As filed with the Securities and Exchange Commission on November 3, 2021
Registration No. 333-__________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SF-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CAPITAL ONE AUTO RECEIVABLES, LLC
as depositor to the issuing entities described herein
(Exact name of registrant as specified in its charter)
Delaware | 31-1750007 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
Commission File Number of depositor: 333-_______
Central Index Key Number of depositor: 0001133438
Central Index Key Number of sponsor: 0000047288
Capital One, National Association
(Exact name of sponsor as specified in its charter)
1680 Capital One Drive
McLean, Virginia 22102
(Address, including zip code, and telephone number, including area code, of registrants principal executive offices)
Matthew W. Cooper
General Counsel
Capital One Financial Corporation
1680 Capital One Drive
McLean, Virginia 22102
(703) 720-1000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies To:
Juan E. Yrausquin | Angela M. Ulum | |
Senior Director, Associate General Counsel | Mayer Brown LLP | |
Capital One Financial Corporation | 71 South Wacker Drive | |
1680 Capital One Drive | Chicago, Illinois 60606 | |
McLean, Virginia 22102 | (312) 782-0600 |
Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective, as determined by market conditions.
If any of the securities being registered on this Form SF-3 are to be offered pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☒
If this Form SF-3 is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐
If this Form SF-3 is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐
CALCULATION OF REGISTRATION FEE
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Title of each class of securities to be registered |
Amount to be registered |
Proposed maximum offering price per unit(1) |
Proposed maximum aggregate offering price |
Amount of registration fee(2) | ||||
Asset-Backed Notes |
$1,000,000 | 100% | $1,000,000 | $92.70 | ||||
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(1) | Estimated for purposes of calculating the registration fee. |
(2) | Calculated pursuant to Rule 457(o) under the Securities Act of 1933, as amended. |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. We may not deliver the notes described in this preliminary prospectus until we deliver a final prospectus. This preliminary prospectus is not an offer to sell these notes nor is it seeking an offer to buy these notes in any state where the offer or sale is not permitted.
Subject to Completion, dated [_______] [ ], 20[ ]
PROSPECTUS
$[ ](1)
Capital One Prime Auto Receivables Trust 20[ ]-[ ]
Issuing Entity
Central Index Key Number: [ ]
Capital One Auto Receivables, LLC Depositor Central Index Key Number: 0001133438 |
Capital One, National Association Sponsor and Servicer Central Index Key Number: 0000047288 |
You should carefully read the risk factors set forth under Risk Factors beginning on page [ ] of this prospectus.
The notes are asset-backed securities. The notes will be the obligation of the issuing entity solely and will not be obligations of or guaranteed by any other person or entity.
Capital One Prime Auto Receivables Trust 20[ ] [ ] will issue the following asset-backed notes:
Initial Note Balance(1) |
Offered Amount |
Interest Rate | Final Scheduled Payment Date |
Price to Public(2) |
Underwriting Discount |
Proceeds to the Depositor |
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Class A-1 Notes |
$ | $ | % | % | % | % | ||||||||||||||||||||||
Class A-2[-A] Notes(3) |
} | $ | $ | % | % | % | % | |||||||||||||||||||||
[Class A-2-B Notes(3)] |
$ | $ | |
[Benchmark + [ ]%](3) |
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% | % | % | ||||||||||||||||||||
Class A-3 Notes(4) |
} | $ | $ | % | % | % | % | |||||||||||||||||||||
Class A-4 Notes(4) |
$ | $ | % | % | % | % | ||||||||||||||||||||||
Class B Notes(5) |
$ | $ | % | |||||||||||||||||||||||||
Class C Notes(5) |
$ | $ | % | |||||||||||||||||||||||||
[Class D Notes](5) |
$ | $ | % | |||||||||||||||||||||||||
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Total |
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(1) | [Not less than 5% of each class of notes will be retained by the sponsor or one or more majority-owned affiliates of the sponsor (which for EU risk retention purposes and UK risk retention purposes will be a wholly-owned special purpose subsidiary of CONA) to satisfy the credit risk retention obligations of the sponsor as described under The SponsorU.S. Credit Risk Retention and The SponsorSecuritization Regulations in this prospectus.] |
(2) | Plus accrued interest, if any, from the closing date. |
(3) | [The interest rate for each class of notes will be a fixed rate, a floating rate or a combination of a fixed rate and a floating rate if that class has both a fixed rate tranche and a floating rate tranche. The Class A-2-B notes will accrue interest at a floating rate based on a benchmark, which initially will be [insert applicable floating rate benchmark]. For more information on how the benchmark is determined, you should read The NotesPayments of Interest in this prospectus.] [NOTE: If floating rate notes are offered, the applicable prospectus will disclose the terms of the specific index, which will be an index other than LIBOR, that will be used to determine interest payments for such floating rate tranches.]] |
