustee shall
mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee
to the successor Indenture Trustee. The retiring Indenture Trustee shall not
be liable for the acts or omissions of any Successor Indenture Trustee
acceptable to the Note Insurer.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Note Insurer (if the Note Insurer is the Controlling
Party), the Issuer or the Holders of a majority in Outstanding Amount of the
Notes may petition any court of competent jurisdiction for the appointment of
a successor Indenture Trustee acceptable to the Note Insurer.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder with the prior written consent of the Note Insurer, may petition
any court of competent jurisdiction for the removal of the Indenture Trustee
and the appointment of a successor Indenture Trustee acceptable to the Note
Insurer.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's and the Administrator's obligations under
Section 6.07 shall continue for the benefit of the retiring Indenture
Trustee.
Section 6.09. Successor Indenture Trustee by Merger. If the Indenture
-------------------------------------
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be acceptable to
the Note Insurer and otherwise qualified and eligible under Section 6.11.
The Indenture Trustee shall provide the Note Insurer and the Rating Agencies
prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created
by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor trustee and deliver such
Notes so authenticated; and in case at that time any of the Notes shall not
have been authenticated, any successor to the Indenture Trustee may
authenticate such Notes either in the name of any predecessor hereunder or in
the name of the successor to the Indenture Trustee; and in all such cases
such certificates shall have the full force that it is anywhere in the Notes
or in this Indenture provided that the certificate of the Indenture Trustee
shall have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
---------------------------------------------------------
Trustee.
- -------
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust Estate may at the time be located, the Indenture
Trustee, with the consent of the Note Insurer (if the Note Insurer is the
Controlling Party), 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 Noteholders and the Note Insurer, such title to the Trust
Estate, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Indenture
Trustee or the Note Insurer 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 6.11 and no notice to
Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.08 hereof.
(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 Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture 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
Indenture 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 the Indenture 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 Estate 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 Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Indenture 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 Indenture 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 VI. 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 Indenture Trustee or separately, as may be provided therein, subject to
all the provisions of this Indenture, specifically including every provision
of this Indenture relating to the conduct of, affecting the liability of, or
affording protection to, the Indenture Trustee. Every such instrument shall
be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact 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 Indenture Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.
Section 6.11. Eligibility; Disqualification. The Indenture Trustee
-----------------------------
shall at all times satisfy the requirements of TIA Section 310(a). The
Indenture Trustee shall be acceptable to the Note Insurer and shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition, and the time deposits of the
Indenture Trustee shall be rated at least A-1 by Standard & Poor's and P-1 by
Moody's. At any time that the Note Insurer is the Controlling Party, the
Indenture Trustee shall provide copies of such reports to the Note Insurer
upon request. The Indenture Trustee shall comply with TIA Section 310(b),
including the optional provision permitted by the second sentence of TIA
Section 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which
other securities of the Issuer are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
Section 6.12. Pennsylvania Motor Vehicle Sales Finance Act Licenses.
-----------------------------------------------------
The Administrator shall use its best efforts to maintain the effectiveness of
all licenses required under the Pennsylvania Motor Vehicle Sales Finance Act
in connection with this Indenture and the transactions contemplated hereby
until the lien and security interest of this Indenture shall no longer be in
effect in accordance with the terms hereof.
Section 6.13. Preferential Collection of Claims Against Issuer. The
------------------------------------------------
Indenture Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An Indenture Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
Section 6.14. Waiver of Setoffs. The Indenture Trustee hereby
-----------------
expressly waives any and all rights of setoff that the Indenture Trustee may
otherwise at any time have under applicable law with respect to any Trust
Account and agrees that amounts in the Trust Accounts shall at all times be
held and applied solely in accordance with the provisions hereof and of the
other Basic Documents.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer To Furnish Indenture Trustee Names and Addresses
-------------------------------------------------------
of Noteholders. The Issuer will furnish or cause to be furnished to the
- --------------
Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and
addresses of the Holders of Notes as of such Record Date, and (b) at such
other times as the Indenture Trustee may request in writing, within 30 days
after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Indenture Trustee is the
Note Registrar, no such list shall be required to be furnished. The
Indenture Trustee or, if the Indenture Trustee is not the Note Registrar, the
Issuer shall furnish to the Note Insurer (if the Note Insurer is the
Controlling Party) in writing on an annual basis and at such other times as
the Note Insurer may request a copy of the list of Noteholders.
Section 7.02. Preservation of Information; Communications to
----------------------------------------------
Noteholders.
- -----------
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as
provided in Section 7.01 and the names and addresses of Holders of Notes
received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in such
Section 7.01 upon receipt of a new list so furnished. The Indenture Trustee
shall make such list available to the Note Insurer (if the Note Insurer is
the Controlling Party) and the Owner Trustee on request, and to the
Noteholders upon written request of three or more Noteholders or one or more
Noteholders evidencing not less than 25% of the Outstanding Amount of the
Notes.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under
the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
Section 7.03. Reports by Issuer.
-----------------
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required (if at all) to file the same with the Commission,
copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe)
that the Issuer may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants of
this Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and (ii) of
this Section 7.03(a) and by rules and regulations prescribed from time
to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee. If required by TIA
----------------------------
Section 313(a), within 60 days after each June 1 beginning with June 1, 1998,
the Indenture Trustee shall mail to each Noteholder as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA
Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money. Except as otherwise expressly
-------------------
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable
to or receivable by the Indenture Trustee pursuant to this Indenture. The
Indenture Trustee shall apply all such money received by it as provided in
this Indenture. Except as otherwise expressly provided in this Indenture, if
any default occurs in the making of any payment or performance under any
agreement or instrument that is part of the Trust Estate, the Indenture
Trustee may take such action as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to
claim a Default or Event of Default under this Indenture and any right to
proceed thereafter as provided in Article V.
Section 8.02. Trust Accounts.
--------------
(a) On or prior to the Closing Date, the Issuer shall establish or
cause to be established, in the name of the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer, the Trust Accounts as
provided in Section 5.02 of the Sale and Servicing Agreement.
(b) On or before each Distribution Date, the Total Distribution Amount
with respect to the related Collection Period will be deposited into the
Collection Account as provided in Section 5.02 of the Sale and Servicing
Agreement. On or before each Distribution Date, all amounts required to be
deposited in the Note Distribution Account with respect to the related
Collection Period pursuant to Section 5.06 of the Sale and Servicing
Agreement will be transferred from the Collection Account, the Reserve
Account, the Capitalized Interest Account, the Pre-Funding Account and the
Yield Maintenance Account to the Note Distribution Account.
(c) On each Distribution Date and Redemption Date, the Indenture
Trustee shall distribute all amounts on deposit in the Note Distribution
Account to Noteholders in respect of the Notes to the extent of amounts due
and unpaid on the Notes in respect of principal and interest (including any
premium) in the following amounts and in the following order of priority
(except as otherwise provided in Section 5.04(b)):
(i) to the Holders of each Class of Notes, accrued and unpaid
interest on the Outstanding Amount of the such Class at the related
Interest Rate;
(ii) on the Mandatory Redemption Date, to the Holders of each
Class of Notes in reduction of the Outstanding Amount of such Class,
pursuant to Section 5.14(b) of the Sale and Servicing Agreement, the
amounts allocated thereto, if any, from the amount withdrawn from the
Pre-Funding Account and deposited in the Note Distribution Account;
(iii) to the Holders of the Class A-1 Notes on account of
principal until the Outstanding Amount of the Class A-1 Notes is reduced
to zero; and
(iv) to the Holders of the Class A-2 Notes on account of
principal until the Outstanding Amount of the Class A-2 Notes is reduced
to zero.
Section 8.03. General Provisions Regarding Accounts.
-------------------------------------
Subject to Section 6.01(c), the Indenture Trustee shall not in any
way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included therein
except for losses attributable to the Indenture Trustee's failure to make
payments on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance
with their terms.
Section 8.04. Release of Trust Estate. Subject to the payment of its
-----------------------
fees and expenses pursuant to Section 6.07, the Indenture Trustee may, and
when required by the provisions of this Indenture shall, execute instruments
to release property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that are
not inconsistent with the provisions of this Indenture. No party relying
upon an instrument executed by the Indenture Trustee as provided in this
Article VIII shall be bound to ascertain the Indenture Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any moneys.
(a) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07
have been paid in full and all amounts due to the Note Insurer under the
Basic Documents have been paid, release any remaining portion of the Trust
Estate that secured the Notes from the lien of this Indenture and release to
the Issuer or any other Person entitled thereto any funds then on deposit in
the Trust Accounts. The Indenture Trustee shall release property from the
lien of this Indenture pursuant to this Section 8.04(b) only upon receipt by
it and the Note Insurer of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA) Independent
Certificates in accordance with TIA SectionSection 314(c) and 314(d)(1)
meeting the applicable requirements of Section 11.01.
The Issuer agrees, upon request by the Servicer and representation by
the Servicer that it has complied with the procedure in Section 9.01 of the
Sale and Servicing Agreement, to render the Issuer Request to the Indenture
Trustee in accordance with Section 4.04, and take such other actions as are
required in that Section.
Section 8.05. Opinion of Counsel. The Indenture Trustee and the Note
------------------
Insurer shall receive at least seven days prior written notice when requested
by the Issuer to take any action pursuant to Section 8.04(b), accompanied by
copies of any instruments involved, and the Indenture Trustee and the Note
Insurer shall also require, as a condition to such action, an Opinion of
Counsel, in form and substance satisfactory to the Indenture Trustee and the
Note Insurer, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such
action will not materially and adversely impair the security for the Notes or
the rights of the Noteholders in contravention of the provisions of this
Indenture; provided, however, that such Opinion of Counsel shall not be
required to express an opinion as to the fair value of the Trust Estate.
Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
------------------------------------------------------
(a) Without the consent of the Holders of any Notes but with the
consent of the Note Insurer and prior written notice to the Rating Agencies
(with copy to the Indenture Trustee), the Issuer and the Indenture Trustee,
when authorized by an Issuer Order, at any time and from time to time, may
enter into one or more supplemental indentures hereto (which shall conform to
the provisions of the Trust Indenture Act as in force at the date of the
execution thereof), in form satisfactory to the Indenture Trustee, for any of
the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required
to be subjected to the lien of this Indenture, or to subject to the lien
of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of
the Holders of the Notes and the Note Insurer, or to surrender any right
or power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property
to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture that may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental indenture;
provided, that such action shall not adversely affect the interests of
the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as shall
be necessary to facilitate the administration of the trusts hereunder by
more than one trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but
with the consent of the Note Insurer and prior notice to the Rating Agencies,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of any Noteholder (including the interests
of the Note Insurer to the extent it is, or will become, upon payment in full
of all amounts due to any other Noteholder hereunder or pursuant to a Note, a
Noteholder pursuant to Section 2.08(c) or Section 5.12 or the Sale and
Servicing Agreement).
Section 9.02. Supplemental Indentures with Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also---
- ------------------------------------------------ may, with prior notice to
the Rating Agencies and with the consent of (i) the Note Insurer and (ii) of
the Holders of not less than a majority of the Outstanding Amount of the
Notes, by Act of such Holders delivered to the Issuer and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder
of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Notes, or change any place of
payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article V, to
the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or after
the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.04;
(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified
or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Distribution Date
(including the calculation of any of the individual components of such
calculation) or to affect the rights of the Holders of Notes to the
benefit of any provisions for the mandatory redemption of the Notes
contained herein; or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any property at any time subject
hereto or deprive the Holder of any Note of the security provided by the
lien of this Indenture.
The Indenture Trustee may in its discretion or at the advice of counsel
determine whether or not any Notes would be affected by any supplemental
indenture and any such determination shall be conclusive upon the Holders of
all Notes, whether theretofore or thereafter authenticated and delivered
hereunder. The Indenture Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee
shall mail to the Holders of the Notes to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture
Trustee to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In executing, or
------------------------------------
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts
created by this Indenture, the Indenture Trustee shall be entitled to
receive, and subject to Sections 6.01 and 6.02, shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights,
duties, liabilities or immunities under this Indenture or otherwise. The
Indenture Trustee shall provide a fully executed copy of any supplemental
indentures to this Indenture to the Note Insurer and each Rating Agency.
Section 9.04. Effect of Supplemental Indenture. Upon the execution of
--------------------------------
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective
rights, limitations of rights, obligations, duties, liabilities and
immunities under this Indenture of the Indenture Trustee, the Issuer and the
Holders of the Notes shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and
all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any
and all purposes.
Section 9.05. Reference in Notes to Supplemental Indentures. Notes
---------------------------------------------
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee
shall, bear a notation in form approved by the Indenture Trustee and the Note
Insurer as to any matter provided for in such supplemental indenture. If the
Issuer or the Indenture Trustee shall so determine, new Notes so modified as
to conform, in the opinion of the Indenture Trustee and the Issuer, to any
such supplemental indenture may be prepared and executed by the Issuer and
authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Notes.
Section 9.06. Conformity with Trust Indenture Act. Every amendment of
-----------------------------------
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as
then in effect so long as this Indenture shall then be qualified under the
Trust Indenture Act.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption.
----------
(a) The Class A-2 Notes are subject to redemption in whole, but not in
part, at the direction of the Servicer or the Note Insurer, as the case may
be, pursuant to Section 9.01 of the Sale and Servicing Agreement, on any
Distribution Date on which the Servicer or the Note Insurer, as the case may
be, exercises its option to purchase the Trust Estate pursuant to said
Section 9.01, for a purchase price equal to the Redemption Price plus all
amounts due to the Note Insurer under the Basic Documents; provided, that the
Issuer has available funds sufficient to pay the Redemption Price plus all
amounts due to the Note Insurer under the Basic Documents. The Servicer or
the Issuer shall furnish the Note Insurer and the Rating Agencies and the
Indenture Trustee notice of such redemption. If the Class A-2 Notes are to
be redeemed pursuant to this Section 10.01(a), the Servicer or the Note
Insurer, as the case may be, shall furnish notice of such election to the
Indenture Trustee not later than 20 days prior to the Redemption Date and
shall deposit by 10:00 A.M. New York City time on the Redemption Date with
the Indenture Trustee in the Note Distribution Account the Redemption Price
of the Class A-2 Notes to be redeemed and shall pay to the Note Insurer all
amounts due to it under the Basic Documents, whereupon all such Class A-2
Notes shall be due and payable on the Redemption Date upon the furnishing of
a notice complying with Section 10.02 to each Holder of the Notes.
(b) (Reserved.)
(c) If the Pre-Funded Amount has not been reduced to zero at the end of
the Funding Period after giving effect to any reductions on such day pursuant
to Section 5.14(a) of the Sale and Servicing Agreement, one or more classes
of Notes then Outstanding will be redeemed in part, as described in
Section 8.02(c)(ii).
Section 10.02. Form of Redemption Notice.
-------------------------
Notice of redemption under Section 10.01(a) shall be given by the
Indenture Trustee by first-class mail, postage prepaid, or by facsimile
mailed or transmitted not later than 10 days prior to the applicable
Redemption Date to the Note Insurer and each Holder of Notes, as of the close
of business on the Record Date preceding the applicable Redemption Date, at
such Holder's address or facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the place where such Notes are to be surrendered for payment
of the Redemption Price (which shall be the office or agency of the
Issuer to be maintained as provided in Section 3.02); and
(iv) that interest on the Notes shall cease to accrue on the
Redemption Date.
Notice of redemption of the Notes shall be given by the Indenture Trustee in
the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair
or affect the validity of the redemption of any other Note.
Section 10.03. Notes Payable on Redemption Date. The Notes or portions
--------------------------------
thereof to be redeemed shall, following notice of redemption as required by
Section 10.02 (in the case of redemption pursuant to Section 10.01(a)), on
the Redemption Date become due and payable at the Redemption Price and
(unless the Issuer shall default in the payment of the Redemption Price) no
interest shall accrue on the Redemption Price for any period after the date
to which accrued interest is calculated for purposes of calculating the
Redemption Price.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc.
-----------------------------------------
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee and the Note Insurer (i) an Officer's
Certificate stating that all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied with and
(ii) an Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with and (iii) (if
required by the TIA) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section,
except that, in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of
this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for
the release of any property or securities subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in
Section 11.01(a) or elsewhere in this Indenture, furnish to the
Indenture Trustee and the Note Insurer (if the Note Insurer is the
Controlling Party) an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value
(within 90 days of such deposit) to the Issuer of the Collateral or
other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee and the Note Insurer an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters described in
clause (i) above, the Issuer shall also deliver to the Indenture Trustee
and the Note Insurer an Independent Certificate as to the same matters,
if the fair value to the Issuer of the securities to be so deposited and
of all other such securities made the basis of any such withdrawal or
release since the commencement of the then-current fiscal year of the
Issuer, as set forth in the certificates delivered pursuant to clause
(i) above and this clause (ii), is 10% or more of the Outstanding Amount
of the Notes, but such a certificate need not be furnished with respect
to any securities so deposited, if the fair value thereof to the Issuer
as set forth in the related Officer's Certificate is less than $25,000
or less than one percent of the Outstanding Amount of the Notes.
(iii) Whenever any property or securities are to be released
from the lien of this Indenture, the Issuer shall also furnish to the
Indenture Trustee and the Note Insurer (if the Note Insurer is the
Controlling Party) an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value
(within 90 days of such release) of the property or securities proposed
to be released and stating that in the opinion of such person the
proposed release will not impair the security under this Indenture in
contravention of the provisions hereof.
(iv) Other than with respect to the release of any Purchased
Receivable, the Issuer is required to furnish to the Indenture Trustee
and the Note Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause
(iii) above, the Issuer shall also furnish to the Indenture Trustee and
the Note Insurer an Independent Certificate as to the same matters if
the fair value of the property or securities and of all other property,
other than property as contemplated by clause (v) below, or securities
released from the lien of this Indenture since the commencement of the
then-current calendar year, as set forth in the certificates required by
clause (iii) above and this clause (iv), equals 10% or more of the
Outstanding Amount of the Notes, but such certificate need not be
furnished in the case of any release of property or securities if the
fair value thereof as set forth in the related Officer's Certificate is
less than $25,000 or less than one percent of the then Outstanding
Amount of the Notes.
(v) Notwithstanding Section 4.04 or any other provision of this
Section, the Issuer may, without compliance with the requirements of the
other provisions of this Section, (A) collect, liquidate, sell or
otherwise dispose of Receivables and Financed Vehicles as and to the
extent permitted or required by the Basic Documents and (B) make cash
payments out of the Trust Accounts as and to the extent permitted or
required by the Basic Documents.
Section 11.02. Form of Documents Delivered to Indenture Trustee. In
------------------------------------------------
any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person,
or that they be so certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some matters and one or
more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by,
an officer or officers of the Servicer, the Seller, the Issuer or the
Administrator, stating that the information with respect to such factual
matters is in the possession of the Servicer, the Seller, the Issuer or the
Administrator, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof,
it is intended that the truth and accuracy, at the time of the granting of
such application or at the effective date of such certificate or report (as
the case may be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Issuer to have such
application granted or to the sufficiency of such certificate or report. The
foregoing shall not, however, be construed to affect the Indenture Trustee's
right to rely upon the truth and accuracy of any statement or opinion
contained in any such document as provided in Article VI.
Section 11.03. Acts of Noteholders.
-------------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to
Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer, if
made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of
every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
Section 11.04. Notices, etc., to Indenture Trustee, Issuer and Rating
------------------------------------------------------
Agencies. Any request, demand, authorization, direction, notice, consent,
- --------
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture shall be in writing and, if such request, demand, authorization,
direction, notice, consent, waiver or act of Noteholders is to be made upon,
given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder, the Note Insurer or
by the Issuer, shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with the Indenture Trustee at
its Corporate Trust Office; or
(ii) the Issuer by the Indenture Trustee, the Note Insurer or by
any Noteholder, shall be sufficient for every purpose hereunder if in
writing and mailed first-class, postage prepaid to the Issuer addressed
to: Hyundai Auto Receivables Trust 1998-A, in care of Wilmington Trust
Company, as Owner Trustee, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration, or at any other address previously furnished in writing
to the Indenture Trustee and the Note Insurer by the Issuer or the
Administrator. The Issuer shall promptly transmit any notice received
by it from the Noteholders to the Indenture Trustee;
(iii) the Note Insurer shall be sufficient for any purpose
hereunder if in writing and mailed by registered mail or personally
delivered or telexed or facsimiled to the Note Insurer at: MBIA
Insurance Corporation, 113 King Street, Armonk, New York 10504,
Attention: IPM-SF; Facsimile No.: (914) 765-3810, Telephone No. (914)
273-4545.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered or mailed by certified mail, return receipt requested, to (i) in
the case of Moody's, at the following address: Moody's Investors Service,
Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007
and (ii) in the case of Standard & Poor's, at the following address:
Standard & Poor's, a division of The McGraw-Hill Companies, Inc., 25 Broadway
(15th Floor), New York, New York 10004, Attention of Asset Backed
Surveillance Department; or as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.
Section 11.05. Notices to Noteholders; Waiver. Where this Indenture
------------------------------
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at such Holder's address as it appears on the Note Register, not later
than the latest date, and not earlier than the earliest date, prescribed for
the giving of such notice. In any case where notice to Noteholders is given
by mail, neither the failure to mail such notice nor any defect in any notice
so mailed to any particular Noteholder shall affect the sufficiency of such
notice with respect to other Noteholders, and any notice that is mailed in
the manner herein provided shall conclusively be presumed to have been duly
given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to
mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed
to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event
of Default.
Section 11.06. Alternate Payment and Notice Provisions.
---------------------------------------
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Paying Agent to such Holder, that is different from the methods provided for
in this Indenture for such payments or notices. The Issuer will furnish to
the Indenture Trustee a copy of each such agreement and the Indenture Trustee
will cause payments to be made and notices to be given in accordance with
such agreements. The Indenture Trustee shall provide a copy of any request
made pursuant to this Section 11.06 to the Owner Trustee.
Section 11.07. Effect of Headings and Table of Contents. The Article
----------------------------------------
and Section headings herein and the Table of Contents are for convenience
only and shall not affect the construction hereof.
Section 11.08. Successors and Assigns. All covenants and agreements
----------------------
in this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture
Trustee in this Indenture shall bind its successors, co-trustees and agents.
Section 11.09. Separability. In case any provision in this Indenture
------------
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
Section 11.10. Benefits of Indenture. The Note Insurer and its
---------------------
successors and assigns shall be third-party beneficiaries to the provisions
of this Indenture, and shall be entitled to rely upon and directly to enforce
the provisions of this Indenture so long as the Note Insurer is the
Controlling Party. Nothing in this Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties hereto, the Note
Insurer and their successors hereunder, and the Noteholders, and any other
party secured hereunder, and any other Person with an ownership interest in
any part of the Trust Estate, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
Section 11.11. Legal Holidays. In any case where the date on which any
--------------
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest
shall accrue for the period from and after any such nominal date.
SECTION 11.12. GOVERNING LAW. THIS INDENTURE 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 11.13. Counterparts. This Indenture may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.14. Recording of Indenture. If this Indenture is subject
----------------------
to recording in any appropriate public recording offices, such recording is
to be effected by the Issuer and at the expense of the Servicer accompanied
by an Opinion of Counsel (which may be counsel to the Indenture Trustee or
any other counsel reasonably acceptable to the Indenture Trustee and the Note
Insurer) to the effect that such recording is necessary either for the
protection of the Noteholders or any other Person secured hereunder or for
the enforcement of any right or remedy granted to the Indenture Trustee under
this Indenture.
Section 11.15. Trust Obligation. No recourse may be taken, directly
----------------
or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee or the Indenture Trustee on the Notes or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer, including
the Seller, or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Indenture Trustee or the Owner Trustee in
its individual capacity, any holder of a beneficial interest in the Issuer,
the Owner Trustee or the Indenture Trustee or of any successor or assign of
the Indenture Trustee or the Owner Trustee in its individual capacity, except
as any such Person may have expressly agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any
unpaid consideration for stock, unpaid capital contribution or failure to pay
any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Article VI, VII and VIII of the
Trust Agreement.
Section 11.16. No Petition. The Indenture Trustee, by entering into
-----------
this Indenture, and each Noteholder, by accepting a Note, hereby covenant and
agree that they will not at any time institute against the Issuer, the
Certificate Trust or the Depositor, or join in any institution against the
Issuer, the Certificate Trust or the Depositor, of any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar
law in connection with any obligations relating to the Notes, this Indenture
or any of the Basic Documents.
Section 11.17. Inspection. The Issuer agrees that, on reasonable prior
----------
notice, it will permit any representative of the Indenture Trustee or of the
Note Insurer (if the Note Insurer is the Controlling Party), during the
Issuer's normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts
therefrom, to cause such books to be audited by Independent certified public
accountants, and to discuss the Issuer's affairs, finances and accounts with
the Issuer's officers, employees and Independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall, and shall cause its representatives
to, hold in confidence all such information except to the extent disclosure
may be required by law (and all reasonable applications for confidential
treatment are unavailing) and except to the extent that the Indenture Trustee
may reasonably determine that such disclosure is consistent with its
obligations hereunder.
Section 11.18. Conflict with Trust Indenture Act. If any provision
---------------------------------
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the
Trust Indenture Act, such required provision shall control.
The provisions of TIA SectionSection 310 through 317 that impose duties
on any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
* * * * *
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto
duly authorized and duly attested, all as of the day and year first above
written.
HYUNDAI AUTO RECEIVABLES TRUST 1998-A,
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee,
By: /s/ Emmitt R. Harmon
--------------------------------------------
Name: Emmitt R. Harmon
Title: Vice President
THE CHASE MANHATTAN BANK,
not in its individual capacity but solely as
Indenture Trustee,
By: /s/ Vada Haight
--------------------------------------------
Name: Vada Haight
Title: Vice President
STATE OF NEW YORK }
} ss.:
COUNTY OF NEW YORK }
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared Emmitt Harman, a Vice
President of Wilmington Trust Company, not in its individual capacity but solely
as Owner Trustee of Hyundai Auto Receivables Trust 1998-A, a Delaware Business
Trust (the "Trust") known to me to be the person and officer whose name is
subscribed to the foregoing instrument and acknowledged to me that the same was
the act of the said Trust, and that s/he executed the same as the act of said
business trust for the purpose and consideration therein expressed, and in the
capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 16th day of April, 1998.
/s/ Jacob Kaplan
----------------------------------------------
Notary Public in and for the State of New York.
My commission expires:
November 17, 1999
- ------------------------------
STATE OF NEW YORK }
} ss.:
COUNTY OF NEW YORK }
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared Vada Haight, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of THE CHASE MANHATTAN BANK, a New
York banking corporation, and that s/he executed the same as the act of said
corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 16th day of April, 1998.
/s/ Jacob Kaplan
-----------------------------------------------
Notary Public in and for the State of New York.
My commission expires:
November 17, 1999
- ------------------------------
SCHEDULE A
(To be Provided on the Closing Date and Supplemented on the Subsequent
Transfer Date)
Exhibit 4.2
EXECUTION COPY
AMENDED AND RESTATED TRUST AGREEMENT
between
SSB VEHICLE SECURITIES INC.,
as Depositor,
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
Dated as of April 1, 1998
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Capitalized Terms . . . . . . . . . . . . . . . . . . 2
Section 1.02. Other Definitional Provisions . . . . . . . . . . . . 5
ARTICLE II
ORGANIZATION
Section 2.01. Name . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.02. Office . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.03. Purposes and Powers . . . . . . . . . . . . . . . . . 6
Section 2.04. Appointment of Owner Trustee . . . . . . . . . . . . 7
Section 2.05. Initial Capital Contribution of Trust Estate . . . . 7
Section 2.06. Declaration of Trust . . . . . . . . . . . . . . . . 7
Section 2.07. (Reserved) . . . . . . . . . . . . . . . . . . . . . 7
Section 2.08. Title to Trust Property . . . . . . . . . . . . . . . 7
Section 2.09. Situs of Trust . . . . . . . . . . . . . . . . . . . 7
Section 2.10. Representations, Warranties and Covenants of the
Depositor . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.11. Federal Income Tax Allocations . . . . . . . . . . . 9
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01. Initial Ownership . . . . . . . . . . . . . . . . . . 10
Section 3.02. The Trust Certificates . . . . . . . . . . . . . . . 10
Section 3.03. Execution, Authentication and Delivery of Trust
Certificates . . . . . . . . . . . . . . . . . . . . 10
Section 3.04. Registration of Transfer and Exchange of Trust
Certificates . . . . . . . . . . . . . . . . . . . . 10
Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust
Certificates . . . . . . . . . . . . . . . . . . . . 13
Section 3.06. Persons Deemed Owners . . . . . . . . . . . . . . . . 13
Section 3.07. Access to List of Certificateholders' Names and
Addresses . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.08. Maintenance of Office or Agency . . . . . . . . . . . 14
Section 3.09. Appointment of Paying Agent . . . . . . . . . . . . . 14
Section 3.10. Definitive Trust Certificates . . . . . . . . . . . . 15
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.01. Prior Notice with Respect to Certain Matters . . . . 16
Section 4.02. Action by Certificateholders with Respect to
Certain Matters . . . . . . . . . . . . . . . . . . . 18
Section 4.03. Action by Certificateholders with Respect to
Bankruptcy . . . . . . . . . . . . . . . . . . . . . 18
Section 4.04. Restrictions on Certificateholders' Power . . . . . . 18
Section 4.05. Majority Control . . . . . . . . . . . . . . . . . . 18
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.01. Establishment of Trust Account . . . . . . . . . . . 19
Section 5.02. Application of Trust Funds . . . . . . . . . . . . . 19
Section 5.03. Method of Payment . . . . . . . . . . . . . . . . . . 20
Section 5.04. No Segregation of Moneys; No Interest. . . . . . . . 20
Section 5.05. Accounting and Reports to Certificateholders, the
Internal Revenue Service and Others . . . . . . . . . 20
Section 5.06. Signature on Returns; Tax Matters Partner . . . . . . 21
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. General Authority . . . . . . . . . . . . . . . . . . 22
Section 6.02. General Duties . . . . . . . . . . . . . . . . . . . 22
Section 6.03. Action upon Instruction . . . . . . . . . . . . . . . 22
Section 6.04. No Duties Except as Specified in this Agreement or
in Instructions . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.05. No Action Except Under Specified Documents or
Instructions . . . . . . . . . . . . . . . . . . . . 24
Section 6.06. Restrictions . . . . . . . . . . . . . . . . . . . . 24
Section 6.07. Administrative Duties . . . . . . . . . . . . . . . . 24
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.01. Acceptance of Trusts and Duties . . . . . . . . . . . 29
Section 7.02. Furnishing of Documents . . . . . . . . . . . . . . . 30
Section 7.03. Representations and Warranties . . . . . . . . . . . 30
Section 7.04. Reliance; Advice of Counsel . . . . . . . . . . . . . 31
Section 7.05. Not Acting in Individual Capacity . . . . . . . . . . 31
Section 7.06. Owner Trustee Not Liable for Trust Certificates or
for Receivables . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.07. Owner Trustee May Own Trust Certificates and
Notes . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.08. Doing Business in Other Jurisdictions . . . . . . . . 32
Section 7.09. Owner Trustee as Paying Agent . . . . . . . . . . . . 33
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.01. Owner Trustee's Fees and Expenses . . . . . . . . . . 34
Section 8.02. Indemnification . . . . . . . . . . . . . . . . . . . 34
Section 8.03. Payments to the Owner Trustee . . . . . . . . . . . . 34
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.01. Termination of Trust Agreement . . . . . . . . . . . 35
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01. Eligibility Requirements for Owner Trustee . . . . . 37
Section 10.02. Resignation or Removal of Owner Trustee . . . . . . 37
Section 10.03. Successor Owner Trustee . . . . . . . . . . . . . . 38
Section 10.04. Merger or Consolidation of Owner Trustee . . . . . . 38
Section 10.05. Appointment of Co-Trustee or Separate Trustee . . . 39
ARTICLE XI
MISCELLANEOUS
Section 11.01. Supplements and Amendments . . . . . . . . . . . . . 41
Section 11.02. No Legal Title to Trust Estate in
Certificateholders . . . . . . . . . . . . . . . . . 42
Section 11.03. Limitations on Rights of Others . . . . . . . . . . 42
Section 11.04. Notices . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.05. Severability . . . . . . . . . . . . . . . . . . . . 43
Section 11.06. Separate Counterparts . . . . . . . . . . . . . . . 43
Section 11.07. Successors and Assigns . . . . . . . . . . . . . . . 43
Section 11.08. Covenants of the Depositor . . . . . . . . . . . . . 43
Section 11.09. No Petition . . . . . . . . . . . . . . . . . . . . 43
Section 11.10. No Recourse . . . . . . . . . . . . . . . . . . . . 43
Section 11.11. Headings . . . . . . . . . . . . . . . . . . . . . . 44
Section 11.12. GOVERNING LAW . . . . . . . . . . . . . . . . . . . 44
Section 11.13. Trust Certificate Transfer Restrictions . . . . . . 44
Section 11.14. Third Party Beneficiary. . . . . . . . . . . . . . . 44
Exhibit A Form of Trust Certificate . . . . . . . . . . . . . . A-1
Exhibit B Form of Certificate of Trust . . . . . . . . . . . . B-1
Exhibit C Form of Transferor Certificate . . . . . . . . . . . C-1
Exhibit D Form of Investment Letter . . . . . . . . . . . . . . D-1
This TRUST AGREEMENT, dated as of April 1, 1998, is between SSB VEHICLE
SECURITIES INC., a Delaware corporation, as depositor (the "Depositor"), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as owner trustee
(the "Owner Trustee").
NOW, THEREFORE, the Depositor and the Owner Trustee hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Capitalized Terms. For all purposes of this
-----------------
Agreement, the following terms shall have the meanings set forth below:
"Administration Agreement" shall mean the Owner Trust Administration
------------------------
Agreement dated as of April 1, 1998, between the Trust and The Chase
Manhattan Bank, as Indenture Trustee and as Administrator.
"Agreement" shall mean this Trust Agreement, as the same may be
---------
amended and supplemented from time to time.
"Benefit Plan" shall have the meaning assigned to such term in
------------
Section 11.13.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
----------------------
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be
---- ----
amended from time to time.
"Certificate Balance" shall mean on any date of determination, the
-------------------
Pool Balance minus the Note Balance.
"Certificate Distribution Account" shall have the meaning assigned to
--------------------------------
such term in Section 5.01.
"Certificate of Trust" shall mean the Certificate of Trust
--------------------
substantially in the form of Exhibit B filed for the Trust pursuant to
Section 3810(a) of the Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
-------------------- ---------------------
register mentioned in and the registrar appointed pursuant to Section 3.04.
"Certificate Trust" means that certain trust established pursuant to
-----------------
the trust agreement, dated as of April 1, 1998, between Wilmington Trust
Company, a Delaware banking corporation, as trustee thereunder, and the
Depositor.
"Certificateholder" or "Holder" shall mean a Person in whose name a
----------------- ------
Trust Certificate is registered, and shall initially be the Certificate
Trust.
"Class A-1 Notes" shall mean the 5.90% Asset Backed Notes, Class A-1,
---------------
issued pursuant to the Indenture.
"Class A-2 Notes" shall mean the 6.05% Asset Backed Notes, Class A-2,
---------------
issued pursuant to the Indenture.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
----
Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
----------------------
Trustee, the principal corporate trust office of the Owner Trustee located at
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-
0001, Attention: Corporate Trust Administration, or at such other address in
the State of Delaware as the Owner Trustee may designate by notice to the
Certificateholders and the Depositor, or the principal corporate trust office
of any successor Owner Trustee at the address (which shall be in the State of
Delaware) designated by such successor Owner Trustee by notice to the
Certificateholders and the Depositor.
"Depositor" shall mean SSB Vehicle Securities Inc., and its
---------
successors, in its capacity as depositor hereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Expenses" shall have the meaning assigned to such term in
--------
Section 8.02.
"Indemnified Parties" shall have the meaning assigned to such term in
-------------------
Section 8.02.
"Indenture" shall mean the Indenture, dated as of April 1, 1998
---------
between the Trust and The Chase Manhattan Bank, as Indenture Trustee.
"Initial Certificate Balance" shall mean $44,850,000.
---------------------------
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware
-------------
banking corporation, not in its individual capacity but solely as owner
trustee under this Agreement, and any successor Owner Trustee hereunder.