(4) | [The initial note balance of the Class A-3 notes and the Class A-4 notes may change, but will be determined on or prior to the day of pricing of those classes of notes. The initial note balance of the issued Class A-3 notes is expected to be within the range of $[ ]$[ ], and the initial note balance of the issued Class A-4 notes is expected to be within the range of $[ ]$[ ]. The offered amount of each of the Class A-3 notes and the Class A-4 notes will be 95% of the related initial note balance of such class. See Risk FactorsRisks related to the issuance of multiple classes of notes, an unknown allocation of notes or retention of notes There are risks associated with the unknown initial note balance of the Class A-3 notes and the Class A-4 notes.] |
(5) | [The Class B notes, the Class C notes and the Class D notes are not being offered hereby and will be retained by the sponsor or another majority-owned affiliate of the sponsor, but will be entitled to certain payments as described herein.] |
| The notes are payable [solely][principally] from the assets of the issuing entity, which consist primarily of receivables which are motor vehicle retail installment sale contracts that are secured by new and used automobiles, light-duty trucks, SUVs and vans, [payments due under an interest rate [swap] [cap] agreement] [and funds on deposit in the reserve account]. [A portion of the receivables may be acquired by the issuing entity subsequent to the closing date during the funding period described in this prospectus using amounts deposited in a pre-funding account on the closing date.] [[ ] will be the counterparty to the interest rate swap agreement]. [[ ] will be the cap provider under the interest rate cap agreement.] |
| The issuing entity will pay interest on and principal of the notes on the [ ] day of each month, or, if the [ ] is not a business day, the next business day, starting on [ ]. |
| [The issuing entity will not pay principal during the revolving period, which is scheduled to terminate after the payment date occurring on [ ]. However, if the revolving period terminates early as a result of an early amortization event, principal payments may commence prior to that date.] |
| Credit enhancement for the notes will consist of a reserve account with an initial deposit of approximately $[ ], [excess interest on the receivables,] [overcollateralization,] and [the yield supplement overcollateralization amount], and, in the case of the Class A notes, Class B notes [and Class C notes], the subordination of certain payments to the noteholders of less senior classes of notes. |
| The issuing entity will also issue non-interest bearing certificates representing the equity interest in the issuing entity, which initially will be issued to the depositor and are not being offered hereby. [The depositor intends to sell [a portion][the majority] of the certificates on or after the closing date.] |
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these notes or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The issuing entity is being structured so as not to constitute a covered fund as defined in the regulations implementing Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly known as the Volcker Rule.
[______________] |
[_________________ | ] |
The date of this prospectus is [ ]
Prospectus
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CERTAIN CONSIDERATIONS FOR ERISA AND OTHER U.S. BENEFIT PLANS |
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Sale and Assignment of Receivables and Related Security Interests |
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[Acquisition of Subsequent Receivables During Funding Period] |
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Indemnification of the Indenture Trustee and the Owner Trustee |
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Modifications of Receivables and Extensions of Receivables Final Payment Dates |
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Requirements for Certain EU and UK Regulated Persons and Affiliates |
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WHERE TO FIND INFORMATION IN THIS PROSPECTUS
This prospectus provides information about the issuing entity, Capital One Prime Auto Receivables Trust 20[ ]-[ ], including terms and conditions that apply to the notes to be offered by this prospectus.
In this prospectus, the terms we, us, and our refer to Capital One Auto Receivables, LLC, the depositor.
We have not authorized anyone to provide any information other than that contained or incorporated by reference in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. If you receive any other information, you should not rely on it. We are not offering the notes in any jurisdiction where the offer is not permitted. We do not claim that the information in this prospectus is accurate on any date other than the date stated on the cover.