"Paying Agent" shall mean any paying agent or co-paying agent
------------
appointed pursuant to Section 3.09 and shall initially be Wilmington Trust
Company.
"Person" shall mean any individual, corporation, estate, partnership,
------
limited liability company, joint venture, association, joint stock company,
trust or business trust (including any beneficiary thereof), unincorporated
organization or government or any agency or political subdivision thereof.
"Policy" shall have the meaning assigned to such term in the Sale and
------
Servicing Agreement.
"Rated Entity" shall mean a Person the long-term unsecured debt
------------
obligations of which are rated within the investment grade categories of any
Rating Agency.
"Record Date" shall mean the last day of the month preceding such
-----------
Distribution Date.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
----------------------------
Agreement dated as of April 1, 1998, among the Trust, as issuer, the
Depositor, HMFC, as seller and servicer, and The Chase Manhattan Bank, as
indenture trustee, custodian, administrator and backup servicer, as the same
may be amended or supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the State
------------------
of Delaware.
"SPV" shall mean a Person that, based upon an Opinion of Counsel of
---
the Depositor (taking into account such counsel's knowledge of similarly
structured entities that have been included in rated securitizations and on
standards that have been accepted for evaluating such entities), is regarded
as "bankruptcy remote."
"Treasury Regulations" shall mean regulations, including proposed or
--------------------
temporary Regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Trust" shall mean the trust established by this Agreement.
-----
"Trust Certificate" shall mean a certificate evidencing the
-----------------
beneficial interest of a Certificateholder in the Trust, substantially in the
form attached hereto as Exhibit A.
"Trust Estate" shall mean all right, title and interest of the Trust
------------
in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from
time to time in the Trust Accounts and the Certificate Distribution Account,
and all other property of the Trust from time to time, including the Policy
for the Noteholders and any rights of the Owner Trustee and the Trust
pursuant to the Sale and Servicing Agreement and the Administration
Agreement.
Section 1.02. Other Definitional Provisions.
-----------------------------
(a) Capitalized terms used and not otherwise defined herein have the
meanings assigned to them in the Sale and Servicing Agreement or, if not
defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein.
(c) 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.
(d) The words "hereof," "herein," "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 and Exhibit
references contained in this Agreement are references to Sections and
Exhibits in or to this Agreement unless otherwise specified; "or" includes
"and/or"; and the term "including" shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular and plural forms of such terms and to the masculine, feminine and
neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means
such agreement, instrument or statute as from time to time amended, modified
or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
ORGANIZATION
Section 2.01. Name. The Trust created hereby shall be known as
----
"Hyundai Auto Receivables Trust 1998-A," in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
Section 2.02. Office. The office of the Trust shall be in care of
------
the Owner Trustee at the Corporate Trust Office or at such other address in
Delaware as the Owner Trustee may designate by written notice to the
Certificateholders, the Note Insurer and the Depositor.
Section 2.03. Purposes and Powers. The purpose of the Trust is to
-------------------
engage in the following activities:
(a) to issue the Notes pursuant to the Indenture and the Trust
Certificates pursuant to this Agreement and to sell the Notes and the
Trust Certificates;
(b) with the proceeds of the sale of the Notes and the Trust
Certificates, to purchase the Initial Receivables, to fund the
Pre-Funding Account, Yield Maintenance Account, Reserve Account and the
Capitalized Interest Account, to pay the organizational, start-up and
transactional expenses of the Trust and to pay the balance of such
proceeds to the Depositor pursuant to the Sale and Servicing Agreement;
(c) to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Certificateholders pursuant to the terms of the Sale
and Servicing Agreement any portion of the Trust Estate released from
the Lien of, and remitted to the Trust pursuant to, the Indenture;
(d) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(e) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(f) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation
of the Trust Estate and the making of distributions to the
Certificateholders and the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Basic Documents.
Section 2.04. Appointment of Owner Trustee. The Depositor hereby
----------------------------
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
Section 2.05. Initial Capital Contribution of Trust Estate. The
--------------------------------------------
Depositor hereby sells, assigns, transfers, conveys and sets over to the
Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee
hereby acknowledges receipt in trust from the Depositor, as of the date
hereof, of the foregoing contribution, which shall constitute the initial
Trust Estate and shall be deposited in the Certificate Distribution Account.
The Depositor shall pay organizational expenses of the Trust as they may
arise or shall, upon the request of the Owner Trustee, promptly reimburse the
Owner Trustee for any such expenses paid by the Owner Trustee.
Section 2.06. Declaration of Trust. The Owner Trustee hereby
--------------------
declares that it will hold the Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the
Certificateholders, subject to the obligations of the Trust under the Basic
Documents. It is the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Statute and that this
Agreement constitute the governing instrument of such business trust. It is
the intention of the parties hereto that the Notes will be characterized as
indebtedness of the Trust, and that the Certificate Trust, as the sole
initial Certificateholder and owner of the entire residual interest in the
Trust, will treat the Trust as an agent of the Certificate Trust and not as a
separate tax entity for federal income tax and state income and franchise tax
purposes. The parties agree that, unless otherwise required by appropriate
tax authorities, the Trust will file or cause to be filed annual or other
necessary returns, reports and other forms consistent with the foregoing
characterization of the Trust for such tax purposes. Effective as of the
date hereof, the Owner Trustee shall have all rights, powers and duties set
forth herein and in the Business Trust Statute with respect to accomplishing
the purposes of the Trust.
Section 2.07. (Reserved).
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Section 2.08. Title to Trust Property. Subject to the Indenture,
-----------------------
legal title to all the Trust Estate shall be vested at all times in the Trust
as a separate legal entity except where applicable law in any jurisdiction
requires title to any part of the Trust Estate to be vested in a trustee or
trustees, in which case title shall be deemed to be vested in the Owner
Trustee, a co-trustee or a separate trustee, as the case may be.
Section 2.09. Situs of Trust. The Trust will be located and
--------------
administered in the State of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of
Delaware or the State of New York. The Trust shall not have any employees;
provided, however, that nothing herein shall restrict or prohibit the Owner
Trustee from having employees within or without the State of Delaware.
Payments will be received by the Trust only in Delaware or New York, and
payments will be made by the Trust only from Delaware or New York. The only
office of the Trust will be at the Corporate Trust Office in the State of
Delaware.
Section 2.10. Representations, Warranties and Covenants of the
------------------------------------------------
Depositor. The Depositor hereby represents and warrants to the Owner
- ---------
Trustee that:
(a) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware,
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(b) The Depositor is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of its
property or the conduct of its business shall require such
qualifications.
(c) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has
full power and authority to sell and assign the property to be sold and
assigned to and deposited with the Trust and the Depositor has duly
authorized such sale and assignment and deposit to the Trust by all
necessary corporate action; and the execution, delivery and performance
of this Agreement have been duly authorized by the Depositor by all
necessary corporate action.
(d) The Depositor has duly executed and delivered this Agreement,
and this Agreement constitutes a legal, valid and binding obligation of
the Depositor, enforceable against the Depositor, in accordance with its
terms.
(e) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or bylaws of the Depositor, or any
indenture, agreement or other instrument to which the Depositor is a
party or by which it is bound; nor result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the
Basic Documents); nor violate any law or, to the best of the Depositor's
knowledge, any order, rule or regulation applicable to the Depositor of
any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Depositor or its properties.
(f) There are no proceedings or investigations pending or
threatened before any court, regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the
Depositor or its properties (i) asserting the invalidity of this
Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Depositor of its obligations under, or the validity
or enforceability of, this Agreement.
(g) The representations and warranties of the Depositor in Section
3.02 of the Sale and Servicing Agreement are true and correct.
Section 2.11. Federal Income Tax Allocations. Net income of the
------------------------------
Trust for any month as determined for federal income tax purposes (and each
item of income, gain, loss and deduction entering into the computation
thereof) shall be allocated among the Certificateholders as of the first day
following the Record Date, in proportion to their percentage ownership
interest of Trust Certificates on the Record Date.
Net losses of the Trust, if any, for any month as determined for federal
income tax purposes (and each item of income, gain, loss and deduction
entering into the computation thereof) shall be allocated among the
Certificateholders as of the first Record Date following the end of such
month in proportion to their percentage ownership interest of Trust
Certificates on such Record Date. The Issuer is authorized to modify the
allocations in this paragraph if necessary or appropriate, in its sole
discretion, for the allocations to fairly reflect the economic income, gain
or loss to the Certificateholders, or as otherwise required by the Code.
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01. Initial Ownership. Upon the formation of the Trust by
-----------------
the contribution by the Depositor pursuant to Section 2.05 and until the
issuance of the Trust Certificates, the Depositor shall be the sole
beneficiary of the Trust.
Section 3.02. The Trust Certificates. No Trust Certificate shall be
----------------------
issued except for the Trust Certificate held by the Certificate Trust without
the prior written consent of the Note Insurer. The Trust Certificates shall
be issued in minimum denominations of $20,000 and in integral multiples of
$1,000 in excess thereof; provided, however, that the Trust Certificates may
be issued in such denomination as required to include any residual amount.
The Trust Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of an authorized officer of the Owner Trustee. Trust
Certificates bearing the manual or facsimile signatures of individuals who
were, at the time when such signatures shall have been affixed, authorized to
sign on behalf of the Trust, shall be validly issued and entitled to the
benefit of this Agreement and shall be valid and binding obligations of the
Trust, notwithstanding that such individuals or any of them shall have ceased
to be so authorized prior to the authentication and delivery of such Trust
Certificates or did not hold such offices at the date of authentication and
delivery of such Trust Certificates.
A transferee of a Trust Certificate, if any, shall become a
Certificateholder and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder upon such transferee's
acceptance of a Trust Certificate duly registered in such transferee's name
pursuant to Section 3.04.
Section 3.03. Execution, Authentication and Delivery of Trust
-----------------------------------------------
Certificates. On the Closing Date, the Owner Trustee shall cause the
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Trust Certificates in an aggregate principal amount equal to the Initial
Certificate Balance to be executed on behalf of the Trust, authenticated and
delivered to or upon the written order of the Depositor, signed by the
Trustee on behalf of the Trust, without further action thereof, in authorized
denominations. No Trust Certificate shall entitle its Holder to any benefit
under this Agreement or be valid for any purpose unless there shall appear on
such Trust Certificate a certificate of authentication substantially in the
form set forth in Exhibit A, executed by the Owner Trustee or The Chase
Manhattan Bank, as the Owner Trustee's authenticating agent, by manual
signature; such authentication shall constitute conclusive evidence that such
Trust Certificate shall have been duly authenticated and delivered hereunder.
All Trust Certificates shall be dated the date of their authentication.
Section 3.04. Registration of Transfer and Exchange of Trust
----------------------------------------------
Certificates. The Certificate Registrar shall keep or cause to be kept,
- ------------
at the office or agency maintained pursuant to Section 3.08, a Certificate
Register in which, subject to such reasonable regulations as it may
prescribe, the Owner Trustee shall provide for the registration of Trust
Certificates and of transfers and exchanges of Trust Certificates as herein
provided. Wilmington Trust Company shall be the initial Certificate
Registrar.
The Trust Certificates have not been and will not be registered under
the Securities Act and will not be listed on any exchange. No transfer of a
Trust Certificate shall be made unless such transfer is made pursuant to an
effective registration statement under the Securities Act and any applicable
state securities laws or is exempt from the registration requirements under
said Act and such state securities laws. In the event that a transfer is to
be made in reliance upon an exemption from the Securities Act and state
securities laws, in order to assure compliance with the Securities Act and
such laws, the Holder desiring to effect such transfer and such Holder's
prospective transferee shall each certify to the Owner Trustee or the
Certificate Registrar and the Depositor in writing the facts surrounding the
transfer in substantially the forms set forth in Exhibit C and Exhibit D (the
"Investment Letter"). Except in the case of a transfer as to which the
proposed transferee has provided an Investment Letter with respect to a Rule
144A transaction, there shall also be delivered to the Owner Trustee an
Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Securities Act and state securities laws, which Opinion of Counsel
shall not be an expense of the Trust, the Owner Trustee or the Indenture
Trustee (unless it is the transferee from whom such opinion is to be
obtained) or of the Depositor or HMFC; provided, that such Opinion of Counsel
in respect of the applicable state securities laws may be a memorandum of law
rather than an opinion if such counsel is not licensed in the applicable
jurisdiction. The Owner Trustee shall provide to any Holder of a Trust
Certificate and any prospective transferee designated by any such Holder
information regarding the Trust Certificates and the Receivables and such
other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for transfer of any such Trust
Certificate without registration thereof under the Securities Act pursuant to
the registration exemption provided by Rule 144A. Each Holder of a Trust
Certificate desiring to effect such a transfer shall, and does hereby agree
to, indemnify the Trust, the Owner Trustee, the Indenture Trustee and the
Depositor against any liability that may result if the transfer is not so
exempt or is not made in accordance with federal and state securities laws.
No transfer of a Trust Certificate shall be made to any Person unless
the Note Insurer has given its prior written consent to the transfer and the
Owner Trustee has received (a) a certificate in the form of paragraph 3 to
the Investment Letter attached hereto as Exhibit D from such Person to the
effect that such Person is not a Benefit Plan, (b) an Opinion of Counsel
satisfactory to the Owner Trustee and the Depositor to the effect that the
purchase and holding of such Trust Certificate will not constitute or result
in the assets of the Trust being deemed to be "plan assets" subject to the
prohibited transactions provisions of ERISA or Section 4975 of the Code and
will not subject the Owner Trustee, the Indenture Trustee or the Depositor to
any obligation in addition to those undertaken in the Basic Documents or (c)
if such Person is an insurance company, a representation that such Person is
an insurance company that is purchasing such Trust Certificates with funds
contained in an "insurance company general account" (as such term is defined
in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-
60")) and that the purchase and holding of such Trust Certificates and any
deemed extension of credit from a Certificateholder which is a party in
interest to a Benefit Plan, the assets of which are held by such "insurance
company" are covered under PTCE 95-60; provided, however, that the Owner
Trustee will not require such certificate or opinion in the event that, as a
result of a change of law or otherwise, counsel satisfactory to the Owner
Trustee has rendered an Opinion of Counsel to the effect that the purchase
and holding of a Trust Certificate by a Benefit Plan or a Person that is
purchasing or holding such a Trust Certificate with the assets of a Benefit
Plan will not constitute or result in a prohibited transaction under ERISA or
Section 4975 of the Code.
No transfer, pledge or encumbrance of Trust Certificates shall be made
to any Person unless such Person is a Rated Entity, an SPV or a business
trust established under the Business Trust Statute 12 Del. C. Section 3801 et
seq. or Salomon Brothers Inc or an Affiliate thereof
-- ---
acceptable to the Note Insurer. In addition, no transfer of Trust
Certificates shall be made to any Person unless the Owner Trustee has
received an Opinion of Counsel satisfactory to the Owner Trustee, the
Depositor and the Note Insurer to the effect that such transfer will not
cause the Trust to be treated as an association or publicly traded
partnership taxable as a corporation for federal income tax purposes and that
such transfer will not result in any materially adverse federal income tax
consequences to the Noteholders.
Upon surrender for registration of transfer of any Trust Certificate at
the office or agency maintained pursuant to Section 3.08, the Owner Trustee
shall execute, authenticate and deliver (or shall cause The Chase Manhattan
Bank as its authenticating agent to authenticate and deliver), in the name of
the designated transferee or transferees, one or more new Trust Certificates
in authorized denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent. At the
option of a Certificateholder, Trust Certificates may be exchanged for other
Trust Certificates of authorized denominations of a like aggregate amount
upon surrender of the Trust Certificates to be exchanged at the office or
agency maintained pursuant to Section 3.08.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the related Certificateholder or such Certificateholder's
attorney duly authorized in writing. Each Trust Certificate surrendered for
registration of transfer or exchange shall be cancelled and subsequently
disposed of by the Owner Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Trust Certificates.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make, and the Certificate Registrar shall not register
transfers or exchanges of, Trust Certificates for a period of 15 days
preceding the due date for any payment with respect to the Trust
Certificates.
Notwithstanding anything contained herein to the contrary, the Owner
Trustee shall not be responsible for ascertaining whether any transfer
complies with the registration provisions or exemptions from the Securities
Act, the Securities Act of 1934, as amended, applicable state securities law
or the Investment Company Act of 1940, as amended; provided, however, that if
a certificate or opinion is specifically
- -------- -------
required to be delivered to the Owner Trustee by a purchaser or transferee of
a Trust Certificate, the Owner Trustee shall be under a duty to examine the
same to determine whether it conforms to the requirements of this Trust
Agreement and shall promptly notify the party delivering the same if such
certificate does not so conform.
Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust
------------------------------------------
Certificates. If (a) any mutilated Trust Certificate shall be surrendered
- ------------
to the Certificate Registrar, or if the Certificate Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Certificate and (b) there shall be delivered to the Certificate Registrar and
the Owner Trustee such security or indemnity as may be required by them to
save each of them harmless, then in the absence of notice that such Trust
Certificate has been acquired by a bona fide purchaser, the Owner Trustee on
behalf of the Trust shall execute and the Owner Trustee or The Chase
Manhattan Bank, as the Owner Trustee's authenticating agent, shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Certificate, a new Trust Certificate of like
tenor and denomination. In connection with the issuance of any new Trust
Certificate under this Section, the Owner Trustee or the Certificate
Registrar may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith. Any
duplicate Trust Certificate issued pursuant to this Section shall constitute
conclusive evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Trust Certificate shall be found
at any time.
Section 3.06. Persons Deemed Owners. Prior to due presentation of a
---------------------
Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar or any Paying Agent may treat the Person in whose name
any Trust Certificate is registered in the Certificate Register as the owner
of such Trust Certificate for the purpose of receiving distributions pursuant
to Section 5.02 and for all other purposes whatsoever, and none of the Owner
Trustee, the Certificate Registrar or any Paying Agent shall be bound by any
notice to the contrary.
Section 3.07. Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses. The Owner Trustee shall furnish or cause to be furnished to
- ---------
the Servicer and the Depositor, within 15 days after receipt by the Owner
Trustee of a written request therefor from the Servicer or the Depositor, a
list, in such form as the Servicer or the Depositor may reasonably require,
of the names and addresses of the Certificateholders as of the most recent
Record Date. If (i) three or more Certificateholders or (ii) one or more
Holders of Trust Certificates evidencing not less than 25% of the Certificate
Balance apply in writing to the Owner Trustee, and such application states
that the applicants desire to communicate with other Certificateholders with
respect to their rights under this Agreement or under the Trust Certificates
and such application is accompanied by a copy of the communication that such
applicants propose to transmit, then the Owner Trustee shall, within five
Business Days after the receipt of such application, afford such applicants
access during normal business hours to the current list of
Certificateholders. Each Certificateholder, by receiving and holding a Trust
Certificate, shall be deemed to have agreed not to hold any of the Depositor,
the Certificate Registrar or the Owner Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
Section 3.08. Maintenance of Office or Agency. The Owner Trustee
-------------------------------
shall maintain in the Borough of Manhattan, the City of New York, an office
or offices or agency or agencies where Trust Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Owner Trustee in respect of the Trust Certificates and the Basic
Documents may be served. The Owner Trustee initially designates The Chase
Manhattan Bank as its office for such purposes. The Owner Trustee shall give
prompt written notice to the Depositor and the Certificateholders of any
change in the location of the Certificate Register or any such office or
agency.
Section 3.09. Appointment of Paying Agent. The Paying Agent shall
---------------------------
make distributions to Certificateholders from the Certificate Distribution
Account pursuant to Section 5.02 and shall report the amounts of such
distributions to the Owner Trustee. Any Paying Agent shall have the
revocable power to withdraw funds from the Certificate Distribution Account
for the purpose of making the distributions referred to above. The Owner
Trustee may revoke such power and remove the Paying Agent if the Owner
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Agreement in any material
respect. The Paying Agent initially shall be Wilmington Trust Company, and
any co-paying agent chosen by Wilmington Trust Company. Wilmington Trust
Company shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Owner Trustee. In the event that Wilmington Trust Company
shall no longer be the Paying Agent, the Owner Trustee shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company).
The Owner Trustee shall cause such successor Paying Agent or any additional
Paying Agent appointed by the Owner Trustee to execute and deliver to the
Owner Trustee an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Owner Trustee that, as Paying
Agent, such successor Paying Agent or additional Paying Agent will hold all
sums, if any, held by it for payment to the Certificateholders in trust for
the benefit of the Certificateholders entitled thereto until such sums shall
be paid to such Certificateholders. The Paying Agent shall return all
unclaimed funds to the Owner Trustee and upon removal of a Paying Agent such
Paying Agent shall also return all funds in its possession to the Owner
Trustee. The provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall apply to
the Owner Trustee also in its role as Paying Agent, for so long as the Owner
Trustee shall act as Paying Agent and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
Section 3.10. Definitive Trust Certificates. The Trust
-----------------------------
Certificates, upon original issuance, will be issued in the form of a
typewritten Trust Certificate or Trust Certificates to be delivered to the
related Certificateholders by, or on behalf of, the Trust. Such Trust
Certificate or Trust Certificates shall be registered on the Certificate
Register in the name of the holder thereof. The Trust Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as
is reasonably acceptable to the Owner Trustee, as evidenced by its execution
thereof.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.01. Prior Notice with Respect to Certain Matters. With
--------------------------------------------
respect to the following matters, the Owner Trustee shall not take action
unless at least 30 days before the taking of such action, the Owner Trustee
shall have notified the Certificateholders and the Note Insurer (so long as
no Note Insurer Default shall have occurred and be continuing) in writing of
the proposed action and neither the Note Insurer (so long as no Note Insurer
Default shall have occurred and be continuing) nor the Certificateholders
shall have notified the Owner Trustee in writing prior to the 30th day after
such notice is given that such Certificateholders or the Note Insurer (so
long as no Note Insurer Default shall have occurred and be continuing) have
withheld consent or provided alternative direction (any direction by the
Certificateholders shall require the prior consent of the Note Insurer unless
the Notes are no longer outstanding and the Note Insurer has been paid in
full):
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the
Receivables) and the compromise of any action, claim or lawsuit brought
by or against the Trust (except with respect to the aforementioned
claims or lawsuits for collection of the Receivables);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed
under the Business Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture or
any other change to this Agreement or any Basic Document in
circumstances where the consent of any Noteholder or the Note Insurer is
required;
(d) the amendment of the Indenture by a supplemental indenture or
any other change to this Agreement or any Basic Document in
circumstances where the consent of any Noteholder or Note Insurer is not
required and such amendment would materially adversely affect the
interests of the Certificateholders;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner or add any provision that would not materially
adversely affect the interests of the Certificateholders; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this
Agreement of a successor Certificate Registrar, or the consent to the
assignment by the Note Registrar, Paying Agent or Indenture Trustee or
Certificate Registrar of its obligations under the Indenture or this
Agreement, as applicable.
(g) the consent to the calling or waiver of any default of any
Basic Document;
(h) the consent to the assignment by the Indenture Trustee or
Servicer of their respective obligations under any Basic Document,
unless permitted in the Basic Documents;
(i) except as provided in Article IX hereof, dissolve, terminate
or liquidate the Trust in whole or in part;
(j) merge or consolidate the Trust with or into any other entity,
or convey or transfer all or substantially all of the Trust's assets to
any other entity;
(k) cause the Trust to incur, assume or guaranty any indebtedness
other than as set forth in this Agreement or the Basic Documents;
(l) do any act that conflicts with any other Basic Document;
(m) do any act which would make it impossible to carry on the
ordinary business of the Trust as described in Section 2.03 hereof;
(n) confess a judgment against the Trust;
(o) possess Trust assets, or assign the Trust's right to property,
for other than a Trust purpose;
(p) cause the Trust to lend any funds to any entity, unless
permitted in the Basic Documents; or
(q) change the Trust's purpose and powers from those set forth in
this Trust Agreement.
In addition, the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books
and records separate from those of any other entity. Except as expressly set
forth herein, the trust shall not pay the indebtedness, operating expenses
and liabilities of any other entity. The Trust shall maintain appropriate
minutes or other records of all appropriate actions and shall maintain its
office separate from the offices of the Depositor and the Servicer.
The Owner Trustee shall not have the power, except upon the direction of
the Certificateholders with the consent of the Note Insurer, and to the
extent otherwise consistent with the Basic Documents, to (i) remove or
replace the Servicer or the Indenture Trustee, (ii) institute proceedings to
have the Trust declared or adjudicated a bankruptcy or insolvent, (iii)
consent to the institution of bankruptcy or insolvency proceedings against
the Trust, (iv) file a petition or consent to a petition seeking
reorganization or relief on behalf of the Trust under any applicable federal
or state law relating to bankruptcy, (v) consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or any similar
official) of the Trust or a substantial portion of the property of the Trust,
(vi) make any assignment for the benefit of the Trust's creditors, (vii)
cause the Trust to admit the writing its inability to pay its debts generally
as they become due, (viii) take any action, or cause the Trust to take any
action, in furtherance of any of the foregoing (any of the above, a
"Bankruptcy Action"). So long as the Indenture and the Insurance Agreement
remain in effect and no Note Insurer Default exists, no Certificateholder
shall have the power to take, and shall not take, any Bankruptcy Action with
respect to the Trust or direct the Owner Trust to take any Bankruptcy Action
with respect to the Trust.
Section 4.02. Action by Certificateholders with Respect to Certain
----------------------------------------------------
Matters. The Owner Trustee shall not have the power, except upon the
- -------
written direction of the Certificateholders (with the consent of the Note
Insurer (so long as no Note Insurer Default shall have occurred and be
continuing)), to (a) remove the Administrator under the Administration
Agreement pursuant to Section 8 thereof, (b) appoint a successor
Administrator pursuant to Section 8 of the Administration Agreement,
(c) remove the Servicer under the Sale and Servicing Agreement pursuant to
Section 8.02 thereof, (d) amend the Sale and Servicing Agreement pursuant to
Section 10.01(b) of such document, or (e) except as expressly provided in the
Basic Documents, sell the Receivables after the termination of the Indenture.
The Owner Trustee shall take the actions referred to in the preceding
sentence only upon written instructions signed by the Certificateholders.
Section 4.03. Action by Certificateholders with Respect to
--------------------------------------------
Bankruptcy. The Owner Trustee shall not have the power to commence a
- ----------
voluntary proceeding in bankruptcy relating to the Trust without the
unanimous prior approval of all Certificateholders and the Note Insurer (so
long as no Note Insurer Default shall have occurred and be continuing) and
the delivery to the Owner Trustee by each such Certificateholder of a
certification certifying that such Certificateholder reasonably believes that
the Trust is insolvent.
Section 4.04. Restrictions on Certificateholders' Power. The
-----------------------------------------
Certificateholders shall not direct the Owner Trustee to take or to refrain
from taking any action if such action or inaction would be contrary to any
obligation of the Trust or the Owner Trustee under this Agreement or any of
the Basic Documents or would be contrary to Section 2.03; nor shall the Owner
Trustee be obligated to follow any such direction, if given.
Section 4.05. Majority Control. Except as expressly provided
----------------
herein, any action that may be taken by the Certificateholders under this
Agreement may be taken by the Holders of Trust Certificates evidencing not
less than a majority of the Certificate Balance. Except as expressly
provided herein, any written notice of the Certificateholders delivered
pursuant to this Agreement shall be effective if signed by Holders of Trust
Certificates evidencing not less than a majority of the Certificate Balance
at the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.01. Establishment of Trust Account. The Owner Trustee,
------------------------------
for the benefit of the Certificateholders, shall establish and maintain in
the name of the Trust an Eligible Deposit Account (the "Certificate
Distribution Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Certificateholders.
The title of the Certificate Distribution Account shall be "Hyundai Auto
Receivables Trust 1998-A: Certificate Distribution Account for the benefit
of the Certificateholders."
The Owner Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Certificate Distribution Account
and in all proceeds thereof. Except as otherwise expressly provided herein,
the Certificate Distribution Account shall be under the sole dominion and
control of the Owner Trustee for the benefit of the Certificateholders. If,
at any time, the Certificate Distribution Account ceases to be an Eligible
Deposit Account, the Owner Trustee (or the Depositor on behalf of the Owner
Trustee, if the Certificate Distribution Account is not then held by the
Owner Trustee or an affiliate thereof) 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 Certificate Distribution Account as an Eligible
Deposit Account and shall transfer any cash or any investments to such new
Certificate Distribution Account.
Section 5.02. Application of Trust Funds.
--------------------------
(a) On each Distribution Date, the Owner Trustee will distribute to
Certificateholders, on a pro rata basis, amounts deposited in the Certificate
Distribution Account pursuant to Section 5.06 of the Sale and Servicing
Agreement with respect to such Distribution Date.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement or statements provided to the Owner Trustee
by the Servicer pursuant to Section 5.13 of the Sale and Servicing Agreement
with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall
reduce the amount otherwise distributable to such Certificateholder in
accordance with this Section. The Owner Trustee is hereby authorized and
directed to retain from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any tax that is
legally owed by the Trust (but such authorization shall not prevent the Owner
Trustee from contesting any such tax in appropriate proceedings and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The amount of any withholding tax imposed with respect to
a Certificateholder shall be treated as cash distributed to such
Certificateholder at the time it is withheld by the Trust and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax
is payable with respect to a distribution (such as a distribution to a
non-U.S. Certificateholder), the Owner Trustee may in its sole discretion
withhold such amounts in accordance with this paragraph (c).
Any Holder of a Trust Certificate which is organized under the laws of a
jurisdiction outside the United States shall, on or prior to the date such
Holder becomes a Holder, (a) so notify the Owner Trustee, (b) (i) provide the
Owner Trustee with Internal Revenue Service form 1001, 4224, 8709 or W-8, as
appropriate, or (ii) notify the Owner Trustee that it is not entitled to an
exemption from United States withholding tax or a reduction in the rate
thereof on payments of interest. Any such Holder agrees by its acceptance of
a Trust Certificate, on an ongoing basis, to provide like certification for
each taxable year and to notify the Owner Trustee should subsequent
circumstances arise affecting the information provided the Owner Trustee in
clauses (a) and (b) above. The Owner Trustee shall be fully protected in
relying upon, and each Holder by its acceptance of a Trust Certificate
hereunder agrees to indemnify and hold the Owner Trustee harmless against all
claims or liability of any kind arising in connection with or related to the
Owner Trustee's reliance upon any documents, forms or information provided by
any Holder to the Owner Trustee.
Section 5.03. Method of Payment. Subject to Section 9.01(c),
-----------------
distributions required to be made to Certificateholders on any Distribution
Date shall be made to each Certificateholder of record on the preceding
Record Date either by wire transfer, in immediately available funds, to the
account of such Certificateholder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder shall have
provided to the Certificate Registrar appropriate written instructions at
least five Business Days prior to such Distribution Date and such Holder's
Trust Certificates in the aggregate evidence a denomination of not less than
$1,000,000, or, if not, by check mailed to such Certificateholder at the
address of such Certificateholder appearing in the Certificate Register.
Section 5.04. No Segregation of Moneys; No Interest. Subject to
-------------------------------------
Sections 5.01 and 5.02, moneys received by the Owner Trustee hereunder need
not be segregated in any manner except to the extent required by law or the
Sale and Servicing Agreement, and may be deposited under such general
conditions as may be prescribed by law, and the Owner Trustee shall not be
liable for any interest thereon.
Section 5.05. Accounting and Reports to Certificateholders, the
-------------------------------------------------
Internal Revenue Service and Others. The Owner Trustee shall (a) maintain
- -----------------------------------
(or cause to be maintained) the books of the Trust on a calendar year basis
and the accrual method of accounting, (b) deliver (or cause to delivered) to
each Certificateholder, as may be required by the Code and applicable
Treasury Regulations, such information as may be required (including
Schedule K-1) to enable each Certificateholder to prepare its federal and
state income tax returns, (c) file (or cause to be filed) such tax returns
relating to the Trust (including a partnership information return, IRS
Form 1065) and make such elections as from time to time may be required or
appropriate under any applicable state or federal statute or any rule or
regulation thereunder so as to maintain the Trust's characterization as a
partnership for federal income tax purposes, (d) cause such tax returns to be
signed in the manner required by law and (e) collect or cause to be collected
any withholding tax as described in and in accordance with Section 5.02(c)
with respect to income or distributions to Certificateholders. The Owner
Trustee shall elect under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to the Receivables.
The Owner Trustee shall not make the election provided under Section 754 of
the Code.
Section 5.06. Signature on Returns; Tax Matters Partner.
-----------------------------------------
(a) The Owner Trustee shall sign on behalf of the Trust the tax returns
of the Trust, if any, unless applicable law requires a Certificateholder to
sign such documents.
(b) The (Depositor) shall be designated the "tax matters partner" of
the Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable
Treasury Regulations.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. General Authority. The Owner Trustee is authorized
-----------------
and directed to execute and deliver the Basic Documents to which the Trust is
to be a party and each certificate or other document attached as an exhibit
to or contemplated by the Basic Documents to which the Trust is to be a
party, in each case, in such form as the Depositor shall approve, as
evidenced conclusively by the Owner Trustee's execution thereof. In addition
to the foregoing, the Owner Trustee is authorized, but shall not be
obligated, to take all actions required of the Trust pursuant to the Basic
Documents. The Owner Trustee is further authorized from time to time to take
such action as the Administrator recommends with respect to the Basic
Documents.
Section 6.02. General Duties. It shall be the duty of the Owner
--------------
Trustee:
(a) to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the Basic
Agreements to which the Trust is a party and to administer the Trust in the
interest of the Certificateholders, subject to the Basic Documents and in
accordance with the provisions of this Agreement. Notwithstanding the
foregoing, the Owner Trustee shall be deemed to have discharged its duties
and responsibilities hereunder and under the Basic Documents to the extent
the Administrator has agreed in the Administration Agreement to perform any
act or to discharge any duty of the Owner Trustee hereunder or under any
Basic Document, and the Owner Trustee shall not be held liable for the
default or failure of the Administrator to carry out its obligations under
the Administration Agreement.
(b) to qualify and preserve the Issuer's qualification to do business
in each jurisdiction, if any, in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes, the Receivables and any other instrument and agreement included in the
Trust Estate; provided that the Owner Trustee may rely on advice of counsel
with respect to such obligation.
Section 6.03. Action upon Instruction.
-----------------------
(a) Subject to Article IV and in accordance with the terms of the Basic
Documents, the Certificateholders may by written instruction direct the Owner
Trustee in the management of the Trust. Such direction may be exercised at
any time by written instruction of the Certificateholders pursuant to
Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Owner Trustee or
is contrary to the terms hereof or of any Basic Document or is otherwise
contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or
under any Basic Document, the Owner Trustee shall promptly give notice (in
such form as shall be appropriate under the circumstances) to the
Certificateholders and the Note Insurer requesting instruction as to the
course of action to be adopted, and to the extent the Owner Trustee acts in
good faith in accordance with any written instruction of the
Certificateholders received, the Owner Trustee shall not be liable on account
of such action to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action not inconsistent with this Agreement
or the Basic Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action
or inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction and, to the extent that the Owner
Trustee acts or refrains from acting in good faith in accordance with any
such instruction received, the Owner Trustee shall not be liable, on account
of such action or inaction, to any Person. If the Owner Trustee shall not
have received appropriate instruction within 10 days of such notice (or
within such shorter period of time as reasonably may be specified in such
notice or may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action not inconsistent
with this Agreement or the Basic Documents, as it shall deem to be in the
best interests of the Certificateholders, and shall have no liability to any
Person for such action or inaction.
Section 6.04. No Duties Except as Specified in this Agreement or in
-----------------------------------------------------
Instructions. The Owner Trustee shall not have any duty or obligation to
- ------------
manage, make any payment with respect to, register, record, sell, dispose of,
or otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated
hereby to which the Owner Trustee is a party, except as expressly provided by
the terms of this Agreement or in any document or written instruction
received by the Owner Trustee pursuant to Section 6.03; and no implied duties
or obligations shall be read into this Agreement or any Basic Document
against the Owner Trustee. The Owner Trustee shall have no responsibility
for filing any financing or continuation statement in any public office at
any time or to otherwise perfect or maintain the perfection of any security
interest or Lien granted to it hereunder or to prepare or file any Securities
and Exchange Commission filing for the Trust or to record this Agreement or
any Basic Document. The Owner Trustee nevertheless agrees that it will, at
its own cost and expense, promptly take all action as may be necessary to
discharge any Liens on any part of the Trust Estate that result from actions
by, or claims against, the Owner Trustee in its individual capacity that are
not related to the ownership or the administration of the Trust Estate.
Section 6.05. No Action Except Under Specified Documents or
---------------------------------------------
Instructions. The Owner Trustee shall not manage, control, use, sell,
- ------------
dispose of or otherwise deal with any part of the Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the
Owner Trustee pursuant to this Agreement, (ii) in accordance with the Basic
Documents and (iii) in accordance with any document or instruction delivered
to the Owner Trustee pursuant to Section 6.03.
Section 6.06. Restrictions. The Owner Trustee shall not take any
------------
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.03 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation for federal income
tax purposes. The Certificateholders shall not direct the Owner Trustee to
take action that would violate the provisions of this Section.
Section 6.07. Administrative Duties.
---------------------
(a) The Owner Trustee shall prepare or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the Trust
to prepare, file or deliver pursuant to the Indenture and are not the
responsibility of the Trustee, the Depositor, the Administrator or the
Servicer. In furtherance of the foregoing, the Owner Trustee shall prepare
or cause the preparation by others of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the Trust
to prepare, file or deliver pursuant to the Indenture with respect to the
following matters under the Indenture (parenthetical section references are
to sections of the Indenture):
(i) the delivery for cancellation of any Note delivered to the
Issuer for cancellation, and the direction to destroy or return such
Note (Section 2.09);
(ii) the obtaining and preservation of the Issuer's qualification
to do business in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of the
Indenture, the Notes, the Collateral and each other instrument and
agreement included in the Trust Estate (Section 3.04);
(iii) the preparation of all supplements and amendments to the
Indenture, instruments of further assurance and other instruments and
the taking of such other action as is necessary or advisable to protect
the Trust Estate (other than the preparation and filing of any financing
statements and continuation statements, which shall be an obligation of
the Servicer under the Sale and Servicing Agreement (Section 3.05));
(iv) the delivery of the Opinion of Counsel on the Closing Date
and the annual delivery of Opinions of Counsel as to the Trust Estate,
and the annual delivery of the Officer's Certificate and certain other
statements as to compliance with the Indenture (Sections 3.06 and 3.09);
(v) the notification of a Servicer Termination Event under the
Sale and Servicing Agreement and, if such Servicer Termination Event
arises from the failure of the Servicer to perform any of its duties
under the Sale and Servicing Agreement with respect to the Receivables,
the taking of all reasonable steps available to remedy such failure
(Section 3.07(d));
(vi) the notification to the Indenture Trustee and the Note
Insurer of (a) the termination of the Servicer and (b) the appointment
of a Successor Servicer (Section 3.07(f));
(vii) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.10(b));
(viii) the duty to take any action as instructed by the
Controlling Party to cause the Servicer to comply with Sections 4.09,
4.10, 4.11 and Article IX of the Sale and Servicing Agreement (Section
3.14);
(ix) the delivery of written notice to the Indenture Trustee, the
Note Insurer and the Rating Agencies of each Event of Default under the
Indenture and each default by the Servicer or the Seller under the Sale
and Servicing Agreement and by the Seller under the Receivables Purchase
Agreement (Section 3.19);
(x) the notification to the Owner Trustee and request of the Owner
Trustee to execute any further instruments and perform any acts
reasonably necessary to carry out more effectively the purpose of the
Indenture (Section 3.20);
(xi) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officer's Certificate and the obtaining of an Opinion of Counsel and the
Independent Certificate relating thereto (Section 4.01);
(xii) the preparation, obtaining or filing of instruments,
opinions, certificates and other documents (other than the preparation
of UCC amendments, which shall be the responsibility of the Servicer
under the Sale and Servicing Agreement) required for the release of
Collateral (Section 4.04);
(xiii) the delivery to the Indenture Trustee and, if the Note
Insurer is the Controlling Party, the Note Insurer, written notice in
the form of an Officer's Certificate of any event that with the giving
of notice and the lapse of time would become an Event of Default under
clause (iii) of Section 5.01 of the Indenture (Section 5.01);
(xiv) the performance of any lawful action as the Controlling
Party may request to compel or secure the performance and observance by
the Seller or the Servicer, as applicable, of each of their obligations
to the Issuer in the Basic Documents (Section 5.16);
(xv) the preparation and delivery of notice to Noteholders of the
removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 6.08);
(xvi) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee
and any written instructions necessary in connection with the
resignation or removal of any co-trustee or separate trustee (Sections
6.08 and 6.10);
(xvii) the notification to the Indenture Trustee if and when the
Notes are listed on any stock exchange (Section 7.04);
(xviii) the preparation of an Issuer Request and Officer's
Certificate and the obtaining of an Opinion of Counsel and Independent
Certificates, if necessary, for the release of the Trust Estate (Section
8.04 and 8.05);
(xix) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Noteholders of notices with respect to
such supplemental indentures (Sections 9.01, 9.02 and 9.03);
(xx) the duty to furnish the Note Insurer, the Rating Agencies and
the Indenture Trustee notice of redemption of Notes, if the Servicer has
not previously done so (Section 10.01);
(xxi) the duty to notify Noteholders of redemption of the Notes or
to cause the Indenture Trustee to provide such notification (Section
10.02);
(xxii) the preparation and delivery of all Officer's Certificates,
Opinions of Counsel and Independent Certificates with respect to any
requests by the Issuer to the Indenture Trustee to take any action under
the Indenture (Section 11.01(a));
(xxiii) the preparation and delivery of all Officer's Certificates
and the obtaining of Independent Certificates, if necessary, for the
release of property from the lien of the Indenture (Section 11.01(b));
(xxiv) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements or requests by the Noteholders with
respect to alternate payment and notice provisions (Section 11.06); and
(xxv) the recording of the Indenture, if applicable (Section
11.14).
(b) The Owner Trustee shall receive as compensation for its services
hereunder such fees as have been separately agreed upon before the date
hereof among the Depositor, the Seller and the Owner Trustee, and the Owner
Trustee shall be reimbursed for its other reasonable expenses hereunder in
the priority set forth in Section 5.06(b) in the Sale and Servicing
Agreement. In performing its duties under this Section 6.07, the Owner
Trustee shall be entitled to the indemnification provided by the Issuer under
Section 8.02 of this Agreement, in the priority set forth in Section 5.06(b)
of the Sale and Servicing Agreement.
(c) It is understood and agreed that the Owner Trustee shall be
entitled to engage outside counsel, independent accountants and other experts
to assist the Owner Trustee in connection with the performance of its duties
set forth in this section, including the preparation of all tax reports and
returns, securities law filings, Opinions of Counsel and Independent
Certificates, and the expenses of such experts shall be paid to the Owner
Trustee in accordance with the priorities set forth in Section 5.06(b) of the
Sale and Servicing Agreement.
(d) The Depositor and the Servicer shall furnish to the Owner Trustee
from time to time such additional information regarding the Trust or the
Basic Documents as the Owner Trustee shall reasonably request. The Indenture
Trustee shall furnish to the Owner Trustee annually (or upon any change
thereto) a copy of the Note Register. The Servicer shall furnish to the
Owner Trustee copies of all documents and reports required to be provided by
the Servicer pursuant to Article IV of the Sale and Servicing Agreement.
(e) The Owner Trustee shall not be responsible for taking any action
with respect to this Section 6.07 unless a responsible officer in the
Corporate Trust Administration Department of the Owner Trustee has actual
knowledge or has received written notice of the need to take such action.
(f) The rights and protections afforded to the Owner Trustee pursuant
to Article VII of this Agreement shall also be afforded to the Owner Trustee
with respect to the performance of its administrative duties under this
Section 6.07.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.01. Acceptance of Trusts and Duties. The Owner Trustee
-------------------------------
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts, but only upon the terms of this Agreement. The
Owner Trustee also agrees to disburse all moneys actually received by it
constituting part of the Trust Estate upon the terms of the Basic Documents
and this Agreement. The Owner Trustee shall not be answerable or accountable
hereunder or under any Basic Document under any circumstances, except (i) for
its own willful misconduct or gross negligence or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 7.03
expressly made by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) The Owner Trustee shall not be liable for any error of
judgment made by a Trust Officer of the Owner Trustee;
(b) The Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the
instructions of the Administrator or any Certificateholder;
(c) No provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any Basic Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured or provided to it;
(d) Under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(e) The Owner Trustee shall not be responsible for or in respect
of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor or for the form, character,
genuineness, sufficiency, value or validity of any of the Trust Estate,
or for or in respect of the validity or sufficiency of the Basic
Documents, other than the certificate of authentication on the Trust
Certificates, and the Owner Trustee shall in no event assume or incur
any liability, duty or obligation to any Noteholder or to any
Certificateholder, other than as expressly provided for herein or
expressly agreed to in the Basic Documents;
(f) The Owner Trustee shall not be responsible for monitoring the
performance of, and shall not be liable for the default or misconduct of
the Administrator, the Depositor, the Servicer, the Indenture Trustee or
the Backup Servicer under any of the Basic Documents or otherwise, and
the Owner Trustee shall have no obligation or liability to perform the
obligations of the Trust under this Agreement or the Basic Documents
that are required to be performed by the Administrator under the
Administration Agreement, the Indenture Trustee under the Indenture or
the Depositor, the Servicer or the Backup Servicer under the Sale and
Servicing Agreement; and
(g) The Owner 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 under this Agreement or otherwise or in
relation to this Agreement or any Basic Document, at the request, order
or direction of any of the Certificateholders, unless such
Certificateholders have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities
that may be incurred by the Owner Trustee therein or thereby. The right
of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Basic Document shall not be construed as a duty, and
the Owner Trustee shall not be answerable for other than its negligence
or willful misconduct in the performance of any such act.
Section 7.02. Furnishing of Documents. The Owner Trustee shall
-----------------------
furnish to the Certificateholders, promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Basic Documents.
Section 7.03. Representations and Warranties. The Owner Trustee
------------------------------
hereby represents and warrants to the Depositor and the Note Insurer, for the
benefit of the Certificateholders, that:
(a) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will
be executed and delivered by one of its officers who is duly authorized
to execute and deliver this Agreement on its behalf.
(c) Neither the execution or the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby, nor
compliance by it with any of the terms or provisions hereof will
contravene any federal or Delaware law, governmental rule or regulation
governing the banking or trust powers of the Owner Trustee or any
judgment or order binding on it, or constitute any default under its
charter documents or bylaws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound.
(d) It is a corporation satisfying the provisions of
Section 3807(a) of the Business Trust Statute; authorized 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 authorities; and having (or having a parent that has) time
deposits that are rated at least A-1 by Standard & Poor's and P-1 by
Moody's or who is otherwise acceptable to each Rating Agency.
Section 7.04. Reliance; Advice of Counsel.
---------------------------
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it
to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of
determination of which is not specifically prescribed herein, the Owner
Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer or other authorized
officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any
action taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Basic Documents, the Owner Trustee (i) may act directly or through its agents
or attorneys pursuant to agreements entered into with any of them, and the
Owner Trustee shall not be liable for the conduct or misconduct of such
agents or attorneys if such agents or attorneys shall have been selected by
the Owner Trustee with reasonable care, and (ii) may consult with counsel,
accountants and other skilled Persons to be selected with reasonable care and
employed by it. The Owner Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the written
opinion or advice of any such counsel, accountants or other such Persons and
not contrary to this Agreement or any Basic Document.
Section 7.05. Not Acting in Individual Capacity. Except as provided
---------------------------------
in this Article VII, in accepting the trusts hereby created, Wilmington Trust
Company acts solely as Owner Trustee hereunder and not in its individual
capacity, and all Persons having any claim against the Owner Trustee by
reason of the transactions contemplated by this Agreement or any Basic
Document shall look only to the Trust Estate for payment or satisfaction
thereof.
Section 7.06. Owner Trustee Not Liable for Trust Certificates or for
------------------------------------------------------
Receivables. The recitals contained herein and in the Trust Certificates
- -----------
(other than the signature and countersignature of the Owner Trustee on the
Trust Certificates) shall be taken as the statements of the Depositor, and
the Owner Trustee assumes no responsibility for the correctness thereof.
Except as set forth in Section 7.03, the Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
Basic Document or of the Trust Certificates (other than the signature and
countersignature of the Owner Trustee on the Trust Certificates) or the
Notes, or of any Receivable or related documents. The Owner Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Receivable or the perfection and
priority of any security interest created by any Receivable in any Financed
Vehicle or the maintenance of any such perfection and priority, or for or
with respect to the sufficiency of the Trust Estate or its ability to
generate the payments to be distributed to Certificateholders under this
Agreement or the Noteholders under the Indenture, including, without
limitation: the existence, condition and ownership of any Financed Vehicle;
the existence and enforceability of any insurance thereon; the existence and
contents of any Receivable on any computer or other record thereof; the
validity of the assignment of any Receivable to the Trust or of any
intervening assignment; the completeness of any Receivable; the performance
or enforcement of any Receivable; the compliance by the Depositor, the
Servicer or the Backup Servicer with any warranty or representation made
under any Basic Document or in any related document or the accuracy of any
such warranty or representation, or any action of the Administrator, the
Indenture Trustee, the Servicer or the Backup Servicer or any subservicer
taken in the name of the Owner Trustee.
Section 7.07. Owner Trustee May Own Trust Certificates and Notes.
--------------------------------------------------
The Owner Trustee in its individual or any other capacity may become the
owner or pledgee of Trust Certificates or Notes and may deal with the
Depositor, the Administrator, the Indenture Trustee and the Servicer in
banking transactions with the same rights as it would have if it were not
Owner Trustee.
Section 7.08. Doing Business in Other Jurisdictions.
-------------------------------------
Notwithstanding anything contained herein to the contrary, neither Wilmington
Trust Company nor the Owner Trustee shall be required to take any action in
any jurisdiction other than in the State of Delaware if the taking of such
action will (i) require the consent or approval or authorization or order of,
or the giving of notice to, or the registration with, or the taking of any
other action in required by, any state or other governmental authority or
agency of any jurisdiction other than the State of Delaware; (ii) result in
any fee, tax or other governmental charge under the laws of any jurisdiction
or any political subdivisions thereof in existence on the date hereof other
than the State of Delaware becoming payable by Wilmington Trust Company or
the Owner Trustee; or (iii) subject Wilmington Trust Company or the Owner
Trustee to personal jurisdiction in any jurisdiction other than the State of
Delaware for causes of action arising from acts unrelated to the consummation
of the transactions by Wilmington Trust Company or the Owner Trustee, as the
case may be, contemplated hereby. The Owner Trustee shall be entitled to
obtain advice of counsel (which advice shall be an expense of the
Administrator under Section 8.01 of this Agreement) to determine whether any
action required to be taken pursuant to the Agreement results in the
consequences described in clauses (i), (ii) and (iii) of the preceding
sentence. In the event that said counsel advises the Owner Trustee that such
action will result in such consequences, the Owner Trustee will appoint an
additional trustee pursuant to Section 10.05 hereof to proceed with such
action.
Section 7.09. Owner Trustee as Paying Agent. In the event the Owner
-----------------------------
Trustee is also acting as Paying Agent or Certificate Registrar, the rights
and protections afforded to the Owner Trustee pursuant to this Article VII
shall also be afforded to the Paying Agent and Certificate Registrar.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.01. Owner Trustee's Fees and Expenses. The Owner Trustee
---------------------------------
shall receive as compensation for its services hereunder such fees as have
been separately agreed upon before the date hereof between the Depositor and
the Owner Trustee, and the Owner Trustee shall be reimbursed for its other
reasonable expenses hereunder, including the reasonable compensation,
expenses and disbursements of such agents, representatives, experts and
counsel as the Owner Trustee may employ in connection with the exercise and
performance of its rights and its duties hereunder, in the priority set forth
in Section 5.06(b) in the Sale and Servicing Agreement.
Section 8.02. Indemnification. The Issuer shall be liable as
---------------
primary obligor for, and shall indemnify the Owner Trustee and its
successors, assigns, agents and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of
any kind and nature whatsoever (collectively, "Expenses") which may at any
time be imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement,
the Basic Documents, the Trust Estate, the administration of the Trust Estate
or the action or inaction of the Owner Trustee hereunder, except only that
the Issuer shall not be liable for or required to indemnify an Indemnified
Party from and against Expenses arising or resulting from any of the matters
described in the third sentence of Section 7.01. The indemnities contained
in this Section shall survive the resignation or termination of the Owner
Trustee or the termination of this Agreement. In any event of any claim,
action or proceeding for which indemnity will be sought pursuant to this
Section, the Owner Trustee's choice of legal counsel shall be subject to the
approval of the Issuer, which approval shall not be unreasonably withheld.
Section 8.03. Payments to the Owner Trustee. Any amounts paid
-----------------------------
pursuant to this Article VIII shall be payable solely in the priority set
forth in Section 5.06(b) of the Sale and Servicing Agreement and shall be
deemed not to be a part of the Trust Estate immediately after such payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.01. Termination of Trust Agreement.
------------------------------
(a) This Agreement (other than Article VIII) and the Trust shall
terminate and be of no further force or effect upon the final distribution by
the Owner Trustee of all moneys or other property or proceeds of the Trust
Estate in accordance with the terms of the Indenture, the Sale and Servicing
Agreement and Article V. The bankruptcy, liquidation, dissolution, death or
incapacity of any Certificateholder shall not (i) operate to terminate this
Agreement or the Trust, (ii) entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of
the Trust or Trust Estate or (iii) otherwise affect the rights, obligations
and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), none of the Depositor, the
Note Insurer nor any Certificateholder shall be entitled to revoke or
terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Distribution
Date upon which Certificateholders shall surrender their Trust Certificates
to the Paying Agent for payment of the final distribution and cancellation,
shall be given by the Owner Trustee by letter to Certificateholders mailed
within five Business Days of receipt of notice of such termination from the
Servicer given pursuant to Section 9.01 of the Sale and Servicing Agreement,
stating (i) the Distribution Date upon or with respect to which final payment
of the Trust Certificates shall be made upon presentation and surrender of
the Trust Certificates at the office of the Paying Agent therein designated,
(ii) the amount of any such final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Trust Certificates at
the office of the Paying Agent therein specified. The Owner Trustee shall
give such notice to the Certificate Registrar (if other than the Owner
Trustee) and the Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Trust
Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant
to Section 5.02.
In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give
a second written notice to the remaining Certificateholders to surrender
their Trust Certificates for cancellation and receive the final distribution
with respect thereto. If within one year after the second notice all the
Trust Certificates shall not have been surrendered for cancellation, the
Owner Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Trust Certificates, and the cost thereof shall be paid out
of the funds and other assets that shall remain subject to this Agreement.
Any funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Owner Trustee to the Depositor, subject to applicable
escheat laws.
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3810 of the Business Trust Statute.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01. Eligibility Requirements for Owner Trustee. The
------------------------------------------
Owner Trustee shall at all times be a corporation satisfying the provisions
of Section 3807(a) of the Business Trust Statute; authorized 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
authorities; and having (or having a parent that has) time deposits that are
rated at least A-1 by Standard & Poor's and P-1 by Moody's and being
acceptable by the Note Insurer, or who is otherwise acceptable to each Rating
Agency. If such corporation shall publish 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, 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 Owner Trustee shall cease to be eligible
in accordance with the provisions of this Section, the Owner Trustee shall
resign immediately in the manner and with the effect specified in
Section 10.02.
Section 10.02. Resignation or Removal of Owner Trustee. The Owner
---------------------------------------
Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Administrator, the Indenture
Trustee, the Note Insurer and the Rating Agencies. Upon receiving such
notice of resignation, the Administrator shall promptly appoint a successor
Owner Trustee (acceptable to the Note Insurer) by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Owner Trustee and one copy to the successor Owner Trustee. If no successor
Owner Trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Owner Trustee may petition any court of competent jurisdiction for the
appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign
after written request therefor by the Administrator, or if at any time the
Owner Trustee shall be legally unable to act, or shall be adjudged bankrupt
or insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator may remove the Owner
Trustee. If the Administrator shall remove the Owner Trustee under the
authority of the immediately preceding sentence, the Administrator shall
promptly appoint a successor Owner Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the outgoing
Owner Trustee so removed and one copy to the successor Owner Trustee, and
shall pay all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.03 and payment of all fees and expenses
owed to the outgoing Owner Trustee. The Administrator shall provide notice
of such resignation or removal of the Owner Trustee to each Rating Agency and
the Note Insurer (so long as no Note Insurer Default shall have occurred and
be continuing).
Section 10.03. Successor Owner Trustee. Any successor Owner Trustee
-----------------------
appointed pursuant to Section 10.01 or 10.02 shall execute, acknowledge and
deliver to the Administrator, the Note Insurer and to its predecessor Owner
Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective, and such successor Owner Trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor under this Agreement, with like
effect as if originally named as Owner Trustee. The predecessor Owner
Trustee shall upon payment of its fees and expenses deliver to the successor
Owner Trustee all documents and statements and monies held by it under this
Agreement; and the Administrator and the predecessor Owner 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 Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to all
Certificateholders, the Servicer, the Indenture Trustee, the Noteholders, the
Note Insurer and the Rating Agencies. If the Administrator shall fail to
mail such notice within 10 days after acceptance of such appointment by the
successor Owner Trustee, the successor Owner Trustee shall cause such notice
to be mailed at the expense of the Administrator.
Any successor Owner Trustee appointed pursuant to this Section 10.03
shall promptly file an amendment to the Certificate of Trust with the
Secretary of State identifying the name and principal place of business of
such successor Owner Trustee in the State of Delaware.
Section 10.04. Merger or Consolidation of Owner Trustee. Any
----------------------------------------
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, without the execution or filing of any instrument or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, that such corporation shall be eligible pursuant
to Section 10.01; and provided further, that the Owner Trustee shall mail
notice of such merger or consolidation to each Rating Agency and the Note
Insurer (so long as no Note Insurer Default shall have occurred and be
continuing); and provided, further, that such successor Owner Trustee shall
file an
- -------- -------
amendment to the Certificate Trust as described in Section 10.03.
Section 10.05. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
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 Estate or any Financed Vehicle may at the time be located,
the Administrator and the Owner Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Administrator and Owner Trustee and acceptable to the Note
Insurer to act as co-trustee, jointly with the Owner Trustee, or as separate
trustee or separate trustees, of all or any part of the Trust Estate, and to
vest in such Person, in such capacity, such title to the Trust or any part
thereof and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Administrator, the Note Insurer
and the Owner Trustee may consider necessary or desirable. If the
Administrator shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, the Owner Trustee (with the consent
of the Note Insurer) alone shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor Owner Trustee pursuant to
Section 10.01 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) All rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner 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 Owner 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, the Owner
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 Estate 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 Owner
Trustee;
(b) No trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(c) The Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner 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. 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 Owner 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 Owner Trustee. Each such instrument shall be
filed with the Owner Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact 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 Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor co-trustee or separate trustee.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Supplements and Amendments. This Agreement may be
--------------------------
amended by the Depositor and the Owner Trustee, with prior consent of the
Note Insurer, and with prior written notice to each Rating Agency, without
the consent of any of the Noteholders or the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions in this Agreement or for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
and satisfaction of the Rating Agency Condition with respect to such
amendment, adversely affect in any material respect the interests of any
Noteholder or Certificateholder or the rights of the Note Insurer.
This Agreement may also be amended from time to time by the Depositor
and the Owner Trustee, with the consent of the Note Insurer (so long as no
Note Insurer Default shall have occurred and be continuing) and with prior
written notice to each Rating Agency, with the consent of the Holders (as
defined in the Indenture) of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and the consent of the Holders of
Certificates evidencing not less than a majority of the Certificate Balance,
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 Noteholders or the Certificateholders; provided,
however, that no such amendment shall (a) increase or reduce in any manner
the amount of, or accelerate or delay the timing of, collections of payments
on Receivables or distributions that shall be required to be made for the
benefit of the Noteholders, the Certificateholders or the Note Insurer or
(b) reduce the aforesaid percentage of the Outstanding Amount of the Notes
and the Certificate Balance required to consent to any such amendment,
without the consent of the Holders of all then-outstanding Notes and
Certificates and the Note Insurer.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment
or consent to each Certificateholder, the Indenture Trustee, the Note
Insurer, and each Rating Agency.
It shall not be necessary for the consent of Certificateholders,
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents
(and any other consents of Certificateholders provided for in this Agreement
or in any other Basic Document) and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall
not be obligated to, enter into any such amendment that affects the Owner
Trustee's own rights, duties or immunities under this Agreement or otherwise.
In connection with the execution of any amendment to this Trust
Agreement or any amendment of any other agreement to which the Issuer is a
party, the Owner Trustee shall be entitled to receive and conclusively rely
upon an Opinion of Counsel to the effect that such amendment is authorized or
permitted by the Basic Documents and that all conditions precedent in the
Basic Documents for the execution and delivery thereof by the Issuer or the
Owner Trustee, as the case may be, have been satisfied.
Section 11.02. No Legal Title to Trust Estate in Certificateholders.
Neither the Depositor nor the Certificateholders shall have legal title to---
- ------------------------------------------------- any part of the Trust
Estate. The Certificateholders shall be entitled to receive distributions
with respect to their undivided ownership interest therein only in accordance
with Articles V and IX. No transfer, by operation of law or otherwise, of
any right, title or interest of the Certificateholders to and in their
ownership interest in the Trust Estate shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee to an accounting
or to the transfer to it of legal title to any part of the Trust Estate.
Section 11.03. Limitations on Rights of Others. The provisions of
-------------------------------
this Agreement are solely for the benefit of the Owner Trustee, the
Depositor, the Certificateholders, the Administrator, the Note Insurer and,
to the extent expressly provided herein, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy
or claim in the Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
Section 11.04. Notices.
-------
(a) Unless otherwise expressly specified or permitted by the terms
hereof, all notices shall be in writing and shall be deemed given upon
receipt by the intended recipient or three Business Days after mailing if
mailed by certified mail, postage prepaid (except that notice to the Owner
Trustee shall be deemed given only upon actual receipt by the Owner Trustee),
(i) if to the Owner Trustee, addressed to the Corporate Trust Office; if to
the Depositor, addressed to Seven World Trade Center, New York, New York
10048; telephone (212) 783-7000, (ii) if to the Note Insurer, MBIA Insurance
Corporation, 113 King Street, Armonk, New York 10504, Attention: 1PM-SF SSB
Vehicle Securities, Inc. Hyundai Auto Receivables Trust 1998-A, telecopy:
914-765-3810, confirmation: 914-765-3781; 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 Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed
to have been duly given, whether or not such Certificateholder receives such
notice.
Section 11.05. Severability. Any provision of this Agreement that
------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Section 11.06. Separate Counterparts. This Agreement may be
---------------------
executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.07. Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon, and inure to the benefit of, each of
the Depositor and its permitted assignees, the Note Insurer, the Owner
Trustee and its successors and each Certificateholder and its successors and
permitted assigns, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by a Certificateholder shall
bind the successors and assigns of such Certificateholder.
Section 11.08. Covenants of the Depositor. The Depositor will not
--------------------------
at any time institute against the Trust any bankruptcy proceedings under any
United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Trust Certificates, the Notes, this Agreement
or any of the other Basic Documents.
Section 11.09. No Petition. The Owner Trustee, by entering into
-----------
this Agreement, each Certificateholder, by accepting a Trust Certificate, and
the Indenture Trustee and each Noteholder, by accepting the benefits of this
Agreement, hereby covenant and agree that they will not at any time institute
against the Depositor or the Trust or the Certificate Trust or join in any
institution against the Depositor or the Trust of, any bankruptcy proceedings
under any United States federal or state bankruptcy or similar law in
connection with any obligations relating to the Trust Certificates, the
Notes, this Agreement or any of the Basic Documents.
Section 11.10. No Recourse. Each Certificateholder by accepting a
-----------
Trust Certificate acknowledges that such Trust Certificate represents a
beneficial interest in the Trust only and does not represent an interest in
or an obligation of the Depositor, the Servicer, the Administrator, the Owner
Trustee, the Indenture Trustee, the Backup Servicer or any Affiliate thereof
and no recourse may be had against such parties or their assets, except as
may be expressly set forth or contemplated in this Agreement, the Trust
Certificates or the Basic Documents.
Section 11.11. Headings. The headings of the various Articles and
--------
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, 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 11.13. Trust Certificate Transfer Restrictions. The Trust
---------------------------------------
Certificates may not be acquired by or for the account of (i) an employee
benefit plan (as defined in Section 3(3) of ERISA) that is subject to the
provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1)
of the Code or (iii) any entity whose underlying assets include plan assets
by reason of a plan's investment in the entity (each, a "Benefit Plan"). By
accepting and holding a Trust Certificate, the Holder thereof shall be deemed
to have represented and warranted that it is not a Benefit Plan.
Section 11.14. Third Party Beneficiary. The Note Insurer is an
-----------------------
express intended third party beneficiary of this Agreement entitled to
enforce any rights reserved to it and to rely on any representations
hereunder to the same extent as if it were a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized, as
of the day and year first above written.
SSB VEHICLE SECURITIES INC.,
as Depositor
By: /s/ Ted Yarbrough
---------------------------------------
Name: Ted Yarbrough
Title: Vice President
WILMINGTON TRUST COMPANY,
as Owner Trustee
By: /s/ Emmitt Harmon
---------------------------------------
Name: Emmitt Harmon
Title: Vice President
Exhibit 10.1
EXECUTION COPY
SALE AND SERVICING AGREEMENT
among
HYUNDAI AUTO RECEIVABLES TRUST 1998-A,
Issuer,
SSB VEHICLE SECURITIES INC.,
Depositor,
HYUNDAI MOTOR FINANCE COMPANY,
Seller and Servicer,
and
THE CHASE MANHATTAN BANK,
Indenture Trustee, Custodian, Administrator and Backup Servicer
Dated as of April 1, 1998
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitional Provisions . . . . . . . . . . . . 23
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables . . . . . . . . . . . . . . 25
ARTICLE III
THE RECEIVABLES
Section 3.01. Representations and Warranties of the Seller . . . . 28
Section 3.02. Representations and Warranties of the Depositor . . . 28
Section 3.03. Repurchase Upon Breach . . . . . . . . . . . . . . . 29
Section 3.04. Custody of Custodial Files . . . . . . . . . . . . . 29
Section 3.05. Duties of the Custodian . . . . . . . . . . . . . . . 30
Section 3.06. Obligations of the Custodian . . . . . . . . . . . . 32
Section 3.07. Certification. . . . . . . . . . . . . . . . . . . . 32
Section 3.08. Future Defects. . . . . . . . . . . . . . . . . . . . 33
Section 3.09. Fees of Custodian. . . . . . . . . . . . . . . . . . 33
Section 3.10. Liability of Custodian. . . . . . . . . . . . . . . . 34
Section 3.11. Reliance of Custodian . . . . . . . . . . . . . . . . 34
Section 3.12. Transmission of Custodial Files . . . . . . . . . . . 34
Section 3.13. Resignation and Removal; Appointment of Successor . . 34
Section 3.14. Acceptance of Appointment by Successor . . . . . . . 35
Section 3.15. Merger, Conversion, Consolidation or Succession to
Business of Custodian . . . . . . . . . . . . . . . . 36
Section 3.16. Representations and Warranties of the Custodian . . . 36
Section 3.17. Custodian's Indemnification . . . . . . . . . . . . . 37
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01. Duties of Servicer . . . . . . . . . . . . . . . . . 39
Section 4.02. Collection of Receivable Payments; Modifications of
Receivables . . . . . . . . . . . . . . . . . . . . . 40
Section 4.03. Realization upon Receivables . . . . . . . . . . . . 40
Section 4.04. Physical Damage Insurance . . . . . . . . . . . . . . 41
Section 4.05. Maintenance of Security Interests in Financed
Vehicles . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.06. Covenants of Servicer . . . . . . . . . . . . . . . . 42
Section 4.07. Purchase of Receivables Upon Breach . . . . . . . . . 43
Section 4.08. Servicing Fee . . . . . . . . . . . . . . . . . . . . 43
Section 4.09. Servicer's Certificate . . . . . . . . . . . . . . . 44
Section 4.10. Annual Statement as to Compliance; Notice of
Servicer Termination Event . . . . . . . . . . . . . 44
Section 4.11. Annual Independent Accountants' Report . . . . . . . 44
Section 4.12. Access to Certain Documentation and Information
Regarding Receivables . . . . . . . . . . . . . . . . 45
Section 4.13. Monthly Tape . . . . . . . . . . . . . . . . . . . . 45
Section 4.14. Term of Servicer . . . . . . . . . . . . . . . . . . 46
Section 4.15. Status Report . . . . . . . . . . . . . . . . . . . . 46
ARTICLE V
DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Post Office Box . . . . . . . . . . . . . . . . . . . 47
Section 5.02. Accounts . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.03. Application of Collections . . . . . . . . . . . . . 50
Section 5.04. Purchase Amounts . . . . . . . . . . . . . . . . . . 50
Section 5.05. (Reserved) . . . . . . . . . . . . . . . . . . . . . 50
Section 5.06. Distributions . . . . . . . . . . . . . . . . . . . . 50
Section 5.07. Yield Maintenance Account . . . . . . . . . . . . . . 52
Section 5.08. Reserve Account . . . . . . . . . . . . . . . . . . . 52
Section 5.09. Claims on the Policy . . . . . . . . . . . . . . . . 55
Section 5.10. Notices to the Note Insurer . . . . . . . . . . . . . 56
Section 5.11. Rights in Respect of Insolvency Proceedings . . . . . 56
Section 5.12. Effect of Payments by the Note Insurer;
Subrogation . . . . . . . . . . . . . . . . . . . . . 57
Section 5.13. Statements to Securityholders . . . . . . . . . . . . 57
Section 5.14. Pre-Funding Account . . . . . . . . . . . . . . . . . 59
Section 5.15. Capitalized Interest Account . . . . . . . . . . . . 60
ARTICLE VI
THE DEPOSITOR
Section 6.01. Representations of Depositor . . . . . . . . . . . . 61
Section 6.02. Corporate Existence . . . . . . . . . . . . . . . . . 62
Section 6.03. Liability of Depositor; Indemnities . . . . . . . . . 63
Section 6.04. Merger or Consolidation of, or Assumption of the
Obligations of, Depositor . . . . . . . . . . . . . . 63
Section 6.05. Limitation on Liability of Depositor and Others . . . 63
Section 6.06. Depositor May Own Securities . . . . . . . . . . . . 64
ARTICLE VII
THE SERVICER
Section 7.01. Representations of Servicer . . . . . . . . . . . . . 65
Section 7.02. Indemnities of Servicer . . . . . . . . . . . . . . . 66
Section 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer . . . . . . . . . . . . . . 67
Section 7.04. Limitation on Liability of Servicer, Backup
Servicer and Others . . . . . . . . . . . . . . . . . 68
Section 7.05. Appointment of Subservicer . . . . . . . . . . . . . 69
Section 7.06. Servicer and Backup Servicer Not to Resign . . . . . 70
Section 7.07. Backup Servicer . . . . . . . . . . . . . . . . . . . 71
Section 7.08. Liability of Backup Servicer. . . . . . . . . . . . . 71
Section 7.09. Reliance of Backup Servicer. . . . . . . . . . . . . 71
Section 7.10. Resignation and Removal; Appointment of
Successor. . . . . . . . . . . . . . . . . . . . . . 72
Section 7.11. Acceptance of Appointment by Successor. . . . . . . . 73
Section 7.12. Merger, Conversion, Consolidation or Succession to
Business of Backup Servicer. . . . . . . . . . . . . 73
Section 7.13. Representations and Warranties of the Backup
Servicer. . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE VIII
DEFAULT
Section 8.01. Servicer Termination Events . . . . . . . . . . . . . 75
Section 8.02. Consequences of a Servicer Termination Event . . . . 75
Section 8.03. Appointment of Successor . . . . . . . . . . . . . . 76
Section 8.04. Notification to Securityholders . . . . . . . . . . . 77
Section 8.05. Waiver of Past Defaults . . . . . . . . . . . . . . . 77
ARTICLE IX
TERMINATION
Section 9.01. Optional Purchase of All Receivables . . . . . . . . 78
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendment . . . . . . . . . . . . . . . . . . . . . 79
Section 10.02. Protection of Title to Trust . . . . . . . . . . . . 80
Section 10.03. Notices . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.04. Assignment by the Depositor or the Servicer . . . . 82
Section 10.05. Limitations on Rights of Others . . . . . . . . . . 82
Section 10.06. Severability . . . . . . . . . . . . . . . . . . . . 83
Section 10.07. Counterparts . . . . . . . . . . . . . . . . . . . . 83
Section 10.08. Headings . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 10.09. GOVERNING LAW . . . . . . . . . . . . . . . . . . . 83
Section 10.10. Assignment by Issuer . . . . . . . . . . . . . . . . 83
Section 10.11. Nonpetition Covenants . . . . . . . . . . . . . . . 83
Section 10.12. Limitation of Liability of Owner Trustee and
Indenture Trustee . . . . . . . . . . . . . . . . . 84
Section 10.13. Servicer Payment Obligation . . . . . . . . . . . . 84
SCHEDULE A Schedule of Receivables
SCHEDULE B Location of the Receivable Files
EXHIBIT A Representations and Warranties of HMFC
EXHIBIT B Form of Distribution Date Statement to
Securityholders
EXHIBIT C Form of Servicer's Certificate
EXHIBIT D Form of Policy
EXHIBIT E Form of Subsequent Transfer Agreement
EXHIBIT F (Reserved)
EXHIBIT G Custodial Notice
EXHIBIT H Extension Policy
EXHIBIT I Cumulative Net Loss Rate Table
EXHIBIT J (Reserved)
EXHIBIT K Form of Dealer Agreement
EXHIBIT L Trigger and Reserve Events
EXHIBIT M Form of Request to Release Documents
EXHIBIT N Backup Servicer Duties
This SALE AND SERVICING AGREEMENT, dated as of April 1, 1998, among
HYUNDAI AUTO RECEIVABLES TRUST 1998-A, a Delaware business trust (the
"Issuer"), SSB VEHICLE SECURITIES INC., a Delaware corporation (the
"Depositor"), HYUNDAI MOTOR FINANCE COMPANY, a California corporation, as
servicer (in such capacity, the "Servicer") and as seller (in such capacity,
the "Seller"), and THE CHASE MANHATTAN BANK, a New York banking corporation,
as indenture trustee (in such capacity, the "Indenture Trustee"), as
administrator (in such capacity, the "Administrator"), as custodian (in such
capacity, the "Custodian") and as backup servicer (in such capacity, the
"Backup Servicer").