We have started with two introductory sections in this prospectus describing the notes and the issuing entity in abbreviated form, followed by a more complete description of the terms of the offering of the notes. The introductory sections are:
| Summary of Termsprovides important information concerning the amounts and the payment terms of each class of notes and gives a brief introduction to the key structural features of the issuing entity; and |
| Risk Factorsdescribes briefly some of the risks to investors in the notes. |
We include cross-references in this prospectus to captions in these materials where you can find additional related information. You can find the page numbers on which these captions are located under the Table of Contents in this prospectus. You can also find a listing of the pages where the principal terms are defined under Index beginning on page [__] of this prospectus.
If you have received a copy of this prospectus in electronic format, and if the legal prospectus delivery period has not expired, you may obtain at no cost a paper copy of this prospectus from the depositor or from the underwriters upon request.
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After the notes are issued, unaudited monthly reports containing information concerning the issuing entity, the notes and the receivables will be prepared by Capital One, National Association (CONA), as the servicer, and sent on behalf of the issuing entity to the indenture trustee, which will forward the same to Cede & Co. (Cede), as nominee of The Depository Trust Company (DTC).
The indenture trustee will also make such reports (and, at its option, any additional files containing the same information in an alternative format) available to noteholders each month via its website, which is presently located at [ ]. Assistance in using this website may be obtained by calling the indenture trustees customer service desk at [ ]. The indenture trustee will notify the noteholders in writing of any changes in the address or means of access to the website where the reports are accessible.
The reports do not constitute financial statements prepared in accordance with generally accepted accounting principles. CONA, the depositor and the issuing entity do not intend to send any of their financial reports to the beneficial owners of the notes. The issuing entity will file with the Securities and Exchange Commission (the SEC) all required annual reports on Form 10-K, distribution reports on Form 10-D and current reports on Form 8-K. Those reports will be filed with the SEC under the name Capital One Prime Auto Receivables Trust 20[ ]-[ ] and file number 333-[ ]. The issuing entity incorporates by reference any current reports on Form 8-K filed after the date of this prospectus by or on behalf of the issuing entity before the termination of the offering of the notes, but not any information that is furnished but that is not deemed filed. The issuing entitys annual reports on Form 10-K, distribution reports on Form 10-D and current reports on Form 8-K, and amendments to those reports filed with, or otherwise furnished to, the SEC will not be made available on CONAs website because those reports are made available to the public on the SEC website as described below.
The depositor has filed with the SEC a Registration Statement (333-[ ]) on Form SF-3 that includes this prospectus and certain amendments and exhibits under the Securities Act of 1933, as amended, relating to the offering of the notes described herein. This prospectus does not contain all of the information in the Registration Statement. The SEC maintains a website (http://www.sec.gov) that contains reports, registration statements, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
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NOTICE TO INVESTORS: THE UNITED KINGDOM
PROHIBITION ON SALES TO UK RETAIL INVESTORS
THE NOTES ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY UK RETAIL INVESTOR IN THE UNITED KINGDOM (UK). FOR THESE PURPOSES, A UK RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF: (I) A RETAIL CLIENT, AS DEFINED IN POINT (8) OF ARTICLE 2 OF COMMISSION DELEGATED REGULATION (EU) 2017/565 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED, THE EUWA); OR (II) A CUSTOMER WITHIN THE MEANING OF THE PROVISIONS OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMENDED (THE FSMA) AND ANY RULES OR REGULATIONS MADE UNDER THE FSMA (SUCH RULES AND REGULATIONS AS AMENDED) TO IMPLEMENT DIRECTIVE (EU) 2016/97 (AS AMENDED), WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT, AS DEFINED IN POINT (8) OF ARTICLE 2(1) OF REGULATION (EU) NO 600/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUWA, AND AS AMENDED; OR (III) NOT A QUALIFIED INVESTOR (A UK QUALIFIED INVESTOR) AS DEFINED IN ARTICLE 2 OF REGULATION (EU) 2017/1129 (AS AMENDED), AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUWA, AND AS AMENDED (THE UK PROSPECTUS REGULATION). CONSEQUENTLY NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014 (AS AMENDED), AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUWA, AND AS AMENDED (THE UK PRIIPS REGULATION) FOR OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO UK RETAIL INVESTORS IN THE UK HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO ANY UK RETAIL INVESTOR IN THE UK MAY BE UNLAWFUL UNDER THE UK PRIIPS REGULATION.
OTHER UK OFFERING RESTRICTIONS
THIS PROSPECTUS IS NOT A PROSPECTUS FOR THE PURPOSE OF THE UK PROSPECTUS REGULATION. THIS PROSPECTUS HAS BEEN PREPARED ON THE BASIS THAT ANY OFFERS OF NOTES IN THE UK WILL BE MADE ONLY TO A UK QUALIFIED INVESTOR. ACCORDINGLY, ANY PERSON MAKING OR INTENDING TO MAKE AN OFFER IN THE UK OF NOTES WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED IN THIS PROSPECTUS MAY ONLY DO SO TO ONE OR MORE UK QUALIFIED INVESTORS. NONE OF THE ISSUING ENTITY, THE DEPOSITOR OR ANY OF THE UNDERWRITERS HAS AUTHORIZED, NOR DO THEY AUTHORIZE, THE MAKING OF ANY OFFER OF NOTES IN THE UK OTHER THAN TO UK QUALIFIED INVESTORS.
[THE CLASS A-1 NOTES HAVE NOT BEEN AND WILL NOT BE OFFERED IN THE UK OR TO UK PERSONS AND NO PROCEEDS OF ANY CLASS A-1 NOTES WILL BE RECEIVED IN THE UK.]
OTHER UK REGULATORY RESTRICTIONS
THE NOTES MUST NOT BE OFFERED OR SOLD AND THIS PROSPECTUS AND ANY OTHER DOCUMENT IN CONNECTION WITH THIS PROSPECTUS AND ISSUANCE OF THE NOTES MUST NOT BE COMMUNICATED OR CAUSED TO BE COMMUNICATED IN THE UK EXCEPT TO PERSONS HAVING PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND QUALIFYING AS INVESTMENT PROFESSIONALS UNDER ARTICLE 19 (INVESTMENT PROFESSIONALS) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE ORDER), OR TO PERSONS WHO FALL WITHIN ARTICLE 49(2)(A)-(D) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.) OF THE ORDER OR WHO OTHERWISE FALL WITHIN AN EXEMPTION SET FORTH IN SUCH ORDER SUCH THAT SECTION 21(1) OF THE FSMA DOES NOT APPLY TO THE ISSUING ENTITY OR ARE PERSONS TO WHOM THIS PROSPECTUS OR ANY OTHER SUCH DOCUMENT MAY OTHERWISE LAWFULLY BE COMMUNICATED OR CAUSED TO BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING
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REFERRED TO AS RELEVANT PERSONS). IN THE UK, ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS PROSPECTUS RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. NEITHER THIS PROSPECTUS NOR THE NOTES ARE OR WILL BE AVAILABLE IN THE UK TO PERSONS WHO ARE NOT RELEVANT PERSONS AND THIS PROSPECTUS MUST NOT BE ACTED ON OR RELIED ON BY PERSONS IN THE UK WHO ARE NOT RELEVANT PERSONS. THE COMMUNICATION OF THIS PROSPECTUS TO ANY PERSON IN THE UK WHO IS NOT A RELEVANT PERSON IS UNAUTHORIZED AND MAY CONTRAVENE THE FSMA.
NOTICE TO INVESTORS: EUROPEAN ECONOMIC AREA
PROHIBITION ON SALES TO EU RETAIL INVESTORS
THE NOTES ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY EU RETAIL INVESTOR IN THE EUROPEAN ECONOMIC AREA (THE EEA). FOR THESE PURPOSES, AN EU RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF: (I) A RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF DIRECTIVE 2014/65/EU (AS AMENDED, MIFID II); OR (II) A CUSTOMER WITHIN THE MEANING OF DIRECTIVE (EU) 2016/97 (AS AMENDED), WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT AS DEFINED IN POINT (10) OF ARTICLE 4(1) OF MIFID II; OR (III) NOT A QUALIFIED INVESTOR (AN EU QUALIFIED INVESTOR) AS DEFINED IN ARTICLE 2 OF REGULATION (EU) 2017/1129 (AS AMENDED) (THE EU PROSPECTUS REGULATION). CONSEQUENTLY, NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014 (AS AMENDED, THE EU PRIIPS REGULATION) FOR OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO EU RETAIL INVESTORS IN THE EEA HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO ANY EU RETAIL INVESTOR IN THE EEA MAY BE UNLAWFUL UNDER THE EU PRIIPS REGULATION.