WHEREAS, the Issuer desires to purchase a portfolio of receivables
arising in connection with automobile retail installment sale contracts
generated by Hyundai Motor Finance Company in the ordinary course of business
and sold by Hyundai Motor Finance Company to the Depositor;
WHEREAS, the Depositor is willing to sell such receivables to the
Issuer; and
WHEREAS, Hyundai Motor Finance Company is willing to service such
receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
-----------
following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Addition Notice" means, with respect to any transfer of Subsequent
---------------
Receivables to the Trust pursuant to Section 2.01, notice of the Depositor's
election to transfer Subsequent Receivables to the Trust, such notice to
designate the Subsequent Transfer Date and the (1) Principal Balance of the
Subsequent Receivables (2) the Reserve Account Subsequent Deposit Amount and
(3) the Yield Maintenance Account Subsequent Deposit Amount to be transferred
on the Subsequent Transfer Date.
"Agreement" means this Sale and Servicing Agreement, as the same may be
---------
amended or supplemented from time to time.
"Amount Financed" means with respect to a Receivable, the amount
---------------
advanced under the Receivable toward the purchase price of the Financed
Vehicle and any related costs, exclusive of any amount allocable to the
premium of force-placed physical damage insurance covering the Financed
Vehicle.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate
---------------------- ---
of finance charges stated in the related Contract.
"Annualized Net Loss Ratio" means, as of any date of determination, the
-------------------------
product of the Net Loss Ratio and 12.
"Backup Servicer" means The Chase Manhattan Bank, its successor in
---------------
interest pursuant to Section 7.03(b) or such other Person as shall have been
appointed as Backup Servicer pursuant to Section 8.03(b).
"Basic Documents" means the Trust Agreement, the Certificate Trust
---------------
Agreement, the Indenture, this Agreement, the Receivables Purchase Agreement,
the Administration Agreement, the Performance Guaranty, the Note Depository
Agreement, the Policy, the Insurance Agreement, the Subsequent Purchase
Agreement and the Subsequent Transfer Agreement and other documents and
certificates delivered in connection therewith.
"Business Day" means any day other than a Saturday, a Sunday or a day
------------
on which the Note Insurer or a commercial banking institution in the states
of California or New York are authorized or obligated by law or executive
order to remain closed.
"Capitalized Interest Account" means the account designated as such,
----------------------------
established and maintained pursuant to Section 5.02(b)(vi).
"Capitalized Interest Distribution Amount" shall mean for each
----------------------------------------
Determination Date and related Distribution Date during the Funding Period,
the amount equal to (A) the product of (i) 1/12, (ii) the Weighted Average
Note Rate and (iii) the amount equal to 87% of the amount by which the sum of
the Certificate Balance and the Note Balance exceeds the amount set forth in
clause (i) of the definition of Pool Balance as of the first day of the
related Collection Period (or in the case of the May 1998 Determination Date,
as of the Closing Date) less (B), the amount of Investment Earnings allocable
to the Pre-Funding Account and the Capitalized Interest Account.
"Capitalized Interest Initial Deposit" shall mean $349,265.34.
------------------------------------
"Certificate" means a certificate evidencing the beneficial interest of
-----------
a Certificateholder in the Trust.
"Certificate Balance" equals, as of any date of determination, the Pool
-------------------
Balance minus the Note Balance.
"Certificate Distribution Account" has the meaning assigned to such term
--------------------------------
in the Trust Agreement.
"Certificate Pool Factor" means, as of the close of business on the last
-----------------------
day of a Collection Period, a seven-digit decimal figure equal to the
Certificate Balance (after giving effect to any reductions therein to be made
on the immediately following Distribution Date) divided by the Initial
Certificate Balance. The Certificate Pool Factor will be 1.0000000 as of the
Closing Date; thereafter, the Certificate Pool Factor will decline to reflect
reductions in the Certificate Balance.
"Certificate Trust" means Hyundai Auto Business Trust 1998-1, a Delaware
-----------------
business trust.
"Certificateholders" has the meaning assigned to such term in the Trust
------------------
Agreement.
"Class" means any one of the classes of Notes.
-----
"Class A-1 Final Scheduled Distribution Date" means the April 2001
-------------------------------------------
Distribution Date.
"Class A-1 Interest Carryover Shortfall" means, with respect to any
--------------------------------------
Distribution Date, the amount, if any, by which the sum of the Class A-1
Monthly Interest Distributable Amount for the preceding Distribution Date and
any outstanding Class A-1 Interest Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of interest actually
deposited in the Note Distribution Account on such preceding Distribution
Date, plus interest on the amount of interest due but not paid to the Class
A-1 Noteholders on such preceding Distribution Date, to the extent permitted
by law, at the Class A-1 Rate.
"Class A-1 Interest Distributable Amount" means, with respect to any
---------------------------------------
Distribution Date, the sum of the Class A-1 Monthly Interest Distributable
Amount for such Distribution Date and the Class A-1 Interest Carryover
Shortfall for such Distribution Date. For all purposes of this Agreement and
the other Basic Documents, interest with respect to the Class A-1 Notes shall
be computed on the basis of a 360-day year consisting of twelve 30-day
months.
"Class A-1 Monthly Interest Distributable Amount" means, with respect
-----------------------------------------------
to any Distribution Date, interest accrued from and including the 15th day of
the preceding calendar month (or, in the case of the first Distribution Date,
from and including the Closing Date) to and including the 14th day of the
calendar month in which such Distribution Date occurs, on the Class A-1 Notes
at the Class A-1 Rate on the Outstanding Amount of the Class A-1 Notes on the
immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date), after giving effect to all
distributions of principal to the Class A-1 Noteholders on or prior to such
preceding Distribution Date.
"Class A-1 Monthly Principal Distributable Amount" means, with respect
------------------------------------------------
to any Distribution Date until the Class A-1 Notes are paid in full, the Note
Percentage of the Regular Principal Distributable Amount.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
--------------------
is registered in the Note Register.
"Class A-1 Notes" means the 5.90% Asset Backed Notes, Class A-1,
---------------
substantially in the form of Exhibit A-1 to the Indenture.
"Class A-1 Principal Carryover Shortfall" means, with respect to any
---------------------------------------
Distribution Date, the amount, if any, by which the sum of the Class A-1
Monthly Principal Distributable Amount for the preceding Distribution Date
and any outstanding Class A-1 Principal Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of principal actually
deposited in the Note Distribution Account on such preceding Distribution
Date.
"Class A-1 Principal Distributable Amount" means, with respect to any
----------------------------------------
Distribution Date, the sum of the Class A-1 Monthly Principal Distributable
Amount and the Class A-1 Principal Carryover Shortfall; provided, however,
that the Class A-1 Principal Distributable Amount on any Distribution Date
shall not exceed the Outstanding Amount of the Class A-1 Notes on such
Distribution Date. In addition, on the Class A-1 Final Scheduled
Distribution Date, the principal required to be deposited in the Note
Distribution Account will include the amount necessary (after giving effect
to the other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the Outstanding
Amount of the Class A-1 Notes to zero.
"Class A-1 Rate" means 5.90% per annum, computed on the basis of a
--------------
360-day year consisting of twelve 30-day months.
"Class A-2 Final Scheduled Distribution Date" means the July 2004
-------------------------------------------
Distribution Date.
"Class A-2 Interest Carryover Shortfall" means, with respect to any
--------------------------------------
Distribution Date, the amount, if any, by which the sum of the Class A-2
Monthly Interest Distributable Amount for the preceding Distribution Date and
any outstanding Class A-2 Interest Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of interest actually
deposited in the Note Distribution Account on such preceding Distribution
Date, plus interest on the amount of interest due but not paid to the Class
A-2 Noteholders on such preceding Distribution Date, to the extent permitted
by law, at the Class A-2 Rate.
"Class A-2 Interest Distributable Amount" means, with respect to any
---------------------------------------
Distribution Date, the sum of the Class A-2 Monthly Interest Distributable
Amount for such Distribution Date and the Class A-2 Interest Carryover
Shortfall for such Distribution Date. For all purposes of this Agreement and
the other Basic Documents, interest with respect to the Class A-2 Notes shall
be computed on the basis of a 360-day year consisting of twelve 30-day
months.
"Class A-2 Monthly Interest Distributable Amount" means, with respect
-----------------------------------------------
to any Distribution Date, interest accrued from and including the 15th day of
the preceding calendar month (or, in the case of the first Distribution Date,
from and including the Closing Date) to and including the 14th day of the
calendar month in which such Distribution Date occurs, on the Class A-2 Notes
at the Class A-2 Rate on the Outstanding Amount of the Class A-2 Notes on the
immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date), after giving effect to all
distributions of principal to the Class A-2 Noteholders on or prior to such
preceding Distribution Date.
"Class A-2 Monthly Principal Distributable Amount" means, with respect
------------------------------------------------
to any Distribution Date (i) prior to the Distribution Date on which the
Class A-1 Notes are paid in full, zero and (ii) on or after the Distribution
Date on which the Class A-1 Notes are paid in full the Note Percentage of the
Regular Principal Distributable Amount (less, on the Distribution Date on
which the Class A-1 Notes are paid in full, the portion thereof payable on
the Class A-1 Notes).
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
--------------------
is registered in the Note Register.
"Class A-2 Notes" means the 6.05% Asset Backed Notes, Class A-2,
---------------
substantially in the form of Exhibit A-2 to the Indenture.
"Class A-2 Principal Carryover Shortfall" means, with respect to any
---------------------------------------
Distribution Date, the amount, if any, by which the sum of the Class A-2
Monthly Principal Distributable Amount for the preceding Distribution Date
and any outstanding Class A-2 Principal Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of principal actually
deposited in the Note Distribution Account on such preceding Distribution
Date.
"Class A-2 Principal Distributable Amount" means, with respect to any
----------------------------------------
Distribution Date, the sum of the Class A-2 Monthly Principal Distributable
Amount and the Class A-2 Principal Carryover Shortfall; provided, however,
that the Class A-2 Principal Distributable Amount on any Distribution Date
shall not exceed the Outstanding Amount of the Class A-2 Notes on such
Distribution Date. In addition, on the Class A-2 Final Scheduled
Distribution Date, the principal required to be deposited in the Note
Distribution Account will include the amount necessary (after giving effect
to the other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the Outstanding
Amount of the Class A-2 Notes to zero.
"Class A-2 Rate" means 6.05% per annum, computed on the basis of a
--------------
360-day year consisting of twelve 30-day months.
"Closing Date " means April 16, 1998.
-------------
"Collateral" has the meaning specified in the Granting Clause of the
----------
Indenture.
"Collection Account" means the account designated as such, established
------------------
and maintained pursuant to Section 5.02(b)(i).
"Collection Period" means with respect to any Distribution Date other
-----------------
than the first Distribution Date, the calendar month preceding such
Distribution Date. The Collection Period with respect to the first
Distribution Date will be the period from and including the Initial Cutoff
Date to and including April 30, 1998. Any amount stated as of the last day
of a Collection Period or as of the first day of a Collection Period shall
give effect to the following calculations as determined as of the close of
business on such last day: (i) all applications of collections and (ii) all
distributions to be made on the following Distribution Date.
"Contract" means a motor vehicle retail installment sale contract.
--------
"Controlling Party" means (i) as long as the Policy is in effect and no
-----------------
Note Insurer Default has occurred and is continuing, the Note Insurer, (ii)
if (a) a Note Insurer Default has occurred and is continuing or the Policy is
otherwise no longer in effect and (b) the Notes have not been paid in full,
the Indenture Trustee for the benefit of the Noteholders and (iii) if (a) a
Note Insurer Default has occurred and is continuing and (b) the Notes have
been paid in full, the Owner Trustee for the benefit of the
Certificateholders.
"Corporate Trust Administration Department" shall have the meaning set
-----------------------------------------
forth in the Trust Agreement.
"Corporate Trust Office" shall have the meaning set forth in the
----------------------
Indenture.
"Cram Down Loss" means any loss resulting from an order issued by a
--------------
court of appropriate jurisdiction in an insolvency proceeding that reduces
the amount owed on a Receivable or otherwise modifies or restructures the
scheduled payments to be made thereon. The amount of any such Cram Down Loss
will equal the excess of (i) the Principal Balance of the Receivable
immediately prior to such order over (ii) the Principal Balance of such
Receivable as so reduced, modified or restructured. A Cram Down Loss will be
deemed to have occurred on the date of issuance of such order.
"Credit and Collection Policy" means the credit and collection policy
----------------------------
of HMFC as in effect as of the Closing Date unless the context indicates
otherwise (a copy of which has been delivered to the Note Insurer) and any
subsequent amendments thereto which shall be delivered to the Note Insurer at
the time of its annual review of the Servicer.
"Cumulative Net Loss Ratio" means, as of any date of determination, a
-------------------------
fraction (expressed as a percentage), the numerator of which is the aggregate
Principal Balance of Receivables that became Liquidated Receivables during
the period from the end of the Funding Period through the close of business
on the last day of the related Collection Period minus all Liquidation
Proceeds received during the same period, and the denominator of which is the
Initial Pool Balance.
"Cumulative Net Loss Ratio Table" means the table set forth in Exhibit
-------------------------------
I hereto.
"Custodial Files" shall have the meaning set forth in Section 3.04.
---------------
"Custodian" means The Chase Manhattan Bank, or any successor thereto,
---------
or any other custodian of the receivables appointed pursuant hereto, as
custodian of the Receivables.
"Cutoff Date" means the Initial Cutoff Date or the Subsequent Cutoff
-----------
Date, as the context may require.
"Dealer" means the dealer who sold a Financed Vehicle and who originated
------
the related Receivable and assigned it to HMFC pursuant to a Dealer
Agreement.
"Dealer Agreement" means an agreement between HMFC and a Dealer pursuant
----------------
to which such Dealer sells Contracts to HMFC.
"Deemed Cured" means, as of any date of determination, no Reserve Event
------------
occurred or was in existence with respect to any of the three immediately
preceding Collection Periods.
"Deficiency Amount" means on any Distribution Date, the sum of (a) the
-----------------
amount by which the Noteholders' Interest Distributable Amount exceeds the
sum of (x) the Total Distribution Amount remaining after the payment of
clauses (i) and (ii) of Section 5.06(b) and (y) the amounts on deposit in the
Reserve Account and (b) (i) the amount by which the Note Balance (after
taking into account all distributions of principal to be made on such
Distribution Date) exceeds the Pool Balance as of the close of business on
the last day of the preceding Collection Period; or (ii) (a) on the Class A-1
Final Scheduled Distribution Date, the amount by which the Class A-1 Note
Balance exceeds the sum of (x) the Total Distribution Amount remaining after
the payment of (i) through (iv) under Section 5.06(b) and (y) the amounts on
deposit in the Reserve Account and (b) on the Class A-2 Final Scheduled
Distribution Date, the amount by which the Class A-2 Note Balance exceeds the
sum of (x) the Total Distribution Amount remaining after the payment of (i)
through (iv) under Section 5.06(b) and (y) the amounts on deposit in the
Reserve Account.
"Deficiency Claim Date" means, with respect to each Distribution Date,
---------------------
the third Business Day preceding such Distribution Date.
"Delinquency Ratio" means, as of any date of determination, the ratio
-----------------
(expressed as a percentage), the numerator of which is the aggregate number
of all Receivables that were Delinquent Receivables during the related
Collection Period, and the denominator of which is the aggregate number of
Receivables as of the last day of such Collection Period, excluding
Receivables with respect to which the related Financed Vehicle has been
repossessed and Liquidated Receivables.
"Delinquent Receivable" means a Receivable with respect to which more
---------------------
than 20% of any Scheduled Payment is more than 30 days delinquent as of the
last day of the related Collection Period, excluding Receivables with respect
to which the related Financed Vehicle has been repossessed and Liquidated
Receivables.
"Delivery" when used with respect to Trust Account Property means:
--------
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and
are susceptible of physical delivery, transfer thereof to the Indenture
Trustee by physical delivery to the Indenture Trustee endorsed to, or
registered in the name of, the Indenture Trustee or endorsed in blank,
and, with respect to a certificated security (as defined in
Section 8-102 of the UCC) transfer thereof (i) by delivery of such
certificated security endorsed to, or registered in the name of, the
Indenture Trustee or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102 of the UCC) and the making by
such clearing corporation of appropriate entries on its books reducing
the appropriate securities account of the transferor and increasing the
appropriate securities account of the Indenture Trustee by the amount of
such certificated security and the identification by the clearing
corporation of the certificated securities for the sole and exclusive
account of the Indenture Trustee (all of the foregoing, "Physical
Property"), and, in any event, any such Physical Property in registered
form shall be in the name of the Indenture Trustee; and such additional
or alternative procedures as may hereafter become appropriate to effect
the complete transfer of ownership of any such Trust Account Property to
the Indenture Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a book-entry security held through the
Federal Reserve System pursuant to federal book-entry regulations, the
following procedures, all in accordance with applicable law, including
applicable federal regulations and Articles 8 and 9 of the UCC: book-
entry registration of such Trust Account Property to an appropriate
book-entry account maintained with a Federal Reserve Bank by a
securities intermediary that is also a "depository" pursuant to
applicable federal regulations; the making by such securities
intermediary of entries in its books and records crediting such Trust
Account Property to the Indenture Trustee's security account at the
securities intermediary and identifying such book-entry security held
through the Federal Reserve System pursuant to federal book-entry
regulations as belonging to the Indenture Trustee; and such additional
or alternative procedures as may hereafter become appropriate to effect
complete transfer of ownership of any such Trust Account Property to the
Indenture Trustee, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the Indenture Trustee or its nominee
or custodian who either (i) becomes the registered owner on behalf of
the Indenture Trustee or (ii) having previously become the registered
owner, acknowledges that it holds for the Indenture Trustee.
"Depositor" means SSB and its successors in interest.
---------
"Determination Date" means, with respect to each Distribution Date, the
------------------
earlier of (i) the eighth calendar day of the month in which such
Distribution Date occurs (or if such eighth day is not a Business Day, the
next succeeding Business Day) and (ii) the fifth Business Day preceding such
Distribution Date.
"Distribution Date" means, with respect to each Collection Period, the
-----------------
fifteenth day of the following month or, if such day is not a Business Day,
the immediately following Business Day, commencing on May 15, 1998.
"Eligible Deposit Account" means either (a) a segregated account with
------------------------
an 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 or any State, 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 that signifies
investment grade.
"Eligible Institution" means (a) the corporate trust department of the
--------------------
Indenture Trustee or the Owner Trustee or (b) a depository institution
organized under the laws of the United States of America or any State, that
(i) has either (A) a long-term unsecured debt rating acceptable to each
Rating Agency and, so long as a Note Insurer Default shall not have occurred
and be continuing, the Note Insurer or (B) a short-term unsecured debt rating
or certificate of deposit rating acceptable to each Rating Agency and, so
long as a Note Insurer Default shall not have occurred and be continuing, the
Note Insurer and (ii) the deposits of which are insured by the FDIC.
"Eligible Investments" means book-entry securities, negotiable
--------------------
instruments or securities represented by instruments in bearer or registered
form that are acceptable to the Note Insurer and that evidence:
(a) direct obligations of, and obligations fully guaranteed as to
the full and timely payment by, the United States of America;
(b) 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 or any State (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 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 other than such depository institution or trust
company) thereof shall have a credit rating from each Rating Agency in
the highest investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each Rating
Agency in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each
Rating Agency in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee or
any of their respective Affiliates is investment manager or advisor)
and, so long as a Note Insurer Default shall not have occurred and be
continuing, having been approved by the Note Insurer;
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) 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 (b);
(g) any other investment with respect to which the Issuer, the
Indenture Trustee or the Servicer has received written notification from
each Rating Agency that the acquisition of such investment will satisfy
the Rating Agency Condition, and, so long as a Note Insurer Default
shall not have occurred and be continuing, which is acceptable to the
Note Insurer.
"Eligible Servicer" means Hyundai Motor Finance Company, the Backup
-----------------
Servicer or any other Person that at the time of its appointment as Servicer
(i) is servicing a portfolio of motor vehicle retail installment sale
contracts or motor vehicle installment loans, (ii) is legally qualified and
has the capacity to service the Receivables, (iii) has demonstrated the
ability professionally and competently to service a portfolio of motor
vehicle retail installment sale contracts or motor vehicle installment loans
similar to the Receivables with reasonable skill and care, (iv) has a minimum
net worth of $100,000,000 or has been approved by the Note Insurer and (v),
so long as a Note Insurer Default shall not have occurred and be continuing,
is acceptable to the Note Insurer.
"Extension Policy" shall mean the policies of the Servicer with respect
----------------
to granting extensions on the Contracts as set forth on Exhibit H hereto.
"Extension Ratio" means, as of any date of determination, the ratio
---------------
(expressed as a percentage), the numerator of which is the aggregate number
of extensions granted during the related Collection Period, and the
denominator of which is the aggregate number of outstanding Receivables as of
the last day of the related Collection Period, excluding all Receivables that
became Liquidated Receivables during such Collection Period.
"FDIC" means the Federal Deposit Insurance Corporation, and its
----
successors.
"Fee Letter" means the letter regarding fees dated April 16, 1998
----------
between The Chase Manhattan Bank and HMFC.
"Final Scheduled Maturity Date" means April 15, 2004.
-----------------------------
"Financed Vehicle" means a new or used automobile, light-duty truck, van
----------------
or minivan, together with all accessions thereto, securing an Obligor's
indebtedness under the related Contract.
"Fiscal Agent" shall have the meaning specified in the Policy.
------------
"Funding Period" means the period beginning on and including the Closing
--------------
Date and ending on and including the first to occur of (a) the Determination
Date on which the amount on deposit in the Pre-Funding Account (after giving
effect to any transfers therefrom in connection with the transfer of
Subsequent Receivables to the Issuer on such Determination Date) is less than
or equal to $100,000, (b) the date of occurrence of a Servicer Termination
Event or an Event of Default under the Indenture, (c) the Determination Date
with respect to the July 1998 Distribution Date or (d) the Subsequent
Transfer Date.
"HMC" means Hyundai Motor Company.
---
"HMFC" means Hyundai Motor Finance Company, a California corporation,
----
and its successors.
"Indenture" means the Indenture, dated as of April 1, 1998, between the
---------
Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under
-----------------
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Initial Certificate Balance" means $44,850,000.
---------------------------
"Initial Class A-1 Note Balance" means $220,000,000.
------------------------------
"Initial Class A-2 Note Balance" means $80,150,000.
------------------------------
"Initial Cutoff Date" means March 16, 1998.
-------------------
"Initial Pool Balance" means an amount equal to the sum of (i) the
--------------------
aggregate Principal Balance of the Initial Receivables as of the Initial
Cutoff Date and (ii) the aggregate Principal Balance of all Subsequent
Receivables as of their Subsequent Cutoff Date.
"Initial Receivable" means any Contract listed on Schedule A (which
------------------
Schedule may be in the form of microfiche).
"Insolvency Event" means, with respect to a specified Person, (a) the
----------------
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in
an involuntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of
60 consecutive days; or (b) the commencement by such Person of a voluntary
case under any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or
the consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors,
or the failure by such Person generally to pay its debts as such debts become
due, or the taking of action by such Person in furtherance of any of the
foregoing.
"Insurance Agreement" means the Insurance Agreement dated as of April
-------------------
1, 1998 among the Note Insurer, the Issuer, HMFC, the Owner Trustee, the
Indenture Trustee, the Depositor, the Backup Servicer, the Custodian and the
Administrator.
"Insurance Documents" mean the Insurance Agreement and the Policy.
-------------------
"Insurance Premium" shall have the meaning set forth in the Insurance
-----------------
Agreement.
"Insured Payment" means, the sum of (i) as of any Distribution Date, any
---------------
Deficiency Amount and (ii) any Preference Amount.
"Interest Distribution Amount" means, with respect to any Distribution
----------------------------
Date, the sum of the following amounts, without duplication, with respect to
the Receivables in respect of the Collection Period preceding such
Distribution Date: (a) that portion of all collections on Receivables
allocable to interest, (b) Liquidation Proceeds with respect to the
Receivables to the extent allocable to interest due thereon, (c) the Purchase
Amount of each Receivable that became a Purchased Receivable during such
Collection Period to the extent attributable to accrued interest on such
Receivable, (d) Investment Earnings for the related Distribution Date, (e)
Liquidation Proceeds for such Collection Period to the extent allocable to
interest, (f) any Yield Maintenance Payment, (g) the Capitalized Interest
Distribution Amount; (h) extension fees collected from an Obligor in
connection with the extension of a Receivable and (i) Net Investment Losses
required to be deposited by the Servicer; provided, however, that in
calculating the Interest Distribution Amount the following will be excluded:
all payments and proceeds (including Liquidation Proceeds) of any Purchased
Receivables the Purchase Amount of which has been included in the Interest
Distribution Amount in a prior Collection Period.
"Inventory Ratio" means, as of any date of determination, the ratio
---------------
(expressed as a percentage), the numerator of which is the aggregate number
of Financed Vehicles that have been repossessed but have not been sold, and
the denominator of which is the aggregate number of Receivables as of the end
of the most recently completed Collection Period, excluding Receivables that
became Liquidated Receivables during such Collection Period.
"Investment Earnings" means, with respect to any Distribution Date, any
-------------------
investment earnings (net of losses and investment expenses) on amounts on
deposit in a Trust Account to be deposited into the Collection Account on
such Distribution Date pursuant to Section 5.02(b).
"Issuer" means Hyundai Auto Receivables Trust 1998-A.
------
"Lien" means a security interest, lien, charge, pledge, equity or
----
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of
any act or omission by the related Obligor.
"Liquidated Receivable" means a Receivable with respect to which the
---------------------
earlier of the following shall have occurred: (i) more than 20% of a payment
due under the related Contract is 120 or more days delinquent, (ii) the
related Financed Vehicle has been repossessed for 30 days or more or (iii)
the Servicer has determined in accordance with the Credit and Collections
Policy that eventual payment in full of the Amount Financed is unlikely.
"Liquidation Proceeds" means, with respect to any Receivable that
--------------------
becomes a Liquidated Receivable, the moneys collected in respect thereof,
from whatever source, during or after the Collection Period in which such
Receivable became a Liquidated Receivable, including liquidation of the
related Financed Vehicle, net of the sum of any reasonable out-of-pocket
expenses of the Servicer in connection with such liquidation and any amounts
required by law to be remitted to the Obligor on such Liquidated Receivable.
"Local Remittance Account" shall have the meaning provided in Section
------------------------
5.02(a).
"Mandatory Redemption Date" means the Distribution Date immediately
-------------------------
following the last day of the Funding Period.
"Moody's" means Moody's Investors Service, Inc., and its successors.
-------
"Net Investment Losses": With respect to a Trust Account and any
---------------------
Collection Period, the amount, if any, by which the aggregate of all losses
and expenses incurred during such period in connection with the investment of
funds in Eligible Investments in accordance with Section 5.02(b) exceeds the
aggregate of all interest and other income realized during such period on
such funds.
"Net Loss Ratio" means, as of any date of determination, the ratio
--------------
(expressed as a percentage), the numerator of which is (a) the aggregate
Principal Balance of all Receivables that became Liquidated Receivables
during the related Collection Period minus (b) all Liquidation Proceeds
received during such Collection Period, and the denominator of which is the
Pool Balance as of the last day of such Collection Period.
"Note Balance" means, as of any date of determination, an amount equal
------------
to the sum of (i) the Initial Class A-1 Note Balance and (ii) the Initial
Class A-2 Note Balance, less all amounts distributed to Noteholders on or
prior to such date and allocable to principal.
"Note Distribution Account" means the account designated as such,
-------------------------
established and maintained pursuant to Section 5.02(b)(ii).
"Note Insurer" means MBIA Insurance Corporation, a New York stock
------------
insurance company, and its successors.
"Note Insurer Default" means any one of the following events shall have
--------------------
occurred and be continuing:
(a) the Note Insurer shall have failed to make a required payment
when due under the Policy;
(b) the Note Insurer shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization, (ii) made a general
assignment for the benefit of its creditors or (iii) had an order for
relief entered against it under the United States Bankruptcy Code, the
New York State Insurance Law or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or any other competent regulatory authority shall have entered
a final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent, or receiver for the Note Insurer or for all
or any material portion of its property or (ii) authorizing the taking
of possession by a custodian, trustee, agent, or receiver of the Note
Insurer or of all or any material portion of its property.
"Note Percentage" means, on any Distribution Date, the percentage equal
---------------
to the Note Balance divided by the Pool Balance.
"Note Pool Factor" means, with respect to each Class of Notes as of the
----------------
close of business on the last day of a Collection Period, a seven-digit
decimal figure equal to the Outstanding Amount of such Class of Notes (after
giving effect to any reductions thereof to be made on the immediately
following Distribution Date) divided by the original Outstanding Amount of
such Class of Notes. The Note Pool Factor will be 1.0000000 as of the
Closing Date; thereafter, the Note Pool Factor will decline to reflect
reductions in the Outstanding Amount of such Class of Notes.
"Noteholders" shall mean the Class A-1 Noteholders or the Class A-2
-----------
Noteholders.
"Noteholders' Distributable Amount" means, with respect to any
---------------------------------
Distribution Date, the sum of the Noteholders' Interest Distributable Amount
and the Noteholders' Principal Distributable Amount.
"Noteholders' Interest Distributable Amount" means, with respect to any
------------------------------------------
Distribution Date, the sum of the Class A-1 Interest Distributable Amount for
such Distribution Date and the Class A-2 Interest Distributable Amount for
such Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to any
-------------------------------------------
Distribution Date, the sum of the Class A-1 Principal Distributable Amount
for such Distribution Date and the Class A-2 Principal Distributable Amount
for such Distribution Date.
"Notice" means the telephonic or telegraphic notice, promptly confirmed
------
in writing by telecopy substantially in the form of Exhibit A attached to the
Policy, the original of which is subsequently delivered by registered or
certified mail, from the Indenture Trustee specifying the Insured Payment
that shall be due and owing on the applicable Distribution Date.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
-------
related Financed Vehicle, and any other Person obligated to make payments
thereunder.
"Officers' Certificate" means a certificate signed by (a) the chairman
---------------------
of the board, any vice president, the controller or any assistant controller
and (b) the president, a treasurer, assistant treasurer, secretary or
assistant secretary of the Depositor or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of counsel, in
------------------
form and substance acceptable to the Note Insurer, who may be an employee of
or counsel to the Depositor or the Servicer, which counsel shall be
acceptable to the Note Insurer and the Indenture Trustee, the Owner Trustee
or the Rating Agencies, as applicable and which shall be addressed to the
Note Insurer, the Owner Trustee and the Indenture Trustee.
"Outstanding Amount" means, as of any date of determination, the
------------------
aggregate principal amount of a Class of Notes outstanding as of such date of
determination.
"Overcollateralization Ratio" means, as of any date of determination,
---------------------------
the ratio (expressed as a percentage), the numerator of which is the Note
Balance as of such date, and the denominator of which is the Pool Balance as
of such date.
"Owner Trustee" means Wilmington Trust Company, acting not in its
-------------
individual capacity but solely as owner trustee under the Trust Agreement.
"Performance Guaranty" means the guaranty dated April 1, 1998 of HMC to
--------------------
the Note Insurer and other beneficiaries.
"Physical Property" has the meaning assigned to such term in the
-----------------
definition of "Delivery" above.
"Policy" means the financial guaranty insurance policy issued by the
------
Note Insurer with respect to the Notes, including any endorsements thereto,
in the form of Exhibit D hereto.
"Pool Balance" means, with respect to any Distribution Date, an amount
------------
equal to the sum of (i) the aggregate Principal Balance of the Receivables at
the end of the related Collection Period, after giving effect to all payments
of principal received from Obligors and Purchase Amounts to be remitted by
the Servicer for such Collection Period, and after adjustment for Cram Down
Losses and reduction to zero of the aggregate outstanding Principal Balance
of all Receivables that became Liquidated Receivables during such Collection
Period and (ii) the Pre-Funded Amount, if any.
"Post Office Box" means any post office boxes maintained by Citibank
---------------
N.A., to which payments on receivables owned or serviced by HMFC are or will
be sent.
"Precomputed Receivable" means any Receivable under which the portion
----------------------
of a payment allocable to earned interest (which may be referred to in the
related Contract as an add-on finance charge) and the portion allocable to
the Amount Financed is determined according to the sum of periodic balances
or the sum of monthly balances or any equivalent method or are monthly
actuarial receivables.
"Pre-Funded Amount" means the amount on deposit in the Pre-Funding
-----------------
Account, which shall initially be $46,545,439.07.
"Pre-Funded Percentage" means, with respect to a Class of Notes, the
---------------------
ratio (expressed as a percentage), the numerator of which is the Outstanding
Amount of such Class of Notes as of the preceding Distribution Date and the
denominator of which is the Note Balance as of the preceding Distribution
Date.
"Pre-Funding Account" means the account designated as such, established
-------------------
and maintained pursuant to Section 5.02(b)(iii).
"Preference Amount" means any amount previously distributed to a
-----------------
Noteholder that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code, as amended from time to time, in accordance with a final
nonappealable order of a court of competent jurisdiction.
"Preference Claim" shall have the meaning assigned hereto in Section
----------------
5.11(b).
"Principal Balance" means, with respect to any Receivable and a
-----------------
Determination Date, the Amount Financed minus an amount equal to the sum, as
of the close of business on the last day of the related Collection Period, of
(1) that portion of all amounts received on or prior to such day with respect
to such Receivable and allocable to principal using the actuarial method
(with respect to Precomputed Receivables) or the Simple Interest Method (with
respect to Simple Interest Receivables), as applicable, and (2) any Cram Down
Losses with respect to such Receivable.
"Purchase Amount" means, with respect to any Receivable that became a
---------------
Purchased Receivable, the unpaid principal balance owed by the Obligor
thereon plus interest on such amount at the applicable APR to the last day of
the month of repurchase.
"Purchased Receivable" means a Receivable purchased as of the close of
--------------------
business on the last day of a Collection Period by or on behalf of the
Servicer pursuant to Section 4.07 or by or on behalf of the Seller pursuant
to the Receivables Purchase Agreement.
"Rating Agency" means Moody's or Standard & Poor's, as the context may
-------------
require. If none of Moody's, Standard & Poor's or a successor thereto
remains in existence, "Rating Agency" shall mean any nationally recognized
statistical rating organization or other comparable Person designated by the
Depositor and, so long as a Note Insurer Default shall not have occurred and
be continuing, with the prior written consent of the Note Insurer, written
notice of which designation shall be given to the Owner Trustee, the
Indenture Trustee, the Servicer and the Note Insurer.
"Rating Agency Condition" means, with respect to any action, that each
-----------------------
Rating Agency shall have been given 10 days' (or such shorter period as shall
be acceptable to each Rating Agency) prior notice thereof and that each
Rating Agency shall not have notified the Issuer, the Indenture Trustee or
the Note Insurer (if the Note Insurer is the Controlling Party) in writing
that such action will result in a reduction, withdrawal or down-grade of the
then-current rating of each class of Notes, or in an increased capital charge
to the Note Insurer.
"Realized Losses" means, with respect to any Receivable that becomes a
---------------
Liquidated Receivable, the excess of the Principal Balance thereof over the
portion of related Liquidation Proceeds allocable to principal.
"Receivable Files" means the following documents with respect to each
----------------
Financed Vehicle:
(i) the fully executed original of each Receivable (together with
any agreements modifying each such Receivable, including any extension
agreement);
(ii) the original credit application, or a copy thereof, fully
executed by each Obligor thereon;
(iii) the original certificate of title or such other documents
evidencing the security interest of the Seller in the related Financed
Vehicle; and
(iv) any and all other documents that the Servicer shall have kept
on file in accordance with its customary procedures relating to the
Receivables, the Obligors or the Financed Vehicles.
"Receivables" means the Initial Receivables and the Subsequent
-----------
Receivables.
"Receivables Purchase Agreement" means the Receivables Purchase
------------------------------
Agreement dated as of April 1, 1998, between HMFC, as seller, and SSB, as
Depositor.
"Record Date" means, as to any Distribution Date, the day immediately
-----------
preceding such Distribution Date.
"Regular Principal Distributable Amount" means, with respect to any
--------------------------------------
Distribution Date, the sum of the following amounts, without duplication,
with respect to the Receivables in respect of the related Collection Period:
(i) that portion of all collections on the Receivables allocable to
principal, (ii) the aggregate outstanding principal balance of all
Receivables that became Liquidated Receivables during such Collection Period,
(iii) that portion allocable to principal of the aggregate amount of any Cram
Down Losses and (iv) that portion allocable to principal of the Purchase
Amount of all Receivables that became Purchased Receivables during or in
respect of such Collection Period.
"Reimbursement Obligations" means the sum of (i) any unreimbursed
-------------------------
payments made by the Note Insurer under the Policy, (ii) any expense paid by
the Note Insurer pursuant to Section 4.05, (iii) any unpaid Insurance
Premium, and (iv) all other amounts due to the Note Insurer under the
Insurance Agreement, in each case together with interest on such amounts at
the Late Payment Rate (as defined in the Insurance Agreement).
"Request for Release of Documents" means the request substantially in
--------------------------------
the form of Exhibit M.
"Required Rate" means the sum of (i) the Weighted Average Note Rate,
-------------
(ii) the Servicing Fee Rate, (iii) the rate at which the Insurance Premium is
calculated, and (iv) the sum of the Trustee Fee Rates.
"Reserve Account" means the account designated as such, established by
---------------
the Issuer and maintained by the Indenture Trustee pursuant to Section
5.02(b)(v).
"Reserve Account Claim Amount" shall have the meaning set forth in
----------------------------
Section 5.08(b).
"Reserve Account Claim Notice" shall have the meaning set forth in
----------------------------
Section 5.08(b).
"Reserve Account Initial Deposit" means the product of (a) 6% and (b)
-------------------------------
clause (i) of the definition of Initial Pool Balance.
"Reserve Account Percentage" shall have the meaning set forth in Exhibit
--------------------------
L.
"Reserve Account Property" means the Reserve Account Initial Deposit and
------------------------
all other amounts deposited in or credited to the Reserve Account from time
to time.
"Reserve Account Required Amount" shall have the meaning set forth in
-------------------------------
Exhibit L.
"Reserve Account Subsequent Deposit Amount" shall equal the product of
-----------------------------------------
the Reserve Account Percentage and the aggregate Principal Balance of the
Subsequent Receivables.
"Reserve Event" shall have the meaning set forth in Exhibit L.
-------------
"Responsible Officer" means the chairman of the board, the president,
-------------------
any executive vice president, any vice president, the treasurer, any
assistant treasurer, the secretary, or any assistant secretary of the
Servicer.
"Scheduled Payment" means, with respect to each Receivable, the
-----------------
scheduled monthly payment amount set forth in the related Contract and
required to be paid by the Obligor during each Collection Period.
"Securities" means the Notes and the Certificates.
----------
"Securities Intermediary" means The Chase Manhattan Bank, in its
-----------------------
capacity as the securities intermediary in the Securities Account Control
Agreement dated as of April 16, 1998.
"Securityholders" means the Noteholders and/or the Certificateholders,
---------------
as the context may require.
"Seller" means HMFC and its successors in interest as seller of the
------
Receivables to the Depositor pursuant to the Receivables Purchase Agreement
and the Subsequent Purchase Agreement.
"Senior Servicing Fee" means an amount equal to the sum of (i) the
--------------------
product of the Senior Servicing Fee Rate and the amount specified in clause
(i) of the definition of Pool Balance as of the first day of the related
Collection Period, and (ii) any late fees, prepayment charges (including, in
the case of a Receivable that provides for payments according to the "Rule of
78's" and that is prepaid in full, the difference between the Principal
Balance of such Receivable (plus accrued interest to the date of prepayment)
and the Principal Balance of such Receivable computed according to the Rule
of 78's), and other administrative fees or similar charges collected on the
Receivables.
"Senior Servicing Fee Rate" means (i) so long as HMFC is the Servicer,
-------------------------
1.5% per annum or (ii) if HMFC is not the Servicer, 3.0% per annum.
"Servicer" means HMFC, as the servicer of the Receivables, and each
--------
successor to HMFC (in the same capacity) pursuant to Section 7.03 or 8.03.
"Servicer Termination Event" shall have the meaning set forth in Section
--------------------------
8.01.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
----------------------
delivered pursuant to Section 4.09, substantially in the form of Exhibit C.
"Servicing Fee" means the Senior Servicing Fee and the Subordinated
-------------
Servicing Fee.
"Servicing Fee Rate" means the Senior Servicing Fee Rate and the
------------------
Subordinated Servicing Fee Rate.
"Simple Interest Method" means the method of allocating the monthly
----------------------
payments received with respect to a Receivable to interest in an amount equal
to the product of (i) the applicable APR, (ii) the period of time (expressed
as a fraction of a year, based on the actual number of days in the calendar
month and 365 days in the calendar year) elapsed since the preceding payment
was made under such Receivable and (iii) the outstanding principal amount of
such Receivable, and allocating the remainder of each such monthly payment to
principal.
"Simple Interest Receivable" means any Receivable under which the
--------------------------
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"SSB" means SSB Vehicle Securities Inc., a Delaware corporation, and its
---
successors.
"Standard & Poor's" means Standard & Poor's, a division of The McGraw
-----------------
Hill Companies, Inc., and its successors.
"Subordinated Servicing Fee" means an amount equal to the product of the
--------------------------
Subordinated Servicing Fee Rate and the amount specified in clause (i) of the
definition of Pool Balance as of the first day of the related Collection
Period.
"Subordinated Servicing Fee Rate" means (i) so long as HMFC is the
-------------------------------
Servicer, 1.5% per annum and (ii) if HMFC is not the Servicer, 0% per annum.
"Subsequent Closing Date" shall have the meaning assigned to such term
-----------------------
in the Subsequent Purchase Agreement.
"Subsequent Cutoff Date" means the date as of which Subsequent
----------------------
Receivables are conveyed to the Trust pursuant to Section 2.01.
"Subsequent Purchase Agreement" shall have the meaning assigned to such
-----------------------------
term in the Receivables Purchase Agreement.
"Subsequent Receivables" means the Contracts transferred to the Issuer
----------------------
pursuant to Section 2.01, which shall be listed on Schedule A to the
Subsequent Transfer Agreement.
"Subsequent Transfer Agreement" shall have the meaning assigned hereto
-----------------------------
in Section 2.01(b).
"Subsequent Transfer Date" means the date designated by the Depositor
------------------------
during the Funding Period on which Subsequent Receivables are to be
transferred to the Issuer in accordance with Section 2.01 and pursuant to the
Subsequent Transfer Agreement.
"Total Distribution Amount" means, for each Distribution Date, the sum
-------------------------
of the related Interest Distribution Amount and the related Regular Principal
Distributable Amount (other than the portion thereof attributable to Realized
Losses or Cram Down Losses).
"Trigger Event" shall have the meaning set forth in Exhibit L.
-------------
"Trust" means the Issuer.
-----
"Trust Account Property" means the Trust Accounts, all amounts and
----------------------
investments held from time to time in any Trust Account and all proceeds of
the foregoing.
"Trust Accounts" shall mean the Collection Account, the Note
--------------
Distribution Account, the Reserve Account, the Capitalized Interest Account,
the Yield Maintenance Account and the Pre-Funding Account.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
---------------
as of April 1, 1998, between the Depositor and the Owner Trustee.
"Trustee Fee Rates" means the rates at which the fees and expenses are
-----------------
due to the Indenture Trustee, the Owner Trustee, the Administrator (to the
extent such fees and expenses are related to the Trust, as set forth in the
Fee Letter) and the Custodian; provided that the aggregate of the rates at
which such fees and expenses accrue shall not exceed 0.25% per annum.
"Trust Officer" means, in the case of the Indenture Trustee or the
-------------
Backup Servicer, any Officer within the Corporate Trust Office of the
Indenture Trustee or the Backup Servicer, as the case may be, including any
Assistant Vice President, Assistant Treasurer, Assistant Secretary or any
other officer of the Indenture Trustee customarily performing functions
similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject and, with respect to the Owner Trustee, any officer in the
Corporate Trust Administration Department of the Owner Trustee with direct
responsibility for the administration of the Trust Agreement and the other
Basic Documents on behalf of the Owner Trustee.
"Weighted Average Note Rate" means the percentage equivalent of a
--------------------------
fraction, the numerator of which is the sum of (i) the product of the Class
A-1 Rate times the Initial Class A-1 Note Balance plus (ii) the product of
the Class A-2 Rate times the Initial Class A-2 Note Balance, and the
denominator of which is the sum of the Initial Class A-1 Note Balance and the
Initial Class A-2 Note Balance.
"Yield Maintenance Account" means the account designated as such,
-------------------------
established by the Issuer and maintained by the Indenture Trustee pursuant to
Section 5.02(b)(iv).
"Yield Maintenance Account Subsequent Deposit Amount" means on the
---------------------------------------------------
Subsequent Transfer Date, an amount, to be deposited into the Yield
Maintenance Account, equal to (A) the aggregate amount by which (i) interest
on the Principal Balance of each Subsequent Receivable for the period
commencing on the Subsequent Cutoff Date and ending with the scheduled
maturity of each such Receivable (assuming that payments on such Receivables
are made as scheduled and no prepayments are made) at a rate equal to the
Required Rate, exceeds (ii) interest on such Principal Balance at the APR of
such Subsequent Receivable.
"Yield Maintenance Amount" means an amount equal to (A) the aggregate
------------------------
amount by which (i) interest on the Principal Balance of each Initial
Receivable for the period commencing on the Initial Cutoff Date and ending
with the scheduled maturity of each such Receivable (assuming that payments
on such Receivables are made as scheduled and no prepayments are made) at a
rate equal to the Required Rate, exceeds (ii) interest on such Principal
Balance at the APR of such Initial Receivable minus (B) the sum of (i) any
amount distributed as a Yield Maintenance Deposit Amount and (ii) any amount
attributable to an Initial Receivable which has been prepaid or liquidated
during the related Collection Period. As of the Initial Cutoff Date, the
Yield Maintenance Amount is $665,927.07.
"Yield Maintenance Deposit Amount" means the aggregate Yield Maintenance
--------------------------------
Payments in respect of the Receivables for the related Collection Period, if
any.
"Yield Maintenance Payment" means with respect to any payment made on
-------------------------
or in respect of a Receivable and any Distribution Date, the amount by which
(i) interest on the Principal Balance of such Receivable during the
Collection Period preceding such Distribution Date at a rate equal to the
Required Rate, exceeds (ii) interest on such Principal Balance at the APR of
such Receivable.
Section 1.02. Other Definitional Provisions.
-----------------------------
(a) Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Indenture or, if not defined
therein, in the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein.
(c) 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.
(d) The words "hereof," "herein," "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; Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; "or" shall include "and/or"; and the term "including"
shall mean "including without limitation".
(e) 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.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means
such agreement, instrument or statute as from time to time amended, modified
or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables.
-------------------------
(a) Subject to the conditions set forth in paragraph (b) below with
respect to Subsequent Receivables, in consideration of the Issuer's delivery
to or upon the order of the Depositor of $233,720,124.34, the Certificates
and such other amounts to be distributed to the Depositor on the Closing Date
and the Subsequent Transfer Date, as applicable, the Depositor does hereby
sell, transfer, assign, set over and otherwise convey to the Issuer, without
recourse (subject to the obligations of the Depositor set forth herein), all
right, title and interest of the Depositor in and to:
(i) the Initial Receivables and all moneys received thereon on or
after the Initial Cutoff Date and the Subsequent Receivables listed on
Schedule A to the Subsequent Transfer Agreement and all moneys received
thereon on or after the Subsequent Cutoff Date;
(ii) the security interests in the Financed Vehicles and any
accessions thereto granted by Obligors pursuant to the Receivables and
any other interest of the Depositor in such Financed Vehicles;
(iii) any Liquidation Proceeds and any other proceeds with
respect to the Receivables from claims on any physical damage, credit
life or disability insurance policies covering the Financed Vehicles or
the related Obligors, including any vendor's single interest or other
collateral protection insurance policy;
(iv) any property that shall have secured a Receivable and shall
have been acquired by or on behalf of the Depositor, the Servicer or the
Trust;
(v) all documents and other items contained in the Receivable
Files;
(vi) all of the Depositor's rights (but not its obligations) under
the Receivables Purchase Agreement and the Subsequent Purchase
Agreement;
(vii) all right, title and interest in all funds on deposit
from time to time in the Trust Accounts and the Certificate Distribution
Account and in all investments therein and proceeds thereof (including
all Investment Earnings thereon);
(viii) any proceeds from any Receivable repurchased by a Dealer
pursuant to a Dealer Agreement; and
(ix) the proceeds of any and all of the foregoing.
In addition, on or prior to the Closing Date, the Seller shall cause the Note
Insurer to deliver the Policy to the Indenture Trustee for the benefit of the
Holders of the Notes.
It is the intention of the Depositor that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Receivables and
other related property from the Depositor to the Trust and the beneficial
interest in and title to the Receivables and the related property shall not
be part of the Depositor's estate in the event of the filing of a bankruptcy
petition by or against the Depositor under any bankruptcy law. In the event
that, notwithstanding the intent of the Depositor, the transfer and
assignment contemplated hereby is held not to be a sale, this Agreement shall
constitute a grant of a security interest in the property referred to in this
Section 2.01 for the benefit of the Securityholders and the Note Insurer.
(b) The Depositor shall transfer to the Issuer the Subsequent
Receivables and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions and satisfaction by the Seller of the conditions in Section 2.03
of the Receivables Purchase Agreement on or prior to the Subsequent Transfer
Date:
(i) the Depositor shall have delivered to the Owner Trustee, the
Note Insurer and the Indenture Trustee (A) a written transfer agreement
in substantially the form of Exhibit E hereto, which shall have been
duly executed by each of the parties thereto (the "Subsequent Transfer
Agreement"), which shall include supplements to Schedule A hereto
listing the Subsequent Receivables and (B) an Addition Notice;
(ii) on the Subsequent Transfer Date, (A) the Depositor was not
insolvent and will not become insolvent as a result of the transfer of
the related Subsequent Receivables on the Subsequent Transfer Date, (B)
the Depositor did not intend to incur or believe that it would incur
debts that would be beyond the Depositor's ability to pay as such debts
matured, (C) such transfer was not made with actual intent to hinder,
delay or defraud any Person and (D) the assets of the Depositor did not
constitute unreasonably small capital to carry out its business as
conducted;
(iii) the Funding Period shall not have terminated;
(iv) each of the representations and warranties made by the
Depositor pursuant to Section 3.02 with respect to the related
Subsequent Receivables shall be true and correct as of the Subsequent
Transfer Date;
(v) the addition of any of the related Subsequent Receivables will
not result in a material adverse tax consequence to the Trust, the
Noteholders or the Certificateholders;
(vi) the Note Insurer in its absolute and sole discretion shall
have approved in writing the transfer of the Subsequent Receivables to
the Trust;
(vii) the Depositor shall have delivered to each Rating Agency,
the Issuer, the Indenture Trustee and the Note Insurer, an Opinion of
Counsel with respect to the transfer of the related Subsequent
Receivables substantially in the form of, or confirming, the Opinion of
Counsel delivered to each Rating Agency and the Note Insurer on the
Closing Date and any other opinions reasonably required by the Note
Insurer;
(viii) the Rating Agency Condition shall be satisfied with
respect to the transfer of the Subsequent Receivables to the Trust; and
(ix) the Depositor shall have delivered to the Indenture Trustee,
the Note Insurer and the Owner Trustee an Officers' Certificate
confirming the satisfaction of each condition precedent on its part to
be performed specified in this paragraph (b).
(c) The Depositor covenants to transfer to the Issuer during the
Funding Period pursuant to, and subject to the conditions set forth in,
paragraph (b) above, all Subsequent Receivables transferred by the Seller to
the Depositor pursuant to Section 2.03 of the Receivables Purchase Agreement.
ARTICLE III
THE RECEIVABLES
Section 3.01. Representations and Warranties of the Seller.
--------------------------------------------
(a) The Seller has made each of the representations and warranties set
forth in Exhibit A hereto under the Receivables Purchase Agreement and has
consented to the assignment by the Depositor to the Issuer of the Depositor's
rights with respect thereto. Such representations and warranties speak as of
the execution and delivery of this Agreement and as of the Closing Date in
the case of the Initial Receivables, and as of the Subsequent Transfer Date
in the case of the Subsequent Receivables, but shall survive the sale,
transfer and assignment of the Receivables to the Issuer and the pledge of
such Receivables to the Indenture Trustee. Pursuant to Section 2.01 of this
Agreement, the Depositor has sold, assigned, transferred and conveyed to the
Issuer, as part of the assets of the Issuer, its rights under the Receivables
Purchase Agreement, including the representations and warranties of the
Seller therein as set forth in Exhibit A, upon which representations and
warranties the Issuer relies in accepting the Receivables and delivering the
Securities, and upon which the Note Insurer relies in issuing the Policy,
together with all rights of the Depositor with respect to any breach thereof,
including the right to require the Seller to repurchase Receivables in
accordance with the Receivables Purchase Agreement. It is understood and
agreed that the representations and warranties referred to in this Section
shall survive the sale and delivery of the Receivables to the Issuer or the
Custodian.
(b) The Seller hereby agrees that the Issuer shall have the right to
enforce any and all rights under the Receivables Purchase Agreement assigned
to the Issuer herein, including the right to cause the Seller to repurchase
any Receivable with respect to which it is in breach of any of its
representations and warranties set forth in Exhibit A, directly against the
Seller as though the Issuer were a party to the Receivables Purchase
Agreement, and the Issuer shall not be obligated to exercise any such rights
indirectly through the Depositor.
Section 3.02. Representations and Warranties of the Depositor. The
-----------------------------------------------
Depositor makes the following representations and warranties, on which the
Issuer relies in accepting the Receivables and delivering the Securities, and
upon which the Note Insurer relies in issuing the Policy. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date in the case of the Initial Receivables,
and as of the Subsequent Transfer Date in the case of the Subsequent
Receivables, but shall survive the sale, transfer and assignment of the
Receivables by the Depositor to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture:
(a) Title. The Depositor shall convey to the Issuer all right,
-----
title and interest of the Depositor in and to the Receivables.
(b) All Filings Made. The Depositor has caused all filings
----------------
(including UCC filings) to be made in California, New York and Delaware with
respect to the sale of the Receivables to the Issuer and the pledge
contemplated in the Basic Agreements to the Indenture Trustee.
(c) Liens. The Depositor has not taken any actions to create,
-----
incur or suffer to exist any Lien on or restriction on transferability of any
Receivable except for the Lien of the Indenture and the restrictions on
transferability imposed by this Agreement.
Section 3.03. Repurchase Upon Breach. The Depositor, the Owner
----------------------
Trustee, the Indenture Trustee, the Seller, the Backup Servicer and the
Servicer shall inform the other parties to this Agreement and the Note
Insurer promptly, in writing, upon the discovery of any breach of the
Seller's representations and warranties made pursuant to Section 3.01 of this
Agreement or Section 2.03 or 3.02 of the Receivables Purchase Agreement,
without regard to any limitation set forth in such representation or warranty
concerning the knowledge of the Seller as to the facts stated therein.
Unless any such breach shall have been cured by the last day of the first
Collection Period following the discovery or notice thereof, the Servicer
shall be obligated and, if necessary, the Issuer shall enforce the obligation
of the Seller under the Receivables Purchase Agreement, to purchase as of
such last day any Receivable materially and adversely affected by any such
breach or with respect to which the interests of the Note Insurer are
materially and adversely affected. In consideration of the repurchase of any
such Receivable, the Servicer shall remit the Purchase Amount to the
Collection Account and notify in writing the Indenture Trustee of such
deposit, in the manner specified in Section 5.04. The sole remedy of the
Issuer, the Indenture Trustee, the Noteholders, or the Certificateholders
with respect to a breach of representations and warranties pursuant to
Section 3.01 and the agreement contained in this Section shall be to require
the Servicer to purchase Receivables pursuant to this Section or the Seller
to repurchase Receivables pursuant to the Receivables Purchase Agreement. If
the Seller fails to repurchase any Receivable which it is so required to
reacquire pursuant to this Agreement or the Receivables Purchase Agreement by
the date specified, the Indenture Trustee shall promptly notify HMC of such
failure at the address set forth in the Performance Guaranty.
Section 3.04. Custody of Custodial Files.
--------------------------
(a) To assure uniform quality in the servicing of the Receivables, the
Issuer hereby appoints the Custodian, and the Custodian hereby accepts such
appointment, to act for the benefit of the Issuer and the Indenture Trustee
as custodian of the following documents or instruments relating to the
Receivables (the "Custodial Files"), which documents and instruments shall be
delivered by the Servicer to the Custodian within 30 days of the Closing Date
with respect to the Initial Receivables and within 30 days of the Subsequent
Closing Date with respect to the Subsequent Receivables:
(i) the fully executed original of each Receivable (together with
any agreements modifying each such Receivable, including any extension
agreement as set forth in the related Schedule); and
(ii) the original certificate of title, application for duplicate
title with proof of security interest for certain identified Receivables
or such other original documents evidencing the security interest of the
Seller in the related Financed Vehicle.
(b) If the Servicer fails to deliver any of the required documents, the
Servicer shall purchase or shall cause the Seller to purchase the related
Receivable for the Purchase Amount pursuant to Section 3.07.
Section 3.05. Duties of the Custodian.
-----------------------
(a) The Custodian may, upon receipt of a Request for Release of
Documents from the Servicer, release any Custodial File to the Servicer, for
the limited purpose, if necessary, of temporarily assisting the Servicer to
conduct collection and other servicing activities; provided, however, that
prior to being released to the Servicer all documents to be released in such
Custodial File shall be conspicuously stamped to reflect the sale to the
Issuer and the security interest of the Indenture Trustee in the related
Receivables (except if the Custodial File is being released because the
related Receivable has been paid in full); provided, further, that if a
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Servicer Termination Event shall have occurred and be continuing and of which
the Custodian has actual knowledge of or has received notice thereof, no part
of any Custodial File shall be released by the Custodian to the Servicer
without the Note Insurer's prior written consent, which shall be evidenced by
the Note Insurer's execution of the Request for Release of Documents. Except
as noted above, no part of the Custodial File shall be delivered by the
Custodian to the Depositor, the Seller or the Servicer or otherwise released
from the possession of the Custodian. The Custodian shall not be under any
duty or obligation to inspect, review or examine any document, instrument,
certificate, agreement or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are
other than what they purport to be on their face.
No successor Custodian may be appointed unless such Person shall be
acceptable to the Note Insurer and shall have entered into an agreement with
the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, containing provisions substantially similar to this Section.
(b) Upon receipt of the Custodial Files, the Custodian shall hold
and acknowledge that it is holding the Custodial File documents (except for
those noted on the notice in the form of Exhibit G given to the Indenture
Trustee) as the agent of the Indenture Trustee and the Owner Trustee for the
use and benefit of the Securityholders and the Note Insurer with respect
thereto. The Indenture Trustee shall not have any responsibility, duty,
obligation or liability with respect to the Custodian acting as a custodian
hereunder or with respect to any document, agreement, certificate or
instrument held or purported to be held by the Custodian. Neither the
Custodian nor the Indenture Trustee shall have any responsibility or
liability with respect to any Receivable or Custodial Files not conveyed by
the Servicer hereunder.
(c) The Custodian shall perform its duties as custodian in
accordance with the terms of this Agreement and applicable law and, to the
extent consistent with such terms, in the same manner in which, and with the
same care, skill, prudence and diligence with which, it administers files for
other portfolios, if any, giving due consideration to customary and usual
standards of practice of prudent custodians. The Custodian shall promptly
report to the Indenture Trustee, the Owner Trustee and to the Note Insurer,
any failure by it to hold the complete set of Custodial Files as herein
provided and shall promptly take appropriate action to remedy any such
failure.
The Custodian shall have and perform the following powers and
duties:
(i) hold the Custodial Files on behalf of the Indenture Trustee
and the Owner Trustee for the benefit of the Securityholders and the
Note Insurer, maintain accurate records pertaining to each Receivable to
enable it to comply with the terms and conditions of this Agreement, and
maintain a current inventory thereof;
(ii) implement policies and procedures in accordance with the
Custodian's normal business practices with respect to the handling and
custody of the Custodial Files so that the integrity and physical
possession of the Custodial Files will be maintained; and
(iii) attend to all details in connection with maintaining custody
of the Custodial Files on behalf of the Indenture Trustee, the Owner
Trustee, the Securityholders and the Note Insurer.
(d) In acting as a custodian, the Custodian agrees further that it
does not and will not have or assert any beneficial ownership interest in the
Receivables or the Custodial Files or any other Receivable.
(e) The Custodian agrees to maintain any Custodial Files in its
possession at its office located in Chase Bank of Texas, 801 West Greens
Road, Suite 200, Houston, Texas 77067, or at such other offices as shall from
time to time be identified by prior written notice to the Issuer, to the
Indenture Trustee and the Note Insurer.
Section 3.06. Obligations of the Custodian.
----------------------------
(a) With respect to the documents constituting each Custodial File
which is delivered to the Custodian or which come into the possession of the
Custodian, the Custodian is the custodian for the Indenture Trustee, on
behalf of the Note Insurer and the Securityholders. The Custodian shall hold
all documents received by it constituting the Custodial Files for the
exclusive use and benefit of the Indenture Trustee on behalf of the
Securityholders and the Note Insurer, and shall make disposition thereof only
in accordance with this Agreement or the instructions furnished by the
Indenture Trustee provided such instructions are consistent with this
Agreement unless otherwise directed in writing by the Note Insurer. The
Custodian shall segregate and maintain continuous custody of all documents
constituting the Custodial Files in secure and fire resistant facilities in
accordance with customary standards for such custody. The Custodian makes no
representations as to and shall not be responsible to verify (i) the
validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness of any document in the Custodial Files or of any
of the Receivables or (ii) the collectability, insurability, effectiveness or
suitability of any Receivable.
(b) Upon the payment in full of any Receivable or redemption of
the Notes by the Servicer, the Indenture Trustee or the Note Insurer, which
shall be evidenced by the delivery to the Custodian of the Request for
Release of Documents, the Custodian shall promptly release the related
Custodial File to the Servicer or the Note Insurer unless otherwise
instructed in writing by such party.
Section 3.07. Certification.
--------------
(a) Within 90 days of the Closing Date or Subsequent Transfer
Date, as applicable, the Custodian shall ascertain that all documents
referred to in Section 3.04 with respect to each Receivable are in its
possession, and shall deliver to the Issuer, the Indenture Trustee and the
Note Insurer a certification in the form of Exhibit G to the effect that, as
to each Custodial File listed in Schedule A (other than any Receivable paid
in full or any Receivable specifically identified in such certification as
not covered by such certification): (i) all documents required to be in the
Custodial Files are in its possession and (ii) such documents have been
reviewed by it and appear regular on their face and relate to such
Receivable. In making this certification, the Custodian shall separately
list those Receivables for which an original certificate of title was not
found in the relevant Custodial File and shall, within 180 days after the
Closing Date or Subsequent Transfer Date, as applicable, deliver to the
Issuer, the Indenture Trustee and the Note Insurer a certification (the
"Second Certification"), to the effect that, as to each such Custodial File
that did not include an original certificate of title in the initial
Certification (other than any Receivable paid in full or any Receivable
specifically identified in such certification as not covered by such
certification): (i) all documents required to be in the Custodial File are in
its possession and (ii) such documents have been reviewed by it and appear
regular on their face and relate to such Receivable.
(b) If the Custodian during the process of reviewing the Custodial
Files, whether pursuant to clause (a) above or Section 3.08 hereof, finds any
document constituting a part of a Custodial File which is not executed, has
not been received, is unrelated to the Receivable identified in Schedule A,
or does not conform to the requirements of clause (a) above or the loan
number set forth in Schedule A, then the Custodian shall promptly so notify
the Issuer, the Servicer, the Note Insurer and the Indenture Trustee in
writing of such discovery.
The Servicer will use reasonable efforts to remedy a material
defect in a document or omission of a document constituting part of a
Custodial File of which it is so notified by the Custodian as set forth in
Section 3.07(a) above. If, however, within 15 days after the initial
Custodian's certification to it respecting such defect or omission (other
than a defect or omission in respect of a certificate of title) or within 15
days after the Second Certification in respect of a defect or omission as to
a certificate of title the Servicer has not remedied or caused the Seller to
remedy the defect or omission, the Servicer shall give notice to the
Indenture Trustee of the date and price of repurchase and, on the next
succeeding Determination Date, cause the Seller to repurchase such
Receivable, which Purchase Amount shall be deposited in the Collection
Account.
Section 3.08. Future Defects.
---------------
During the term of this Agreement, if the Custodian discovers any
defect with respect to the Custodial Files, the Custodian shall give written
specification of such defect to the Indenture Trustee, the Issuer, the
Depositor and the Note Insurer. Notwithstanding the foregoing, the Custodian
shall be under no obligation to conduct any other review of the Custodial
Files other than as described in Section 3.07.
Section 3.09. Fees of Custodian.
------------------
The Custodian shall charge such fees for its services under this
Agreement as are set forth in the Fee Letter, the payment of which fees,
together with the Custodian's expenses in connection herewith, shall be made
in the priority set forth in Section 5.06(b). The Custodian shall perform
its obligations under this Agreement notwithstanding nonpayment of the fees
and expenses of the Custodian.
Section 3.10. Liability of Custodian.
-----------------------
Neither the Custodian nor any of its directors, officers, agents or
employees, shall be liable for any action taken or omitted to be taken by it
or them hereunder or in connection herewith in good faith and believed by it
or them to be within the purview of this Agreement, except for its or their
own negligence, lack of good faith or willful misconduct.
Section 3.11. Reliance of Custodian.
---------------------
In the absence of bad faith or negligence on the part of the
Custodian, the Custodian may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
request, instructions, certificate, opinion or other document furnished to
the Custodian, reasonably believed by the Custodian to be genuine and to have
been signed or presented by the proper party or parties and conforming to the
requirements of this Agreement; but in the case of any loan document or other
request, instruction, document or certificate which by any provision hereof
is specifically required to be furnished to a Trust Officer of the Custodian,
the Custodian shall be under a duty to examine the same to determine whether
or not it conforms to the requirements of this Agreement.
Section 3.12. Transmission of Custodial Files.
-------------------------------
Written instructions as to the method of shipment and shipper(s)
the Custodian is directed to utilize in connection with the transmission of
files and loan documents in the performance of the Custodian's duties
hereunder shall be delivered by the Servicer to the Custodian prior to any
shipment of any files and loan documents hereunder. Pursuant to this
Agreement, the Servicer will arrange for the provision of such services at
its sole cost and expense (or, at the Custodian's option, reimburse the
Custodian for all costs and expenses incurred by the Custodian consistent
with such instructions) and will maintain such insurance in connection with
shipment of the Custodial Files against loss or damage to files and loan
documents as the Servicer deems appropriate. Without limiting the generality
of the provisions of Section 3.10 hereof, it is expressly agreed that in no
event shall the Custodian have any liability for any losses or damages to any
person, including without limitation, the Indenture Trustee, arising out of
actions of the Custodian consistent with instructions of the Servicer unless
such instructions are inconsistent with any of the Basic Documents.
Section 3.13. Resignation and Removal; Appointment of Successor.
--------------------------------------------------
(a) No resignation or removal of the Custodian and no appointment
of a successor Custodian pursuant to this Article III shall become effective
until the acceptance of appointment by the successor Custodian under Section
3.14 hereof.
(b) The Custodian may resign at any time by giving 30 days' prior
written notice thereof to the Issuer, the Note Insurer and the Indenture
Trustee. If the Custodian shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Custodian for any
cause with respect to any of the Notes, the Issuer shall, with the prior
written consent of the Note Insurer, promptly appoint a successor Custodian
reasonably satisfactory to the Note Insurer. If no successor Custodian shall
have been so appointed by the Issuer within 30 days of notice of removal or
resignation and shall not have accepted appointment in the manner hereinafter
provided, then the Note Insurer may appoint a successor Custodian. If the
Note Insurer shall fail to appoint a successor Custodian within 90 days or if
a Note Insurer Default shall have occurred and is continuing, then the
Controlling Party may petition any court of competent jurisdiction for the
appointment of a successor Custodian with respect to the Notes.
(c) The Custodian may be removed by the Note Insurer or, if a Note
Insurer Default has occurred and is continuing, by the Controlling Party, at
any time if one of the following events have occurred:
(i) the Custodian shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Custodian or of
its property shall be appointed, or any public officer shall take charge
or control of the Custodian or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, or
(ii) the Custodian has failed to perform its duties under any of
the Basic Documents or any side agreements with the Servicer or has
breached any representation or warranty made herein or therein.
(d) The Issuer shall give notice in the manner provided in Section
10.03 of each resignation and each removal of the Custodian and each
appointment of a successor Custodian to the Indenture Trustee, the Note
Insurer and the Rating Agencies. Each notice shall include the name of the
successor Custodian and the address of its chief executive office.
Section 3.14. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Custodian appointed hereunder shall be acceptable
to the Note Insurer and shall execute, acknowledge and deliver to the Issuer,
the Indenture Trustee, the Note Insurer and the retiring Custodian an
instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Custodian shall become effective and such successor
Custodian, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Custodian but,
on request of the Issuer, the Indenture Trustee, the Note Insurer or the
successor Custodian, such retiring Custodian shall execute and deliver an
instrument transferring to such successor Custodian all the rights, powers
and trusts of the retiring Custodian, and shall duly assign, transfer and
deliver to such successor Custodian all property and money held by such
retiring Custodian hereunder. Upon request of any such successor Custodian,
the Issuer or the Indenture Trustee on behalf of the Issuer shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Custodian all such rights, powers and trusts.
No successor Custodian shall accept its appointment unless at the
time of such acceptance such successor Custodian shall be acceptable to the
Note Insurer and shall be eligible under this Article III.
Section 3.15. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business of Custodian.
- ----------------------
Any Person into which the Custodian 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 Custodian shall be a party, or any
corporation succeeding to all or substantially all of the business of the
Custodian, shall be the successor of the Custodian hereunder, provided such
Person shall be acceptable to the Note Insurer and shall be otherwise
qualified and eligible, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, and prior written
notice thereof shall be provided by the Custodian to the Indenture Trustee,
the Note Insurer and the Rating Agencies.