OTHER EEA OFFERING RESTRICTIONS
THIS PROSPECTUS IS NOT A PROSPECTUS FOR THE PURPOSE OF THE EU PROSPECTUS REGULATION. THIS PROSPECTUS HAS BEEN PREPARED ON THE BASIS THAT ANY OFFERS OF NOTES IN THE EEA WILL BE MADE ONLY TO AN EU QUALIFIED INVESTOR. ACCORDINGLY, ANY PERSON MAKING OR INTENDING TO MAKE AN OFFER IN THE EEA OF NOTES WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED IN THIS PROSPECTUS MAY ONLY DO SO TO ONE OR MORE EU QUALIFIED INVESTORS. NONE OF THE ISSUING ENTITY, THE DEPOSITOR OR ANY OF THE UNDERWRITERS HAS AUTHORIZED, NOR DO THEY AUTHORIZE, THE MAKING OF ANY OFFER OF NOTES IN THE EEA OTHER THAN TO EU QUALIFIED INVESTORS.
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SUMMARY OF STRUCTURE AND FLOW OF FUNDS
This structural summary briefly describes certain major structural components, the relationship among the parties, the flow of funds prior to an acceleration after an event of default and certain other material features of the transaction. This structural summary does not contain all of the information that you need to consider in making your investment decision. You should carefully read this entire prospectus to understand all the terms of this offering.
Structural Diagram
(1) | [Neither the certificates, which represent an equity interest in the issuing entity, nor the Class B notes, the Class C notes [or the Class D notes] are being offered hereby.] [The depositor intends to sell [a portion][the majority] of the certificates on or after the closing date.] |
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(2) | [Not less than 5% of each class of notes and the certificates will be retained by CONA (which for EU risk retention purposes and UK risk retention purposes will be a wholly-owned special purpose subsidiary of CONA) or one or more majority-owned affiliates of CONA to satisfy the credit risk retention obligations of CONA described under The SponsorU.S. Credit Risk Retention and Securitization Regulations in this prospectus.] |
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Flow of Funds
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This summary provides an overview of selected information from this prospectus and does not contain all of the information that you need to consider in making your investment decision. This summary provides an overview of certain information to aid your understanding. You should carefully read this entire prospectus to understand all of the terms of this offering.
Issuing Entity
Capital One Prime Auto Receivables Trust 20[ ][ ], a Delaware statutory trust, will be the issuing entity of the notes and the certificates. The primary assets of the issuing entity will be a pool of receivables, which are motor vehicle retail installment sale contracts that are secured by new and used automobiles, light-duty trucks, SUVs and vans.
Depositor
Capital One Auto Receivables, LLC, a Delaware limited liability company and a wholly-owned special purpose subsidiary of Capital One, National Association, is the depositor. The depositor will sell the receivables to the issuing entity. The depositor will be the initial holder of the issuing entitys certificates[, although the depositor intends to sell [a portion of][the majority of] the certificates on or after the closing date.] The certificates are not being offered by this prospectus.
You may contact the depositor by mail at [1600 Capital One Drive, Room 27907B, McLean, Virginia 22102].
Sponsor
Capital One, National Association, a national banking association, known as CONA will be the sponsor of the transaction described in this prospectus.
Servicer
CONA, operating through its Capital One Auto Finance division and in its capacity as the servicer, will service the receivables held by the issuing entity.
* | NOTE: Disclose transactions that are not arms length or transactions that are outside the ordinary course between sponsor, depositor or issuing entity and any other transaction party. |
The servicer will be entitled to receive a servicing fee for each collection period. The servicing fee for any payment date will be an amount equal to the product of (1) [ ]%; (2) one-twelfth [(or, in the case of the first payment date, [a fraction equal to the number of days from but not including the initial cut-off date to and including the last day of the first collection period over 360][one-sixth])], and (3) the net pool balance of the receivables as of the first day of the related collection period (or, for the first payment date, as of the cut-off date). As additional compensation, the servicer will be entitled to retain all supplemental servicing fees [and reimbursements and investment earnings (net of investment losses and expenses) from amounts on deposit in the collection account [and the reserve account]]. The servicing fee, together with any portion of the servicing fee that remains unpaid from prior payment dates, will be payable on each payment date from funds on deposit in the collection account with respect to the collection period preceding such payment date, including funds, if any, deposited into the collection account from the reserve account.