Section 3.16. Representations and Warranties of the Custodian.
------------------------------------------------
The Custodian represents and warrants to, and agrees with the
Indenture Trustee, the Note Insurer and the Issuer, as of the Closing Date
that:
(a) The Custodian is duly organized as a state banking association
under the laws of the state of New York, is validly existing, in good
standing and has the corporate power and authority under the laws of the
United States of America to conduct its business as now conducted.
(b) The Custodian has full corporate power and authority under the
laws of the United States of America to enter into and perform all
transactions contemplated herein and no consent, approval, authorization or
order of any federal court or governmental agency or body governing or having
jurisdiction with respect to the Custodian's custodial powers is required for
the Custodian to enter into this Agreement and to perform its obligations
hereunder.
(c) The execution, delivery and performance by it of this
Agreement (a) do not violate any provision of any law or regulation governing
the banking or the custodial powers of the Custodian or any order, writ,
judgment, or decree of any court, arbitrator, or governmental authority
applicable to the Custodian or any of its assets, (b) do not violate any
provision of its corporate charter or by-laws, or (c) do not violate any
provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of any lien on any of
the property acquired by the Issuer pursuant to the provisions of any
indenture, contract, agreement or other undertaking other than this Agreement
to which it is a party.
(d) This Agreement has been duly executed and delivered by the
Custodian and constitutes the legal, valid and binding agreement of the
Custodian, enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at
law.
(e) Nothing has come to the Custodian's attention indicating that,
with respect to the Receivables and the Financed Vehicles (i) there exist any
adverse claims, lien, or encumbrances against any of the same; (ii) any
Receivable was overdue or had been dishonored or subject to the circumstances
described in Section3-304 of the Uniform Commercial Code as in effect in the
State of New York, or (iii) there exists any other defense against or claim
to the Receivables by any other person or entity. For purposes of this
subsection (e), the Custodian shall not be deemed to have notice or knowledge
of the foregoing matters unless a Responsible Officer assigned to and working
in the Custodian's Corporate Trust Office shall have actual knowledge thereof
or written notice thereof is received by the Custodian in accordance
herewith.
Section 3.17. Custodian's Indemnification. The Custodian shall
---------------------------
indemnify the Trust, the Note Insurer, the Owner Trustee and the Indenture
Trustee and each of their respective officers, directors, employees and
agents for any and all liabilities, obligations, losses, compensatory
damages, payments, costs or expenses of any kind whatsoever that may be
imposed upon, incurred by or asserted against the Trust, the Owner Trustee or
the Indenture Trustee or any of their respective officers, directors,
employees or agents as the result of negligence, lack of good faith or
willful misconduct on the part of the Custodian relating to the maintenance
and custody of the Custodial Files as Custodian thereof; provided, however,
that the Custodian shall not be liable to the Owner Trustee, the Indenture
Trustee or any such officer, director, employee or agent of the Owner Trustee
or the Indenture Trustee for any portion of any such amount resulting from
the willful misfeasance, bad faith or negligence of the Owner Trustee or the
Indenture Trustee, as the case may be, or of any such officer, director,
employee or agent of the Owner Trustee or the Indenture Trustee, as the case
may be.
Indemnification under this Section shall survive the resignation or
removal of the Custodian or the termination of this Agreement, and shall
include reasonable fees and expenses of counsel and expenses of litigation.
If the Custodian shall have made any indemnity payments pursuant to this
Section and the Person to or on behalf of whom such payments are made
thereafter collects any of such amounts from others, such Person shall
promptly repay such amounts to the Custodian, without interest.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01. Duties of Servicer. The Servicer, for the benefit of the
------------------
Issuer, the Indenture Trustee and the Note Insurer, shall manage, service,
administer and make collections on the Receivables and perform the other
actions required by the Servicer under this Agreement. The Servicer shall
service the Receivables in accordance with its customary and usual procedures
and consistent with the procedures employed by institutions that service
motor vehicle retail installment sale contracts. The Servicer's duties shall
include the collection and posting of all payments, responding to inquiries
of Obligors, investigating delinquencies, sending payment statements to
Obligors, reporting any required tax information to Obligors, monitoring the
Collateral, accounting for collections, furnishing monthly and annual
statements to the Owner Trustee, the Indenture Trustee and the Note Insurer
with respect to distributions and performing the other duties specified
herein. The Servicer also shall administer and enforce all rights of the
holder of the Receivables under the Receivables and the Dealer Agreements.
To the extent consistent with the standards, policies and procedures
otherwise required hereby and the Credit and Collection Policy, the Servicer
shall follow its customary standards, policies and procedures and shall have
full power and authority, acting alone, to do any and all things in
connection with the managing, servicing, administration and collection of the
Receivables that it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Servicer is hereby authorized and empowered
to execute and deliver, on behalf of itself, the Issuer, the Owner Trustee,
the Indenture Trustee, the Certificateholders and the Noteholders, or any of
them, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge, and all other comparable instruments with
respect to the Receivables and with respect to the Financed Vehicles;
provided, however, that notwithstanding the foregoing, the Servicer shall
not, except pursuant to an order from a court of competent jurisdiction,
release an Obligor from payment of any unpaid amount due under any
Receivable, reduce the related APR or waive the right to collect the unpaid
balance of any Receivable from an Obligor. The Servicer is hereby authorized
to commence, in its own name or in the name of the Issuer, the Indenture
Trustee, the Owner Trustee, the Certificateholders or the Noteholders, a
legal proceeding to enforce a Receivable pursuant to Section 4.03 or to
commence or participate in any other legal proceeding (including a bankruptcy
proceeding) relating to or involving a Receivable, an Obligor or a Financed
Vehicle. If the Servicer commences or participates in any such legal
proceeding in its own name, the Indenture Trustee or the Issuer shall
thereupon be deemed to have automatically assigned the applicable Receivable
to the Servicer solely for purposes of commencing or participating in such
proceeding as a party or claimant, and the Servicer is authorized and
empowered by the Indenture Trustee or the Issuer to execute and deliver in
the Indenture Trustee's or the Issuer's name any notices, demands, claims,
complaints, responses, affidavits or other documents or instruments in
connection with any such proceeding. If in any enforcement suit or legal
proceeding it shall be held that the Servicer may not enforce a Receivable on
the ground that it shall not be a real party in interest or a holder entitled
to enforce such Receivable, the Owner Trustee shall, at the Servicer's
expense and direction, take steps to enforce such Receivable, including
bringing suit in its name or the name of the Issuer, the Indenture Trustee,
the Certificateholders or the Noteholders. The Owner Trustee and the
Indenture Trustee shall upon the written request of the Servicer furnish the
Servicer with any powers of attorney and other documents reasonably necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
Section 4.02. Collection of Receivable Payments; Modifications of
---------------------------------------------------
Receivables.
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(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as and
when the same shall become due, and shall follow such collection procedures
as it follows with respect to all comparable motor vehicle receivables that
it services for itself or others and otherwise act with respect to the
Receivables in such a manner as will, in the reasonable judgment of the
Servicer, maximize the amount to be received by the Trust with respect
thereto. The Servicer is authorized in its discretion to waive any
prepayment charge, late payment charge or any other similar fees that may be
collected in the ordinary course of servicing any Receivable. The Servicer
shall grant extensions on the Receivables only to the extent permissible in
its extension policy attached hereto as Exhibit H; provided, however, that
the Servicer shall not grant any "holiday extensions" with respect to any
Receivables.
(b) The Servicer may grant payment extensions in accordance with its
customary procedures if the Servicer believes in good faith that such
extension, is necessary to avoid a default on such Receivable, will maximize
the amount to be received by the Trust with respect to such Receivable and is
otherwise in the best interests of the Trust and the Note Insurer; provided,
that no such extension shall extend the final payment date on any Receivable
beyond the last day of the Collection Period ending three months prior to the
Final Scheduled Maturity Date. Anything herein to the contrary
notwithstanding, the Servicer shall grant payment extensions with respect to
a Receivable only to the extent permissible in its extension policy attached
hereto as Exhibit H.
(c) Upon any extension not in accordance with this Section, the
Servicer shall be required to purchase the related Receivable in accordance
with Section 4.07.
Section 4.03. Realization upon Receivables. Consistent with the
----------------------------
standards, policies and procedures required by this Agreement and the Credit
and Collection Policy, the Servicer shall use its best efforts to repossess
or otherwise convert the ownership of and liquidate any Financed Vehicle
securing a Receivable with respect to which the Servicer shall have
determined that eventual payment in full is unlikely. The Servicer shall
begin such repossession and conversion procedures as soon as practicable
after default on such Receivable; provided, however, that the Servicer may
elect not to repossess a Financed Vehicle within such time period if in its
good faith judgment it determines that the proceeds ultimately recoverable
with respect to such Receivable would be increased by forbearance. In
repossessing or otherwise converting the ownership of a Financed Vehicle and
liquidating a Receivable, the Servicer is authorized to follow such customary
practices and procedures as it shall deem necessary or advisable, consistent
with the standard of care required by Section 4.01, which practices and
procedures may include reasonable efforts to realize upon any recourse to
Dealers, the sale of the related Financed Vehicle at public or private sale,
the submission of claims under an insurance policy and other actions by the
Servicer in order to realize upon a Receivable; provided, however, that in
any case in which the Financed Vehicle shall have suffered damage, the
Servicer shall not expend funds in connection with any repair or towards the
repossession of such Financed Vehicle unless it shall determine in its
reasonable judgment that such repair or repossession shall increase the
related Liquidation Proceeds by an amount materially greater than the expense
for such repair or repossession. The Servicer shall be entitled to recover
all reasonable expenses incurred by it in the course of repossessing and
liquidating a Financed Vehicle into cash proceeds, but only out of the cash
proceeds of the sale of such Financed Vehicle, any deficiency obtained from
the related Obligor or any amounts received from recourse to the related
Dealer.
Section 4.04. Physical Damage Insurance. The Servicer shall, in
-------------------------
accordance with its customary servicing procedures, require each Obligor to
obtain and maintain physical loss damage insurance covering the related
Financed Vehicle as of the execution of the related Receivable.
Section 4.05. Maintenance of Security Interests in Financed Vehicles.
------------------------------------------------------
(a) The Servicer shall, in accordance with its customary servicing
procedures, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Servicer is hereby authorized to take such steps as are necessary to re-
perfect such security interest on behalf of the Issuer and the Indenture
Trustee in the event of the relocation of a Financed Vehicle, or for any
other reason. In the event that the assignment of a Receivable to the Issuer
is insufficient, without a notation on the related Financed Vehicle's
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the State in which such Financed Vehicle is
located, to perfect a security interest in the related Financed Vehicle in
favor of the Issuer, the Servicer hereby agrees that the designation of HMFC
as the secured party on the certificate of title is in its capacity as agent
of the Issuer.
(b) The Depositor, the Owner Trustee, the Indenture Trustee, the
Servicer and the Backup Servicer hereby agree that, upon a Trigger Event, the
Controlling Party may take or cause to be taken such actions as may, in the
opinion of counsel to the Controlling Party, be necessary to perfect or
re-perfect the security interests in the Financed Vehicles in the name of the
Issuer, including by amending the title documents of the Financed Vehicles.
The Servicer hereby agrees to pay all expenses related to such perfection or
reperfection and to take all action necessary therefor. If such expenses are
not paid within 15 days after delivery of any invoice for such expenses to
the Servicer, such expenses shall be paid pursuant to Section 5.06(b)(x).
The Note Insurer may in its sole discretion pay such costs and any such
amounts shall be included in amounts owed to the Note Insurer pursuant to
Section 5.06(b)(vi). In addition, the Controlling Party may at any other
time instruct the Servicer to take or cause to be taken such action as may,
in the opinion of counsel to the Controlling Party, be necessary to perfect
or re-perfect the security interest in the Financed Vehicles in the name of
the Trust; provided, however, that if the Controlling Party requests that the
title documents be amended prior to the occurrence of a Trigger Event, the
out-of-pocket expenses of the Servicer or any other entity incurred in
connection with any such action shall be reimbursed to the Servicer or such
other party by the Controlling Party.
Section 4.06. Covenants of Servicer. By its execution and delivery of
---------------------
this Agreement, the Servicer hereby covenants as follows (upon which
covenants the Issuer, the Indenture Trustee and the Owner Trustee rely in
accepting the Receivables and delivering the applicable Securities and on
which the Note Insurer relies in issuing the Policy):
(a) Liens in Force. No Financed Vehicle securing a Receivable
--------------
shall be released in whole or in part from the security interest granted by
such Receivable, except upon payment in full of such Receivable or as
otherwise contemplated herein;
(b) No Impairment. The Servicer shall do nothing to impair the
-------------
rights of the Trust or the Note Insurer in the property of the Trust;
(c) No Amendments. The Servicer shall not extend or otherwise
-------------
amend the terms of any Receivable, except in accordance with Section 4.02 and
the Servicer shall not amend or modify the Credit and Collection Policy if
such amendment or modification may have a material adverse effect on the
interest of the Noteholders or Note Insurer; and
(d) Restrictions on Liens. The Servicer shall not (A) create,
---------------------
incur or suffer to exist, or agree to create, incur or suffer to exist, or
consent to or permit in the future (upon the occurrence of a contingency or
otherwise) the creation, incurrence or existence of any Lien on or
restriction on transferability of any Receivable except for the Lien of the
Indenture and the restrictions on transferability imposed by this Agreement
or (B) sign or file any UCC financing statements in any jurisdiction that
names HMFC, the Servicer or the Depositor as a debtor, and any Person other
than the Depositor, the Indenture Trustee or the Issuer as a secured party,
or sign any security agreement authorizing any secured party thereunder to
file any such financing statement with respect to the Receivables or the
related property.
Section 4.07. Purchase of Receivables Upon Breach. Upon discovery by
-----------------------------------
any of the Servicer, the Seller, the Depositor, the Owner Trustee, the
Indenture Trustee or the Backup Servicer of a breach of any of the covenants
set forth in Sections 3.07, 4.02(b), 4.05(a) or 4.06, the party discovering
such breach shall give prompt written notice to the other parties and the
Note Insurer; provided, however, that the failure to give any such notice
shall not affect any obligation of the Servicer under this Section 4.07. On
or before the last day of the first Collection Period following its discovery
or receipt of notice of the breach of any covenant set forth in Sections
3.07, 4.02(b), 4.05(a) or 4.06 that materially and adversely affects the
interests of the Issuer, the Indenture Trustee, the Owner Trustee, the
Certificateholders, the Noteholders or the Note Insurer in any Receivable,
the Servicer shall, unless such breach shall have been cured in all material
respects by such date, purchase from the Issuer the Receivable affected by
such breach. In consideration of the purchase of any such Receivable, the
Servicer shall remit the related Purchase Amount into the Collection Account,
with written notice to the Indenture Trustee of such deposit, in the manner
specified in Section 5.04. Subject to Section 7.02, it is understood and
agreed that the obligation of the Servicer to purchase any Receivable with
respect to which such a breach has occurred and is continuing shall, if such
obligation is fulfilled, constitute the sole remedy against the Servicer for
such breach available to the Issuer, the Owner Trustee, the Indenture
Trustee, the Certificateholders or the Noteholders. If the Servicer fails to
purchase any Receivable which it is so required to purchase pursuant to this
Agreement by the date specified, the Indenture Trustee shall promptly notify
HMC of such failure at the address set forth in the Performance Guaranty.
Section 4.08. Servicing Fee. The Servicing Fee shall be payable to the
-------------
Servicer on each Distribution Date. The Servicing Fee shall be calculated on
the basis of a 360-day year comprised of twelve 30-day months. The Servicer
shall be required to pay all expenses incurred by it in connection with its
activities under this Agreement (including taxes imposed on the Servicer and
expenses incurred in connection with distributions and reports made by the
Servicer to the Owner Trustee, the Note Insurer and the Indenture Trustee).
The Backup Servicer shall be paid a portion of the Servicing Fee pursuant to
Section 5.06(b) (ii) for its duties as Backup Servicer as set forth in the
Fee Letter.
Section 4.09. Servicer's Certificate. Not later than 10:00 a.m. (New
----------------------
York City time) on each Determination Date, the Servicer shall deliver to the
Owner Trustee, each Paying Agent (if any), the Indenture Trustee, the Backup
Servicer, the Note Insurer and the Depositor, with a copy to each Rating
Agency, a Servicer's Certificate containing all information necessary to make
the distributions to be made on the related Distribution Date pursuant to
Section 5.06 for the related Collection Period and any other information the
Indenture Trustee may reasonably request and such Servicer's Certificate
shall be certified by a Responsible Officer of the Servicer that the
information provided is complete and no defaults have occurred. Receivables
to be purchased by the Servicer or to be repurchased by the Seller and each
Receivable that became a Liquidated Receivable shall be identified by the
Servicer by account number with respect to such Receivable (as specified in
the applicable Schedule of Receivables).
Section 4.10. Annual Statement as to Compliance; Notice of Servicer
-----------------------------------------------------
Termination Event.
- -----------------
(a) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee, the Backup Servicer, the Note Insurer and each Rating Agency, within
120 days after the end of the Servicer's fiscal year (or, in the case of the
first such certificate, not later than April 30, 1999), an Officer's
Certificate signed by a Responsible Officer of the Servicer, stating that (i)
a review of the activities of the Servicer during the preceding 12-month
period (or such shorter period in the case of the first such Officer's
Certificate) and of the performance of its obligations under this Agreement
has been made under such officer's supervision and (ii) to such officer's
knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such period or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee, the Backup Servicer, the Note Insurer and each Rating Agency,
promptly after having obtained knowledge thereof, but in no event later than
two Business Days thereafter, written notice in an Officer's Certificate of
any event that with the giving of notice or lapse of time or both would
become a Servicer Termination Event under Section 8.01.
Section 4.11. Annual Independent Accountants' Report. The Servicer
--------------------------------------
shall cause a firm of independent certified public accountants, reasonably
acceptable to the Note Insurer, which may also render other services to the
Servicer or its Affiliates, to deliver to the Owner Trustee, the Indenture
Trustee, the Backup Servicer, the Note Insurer and each Rating Agency, within
120 days after the end of each fiscal year (or, in the case of the first such
report, not later than April 30, 1999), a report addressed to the Board of
Directors of the Servicer, the Owner Trustee, the Indenture Trustee, the
Backup Servicer and the Note Insurer, to the effect that such firm has
audited the books and records of the Servicer and issued its report thereon
and that (i) such audit 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; (ii) the firm is independent of the Depositor and the
Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants; (iii) a review in
accordance with agreed-upon procedures was made of the Servicer's
Certificates relating to such fiscal year, including the delinquency, default
and loss statistics required to be specified therein and, except as disclosed
in the accountants' report, no exceptions or errors in the Servicer's
Certificates were found; and (iv) a review in accordance with agreed-upon
procedures was made of the Servicer's compliance with its servicing
obligations in this Agreement, including without limitation the obligations
of the Servicer set forth in Section 4.02(b) hereof, and, except as disclosed
in the accountants' report, no exceptions to such compliance were found.
Section 4.12. Access to Certain Documentation and Information Regarding
---------------------------------------------------------
Receivables. The Servicer shall provide to representatives of the Owner
- -----------
Trustee, the Indenture Trustee, the Backup Servicer, the Note Insurer (so
long as no Note Insurer Default shall have occurred and be continuing), the
Certificateholders and the Noteholders reasonable access to the documentation
regarding the Receivables and the related Trust property. Access shall be
afforded without charge, but only upon reasonable request and during the
normal business hours at the offices of the Servicer. Nothing in this
Section shall affect the obligation of the Servicer to observe any applicable
law prohibiting disclosure of information regarding the Obligors and the
failure of the Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section.
Section 4.13. Monthly Tape. On the Determination Date, the Servicer
------------
shall deliver or cause to be delivered to the Indenture Trustee, the Owner
Trustee, the Note Insurer and the Backup Servicer a computer tape and a
diskette (or any other form of electronic transmission acceptable to the
Owner Trustee, the Indenture Trustee, the Note Insurer and the Backup
Servicer) in a format acceptable to the Indenture Trustee, Owner Trustee, the
Note Insurer and the Backup Servicer containing the information with respect
to the Receivables as of the last day of the preceding Collection Period and
necessary for preparation of the Servicer's Certificate for the immediately
succeeding Determination Date and to determine the application of payments
received on the Receivables as provided herein. The Backup Servicer shall
use such tape or diskette (or other electronic transmission acceptable to the
Indenture Trustee, Owner Trustee, the Note Insurer and the Backup Servicer)
to verify the mathematical accuracy of the items set forth in Exhibit C to
the extent possible from the information given to the Backup Servicer at such
time or subsequent thereto, and the Backup Servicer shall certify to the
Indenture Trustee, the Note Insurer and the Owner Trustee that it has
verified the mathematical accuracy of the Servicer's Certificate, other than
the items in I of the Servicer's Certificate, and such compliance by the
Servicer in accordance with this Section 4.13 and shall notify the Servicer,
the Indenture Trustee, the Note Insurer and the Owner Trustee of any
discrepancies, in each case, on or before the third Business Day following
the related Determination Date. In the event that the Backup Servicer
reports any discrepancies, the Servicer and the Backup Servicer shall attempt
to reconcile such discrepancies prior to the related Distribution Date, but
in the absence of a reconciliation, the Servicer's Certificate shall control
for the purpose of calculations and distributions with respect to the related
Distribution Date. In the event that the Backup Servicer and the Servicer
are unable to reconcile discrepancies with respect to a Servicer's
Certificate by the related Distribution Date, the Servicer shall cause a firm
of nationally recognized independent certified public accountants, at the
Servicer's expense, to audit the Servicer's Certificate and, prior to the
third Business Day, but in no event later than the fifth calendar day, of the
following month, to reconcile such discrepancies. The effect, if any, of
such reconciliation shall be reflected in the Servicer's Certificate for the
next succeeding Determination Date. In addition, upon the occurrence of a
Servicer Termination Event, the Servicer shall, if so requested by the
Indenture Trustee, the Note Insurer or the Owner Trustee, each with the prior
written consent of the Note Insurer, deliver to the Backup Servicer, or the
successor Servicer if other than the Backup Servicer, within 15 days after
demand therefor its records relating to the Receivables and the related
property and a computer tape containing as of the close of business on the
date of demand all of the data maintained by the Servicer in computer format
in connection with the servicing of the Receivables. Other than the duties
specifically set forth in this Agreement, the Backup Servicer shall have no
obligations hereunder, including, without limitation, to supervise, verify or
monitor the performance of the Servicer. The Backup Servicer shall have no
liability for any actions taken or omitted by the Servicer.
Section 4.14. Term of Servicer. The Servicer hereby covenants and
----------------
agrees to act as Servicer under, and for the term of, this Agreement.
Section 4.15. Status Report. The Servicer shall provide to the Note
-------------
Insurer on a semi-annual basis, beginning June 30, 1998, forecasts for (i)
HMFC's expected quarterly contract origination volume for the following six
month period and (ii) HMFC's financial budgets for contract origination and
servicing operations for such period. The Servicer shall also provide to the
Note Insurer on a semi-annual basis a status report (i) setting forth actual
versus budgeted contract originations during the preceding six month period
and (ii) updating the condition of HMFC's credit facilities; this status
report shall be delivered within 60 days following the end of each semi-
annual calendar period (the first such status report shall be due on or
before March 2, 1999); provided, however, that the Servicer shall not be
-------- -------
required to deliver any of such forecasts or such reports if HMC is assigned
and maintains a senior unsecured debt rating of at least "investment grade"
by each Rating Agency.
ARTICLE V
DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Post Office Box. All payments and other proceeds of any
---------------
type and from any source on or with respect to the Receivables that are
delivered to a Post Office Box shall be the property of the Trust, subject to
the Lien of the Indenture and the rights of the Indenture Trustee thereunder.
On each Business Day, Citibank N.A., as the remittance processor, will
transfer any such payments received by it to the Local Remittance Account or
to such other account as directed by the Note Insurer pursuant to Section
5.02(a).
Section 5.02. Accounts.
--------
(a) The Servicer has established an account or accounts in the name of
HMFC (the "Local Remittance Account"). All payments on the Receivables
mailed by Obligors or any other Person to the Post Office Box or otherwise
delivered to the Servicer shall be deposited by Citibank N.A., as remittance
processor, or the Servicer, as applicable, on a daily basis into the Local
Remittance Account, from which the available funds related to the Receivables
will be swept by the Servicer within two Business Days to the Collection
Account; provided, however, that if the Servicer fails to transfer such
payments to the Collection Account within two Business Days or the Servicer
shall for any reason no longer be acting as Servicer, at the direction of the
Note Insurer, HMFC at its expense shall deliver to the successor Servicer all
documents and records relating to the Post Office Boxes and cause Citibank
N.A. to transfer payments related to the Receivables directly from the Post
Office Box to the Collection Account or such other account designated by the
Note Insurer. Amounts on deposit in the Local Remittance Account shall not
be invested.
(b) (i) On or prior to the Closing Date, the Indenture Trustee shall
establish, or cause to be established, an account with and in the name of the
Indenture Trustee (the "Collection Account"), which shall be maintained as an
Eligible Deposit Account and shall bear a designation clearly indicating that
the amounts deposited thereto are held for the benefit of the Noteholders,
the Note Insurer and Certificateholders.
(ii) The Issuer, for the benefit of the Noteholders, shall cause
the Indenture Trustee to establish with and maintain in the name of the
Indenture Trustee an Eligible Deposit Account (the "Note Distribution
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Noteholders.
(iii) The Issuer, for the benefit of the Noteholders, the Note
Insurer, and the Certificateholders, shall cause the Indenture Trustee
to establish with and maintain in the name of the Indenture Trustee an
Eligible Deposit Account (the "Pre-Funding Account"), bearing a
designation clearly indicating that the funds deposited therein are held
for the benefit of the Noteholders, the Note Insurer and the
Certificateholders.
(iv) The Issuer, for the benefit of the Noteholders and the Note
Insurer, shall cause the Indenture Trustee to establish with and
maintain in the name of the Indenture Trustee an Eligible Deposit
Account (the "Yield Maintenance Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Noteholders and the Note Insurer.
(v) The Issuer, for the benefit of the Noteholders and the Note
Insurer, shall cause the Indenture Trustee to establish with and
maintain in the name of the Indenture Trustee an Eligible Deposit
Account (the "Reserve Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Noteholders and the Note Insurer.
(vi) The Issuer, for the benefit of the Noteholders, the Note
Insurer and the Certificateholders, shall cause the Indenture Trustee to
establish with and maintain in the name of the Indenture Trustee an
Eligible Deposit Account (the "Capitalized Interest Account"), bearing a
designation clearly indicating that the funds deposited therein are held
for the benefit of the Noteholders, the Note Insurer and the
Certificateholders.
(vii) Funds on deposit in the Collection Account, the
Capitalized Interest Account, the Reserve Account, the Yield Maintenance
Account and the Pre-Funding Account shall be invested by the Indenture
Trustee in Eligible Investments selected in writing by the Servicer
provided, however, that if the Servicer fails to select any Eligible
Investment, the Indenture Trustee shall invest such funds in an Eligible
Investment described in clause (d) of such definition. All such
Eligible Investments shall be held by the Indenture Trustee for the
benefit of the Note Insurer, Noteholders and/or the Certificateholders,
as applicable; provided, that such amount shall be calculated on the
Determination Date and on each Distribution Date all interest and other
investment income (net of Net Investment Losses) on funds on deposit in
the Trust Accounts shall be deposited by the Indenture Trustee into the
Collection Account and shall be deemed to constitute a portion of the
Interest Distribution Amount for the related Distribution Date. Other
than as permitted in writing by the Rating Agencies and the Note
Insurer, funds on deposit in certain of the Trust Accounts shall be
invested in Eligible Investments that will mature not later than the
Business Day immediately preceding the next Distribution Date. Funds
deposited in a Trust Account on a day which immediately precedes a
Distribution Date upon the maturity of any Eligible Investments are not
required to be invested overnight.
(viii) In the event that there are Net Investment Losses in
Eligible Investments chosen by the Servicer, the Servicer shall deposit
into the Collection Account, no later than two (2) Business Days prior
to the Distribution Date the amount of the Net Investment Losses. The
Indenture Trustee shall not be held liable in any way for any Net
Investment Losses, except for losses attributable to the Indenture
Trustee's failure to make payments on such Eligible Investments issued
by the Indenture Trustee, in its commercial capacity as principal
obligor and not as Indenture Trustee, in accordance with their terms.
(c) (i) The Indenture Trustee and the Note Insurer shall possess all
right, title and interest in all funds received and all funds on deposit
from time to time in a Post Office Box and the Local Remittance Account
in each case only with respect to the Receivables, the Trust Accounts
and in all proceeds thereof (including all income thereon). The Trust
Accounts shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Noteholders and the Note Insurer or the
Noteholders, the Note Insurer and the Certificateholders, as the case
may be. If, at any time, a Trust Account ceases to be an Eligible
Deposit Account, the Indenture Trustee (or the Servicer on its behalf)
shall within 5 Business Days (or such longer period, not to exceed 15
calendar days, as to which each Rating Agency and the Note Insurer may
consent) establish a new Trust Account as an Eligible Deposit Account
and shall transfer any cash or any investments from the account that is
no longer an Eligible Deposit Account to the Trust Account.
(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Deposit Accounts,
subject to the last sentence of Section 5.02(c)(i); and each such
Eligible Deposit Account shall be subject to the exclusive custody
and control of the Indenture Trustee, and the Indenture Trustee
shall have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance
with paragraph (a) of the definition of "Delivery" and shall be
held, pending maturity or disposition, solely by the Indenture
Trustee or a securities intermediary (as such term is defined in
Section 8-102(a)(14) of the UCC) acting solely for the Indenture
Trustee;
(C) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to federal book-
entry regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery" and shall be
maintained by the Indenture Trustee, pending maturity or
disposition, through continued book-entry registration of such
Trust Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article VIII of the UCC and that is not governed by
clause (C) above shall be delivered to the Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued registration of the Indenture
Trustee's (or its nominee's) ownership of such security.
(iii) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make withdrawals
and payments from the Trust Accounts and the Certificate Distribution
Account for the purpose of withdrawing any amounts deposited in error
into such accounts.
Section 5.03. Application of Collections. All payments received from
--------------------------
or on behalf of an Obligor during each Collection Period (i) with respect to
each Simple Interest Receivable (other than a Purchased Receivable), shall be
applied to interest and principal in accordance with the Simple Interest
Method; and (ii) with respect to each Precomputed Receivable (other than a
Purchased Receivable), shall be applied, first, to the Scheduled Payment,
with any excess amounts being applied to future Scheduled Payments.
Section 5.04. Purchase Amounts. The Servicer or the Seller shall
----------------
deposit or cause to be deposited in the Collection Account, on or prior to
each Determination Date, the aggregate Purchase Amount with respect to
Purchased Receivables and the Servicer shall deposit therein all amounts to
be paid under Section 4.07.
Section 5.05. (Reserved).
--------
Section 5.06. Distributions.
-------------
(a) On each Determination Date, the Servicer shall calculate all
amounts required to be deposited pursuant to this Section and deliver a
Servicer's Certificate pursuant to Section 4.09.
(b) On each Distribution Date, the Servicer shall instruct the
Indenture Trustee in writing (based on the information contained in the
Servicer's Certificate delivered on the related Determination Date pursuant
to Section 4.09) to make the following deposits and distributions from
amounts on deposit in the Collection Account, to the extent of the Total
Distribution Amount for such Distribution Date including all amounts
transferred to the Collection Account from the Reserve Account and any
amounts transferred pursuant to Section 5.02(b)(viii), Section 5.07(b) and
Section 5.15, to make required payments and distributions on such date
pursuant to clauses (i) through (xi) below, in the following order and
priority (subject to the provisions of Section 5.08):
(i) to the Owner Trustee, the Indenture Trustee, the Administrator
and the Custodian, any currently due fees and expenses, in the aggregate
not to exceed an amount equal to the product of the Trustee Fee Rates
and the Pool Balance on such Distribution Date (if such amount shall be
insufficient to pay all amounts due, such amount shall be distributed
pro-rata based on the amounts otherwise due to the parties);
(ii) to the Servicer and the Backup Servicer, their ratable portion
of the Senior Servicing Fee (and any accrued and unpaid Senior Servicing
Fees from prior Collection Periods) and following a Servicer Termination
Event, to the successor Servicer, reasonably incurred Servicer
transition costs up to $75,000;
(iii) to the Note Distribution Account, the Noteholders'
Interest Distributable Amount;
(iv) to the Note Insurer, the Insurance Premium;
(v) to the Note Distribution Account, the Noteholders' Principal
Distributable Amount;
(vi) to the Note Insurer, any Reimbursement Obligations owed to the
Note Insurer;
(vii) to the Reserve Account, any deficiency in the Reserve
Account Required Amount;
(viii) to the Indenture Trustee, the Owner Trustee, the
Custodian, the Administrator and the Backup Servicer, any accrued and
unpaid fees, expenses and indemnification expenses owed thereto under
any of the Basic Documents to the extent not otherwise paid (including
legal fees and expenses and any Servicer transition costs not paid in
clause (ii) above) and to the Securities Intermediary, any accrued and
unpaid indemnification expenses owed to it;
(ix) to the Servicer, the Subordinated Servicing Fee;
(x) any costs associated with the perfection of security interests
in the Financed Vehicles to the extent not paid by the Servicer; and
(xi) the remaining balance, if any, to the Owner Trustee for
deposit in the Certificate Distribution Account and distribution to the
Certificateholders.
If the Total Distribution Amount remaining on any Distribution Date after
payment of the amounts due pursuant to clause (ii) above is insufficient to
pay the amounts due pursuant to clause (iii), then such shortfall shall be
paid, first, from amounts available, if any, in the Reserve Account, then
from amounts payable under the Policy. If the Total Distribution Amount
remaining on any Distribution Date after payment of the amounts due pursuant
to clause (iv) above is insufficient to pay amounts due pursuant to clause
(v), then such shortfall shall be paid, first, from amounts available, if
any, in the Reserve Account (but only to the extent the Note Balance exceeds
the Pool Balance) and then from amounts payable under the Policy (but only to
the extent the Note Balance exceeds the Pool Balance) or on the Class A-1
Final Scheduled Distribution Date or the Class A-2 Final Scheduled
Distribution Date, as applicable, to the extent of the outstanding principal
amount of the Class A-1 Notes or the Class A-2 Notes, as applicable. Any
amounts received under the Policy shall be deposited to the Note Distribution
Account and distributed to the Noteholders on the related Distribution Date
in accordance with the terms of the Policy. Notwithstanding that the Notes
have been paid in full, the Indenture Trustee shall continue to maintain the
Collection Account hereunder until the Certificate Balance is reduced to
zero.
Section 5.07. Yield Maintenance Account.
-------------------------
(a) On or prior to the Closing Date, the Issuer shall cause to have
deposited an amount equal to the Yield Maintenance Amount into the Yield
Maintenance Account from the net proceeds of the sale of the Notes. On each
Determination Date, the Servicer shall recalculate the Yield Maintenance
Amount. Amounts held in the Yield Maintenance Account shall be invested by
the Indenture Trustee in Eligible Investments pursuant to 5.02(b)(vii). Upon
termination of this Agreement pursuant to Section 9.01, any amounts on
deposit in the Yield Maintenance Account, after payments of amounts due to
the Noteholders, shall be paid to the Certificateholders.
(b) On each Determination Date, by delivery of a Servicer's Certificate
pursuant to Section 4.09, the Servicer shall notify the Indenture Trustee of
the Yield Maintenance Deposit Amount for the related Distribution Date. No
later than 12:00 noon, New York City time, on the Business Day prior to the
related Distribution Date, the Indenture Trustee shall withdraw from the
Yield Maintenance Account an amount equal to the Yield Maintenance Deposit
Amount and deposit such amount into the Collection Account.
(c) To the extent that the amount on deposit in the Yield Maintenance
Account exceeds the Yield Maintenance Amount for the related Distribution
Date, such excess shall be deposited one Business Day prior to the related
Distribution Date into the Certificate Distribution Account.
Section 5.08. Reserve Account.
---------------
(a) On or prior to the Closing Date, the Issuer shall cause to have
deposited an amount equal to the Reserve Account Initial Deposit into the
Reserve Account from the net proceeds of the sale of the Notes.