Originator
CONA, operating through its Capital One Auto Finance division, acquired the receivables from motor vehicle dealers. We refer to CONA as the originator. [Each of the receivables to be transferred to the issuing entity during the funding period will have been acquired by CONA from a motor vehicle dealer.]
CONA will sell all of the receivables to be included in the receivables pool to the depositor and the depositor will sell those receivables to the issuing entity.
Administrator
CONA will be the administrator of the issuing entity, and in such capacity will provide administrative and ministerial services for the issuing entity.
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Trustees
[ ], a [ ], will be the indenture trustee.
[ ], a [ ], will be the owner trustee.
Asset Representations Reviewer
[ ], a [ ], will be the asset representations reviewer.
[Swap Counterparty]
[[ ], a [ ], will be the swap counterparty] [insert disclosure required by Item 1115 of Regulation AB].
[Cap Provider]
[[ ], a [ ], will be the cap provider.] [insert disclosure required by Item 1115 of Regulation AB.]
The issuing entity will offer the following notes:
Class |
Offered Amount(1) |
Interest Rate(2) |
Final Scheduled Payment Date | |||||
Class A-1 Notes |
$[] | []% | [] | |||||
Class A-2[-A] Notes |
} | []% | ||||||
[Class A-2-B Notes] |
$[] | [Benchmark] + []%(2) | [] | |||||
Class A-3 Notes(3) |
} | $[] | []% | [] | ||||
Class A-4 Notes(3) |
$[] | []% | [] |
(1) [Not less than 5% of each class of notes will be retained by CONA or one or more majority-owned affiliates of CONA (which for EU risk retention purposes and UK risk retention purposes will be a wholly-owned special purpose subsidiary of CONA) to satisfy the credit risk retention obligations of CONA described under The SponsorU.S. Credit Risk Retention and Securitization Regulations in this prospectus. $[] of the Class A-1 notes, $[] of the Class A-2 notes and the Class A-3 notes in the aggregate, and $[] of the Class A-4 notes are not being offered hereunder.]
(2) [The interest rate for each class of notes will be a fixed rate, a floating rate or a combination of a fixed rate and a floating rate if that class has both a fixed rate tranche and a floating rate tranche. The Class A-2-B notes will accrue interest at a floating rate based on a benchmark, which initially will be [insert applicable floating rate benchmark]. For more information on how the benchmark is determined, you should read The NotesPayments of Interest in this prospectus.] [NOTE: If floating rate notes are offered, the applicable prospectus will disclose the terms of the specific index, which will be an index other than LIBOR, that will be used to determine interest payments for such floating rate tranches.]] (3) [The initial note balance of the Class A-3 notes and the Class A-4 notes may change, but will be determined on or prior to the day of pricing of those classes of notes. The initial note balance of the issued Class A-3 notes is expected to be within the range of $[ ]$[ ], and the initial note balance of the issued Class A-4 notes is expected to be within the range of $[ ]$[ ]. The offered amount of each of the Class A-3 notes and the
Class A-4 notes will be 95% of the related initial note balance of such class. See Risk FactorsRisks related to the issuance of multiple classes of notes, an unknown allocation of notes or retention of notes There are risks associated with the unknown initial note balance of the Class A-3 notes and the Class A-4 notes.]
[The Class A-2-A notes and the Class A-2-B notes are sometimes together referred to as the Class A-2 notes. The Class A-2-A notes rank pari passu with the Class A-2-B notes.]
[The allocation of the principal balance between the Class A-2-A notes and Class A-2-B notes will be determined no later than the day of pricing and may result in any number of possible allocation scenarios, including a scenario in which the entire principal balance of the Class A-2 notes is allocated to the floating rate Class A-2-B notes and none of the principal balance is allocated to the fixed rate Class A-2-A notes.]