(b) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the amount of the Total Distribution
Amount with respect to such Determination Date is insufficient to pay the
amounts payable on the related Distribution Date pursuant to Section
5.06(b)(iii) or Section 5.06(b)(v) (but, with respect to Section 5.06(b)(v),
only to the extent the Note Balance, after taking into account all
distributions to be made on the related Distribution Date, exceeds the Pool
Balance or on the Class A-1 Final Scheduled Distribution Date or the Class A-
2 Final Scheduled Distribution Date, as applicable, to the extent of the
outstanding principal amount of the Class A-1 Notes or the Class A-2 Notes,
as applicable) (such deficiency being a "Reserve Account Claim Amount") then
on the third Business Day immediately preceding such Distribution Date, the
Indenture Trustee shall deliver to the Note Insurer, the Owner Trustee and
the Servicer, by hand delivery, telex or facsimile transmission, a written
notice (a "Reserve Account Claim Notice") specifying the Reserve Account
Claim Amount for such Distribution Date. Unless otherwise so directed by the
Note Insurer, the Indenture Trustee shall deposit such Reserve Account Claim
Amount (to the extent of the funds available in the Reserve Account) from the
Reserve Account into the Collection Account no later than 12:00 noon, New
York City time, on the Business Day prior to the related Distribution Date.
(c) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the amount on deposit in the Reserve
Account (after giving effect to all deposits thereto and withdrawals
therefrom on such Business Day prior to a Distribution Date) is greater than
the Reserve Account Required Amount, the Indenture Trustee shall release and
deposit all such amounts on the related Distribution Date into the
Certificate Distribution Account. Upon any such deposit into the Certificate
Distribution Account, the Noteholders shall have no further rights in, or
claims to, such amounts.
(d) Unless a Trigger Event shall have occurred, in the event that the
Servicer's Certificate with respect to any Determination Date shall state
that on the related Distribution Date, the amount on deposit in the Reserve
Account shall be less than the Reserve Account Required Amount, the Total
Distribution Amount remaining after the payment of the amounts set forth in
Section 5.06(b)(i) through (vi), up to an amount equal to such shortfall,
shall be deposited by the Indenture Trustee to the Reserve Account on such
Distribution Date.
(e) Upon the occurrence of a Trigger Event of which the Indenture
Trustee has actual knowledge or has received written notice and each
Distribution Date thereafter, any amounts remaining after the payment of the
amount set forth in Section 5.06(b)(v) and all amounts in the Reserve
Account, at the discretion of the Note Insurer, shall be applied in the
following order of priority:
(i) to the Noteholder's Distribution Account, all amounts to
reduce the Outstanding Amount of the Notes until the Note Balance is
reduced to zero;
(ii) to pay Reimbursement Obligations to the Note Insurer;
(iii) to pay any accrued and unpaid fees and expenses owed to
the Indenture Trustee, the Owner Trustee, the Custodian and the Backup
Servicer; and
(iv) the remaining balance, if any, to the Certificate Distribution
Account.
(f) Upon the occurrence of a Reserve Event of which the Indenture
Trustee has actual knowledge or has received written notice, any amounts
remaining after the deposit pursuant to Section 5.06(b)(vii) from the Total
Distribution Amount shall be deposited in the Reserve Account to the extent
necessary to maintain the amounts on deposit therein at the Reserve Account
Required Amount until the earlier of (i) all Reserve Events have been Deemed
Cured of which the Indenture Trustee shall have received written notice
acknowledged by the Note Insurer or (ii) the occurrence of a Trigger Event.
(g) Amounts held in the Reserve Account shall be invested in Eligible
Investments pursuant to Section 5.02(b)(vii).
(h) With respect to the Reserve Account Property, the Indenture Trustee
agrees that:
(i) Any Reserve Account Property that is held in deposit accounts
shall be held solely in the name of the Indenture Trustee, as collateral
agent, with the Indenture Trustee. The Reserve Account shall be subject
to the exclusive custody and control of the Indenture Trustee, and the
Indenture Trustee shall have sole signature authority with respect
thereto.
(ii) Any Reserve Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee, as collateral
agent, in accordance with clause (a) of the definition of "Delivery" and
shall be held, pending maturity or disposition, solely by the Indenture
Trustee, as collateral agent, or a securities intermediary, as such term
is defined in Section 8-102(a)(14) of the UCC) acting solely for the
Indenture Trustee, as collateral agent.
(iii) Any Reserve Account Property that is a book-entry
security held through the Federal Reserve System pursuant to federal
book-entry regulations shall be delivered in accordance with clause (b)
of the definition of "Delivery" and shall be maintained by the Indenture
Trustee, as collateral agent, pending maturity or disposition, through
continued book-entry registration of such Reserve Account Property as
described in such paragraph.
(iv) Any Reserve Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause
(iii) above shall be delivered to the Indenture Trustee, as collateral
agent, in accordance with clause (c) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee, as collateral agent,
pending maturity or disposition, through continued registration of the
Indenture Trustee's or its securities intermediary's (or its custodian's
or its nominee's) ownership of such security, in its capacity as
collateral agent.
Effective upon Delivery of any Reserve Account Property in the form of
Physical Property, book-entry securities or uncertificated securities, the
Indenture Trustee shall be deemed to have purchased such Reserve Account
Property for value, in good faith and without notice of any adverse claim
thereto.
The Indenture Trustee shall not enter into any subordination or
intercreditor agreement with respect to the Reserve Account Property.
Upon termination of this Agreement, any amounts on deposit in the
Reserve Account, after payment of all amounts due to the Noteholders and the
Note Insurer, shall be paid to the Certificateholders.
Section 5.09. Claims on the Policy.
--------------------
(a) If an Insured Payment is necessary for any Collection Period, then
the Indenture Trustee shall give notice to the Note Insurer and the Fiscal
Agent (as defined in the Policy), if any, by telephone or telecopy of the
amount of the required Insured Payment. Such notice shall be confirmed in
writing by the Indenture Trustee in the form set forth as Exhibit A to the
Policy, to the Note Insurer and the Fiscal Agent, if any, so that such notice
is received by the Note Insurer and the Fiscal Agent no later than
12:00 noon, New York City time, on the Deficiency Claim Date. Following
receipt by the Note Insurer of such notice in such form, the Note Insurer or
the Fiscal Agent shall pay the Indenture Trustee any amount payable under the
Policy, on the later to occur of (i) 12:00 noon, New York City time, on the
third Business Day following such receipt and (ii) 12:00 noon, New York City
time, on the Distribution Date to which such deficiency relates, as provided
in the Policy.
(b) The Indenture Trustee shall deposit the Insured Payment made under
the Policy in the Note Distribution Account and distribute such amount only
to pay to the Noteholders in accordance with the terms of the Policy, and
such amount may not be applied in any other manner. Amounts paid under the
Policy shall remain uninvested and shall be disbursed by the Indenture
Trustee to Noteholders in accordance with Section 5.06(b), the Policy and the
Indenture. However, the amount of any payment of principal of or interest on
the Notes to be paid from amounts in the Note Distribution Account in respect
of payments on the Policy shall be noted as provided in paragraph (c) below
in the Note Register, and in the statement to be furnished to the Noteholders
pursuant to Section 5.13.
(c) The Indenture Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Notes from moneys
received under the Policy. The Note Insurer shall have the right to inspect
such records at reasonable times during normal business hours upon three
Business Day's prior notice to the Indenture Trustee at the expense of the
Note Insurer.
Section 5.10. Notices to the Note Insurer. All notices, statements,
---------------------------
reports, notes, or opinions required by this Agreement to be sent to any
other party hereto or to the Noteholders at any time shall also be sent to
the Note Insurer unless the Policy is no longer in effect (and the Note
Insurer has been paid in full).
Section 5.11. Rights in Respect of Insolvency Proceedings.
-------------------------------------------
(a) In the event that the Indenture Trustee has received a certified
copy of a final, nonappealable order of the appropriate court that any
distribution of the Noteholders' Distributable Amount has been voided in
whole or in part as a preference payment under applicable bankruptcy or
insolvency law, the Indenture Trustee shall comply with the terms of the
Policy relating to Preference Amounts.
(b) The Indenture Trustee shall promptly notify the Note Insurer of
either of the following as to which an applicable Trust Officer has actual
knowledge: (i) the commencement of any proceeding by or against an Obligor,
the Seller, the Depositor or the Issuer commenced under the United States
Bankruptcy Code or any other applicable United States federal or state
bankruptcy, insolvency, receivership, rehabilitation, or similar law (an
"Insolvency Proceeding") or (ii) the making of any claim in connection with
any Insolvency Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") of any payment of principal of or interest on the Notes
or the Certificates. Each Noteholder, by its purchase of a Note, and the
Indenture Trustee hereby agree that, so long as a Note Insurer Default shall
not have occurred and be continuing, the Note Insurer may at any time during
the continuation of an Insolvency Proceeding direct all matters relating to
such Insolvency Proceeding, including (i) all matters relating to any
Preference Claim, (ii) the direction of any appeal of any order relating to
any Preference Claim and (iii) the posting of any surety, supersedeas or
performance bond pending any such appeal. In addition, and without
limitation of the foregoing, as set forth in Section 5.12, the Note Insurer
shall be subrogated to, and each Noteholder and the Indenture Trustee hereby
delegate and assign, to the fullest extent permitted by law, the rights of
the Indenture Trustee and such Noteholder in the conduct of any Insolvency
Proceeding, including all rights of any party to an adversary proceeding
action with respect to any court order issued in connection with any such
Insolvency Proceeding.
(c) Upon the occurrence of any of the events described in (a) or (b)
above, the Indenture Trustee shall furnish to the Note Insurer its records
evidencing the distributions of principal of and interest on the Notes that
have been made and subsequently recovered from Noteholders and the dates on
which such payments were made.
Section 5.12. Effect of Payments by the Note Insurer; Subrogation.
---------------------------------------------------
(a) Anything herein to the contrary notwithstanding, any distribution
of principal of or interest on the Notes that is made with moneys received
pursuant to the terms of the Policy shall not be considered payment of the
Notes by the Issuer and shall not discharge the Trust assets in respect of
such distribution. The Indenture Trustee acknowledges that, without the need
for any further action on the part of the Note Insurer, the Indenture Trustee
or the Note Registrar, (i) to the extent the Note Insurer makes payments,
directly or indirectly, on account of principal of or interest on the Notes
to the Noteholders thereof, the Note Insurer will be fully subrogated to the
rights of such Noteholders to receive such principal and interest from
distributions of the assets of the Trust and will be deemed to the extent of
the payments so made to be a Noteholder and (ii) the Note Insurer shall be
paid principal and interest in its capacity as a Noteholder until all such
payments by the Note Insurer have been fully reimbursed, but only from the
sources and in the manner provided herein for the distribution of such
principal and interest and in each case only after the Noteholders have
received all payments of principal and interest due to them under this
Agreement on the related Distribution Date.
(b) Without limiting the rights or interests of the Noteholders as
otherwise set forth herein, so long as no Note Insurer Default exists or is
not continuing, the Indenture Trustee shall cooperate in all respects with
any reasonable request by the Note Insurer for action to preserve or enforce
the Note Insurer's rights or interests under this Agreement, including, upon
the occurrence of a Servicer Termination Event, a request to take any one or
more of the following actions:
(i) institute proceedings for the collection of all amounts then
payable on the Notes or under this Agreement, enforce any judgment
obtained and collect moneys adjudged due; and
(ii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Note Insurer hereunder.
Section 5.13. Statements to Securityholders. On each Distribution
-----------------------------
Date, the Servicer shall provide to the Note Insurer and the Indenture
Trustee (with a copy to each Rating Agency and each Paying Agent (if any))
for the Indenture Trustee to forward to each Noteholder of record as of the
most recent Record Date and to the Owner Trustee (with a copy to each Paying
Agent (if any)) for the Owner Trustee to forward to each Certificateholder of
record as of the most recent Record Date a statement substantially in the
form of Exhibit B, respectively, setting forth at least the following
information as to the Securities to the extent applicable:
(i) the amount of collections received with respect to the
Receivables during the related Collection Period and allocable to
principal allocable to each Class of Notes on such Distribution Date;
(ii) the amount of collections received with respect to the
Receivables during the related Collection Period and allocable to
interest allocable to each Class of Notes on such Distribution Date;
(iii) the Outstanding Amount of each Class of Notes, the Note
Pool Factor for each such Class, the Certificate Balance and the
Certificate Pool Factor as of the close of business on the last day of
the preceding Collection Period, after giving effect to payments
allocated to principal reported under clause (i) above;
(iv) the amount of the Servicing Fee paid to the Servicer and the
amount of any fees payable to the Owner Trustee, the Backup Servicer,
the Custodian or the Indenture Trustee with respect to the related
Collection Period;
(v) the aggregate amounts of Realized Losses, if any, and Cram
Down Losses, if any, separately identified, with respect to the related
Collection Period;
(vi) the amount, if any, of the distribution payable on such
Distribution Date pursuant to claims under the Policy;
(vii) the balance of the Reserve Account on the related
Determination Date after giving effect to deposits and withdrawals to be
made on such Distribution Date, if any;
(viii) the Pool Balance as of the close of business on the last
day of the related Collection Period, after giving effect to payments
allocated to principal reported under clause (i) above;
(ix) the amount of any deposit to the Reserve Account and the
amount and application of any funds withdrawn from the Reserve Account,
in each case with respect to such Distribution Date;
(x) the aggregate principal balance of all Receivables that became
Liquidated Receivables or Purchased Receivables during the related
Collection Period;
(xi) the aggregate principal balance and number of Receivables that
are 30 to 59 days, 60 to 89 days or 90 days or more delinquent as of the
last day of the related Collection Period;
(xii) the Class A-1 Interest Carryover Shortfall, the Class A-1
Principal Carryover Shortfall, the Class A-2 Interest Carryover
Shortfall, the Class A-2 Principal Carryover Shortfall, in each case
after giving effect to payments on such Distribution Date, and any
change in such amounts from the preceding statement;
(xiii) the aggregate Purchase Amounts for Receivables, if any,
that were purchased during or with respect to such Collection Period;
(xiv) for each such date during the Funding Period, the
remaining amount in the Pre-Funding Account and the Capitalized Interest
Account;
(xv) the amount released to Certificateholders from the Yield
Maintenance Account on such Distribution Date, the amount on deposit in
the Yield Maintenance Account after giving effect to distributions made
on such Distribution Date, the change in such amount from the
immediately preceding Distribution Date;
(xvi) the Pre-Funded Amount remaining following the end of the
Funding Period that was not used to fund the purchase of Subsequent
Receivables and is being passed through as payments of principal on one
or both Classes of Notes;
(xvii) the aggregate Principal Balance and number of all
Receivables with respect to which the related Financed Vehicle was
repossessed;
(xviii) the aggregate Principal Balance and number of Receivables
with respect to which the Servicer granted an extension;
(xix) the Delinquency Ratio, the Cumulative Net Loss Ratio, the
Net Loss Ratio, the Annualized Net Loss Ratio, the Inventory Ratio
(including the aggregate number of Financed Vehicles that were
repossessed during the related Collection Period, the aggregate number
of all Financed Vehicles repossessed and unsold as of the end of the
related Collection Period and the number of Financed Vehicles
repossessed and sold during the related Collection Period), the
Extension Ratio and the Overcollateralization Ratio; and
(xx) any amounts distributed to the Certificateholders.
Each amount set forth on the Distribution Date statement under clauses
(i), (ii) or (iv) above shall be expressed as a dollar amount per $1,000 of
original principal balance of a Certificate or Note, as applicable.
Section 5.14. Pre-Funding Account.
-------------------
(a) On the Closing Date, the Issuer shall cause the Indenture Trustee
to deposit in the Pre-Funding Account the Pre-Funded Amount from the net
proceeds of the sale of the Notes. On the Subsequent Transfer Date, upon
satisfaction of the conditions set forth in Section 2.01(b) with respect to
such transfer, the Servicer shall instruct the Indenture Trustee in writing
to withdraw from the Pre-Funding Account an amount equal to (i) the Principal
Balance of the Subsequent Receivables transferred to the Issuer on such
Subsequent Transfer Date less the Reserve Account Subsequent Deposit Amount
and the Yield Maintenance Account Subsequent Deposit Amount for such
Subsequent Transfer Date, to distribute such amount to or upon the order of
the Depositor, (ii) the Reserve Account Subsequent Deposit Amount for such
Subsequent Transfer Date and, on behalf of the Issuer, to deposit such amount
in the Reserve Account and (iii) the Yield Maintenance Account Subsequent
Deposit Amount for such Subsequent Transfer Date and, on behalf of the
Depositor, to deposit such amount in the Yield Maintenance Account.
(b) If the Pre-Funded Amount has not been reduced to zero on the last
day of the Funding Period after giving effect to any reductions in the Pre-
Funded Amount on such date pursuant to paragraph (a) above, the Servicer
shall instruct the Indenture Trustee in writing to withdraw from the Pre-
Funding Account on the Mandatory Redemption Date (i) if the Pre-Funded Amount
is equal to or less than $100,000, the Pre-Funded Amount and deposit such
amount in the Note Distribution Account to be applied to reduce the
Outstanding Amount of the Class A-1 Notes and (ii) if the Pre-Funded Amount
is greater than $100,000, amounts equal to the Pre-Funded Percentage for each
Class of Notes of the Pre-Funded Amount and deposit such amounts in the Note
Distribution Account to be applied in reduction of the Outstanding Amount of
each Class of Notes.
Section 5.15. Capitalized Interest Account.
----------------------------
(a) On the Closing Date, the Issuer shall cause the Indenture Trustee
to deposit in the Capitalized Interest Account the Capitalized Interest
Initial Deposit from the net proceeds of the sale of the Notes.
(b) No later than 12:00 noon, New York City time, on the Business Day
prior to each Distribution Date during the Funding Period, the Indenture
Trustee shall withdraw, based on the information contained in the Servicer's
Certificate delivered pursuant to Section 4.09, from the Capitalized Interest
Account an amount equal to the Capitalized Interest Distribution Amount and
deposit such amount into the Collection Account.
(c) At the end of the Funding Period, any amounts remaining in the
Capitalized Interest Account shall be deposited into the Certificate
Distribution Account.
ARTICLE VI
THE DEPOSITOR
Section 6.01. Representations of Depositor. The Depositor makes the
----------------------------
following representations on which the Issuer relies in accepting the
Receivables and delivering the Securities and the Note Insurer relies in
issuing the Policy. Such representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, in the case of the
Initial Receivables, and as of the Subsequent Transfer Date in the case of
the Subsequent Receivables, and shall survive the sale, transfer and
assignment of the Receivables by the Depositor to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Depositor is duly
------------------------------
organized and validly existing as a corporation in good standing under the
laws of the State of Delaware, with the corporate power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is presently conducted.
(b) Due Qualification. The Depositor is duly qualified to do
-----------------
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions where the failure to
do so would materially and adversely affect the Depositor's ability to
transfer the Receivables to the Trust pursuant to this Agreement or the
validity or enforceability of the Receivables.
(c) Power and Authority. The Depositor has the corporate power
-------------------
and authority to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to carry out their respective terms; the
Depositor has full power and authority to sell and assign the property to be
sold and assigned to and deposited with the Issuer, and the Depositor shall
have duly authorized such sale and assignment to the Issuer by all necessary
corporate action; and the execution, delivery and performance of this
Agreement and the other Basic Documents to which the Depositor is a party
have been and, in the case of the Subsequent Purchase Agreement and the
Subsequent Transfer Agreement, will be, duly authorized by the Depositor by
all necessary corporate action.
(d) Binding Obligation. This Agreement and the other Basic
------------------
Documents to which the Depositor is a party, when duly executed and delivered
by the other parties hereto and thereto, shall constitute legal, valid and
binding obligations of the Depositor, enforceable against the Depositor in
accordance with their respective terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization or similar laws now
or hereafter in effect relating to or affecting creditors' rights generally
and to general principles of equity (whether applied in a proceeding at law
or in equity).
(e) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the other Basic Documents and the
fulfillment of the terms of this Agreement and the other Basic Documents
shall not conflict with, result in any breach of any of the terms or
provisions of or constitute (with or without notice or lapse of time, or
both) a default under, the certificate of incorporation or bylaws of the
Depositor, or any indenture, agreement, mortgage, deed of trust or other
instrument to which the Depositor is a party or by which it is bound; or
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument, other than this Agreement and the other Basic
Documents; or violate any law, order, rule or regulation applicable to the
Depositor of any court or federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Depositor or its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the Depositor's knowledge, threatened, against the Depositor
before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Depositor or its
properties: (i) asserting the invalidity of this Agreement or any other Basic
Document; (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by
this Agreement or any other Basic Document; (iii) seeking any determination
or ruling that might materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or enforceability of,
this Agreement or any other Basic Document; or (iv) seeking to adversely
affect the federal income tax attributes of the Trust, the Notes or the
Certificates.
(g) No Consents. The Depositor is not required to obtain the
-----------
consent of any other party or any consent, license, approval, registration,
authorization, or declaration of or with any governmental authority, bureau
or agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement or any other Basic Document to which it
is a party that has not already been obtained.
Section 6.02. Corporate Existence. During the term of this Agreement,
-------------------
the Depositor will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic
Documents and each other instrument or agreement necessary or appropriate to
the proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Depositor and
its Affiliates will be conducted on an arm's-length basis.
Section 6.03. Liability of Depositor; Indemnities. The Depositor shall
-----------------------------------
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement (which shall
not include distributions on account of the Notes or the Certificates).
Section 6.04. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Depositor. The Depositor shall not merge or consolidate with
- -------------------------
any other Person or permit any other Person to become the successor to the
Depositor's business without the prior written consent of the Note Insurer.
Any such successor Person shall execute an agreement of assumption of every
obligation of the Depositor under this Agreement and the other Basic
Documents and, whether or not such assumption agreement is executed, shall be
the successor to the Depositor under this Agreement without the execution or
filing of any document or any further act on the part of any of the parties
to this Agreement. The Depositor shall provide prompt notice of any merger,
consolidation or succession pursuant to this Section 6.04 to the Owner
Trustee, the Indenture Trustee, the Note Insurer, the Servicer, the
Securityholders and the Rating Agencies. Notwithstanding the foregoing, the
Depositor shall not merge or consolidate with any other Person or permit any
other Person to become a successor to the Depositor's business unless (x)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.02 or 6.01 shall have been breached (for
purposes hereof, such representations and warranties shall speak as of the
date of the consummation of such transaction), (y) the Depositor shall have
delivered to the Owner Trustee, the Indenture Trustee, the Servicer and the
Note Insurer an Officer's Certificate and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of
assumption comply with this Section 6.04 and that all conditions precedent
provided for in this Agreement relating to such transaction have been
complied with and (z) the Depositor shall have delivered to the Owner
Trustee, the Indenture Trustee, the Servicer and the Note Insurer an Opinion
of Counsel stating that, in the opinion of such counsel, either (A) all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary to preserve and protect the
interest of the Trust in the Receivables and reciting the details of such
filings or (B) no such action is necessary to preserve and protect such
interest.
Section 6.05. Limitation on Liability of Depositor and Others. The
-----------------------------------------------
Depositor and any director, officer, employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Depositor shall be under no obligation to
appear in, prosecute or defend any legal action that shall not be incidental
to its obligations under this Agreement and that in its opinion may involve
it in any expense or liability.
Section 6.06. Depositor May Own Securities. The Depositor and any
----------------------------
Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of Securities with the same rights as it would have if it
were not the Depositor or an Affiliate thereof, except as expressly provided
herein or in any Basic Document.
ARTICLE VII
THE SERVICER
Section 7.01. Representations of Servicer. The Servicer makes the
---------------------------
following representations upon which the Issuer is deemed to have relied in
acquiring the Receivables and upon which the Note Insurer relies in issuing
the Policy. Such representations speak as of the execution and delivery of
this Agreement and as of the Closing Date, in the case of the Initial
Receivables, and as of the Subsequent Transfer Date in the case of the
Subsequent Receivables, and shall survive the sale of the Receivables to the
Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Servicer is duly
------------------------------
organized and validly existing as a corporation in good standing under the
laws of the State of its incorporation, with the corporate power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted, and
had at all relevant times, and has, the corporate power, authority and legal
right to acquire, own, and service the Receivables.
(b) Due Qualification. The Servicer is duly qualified to do
-----------------
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions where the failure to
do so would materially and adversely affect the Servicer's ability to
acquire, own and service the Receivables.
(c) Power and Authority. The Servicer has the power and authority
-------------------
to execute and deliver this Agreement and the other Basic Documents to which
it is a party and to carry out their respective terms; and the execution,
delivery and performance of this Agreement and the other Basic Documents to
which it is a party have been duly authorized by the Servicer by all
necessary corporate action.
(d) Binding Obligation. This Agreement and the other Basic
------------------
Documents to which it is a party constitute legal, valid and binding
obligations of the Servicer, enforceable against the Servicer in accordance
with their respective terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and to general
principles of equity whether applied in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the other Basic Documents to which it is a
party and the fulfillment of their respective terms shall not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, the
articles of incorporation or bylaws of the Servicer, or any indenture,
agreement, mortgage, deed of trust or other instrument to which the Servicer
is a party or by which it is bound; or result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, other than
this Agreement and the other Basic Documents, or violate any law, order, rule
or regulation applicable to the Servicer of any court or federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the Servicer's knowledge, threatened, against the Servicer
before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Servicer or its
properties: (i) asserting the invalidity of this Agreement or any of the
other Basic Documents; (ii) seeking to prevent the issuance of the Securities
or the consummation of any of the transactions contemplated by this Agreement
or any of the other Basic Documents; (iii) seeking any determination or
ruling that might materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability of, this
Agreement or any of the other Basic Documents; or (iv) seeking to adversely
affect the federal income tax or other federal, state or local tax attributes
of the Securities.
(g) No Insolvent Obligors. As of the related Cutoff Date, no
---------------------
Obligor on a Receivable is shown on the Receivable Files as or has been the
subject of a bankruptcy proceeding.
Section 7.02. Indemnities of Servicer. The Servicer shall be liable
-----------------------
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer and the representations made by the Servicer under
this Agreement:
(a) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Backup Servicer,
the Note Insurer, the Securityholders and the Depositor and any of the
officers, directors, employees and agents of the Issuer, the Owner
Trustee, the Indenture Trustee, the Backup Servicer and the Note Insurer
from and against any and all costs, expenses, losses, damages, claims
and liabilities arising out of or resulting from the use, ownership or
operation by the Servicer or any Affiliate thereof of a Financed
Vehicle, excluding any losses incurred in connection with the sale of
any repossessed Financed Vehicles in a commercially reasonable manner
and in compliance with the terms of this Agreement.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Depositor, the
Backup Servicer, the Note Insurer and their respective officers,
directors, agents and employees, and the Securityholders, from and
against any taxes that may at any time be asserted against any of such
parties with respect to the transactions contemplated in this Agreement,
including any sales, gross receipts, tangible or intangible personal
property, privilege or license taxes (but not including any federal or
other income taxes, including franchise taxes asserted with respect to,
and as of the date of, the transfer of the Receivables to the Trust or
the issuance and original sale of the Securities), and any costs and
expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Depositor, the
Backup Servicer, the Note Insurer, the Securityholders and any of the
officers, directors, employees or agents of the Issuer, the Owner
Trustee, the Note Insurer and the Indenture Trustee from and against any
and all costs, expenses, losses, claims, damages and liabilities to the
extent that such cost, expense, loss, claim, damage or liability arose
out of, or was imposed upon any such Person through, the negligence,
misfeasance or bad faith of the Servicer in the performance of its
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
For purposes of this Section, in the event of the termination of the
rights and obligations of HMFC (or any successor thereto pursuant to
Section 7.03) as Servicer pursuant to Section 8.02, or the resignation by
such Servicer pursuant to this Agreement, such Servicer shall be deemed to be
the Servicer pending appointment of a successor Servicer (other than the
Indenture Trustee) pursuant to Section 8.03.
Indemnification under this Section shall survive the resignation or
removal of the Servicer or the termination of this Agreement, and shall
include reasonable fees and expenses of counsel and reasonable expenses of
litigation. If the Servicer shall have made any indemnity payments pursuant
to this Section and the Person to or on behalf of whom such payments are made
thereafter collects any of such amounts from others, such Person shall
promptly repay such amounts to the Servicer, without interest. The Servicer
shall pay all amounts due, pursuant to this Section, with respect to the
Indenture Trustee and Owner Trustee as set forth in Section 5.06(b)(viii).
Section 7.03. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Servicer.
- ------------------------
(a) The Servicer shall not merge or consolidate with any other Person,
convey, transfer or lease substantially all its assets as an entirety to
another Person, or permit any other Person to become the successor to the
Servicer's business unless, after such merger, consolidation, conveyance,
transfer, lease or succession, the successor or surviving entity shall be
capable of fulfilling the duties of the Servicer contained in this Agreement
and shall be reasonably acceptable to the Controlling Party. Any Person (i)
into which the Servicer may be merged or consolidated, (ii) resulting from
any merger or consolidation to which the Servicer shall be a party, (iii)
that acquires by conveyance, transfer or lease substantially all of the
assets of the Servicer or (iv) succeeding to the business of the Servicer,
which Person shall execute an agreement of assumption to perform every
obligation of the Servicer under this Agreement, shall be the successor to
the Servicer under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties to this Agreement.
The Servicer shall provide notice of any merger, consolidation or succession
pursuant to this Section 7.03(a) to the Owner Trustee, the Indenture Trustee,
the Note Insurer and each Rating Agency. Notwithstanding the foregoing, the
Servicer shall not merge or consolidate with any other Person or permit any
other Person to become a successor to the Servicer's business unless (i)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 7.01 shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction) and no event that, after notice or lapse of
time or both, would become a Servicer Termination Event shall have occurred,
(ii) the Servicer shall have delivered to the Owner Trustee, the Indenture
Trustee and the Note Insurer an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 7.03(a) and that all
conditions precedent provided for in this Agreement relating to such
transaction have been complied with and (iii) the Servicer shall have
delivered to the Owner Trustee, the Indenture Trustee and the Note Insurer an
Opinion of Counsel stating that either (A) all financing statements and
continuation statements and amendments thereto have been executed and filed
that are necessary to preserve and protect the interest of the Trust and the
Indenture Trustee, respectively, in the assets of the Trust and reciting the
details of such filings or (B) no such action shall be necessary to preserve
and protect such interest.
(b) Any Person who is acceptable to the Note Insurer and (i) into which
the Backup Servicer may be merged or consolidated, (ii) resulting from any
merger or consolidation to which the Backup Servicer shall be a party, (iii)
that acquires by conveyance, transfer or lease substantially all of the
assets of the Backup Servicer or (iv) succeeding to the business of the
Backup Servicer, which Person shall execute an agreement of assumption to
perform every obligation of the Backup Servicer under this Agreement, shall
be the successor to the Backup Servicer under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties to this Agreement.
Section 7.04. Limitation on Liability of Servicer, Backup Servicer and
--------------------------------------------------------
Others.
- ------
(a) None of the Servicer, the Backup Servicer or any of their
respective directors, officers, employees or agents shall be under any
liability to the Issuer, the Depositor, the Note Insurer, the Indenture
Trustee, the Owner Trustee, the Noteholders or the Certificateholders, except
as provided in this Agreement, for any action taken or for refraining from
the taking of any action pursuant to this Agreement; provided, however, that
this provision shall not protect the Servicer, the Backup Servicer or any
such Person against any liability that would otherwise be imposed by reason
of a breach of this Agreement or willful misfeasance, bad faith or negligence
in the performance of duties. The Servicer, the Backup Servicer and any
director, officer, employee or agent of the Servicer or Backup Servicer may
conclusively rely in good faith on the written advice of counsel or on any
document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
(b) The Backup Servicer shall not be liable for any obligation of the
Servicer contained in this Agreement or for any errors of the Servicer
contained in any computer tape, certificate or other data or document
delivered to the Backup Servicer hereunder or on which the Backup Servicer
must rely in order to perform its obligations hereunder, and the Owner
Trustee, the Indenture Trustee, the Depositor, the Note Insurer and the
Securityholders shall look only to the Servicer to perform such obligations.
The Backup Servicer, the Owner Trustee and the Indenture Trustee shall have
no responsibility and shall not be in default hereunder or incur any
liability for any failure, error, malfunction or any delay in carrying out
any of its duties under this Agreement if such failure or delay results from
the Backup Servicer acting in accordance with information prepared or
supplied by a Person other than the Backup Servicer or the failure of any
such other Person to prepare or provide such information. Subject to Section
7.04(a), the Backup Servicer shall have no responsibility, shall not be in
default and shall incur no liability for (i) any act or failure to act of any
third party, including the Servicer or the Controlling Party, (ii) any
inaccuracy or omission in a notice or communication received by the Backup
Servicer from any third party, (iii) the invalidity or unenforceability of
any Receivable under applicable law, (iv) the breach or inaccuracy of any
representation or warranty made with respect to any Receivable, or (v) the
acts or omissions of any successor Backup Servicer.
(c) The parties expressly acknowledge and consent to The Chase
Manhattan Bank simultaneously acting in the capacity of Backup Servicer or
successor Servicer and Indenture Trustee. The Chase Manhattan Bank may, in
such capacities, discharge its separate functions fully, without hinderance
or regard to conflict of interest principles, duty of loyalty principles or
other breach of fiduciary duties to the extent that any such conflict or
breach arises from the performance by The Chase Manhattan Bank of express
duties set forth in this Agreement in any of such capacities.
Section 7.05. Appointment of Subservicer. The Servicer may at any
--------------------------
time, with the Note Insurer's consent, appoint a subservicer to perform all
or any portion of its obligations as Servicer hereunder; provided, however,
that 10 days' prior notice of such appointment shall have been given to each
Rating Agency and the Note Insurer, and each Rating Agency shall have
notified the Servicer, the Backup Servicer, the Owner Trustee, the Indenture
Trustee and the Note Insurer in writing that such appointment satisfies the
Rating Agency Condition; and provided further, that the Servicer shall remain
obligated and be liable to the Owner Trustee, the Indenture Trustee, the Note
Insurer and the Securityholders for the servicing and administering of the
Receivables in accordance with the provisions hereof without diminution of
such obligation and liability by virtue of the appointment of such
subservicer and to the same extent and under the same terms and conditions as
if the Servicer alone were servicing and administering the Receivables. The
fees and expenses of any subservicer shall be as agreed between the Servicer
and such subservicer from time to time, and none of the Owner Trustee, the
Indenture Trustee, the Issuer, the Backup Servicer, the Note Insurer or the
Securityholders shall have any responsibility therefor. The Note Insurer's
consent and notice requirement of this Section shall not apply to the use of
independent repossession companies by the Servicer in accordance with the
Credit and Collection Policy.
Section 7.06. Servicer and Backup Servicer Not to Resign.
------------------------------------------
(a) Subject to the provisions of Section 7.03(a), the Servicer shall
not resign from the obligations and duties imposed on it by this Agreement as
Servicer except upon a determination that the performance of its duties under
this Agreement shall no longer be permissible under applicable law.
(b) Subject to the provisions of Section 7.03(b), the Backup Servicer
may resign from the obligations and duties imposed on it by this Agreement as
Backup Servicer (i) upon a determination that the performance of its duties
under this Agreement shall no longer be permissible under applicable law,
(ii) if the Backup Servicer resigns or is removed as Indenture Trustee (in
which case the Backup Servicer may resign as Backup Servicer subject to the
same conditions applicable to the Indenture Trustee pursuant to Section 6.08
of the Indenture), or (iii) with the prior written consent of each Rating
Agency and the Controlling Party; provided, that the Rating Agency Condition
shall have been satisfied.
(c) Notice of any determination that the performance by either the
Servicer or the Backup Servicer of its duties hereunder is no longer
permitted under applicable law shall be communicated to the Owner Trustee,
the Indenture Trustee and the Note Insurer at the earliest practicable time
(and, if such communication is not in writing, shall be confirmed in writing
at the earliest practicable time) and any such determination shall be
evidenced by an Opinion of Counsel to such effect delivered by the Servicer
or Backup Servicer, as applicable, to the Owner Trustee, the Indenture
Trustee and the Note Insurer concurrently with or promptly after such notice.
No resignation of the Servicer shall become effective until the Backup
Servicer or a successor Servicer acceptable to the Note Insurer shall have
assumed the responsibilities and obligations of the Servicer in accordance
with Section 8.03. No resignation of the Backup Servicer or the Servicer
shall become effective until an entity acceptable to the Controlling Party
shall have assumed the responsibilities and obligations of the Backup
Servicer or the Servicer, as applicable. If no successor Backup Servicer or
Servicer has been appointed within 30 days of resignation or removal, the
Controlling Party may petition any court of competent jurisdiction for such
appointment.
Section 7.07. Backup Servicer
---------------
(a) No successor Backup Servicer may be appointed unless such Person
shall be acceptable to the Note Insurer and shall have entered into an
agreement, acceptable to the Note Insurer, with the Indenture Trustee, for
the benefit of the Noteholders and the Note Insurer.
(b) The Backup Servicer shall perform its duties as backup servicer in
accordance with the terms of this Agreement and applicable law and, to the
extent consistent with such terms, in the same manner in which, and with the
same care, skill, prudence and diligence with which, it administers files for
other portfolios, if any, giving due consideration to customary and usual
standards of practice of prudent backup servicers.
Section 7.08. Liability of Backup Servicer.
-----------------------------
Neither the Backup Servicer nor any of its directors, officers, agents
or employees, shall be liable for any action taken or omitted to be taken by
it or them hereunder or in connection herewith in good faith and believed by
it or them to be within the purview of this Agreement, except for its or
their own negligence, lack of good faith or willful misconduct.
Section 7.09. Reliance of Backup Servicer.
----------------------------
In the absence of bad faith and negligence on the part of the Backup
Servicer, the Backup Servicer may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
request, instructions, certificate, electronic file/tape/diskette, opinion or
other document furnished to the Backup Servicer, reasonably believed by the
Backup Servicer to be genuine and to have been signed or presented by the
proper party or parties and conforming to the requirements of this Agreement;
but in the case of any loan document or other request, instruction, document
or certificate which by any provision hereof is specifically required to be
furnished to the Backup Servicer, the Backup Servicer shall be under a duty
to examine the same to determine whether or not it conforms to the
requirements of this Agreement.
Section 7.10. Resignation and Removal; Appointment of Successor.
--------------------------------------------------
(a) No resignation or removal of the Backup Servicer and no
appointment of a successor Backup Servicer pursuant to this Article VII shall
become effective until the acceptance of appointment by the successor Backup
Servicer under Section 7.11 hereof.
(b) The Backup Servicer may resign at any time by giving 30 days'
prior written notice thereof to the Issuer, the Note Insurer and the
Indenture Trustee. If the Backup Servicer shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Backup
Servicer for any cause with respect to any of the Notes, the Issuer shall,
with the prior written consent of the Note Insurer, promptly appoint a
successor Backup Servicer reasonably satisfactory to the Note Insurer. If no
successor Backup Servicer shall have been so appointed by the Issuer within
30 days of notice of removal or resignation and shall not have accepted
appointment in the manner hereinafter provided, then the Note Insurer may
appoint a successor Backup Servicer. If the Note Insurer shall fail to
appoint a successor Backup Servicer within 90 days or if a Note Insurer
Default shall have occurred and is continuing, then the Controlling Party may
petition any court of competent jurisdiction for the appointment of a
successor Backup Servicer with respect to the Notes.
(c) The Backup Servicer may be removed by the Note Insurer or, if
a Note Insurer Default has occurred and is continuing, by the Controlling
Party, at any time if one of the following events have occurred:
(i) the Backup Servicer shall become incapable of acting or shall
be adjudged a bankrupt or insolvent, or a receiver of the Backup
Servicer or of its property shall be appointed, or any public officer
shall take charge or control of the Backup Servicer or of its property
or affairs for the purpose of rehabilitation, conservation or
liquidation, or
(ii) the Backup Servicer has failed to perform its duties under
any of the Basic Documents or any side agreements with the Servicer or
has breached any representation or warranty made herein or therein.
(d) The Issuer shall give notice in the manner provided in
Section 10.03 of each resignation and each removal of the Backup Servicer and
each appointment of a successor Backup Servicer to the Indenture Trustee, the
Note Insurer, the Servicer and the Rating Agencies. Each notice shall
include the name of the successor Backup Servicer and the address of its
chief executive office.
Section 7.11. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Backup Servicer appointed hereunder shall be
acceptable to the Note Insurer and shall execute, acknowledge and deliver to
the Issuer, the Indenture Trustee, the Servicer, the Note Insurer and the
retiring Backup Servicer an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Backup Servicer shall
become effective and such successor Backup Servicer, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Backup Servicer but, on request of the Issuer, the
Indenture Trustee, the Note Insurer, the Servicer or the successor Backup
Servicer, such retiring Backup Servicer shall execute and deliver an
instrument transferring to such successor Backup Servicer all the rights,
powers and trusts of the retiring Backup Servicer, and shall duly assign,
transfer and deliver to such successor Backup Servicer all property and money
held by such retiring Backup Servicer hereunder. Upon request of any such
successor Backup Servicer, the Issuer or the Indenture Trustee on behalf of
the Issuer shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Backup Servicer all such rights,
powers and trusts.
No successor Backup Servicer shall accept its appointment unless at
the time of such acceptance such successor Backup Servicer shall be
acceptable to the Note Insurer and shall be eligible under this Article VII.
Section 7.12. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business of Backup Servicer.
- ----------------------------
Any Person into which the Backup Servicer 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 Backup Servicer shall be
a party, or any corporation succeeding to all or substantially all of the
business of the Backup Servicer, shall be the successor of the Backup
Servicer hereunder, provided such Person shall be acceptable to the Note
Insurer and shall be otherwise qualified and eligible, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, and prior written notice thereof shall be provided by the Backup
Servicer to the Indenture Trustee, the Note Insurer and the Rating Agencies.
Section 7.13. Representations and Warranties of the Backup Servicer.
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The Backup Servicer represents and warrants to, and agrees with the
Indenture Trustee, the Note Insurer and the Issuer, as of the Closing Date
that:
(a) The Backup Servicer is duly organized as a state banking
association under the laws of the state of New York, is validly existing, in
good standing and has the corporate power and authority under the laws of the
United States of America to conduct its business as now conducted.
(b) The Backup Servicer has full corporate power and authority under
the laws of the United States of America to enter into and perform all
transactions contemplated herein and no consent, approval, authorization or
order of any federal court or governmental agency or body governing or having
jurisdiction with respect to the Backup Servicer's custodial powers is
required for the Backup Servicer to enter into this Agreement and to perform
its obligations hereunder.
(c) The execution, delivery and performance by it of this Agreement (a)
do not violate any provision of any law or regulation governing the banking
or the custodial powers of the Backup Servicer or any order, writ, judgment,
or decree of any court, arbitrator, or governmental authority applicable to
the Backup Servicer or any of its assets, (b) do not violate any provision of
its corporate charter or by-laws, or (c) do not violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of any lien on any of the property
acquired by the Issuer pursuant to the provisions of any mortgage, indenture,
contract, agreement or other undertaking other than this Agreement to which
it is a party.
(d) This Agreement has been duly executed and delivered by the Backup
Servicer and constitutes the legal, valid and binding agreement of the Backup
Servicer, enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at
law.
(e) Nothing has come to the Backup Servicer's attention indicating
that, with respect to the Contracts and the Financed Vehicles (i) there exist
any adverse claims, lien, or encumbrances against any of the same; (ii) any
Contract was overdue or had been dishonored or subject to the circumstances
described in Section3-304 of the Uniform Commercial Code as in effect in the
State of New York, or (iii) there exists any other defense against or claim
to the Contracts by any other person or entity. For purposes of this
subsection (e), the Backup Servicer shall not be deemed to have notice or
knowledge of the foregoing matters unless a Responsible Officer assigned to
and working in the Backup Servicer's Corporate Trust Office shall have actual
knowledge thereof or written notice thereof is received by a Responsible
Officer of the Backup Servicer's Corporate Trust Office in accordance
herewith.
ARTICLE VIII
DEFAULT
Section 8.01. Servicer Termination Events. For purposes of this
---------------------------
Agreement, the occurrence of a Trigger Event (other than for event 6 in the
definition of Trigger Event) shall constitute a "Servicer Termination Event".
Section 8.02. Consequences of a Servicer Termination Event. If a
--------------------------------------------
Servicer Termination Event shall occur, the Note Insurer or, if the Note
Insurer is not the Controlling Party, the Custodian, the Indenture Trustee or
Noteholders evidencing 25% of the Outstanding Amount of the Notes, by notice
given in writing to the Servicer (and to the Indenture Trustee, the Owner
Trustee and the Depositor if given by the Note Insurer or such Noteholders),
may terminate all of the rights and obligations of the Servicer under this
Agreement. On or after the receipt by the Servicer of such written notice,
and upon the consent of the Note Insurer (if the Note Insurer is the
Controlling Party), all authority, power, obligations and responsibilities of
the Servicer under this Agreement automatically shall pass to, be vested in
and become obligations and responsibilities of the Backup Servicer (or such
other successor Servicer appointed by the Controlling Party); provided,
however, that the Backup Servicer or any other successor Servicer shall have
no liability with respect to any obligation that was required to be performed
by the terminated Servicer prior to the date that the Backup Servicer or any
other successor Servicer becomes the Servicer or any claim of a third party
based on any alleged action or inaction of the terminated Servicer. The
Backup Servicer or any other successor Servicer is authorized and empowered
by this Agreement to execute and deliver, on behalf of the terminated
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and related
documents to show the Indenture Trustee (or the Owner Trustee if the Notes
have been paid in full) as lienholder or secured party on the related
certificates of title of the Financed Vehicles or otherwise. The terminated
Servicer agrees to cooperate with the Backup Servicer or any other successor
Servicer in effecting the termination of the responsibilities and rights of
the terminated Servicer under this Agreement, including the transfer to the
Backup Servicer or any other successor Servicer for administration by it of
all money and property held by the Servicer with respect to the Receivables
and other records relating to the Receivables, including any portion of the
Receivables File held by the Servicer and a computer tape in readable form as
of the most recent Business Day containing all information necessary to
enable the Backup Servicer or any other successor Servicer to service the
Receivables. The terminated Servicer shall also provide the Backup Servicer
or any other successor Servicer access to Servicer personnel and computer
records in order to facilitate the orderly and efficient transfer of
servicing duties.
Section 8.03. Appointment of Successor Servicer.
---------------------------------
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 8.02 or upon the resignation of the Servicer pursuant to
Section 7.06, the Backup Servicer (unless the Note Insurer shall have
exercised its option pursuant to Section 8.03(b) to appoint an alternate
successor Servicer) shall be the successor in all respects to the Servicer in
its capacity as Servicer under this Agreement and shall be subject to all the
rights, responsibilities, restrictions, duties, liabilities and termination
provisions relating to the Servicer under this Agreement, except as otherwise
stated herein. The Depositor, the Owner Trustee, the Indenture Trustee and
such successor Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. If a
successor Servicer is acting as Servicer hereunder, it shall be subject to
termination under Section 8.02 upon the occurrence of any Servicer
Termination Event after its appointment as successor Servicer.
(b) On and after the time the Servicer receives a notice of termination
pursuant to Section 8.02 or upon the resignation of the Servicer pursuant to
Section 7.06, or if the Backup Servicer is legally unable or unwilling to act
as Servicer, the Controlling Party may exercise at any time its right to
appoint as Backup Servicer or as successor to the Servicer a Person other
than the Person serving as Backup Servicer at the time, and shall have no
liability to the Owner Trustee, the Indenture Trustee, the Servicer, the
Depositor, the Person then serving as Backup Servicer, any Noteholders, any
Certificateholders or any other Person if it does so. Notwithstanding the
above, if the Backup Servicer shall be legally unable or unwilling to act as
Servicer, and the Note Insurer is no longer the Controlling Party or
otherwise fails to appoint a successor, the Backup Servicer, the Indenture
Trustee, the Owner Trustee or Noteholders evidencing 25% of the Outstanding
Amount of the Notes may petition a court of competent jurisdiction to appoint
any Eligible Servicer as the successor to the Servicer. Pending appointment
pursuant to the preceding sentence, the Backup Servicer shall act as
successor Servicer unless it is legally unable to do so, in which event the
outgoing Servicer shall continue to act as Servicer until a successor
acceptable to the Note Insurer has been appointed and accepted such
appointment. Subject to Section 7.06, no provision of this Agreement shall
be construed as relieving the Backup Servicer of its obligation to succeed as
successor Servicer upon the termination of the Servicer pursuant to Section
8.02 or the resignation of the Servicer pursuant to Section 7.06. If upon
the termination of the Servicer pursuant to Section 8.02 or the resignation
of the Servicer pursuant to Section 7.06, the Controlling Party appoints a
successor Servicer other than the Backup Servicer, the Backup Servicer shall
not be relieved of its duties as Backup Servicer hereunder.
(c) Upon appointment, the successor Servicer (including the Backup
Servicer acting as successor Servicer) shall be the successor in all respects
to the predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities arising thereafter relating thereto placed on the
predecessor Servicer, and shall be entitled to the Servicing Fee and all the
rights granted to the predecessor Servicer by the terms and provisions of
this Agreement.
Section 8.04. Notification to Securityholders. Upon any termination
-------------------------------
of, or appointment of a successor to, the Servicer pursuant to this
Article VIII, the Owner Trustee shall give prompt written notice thereof to
the Certificateholders, and the Indenture Trustee shall give prompt written
notice thereof to the Noteholders, the Note Insurer and each Rating Agency.
Section 8.05. Waiver of Past Defaults. The Note Insurer or, if the
-----------------------
Note Insurer is no longer the Controlling Party, Noteholders evidencing not
less than a majority of the Outstanding Amount of the Notes or the
Certificateholders evidencing not less than a majority of the outstanding
Certificate Balance (in the case of any default that does not adversely
affect the Indenture Trustee, the Note Insurer or the Noteholders) may, on
behalf of all Securityholders, waive in writing any default by the Servicer
in the performance of its obligations hereunder and its consequences, except
a default in making any required deposits to or payments from any of the
Trust Accounts in accordance with this Agreement. Upon any such waiver of a
past default, such default shall cease to exist, and any Servicer Termination
Event arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto.
ARTICLE IX
TERMINATION
Section 9.01. Optional Purchase of All Receivables.
------------------------------------
(a) On each Determination Date as of which the Pool Balance is equal to
or less than 10% of the Initial Pool Balance, the Servicer (with the consent
of the Note Insurer, if a claim has previously been made under the Policy or
if such purchase would result in a claim on the Policy or if such purchase
would result in any amount owing and remaining unpaid under this Agreement or
the Insurance Agreement to the Note Insurer or any other Person) and, if the
Servicer does not, the Note Insurer, shall have the option to purchase the
Receivables. To exercise such option, the Servicer or the Note Insurer, as
applicable, shall deposit to the Collection Account pursuant to Section 5.04
an amount equal to the aggregate Purchase Amount for the Receivables
(including Liquidated Receivables) and shall pay to the Note Insurer all
amounts due to the Note Insurer and shall succeed to all interests in and to
the Receivables. The exercise of such option shall effect a retirement, in
whole but not in part, of all outstanding Class A-2 Notes.
(b) As described in Article IX of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee,
the Indenture Trustee and the Note Insurer as soon as practicable after the
Servicer has received notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes and all amounts
owed to the Note Insurer, the Certificateholders will succeed to the rights
of the Noteholders hereunder and the Owner Trustee will succeed to the rights
of, and assume the obligations to make payments to Certificateholders of, the
Indenture Trustee pursuant to this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendment.
---------
(a) This Agreement may be amended by the Depositor, the Servicer, the
Backup Servicer, the Indenture Trustee and the Issuer, with the prior written
consent of the Note Insurer (unless the Notes are no longer Outstanding and
the Note Insurer has been paid in full), but without the consent of any of
the Noteholders or the Certificateholders, to cure any ambiguity, to correct
or supplement any provisions in this Agreement or for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions in this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that such action
shall not, as evidenced by an Opinion of Counsel delivered to the Owner
Trustee and the Indenture Trustee, adversely affect in any material respect
the interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time by the
Depositor, the Servicer and the Issuer, with the prior written consent of the
Indenture Trustee, the Note Insurer (unless the Notes are no longer
Outstanding and the Note Insurer has been paid in full), Noteholders holding
not less than a majority of the Outstanding Amount of the Notes and the
Holders (as defined in the Trust Agreement) of outstanding Certificates
evidencing not less than a majority of the outstanding Certificate Balance,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Securityholders; provided, however, that no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made for the benefit of the
Securityholders or (ii) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Certificate Balance, the Securityholders of which
are required to consent to any such amendment, without the consent of the
Noteholders holding all Outstanding Notes and Certificateholders holding all
outstanding Certificates.
Promptly after the execution of any amendment or consent, the
Administrator shall furnish written notification of the substance of such
amendment or consent to each Securityholder, the Indenture Trustee, the Note
Insurer and each Rating Agency.
It shall not be necessary for the consent of Securityholders pursuant to
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the
substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee, on behalf of the Issuer, the Note Insurer and the Indenture Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement
and the Opinion of Counsel referred to in Section 10.02(i)(A). The Owner
Trustee, on behalf of the Issuer, and the Indenture Trustee may, but shall
not be obligated to, enter into any such amendment that affects the Owner
Trustee's or the Indenture Trustee's, as applicable, own rights, duties or
immunities under this Agreement or otherwise.
Section 10.02. Protection of Title to Trust.
----------------------------
(a) The Servicer shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such a
manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Issuer and the Indenture Trustee in
the Receivables and the proceeds thereof. The Servicer shall deliver or
cause to be delivered to the Owner Trustee, the Note Insurer and the
Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above as soon as available following such filing.
(b) Neither the Depositor nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section 9-
402(7) of the UCC, unless it shall have given the Owner Trustee, the Note
Insurer and the Indenture Trustee at least five days' prior written notice
thereof and shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements.
(c) Each of the Depositor and the Servicer shall have an obligation to
give the Owner Trustee, the Note Insurer and the Indenture Trustee at least
5 days' prior written notice of any relocation of its principal executive
office if, as a result of such relocation, the applicable provisions of the
UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement, and
shall promptly file any such amendment or new financing statement. The
Servicer shall at all times maintain each office from which it shall service
Receivables, and its principal executive office, within the United States of
America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of each such Receivable, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on or with respect to each
such Receivable and the amounts from time to time deposited in the Collection
Account in respect of each such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that refer
to a Receivable shall indicate clearly the interest of the Issuer in such
Receivable and that such Receivable is owned by the Issuer and has been
pledged to the Indenture Trustee. Indication of the Issuer's interest in a
Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, the related Receivable shall have been paid in
full or repurchased.
(f) If at any time the Depositor or the Servicer shall propose to sell,
grant a security interest in or otherwise transfer any interest in motor
vehicle receivables to any prospective purchaser, lender or other transferee,
the Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and the Note
Insurer (so long as no Note Insurer Default shall have occurred and be
continuing) and their agents upon reasonable notice and at any time during
normal business hours to inspect, audit and make copies of and abstracts from
the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee, the
Note Insurer (so long as no Note Insurer Default shall have occurred and be
continuing) or the Indenture Trustee, within fifteen Business Days, a list of
all Receivables (by contract number and name of Obligor) then held as part of
the Trust, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished prior to
such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee, the Note Insurer
(so long as no Note Insurer Default shall have occurred and be continuing)
and the Indenture Trustee:
(A) promptly after the execution and delivery of this Agreement
and each amendment hereto and in connection with the transfer of
Subsequent Receivables from the Depositor to the Trust, an Opinion of
Counsel stating that, in the opinion of such counsel, either (i) all
financing statements and continuation statements have been executed and
filed that are necessary to fully preserve and protect the interest of
the Trust and the Indenture Trustee in the Receivables, and reciting the
details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (ii) no such action shall be necessary
to preserve and protect such interest; and
(B) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Initial Cutoff Date, an Opinion of Counsel, dated as of a date
during such 90-day period, stating that, in the opinion of such counsel,
either (i) all financing statements and continuation statements have
been executed and filed that are necessary to fully preserve and protect
the interest of the Trust and the Indenture Trustee in the Receivables,
and reciting the details of such filings or referring to prior Opinions
of Counsel in which such details are given, or (ii) no such action shall
be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i) or (ii) above shall specify
any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
Section 10.03. Notices. All demands, notices, communications and
-------
instructions upon or to the Depositor, the Servicer, the Issuer, the Owner
Trustee, the Note Insurer, the Indenture Trustee or any Rating Agency under
this Agreement shall be in writing, personally delivered, faxed and followed
by first class mail, or mailed by certified mail, return receipt requested,
and shall be deemed to have been duly given upon receipt (a) in the case of
the Depositor, to Seven World Trade Center, New York, New York 10048,
Attention: SSB Vehicle Securities Inc.; (b) in the case of the Servicer and
HMFC, to 10550 Talbert Avenue, Fountain Valley, California 92708, Attention:
Vice President and General Counsel with a copy to Vice President, Finance;
(c) in the case of the Backup Servicer, the Custodian, the Administrator or
the Indenture Trustee, to 450 West 33rd Street, 15th Floor, New York, New
York 11001, Attention: Structured Finance Services, Attention: Indenture
Trust Administration; (d) in the case of the Issuer or the Owner Trustee, at
the Corporate Trust Administration Department (as defined in the Trust
Agreement), (e) in the case of the Note Insurer, to 113 King Street, Armonk,
New York 10504, Attention: IPM-SF; (f) in the case of Moody's, to 99 Church
Street, New York, New York 10007, Attention: ABS Monitoring Department, and
(g) in the case of Standard & Poor's, to 25 Broadway (15th Floor), New York,
New York 10004, Attention: Asset Backed Surveillance Department; or, as to
each of the foregoing, at such other address as shall be designated by
written notice to the other parties. In addition, copies of such notices
shall be sent to the Note Insurer pursuant to Section 5.10.
Section 10.04. Assignment by the Depositor or the Servicer.
-------------------------------------------
Notwithstanding anything to the contrary contained herein, except as provided
in Sections 6.04 and 7.03 herein and as provided in the provisions of this
Agreement concerning the resignation of the Servicer, this Agreement may not
be assigned by the Depositor or the Servicer.
Section 10.05. Limitations on Rights of Others. The Note Insurer is
-------------------------------
an intended third party beneficiary of this Agreement entitled to enforce the
provisions hereof as if a party hereto. The provisions of this Agreement are
solely for the benefit of the Depositor, the Servicer, the Issuer, the Owner
Trustee, the Note Insurer, the Certificateholders, the Indenture Trustee and
the Noteholders, and nothing in this Agreement, whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Trust Estate or under or in respect of this Agreement
or any covenants, conditions or provisions contained herein.
Section 10.06. Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Section 10.07. Counterparts. This Agreement may be executed by the
------------
parties hereto in any number of counterparts, each of which when so executed
and delivered shall be an original, but all of which shall together
constitute but one and the same instrument.
Section 10.08. Headings. The headings of the various Articles and
--------
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 10.09. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 10.10. Assignment by Issuer. The Depositor hereby acknowledges
--------------------
and consents to any mortgage, pledge, assignment and grant of a security
interest by the Issuer to the Indenture Trustee pursuant to the Indenture for
the benefit of the Noteholders of all right, title and interest of the Issuer
in, to and under the Receivables or the assignment of any or all of the
Issuer's rights and obligations hereunder to the Indenture Trustee.
Section 10.11. Nonpetition Covenants. Notwithstanding any prior
---------------------
termination of this Agreement, the parties hereto shall not, prior to the
date that is one year and one day after the termination of this Agreement
with respect to the Issuer, the Certificate Trust or the Depositor,
acquiesce, petition or otherwise invoke or cause the Issuer, the Certificate
Trust or the Depositor to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the
Issuer, the Certificate Trust or the Depositor under any federal or state
bankruptcy, insolvency or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer, the Certificate Trust or the Depositor or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the
Issuer, the Certificate Trust or the Depositor.
Section 10.12. Limitation of Liability of Owner Trustee and Indenture
------------------------------------------------------
Trustee.
- -------
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee of the
Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer in accordance
with the priorities set forth herein. For all purposes of this Agreement, in
the performance of its duties or obligations hereunder or in the performance
of any duties or obligations of the Issuer hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by The Chase Manhattan Bank, not in its
individual capacity but solely as Indenture Trustee, and in no event shall
The Chase Manhattan Bank have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the
assets of the Issuer in accordance with the priorities set forth herein.
Section 10.13. Servicer Payment Obligation. The Servicer shall be
---------------------------
responsible for the payment of all fees and expenses of the Trust, the Owner
Trustee and the Indenture Trustee paid by any of them in connection with any
of their obligations under the Basic Documents to obtain or maintain any
required license under the Pennsylvania Motor Vehicle Sales Finance Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
HYUNDAI AUTO RECEIVABLES TRUST 1998-A
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust
By: /s/ Emmitt Harmon
---------------------------------------
Name: Emmitt Harmon
Title: Vice President
SSB VEHICLE SECURITIES INC.,
as Depositor
By: /s/ Ted Yarbrough
---------------------------------------
Name: Ted Yarbrough
Title: Vice President
HYUNDAI MOTOR FINANCE COMPANY,
as Servicer and Seller
By: /s/ Yang-Ki Chae
---------------------------------------
Name: Yang-Ki Chae
Title: Executive Vice President and Treasurer
THE CHASE MANHATTAN BANK,
as Indenture Trustee,
Administrator, Custodian
and Backup Servicer
By: /s/ Vada Haight
---------------------------------------
Name: Vada Haight
Title: Vice President
SCHEDULE A
Schedule of Receivables
-----------------------
(To be Delivered to the Trust at Closing and Supplemented
on the Subsequent Transfer Date for Subsequent Receivables)
SCHEDULE B
Location of Receivable Files
----------------------------
Hyundai Motor Finance Company
10550 Talbert Avenue
Fountain Valley, CA 92708
Exhibit 10.2
NOTE GUARANTY INSURANCE POLICY
OBLIGATIONS: Hyundai Auto Receivables Trust 1998-A POLICY NUMBER: 26195
$220,000,000 5.90% Asset Backed Notes, Class A-1
$80,150,000 6.05% Asset Backed Notes, Class A-2
MBIA Insurance Corporation (the "Insurer"), in consideration of the
payment of the premium and subject to the terms of this Note Guaranty
Insurance Policy (this "Policy"), hereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete Insured
Payment will be received from the Insurer by The Chase Manhattan Bank or its
successors, as indenture trustee for the Owners (the "Trustee"), on behalf of
the Owners, for distribution by the Trustee to each Owner of each Owner's
proportionate share of the Insured Payment. The Insurer's obligations
hereunder with respect to a particular Insured Payment shall be discharged to
the extent funds equal to the applicable Insured Payment are received by the
Trustee, whether or not such funds are properly applied by the Trustee.
Insured Payments shall be made only at the time set forth in this Policy and
no accelerated Insured Payments shall be made regardless of any acceleration
of the Obligations, unless such acceleration is at the sole option of the
Insurer.
Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Trust or the Trustee
for withholding taxes, if any (including interest and penalties in respect of
any such liability).
The Insurer will pay any Insured Payment that is a Preference Amount on
the Business Day following receipt on a Business Day by the Fiscal Agent (as
described below) of (i) a certified copy of the order requiring the return of
a preference payment, (ii) an opinion of counsel satisfactory to the Insurer
that such order is final and not subject to appeal, (iii) an assignment in
such form as is reasonably required by the Insurer, irrevocably assigning to
the Insurer all rights and claims of the Owner relating to or arising under
the Obligations against the debtor which made such preference payment or
otherwise with respect to such preference payment and (iv) appropriate
instruments to effect the appointment of the Insurer as agent for such Owner
in any legal proceeding related to such preference payment, such instruments
being in a form satisfactory to the Insurer, provided that if such documents
are received after 12:00 noon New York City time on such Business Day, they
will be deemed to be received on the following Business Day. Such payments
shall be disbursed to the receiver or trustee in bankruptcy named in the final
order of the court exercising jurisdiction on behalf of the Owner and not to
any Owner directly unless such Owner has returned principal or interest paid
on the Obligations to such receiver or trustee in bankruptcy, in which case
such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable hereunder no later than
12:00 noon New York City time on the later of the Distribution Date on which
the related Deficiency Amount is due or the third Business Day following
receipt in New York, New York on a Business Day by State Street Bank and Trust
Company, N.A., as Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as described
below); provided that if such Notice is received after 12:00 noon New York
City time on such Business Day, it will be deemed to be received on the
following Business Day. If any such Notice received by the Fiscal Agent is not
in proper form or is otherwise insufficient for the purpose of making claim
hereunder it shall be deemed not to have been received by the Fiscal Agent for
purposes of this paragraph, and the Insurer or the Fiscal Agent, as the case
may be, shall promptly so advise the Trustee and the Trustee may submit an
amended Notice.
Insured Payments due hereunder unless otherwise stated herein will be
disbursed by the Fiscal Agent to the Trustee on behalf of the Owners by wire
transfer of immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference Amounts, any amount
held by the Trustee for the payment of such Insured Payment and legally
available therefor.
The Fiscal Agent is the agent of the Insurer only and the Fiscal Agent
shall in no event be liable to Owners for any acts of the Fiscal Agent or any
failure of the Insurer to deposit or cause to be deposited, sufficient funds
to make payments due under this Policy.
Subject to the terms of the Agreement, the Insurer shall be subrogated to
the rights of each Owner to receive payments under the Obligations to the
extent of any payment by the Insurer hereunder.
As used herein, the following terms shall have the following meanings:
"Agreement" means the Sale and Servicing Agreement dated as of April 1,
1998 among Hyundai Auto Receivables Trust 1998-A, as Issuer, SSB Vehicle
Securities Inc., as Depositor, Hyundai Motor Finance Company, as Seller and
Servicer, and the Trustee, as Indenture Trustee, Custodian, Administrator and
Backup Servicer, without regard to any amendment or supplement thereto.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which the Insurer or banking institutions in New York City or in the city in
which the corporate trust office of the Trustee under the Agreement is located
are authorized or obligated by law or executive order to close.
"Deficiency Amount" means, on any Distribution Date, the sum of (a) the
amount by which the Noteholders' Interest Distributable Amount exceeds the sum
of (x) the Total Distribution Amount remaining after the payment of clauses
(i) through (ii) under Section 5.06(b) of the Agreement and (y) the amounts on
deposit in the Reserve Account and (b)(i) the amount by which the Note Balance
(after taking into account all distributions of principal to be made on such
Distribution Date) exceeds the sum of the Pool Balance as of the close of
business on the last day of the preceding Collection Period; or (ii)(a) on the
Class A-1 Final Scheduled Distribution Date, the amount by which the Class A-1
Note Balance exceeds the sum of (x) the Total Distribution Amount remaining
after the payment of (i) through (iv) under Section 5.06(b) of the Agreement
and (y) the amounts on deposit in the Reserve Account and (b) on the Class A-2
Final Scheduled Distribution Date, the amount by which the Class A-2 Note
Balance exceeds the sum of (x) the Total Distribution Amount remaining after
the payment of (i) through (iv) under Section 5.06(b) of the Agreement and (y)
the amounts on deposit in the Reserve Account.
"Insured Payment" means (i) as of any Distribution Date any Deficiency
Amount and (ii) any Preference Amount.
"Notice" means the telephonic or telegraphic notice, promptly confirmed
in writing by fax substantially in the form of Exhibit A attached hereto, the
original of which is subsequently delivered by registered or certified mail,
from the Trustee specifying the Insured Payment which shall be due and owing
on the applicable Distribution Date.
"Owner" means each Note Owner (as defined in the Indenture) who, on the
applicable Distribution Date, is entitled under the terms of the applicable
Notes to payment thereunder.
"Preference Amount" means any amount previously distributed to an Owner
on the Obligations that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with
a final nonappealable order of a court having competent jurisdiction.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Agreement as of the date of execution
of this Policy, without giving effect to any subsequent amendment to or
modification of the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice hereunder or service of process on the Fiscal Agent may be
made at the address listed below for the Fiscal Agent or such other address as
the Insurer shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 61 Broadway, 15th Floor, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Trustee in writing.
This Policy is being issued under and pursuant to, and shall be construed
under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by this Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
This Policy is not cancelable for any reason. The premium on this Policy
is not refundable for any reason including payment, or provision being made
for payment, prior to maturity of the Obligations.
IN WITNESS WHEREOF, the Insurer has caused this Policy to be executed and
attested this 16th day of April, 1998.
MBIA INSURANCE CORPORATION
By /s/ Richard Weill
-----------------------------
Title: President
Attest:
By Ann McKenna
--------------------------
Assistant Secretary
EXHIBIT A
TO NOTE GUARANTY INSURANCE POLICY
NUMBER: 26195
NOTICE UNDER NOTE GUARANTY
INSURANCE POLICY NUMBER: 26195
State Street Bank and Trust Company, N.A., as Fiscal Agent
for MBIA Insurance Corporation
61 Broadway, 15th Floor
New York, NY 10006
Attention: Municipal Registrar and
Paying Agency
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
The undersigned, a duly authorized officer of [NAME OF TRUSTEE], as
indenture trustee (the "Trustee"), hereby certifies to State Street Bank and
Trust Company, N.A. (the "Fiscal Agent") and MBIA Insurance Corporation (the
"Insurer"), with reference to Note Guaranty Insurance Policy Number: 26195
(the "Policy") issued by the Insurer in respect of the Hyundai Auto
Receivables Trust 1998-A, $220,000,000 5.90% Asset Backed Notes, Class A-1 and
$80,150,000 6.05% Asset Backed Notes Class A-2 (the "Obligations"), that:
(i) ______ the Trustee is the indenture trustee under the Sale and
Servicing Agreement dated as of April 1, 1998, among Hyundai Auto Receivables
Trust 1998-A, as Issuer, SSB Vehicle Securities Inc., as Depositor, Hyundai
Motor Finance Company, as Seller and Servicer, and The Chase Manhattan Bank,
as Indenture Trustee, Custodian, Administrator and Backup Servicer;
(ii) _____ the amount due under clause (i) of the definition of
Deficiency Amount for the Distribution Date occurring on
_____________ (the "Applicable Distribution Date") is $ __________ ;
(iii) _____ the amount due under clause (ii) of the definition of
Deficiency Amount for the Applicable Distribution Date is $
__________ ;
(iv) the sum of the amounts listed in paragraphs (ii) and (iii)
above is $ (the "Deficiency Amount");
(v) ______ the amount of previously distributed payments on the
Obligations that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the
Bankruptcy Code in accordance with a final nonappealable order of a
court having competent jurisdiction is $ ___________ (the
"Preference Amount");
(vi) the total Insured Payment due is $ , which amount equals the
sum of the Deficiency Amount and the Preference Amount;
(vii) ____ the Trustee is making a claim under and pursuant to the
terms of the Policy for the dollar amount of the Insured Payment set
forth in (iv) above to be applied to the payment of the Deficiency
Amount for the Applicable Distribution Date in accordance with the
Agreement and for the dollar amount of the Insured Payment set forth
in (v) above to be applied to the payment of any Preference Amount;
and
(viii) the Trustee directs that payment of the Insured Payment be
made to the following account by bank wire transfer of federal or
other immediately available funds in accordance with the terms of
the Policy: [TRUSTEE'S ACCOUNT NUMBER].
Any capitalized term used in this Notice and not otherwise defined herein
shall have the meaning assigned thereto in the Policy.
Any Person Who Knowingly And With Intent To Defraud Any Insurance Company
Or Other Person Files An Application For Insurance Or Statement Of Claim
Containing Any Materially False Information, Or Conceals For The Purpose Of
Misleading, Information Concerning Any Fact Material Thereto, Commits A
Fraudulent Insurance Act, Which Is A Crime, And Shall Also Be Subject To A
Civil Penalty Not To Exceed Five Thousand Dollars And The Stated Value Of The
Claim For Each Such Violation.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
under the Policy as of the day of _________ , _____ .
[NAME OF TRUSTEE], as Trustee
By _____________________________________________________________
Title __________________________________________________________
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus Supplement of
Hyundai Auto Receivables Trust 1998-A, of our report dated February 3, 1998,
on our audits of the consolidated financial statements of MBIA Insurance
Corporation and Subsidiaries as of December 31, 1997 and 1996 and for each of
the three years in the period ended December 31, 1997. We also consent to the
reference to our firm under the caption "Experts" in such Prospectus
Supplement.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
New York, New York
April 14, 1998