[The interest rate for each class of notes will be a fixed rate or a combination of a fixed and floating rate if that class has both a fixed rate tranche and a floating rate tranche. For example, the Class [A-2] notes are divided into fixed and floating rate tranches, and the Class [A-2-A] notes are the fixed rate notes and the Class [A-2-B] notes are the floating rate notes. We refer in this prospectus to notes that bear interest at a floating rate as floating rate notes, and to notes that bear interest at a fixed rate as fixed rate notes.
For a description of how interest will be calculated on the floating rate notes, see The NotesPayments of Interest in this prospectus.]
[The issuing entity will also issue $[] of Class B []% asset-backed notes, $[] of Class C []% asset-backed notes and $[] of Class D []% asset-backed notes, which are not being offered by this prospectus. The final scheduled payment date for the Class B notes is [ ]. The final scheduled payment date for the Class C notes is [ ]. The final scheduled payment date for the Class D notes is [ ]. The Class B notes, Class C notes and the Class D notes [are not being publicly registered and will be retained by the sponsor or another majority-owned affiliate of the sponsor]. Information about the Class B notes, Class C notes and the Class D notes is set forth herein solely to provide a better understanding of the Class A notes.]
We refer to the Class A-1 notes, the Class A-2 notes, the Class A-3 notes and the Class A-4 notes as the Class A notes. We refer to the Class A notes, the Class B notes, the Class C notes [and the Class D notes,] collectively as the notes. The Class A notes, which we refer to as the offered notes, are the only securities that are being offered by this prospectus.
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The notes are issuable in a minimum denomination of $[1,000] and integral multiples of $[1,000] in excess thereof.
So long as the Class A notes are outstanding, the Class A notes will be the controlling class. After the Class A notes have been paid in full, the Class B notes will be the controlling class, after the Class B notes have been paid in full, the Class C notes will be the controlling class [and after the Class C notes have been paid in full, the Class D notes will be the controlling class].
The issuing entity expects to issue the notes on or about [ ], which we refer to as the closing date.
On the closing date, the issuing entity will issue subordinated and non-interest bearing certificates in a nominal aggregate principal amount of $[100,000], which represent the equity interest in the issuing entity and are not offered hereby. The certificateholders will be entitled on each payment date only to amounts remaining after payments on the notes and payments of issuing entity expenses and other required amounts on such payment date. The certificates will initially be held by the depositor, but the depositor may transfer all or a portion of the certificates to one of its affiliates [or sell [all or] a portion of the certificates][or sell the portion of the certificates not required to be retained] on or after the closing date. [The depositor intends to sell [a portion of] [the majority of] the certificates on or after the closing date.] [However, the portion of the certificates retained by the depositor to satisfy U.S. credit risk retention rules and for purposes of the SR Rules will not be sold, transferred or hedged except as permitted under, or in accordance with, those rules. See The SponsorU.S. Credit Risk Retention, Securitization Regulations and Legal InvestmentsRegulations for Certain EU and UK Regulated Persons and Affiliates.]
To the extent of funds available therefor and prior to an acceleration of the notes following an event of default, after payment of certain amounts to the servicer, the issuing entity will pay interest and principal on the notes monthly, on the [__] day of each month (or, if the [ ] day is not a business day, on the next business day), which we refer to as the payment date. The first payment date is [ ][ ], 20[ ]. On each payment date, payments on the
notes will be made to holders of record as of the close of business on the business day immediately preceding that payment date (except in limited circumstances where definitive notes are issued), which we refer to as the record date.
Interest Payments
The issuing entity will pay interest on the Class [A-1] notes [and the Class [A-2-B] notes] on the basis of the actual number of days elapsed during the period for which interest is payable and a 360-day year. This means that the interest due on each payment date for the Class [A-1] notes [and the Class A-2-B notes, as applicable] will be the product of (i) the outstanding note balance of the related class of notes, (ii) the applicable interest rate and (iii) the actual number of days from and including the previous payment date (or, in the case of the first payment date, from and including the closing date) to but excluding the current payment date divided by 360.
The issuing entity will pay interest on the Class [A-2-A] notes, the Class [A-3] notes, the Class [A-4] notes, the Class [B] notes, the Class [C] notes [and the Class D notes] on the basis of a 360-day year consisting of twelve 30-day months. This means that the interest due on each payment date for the Class [A-2-A] notes, the Class [A-3] notes, the Class [A-4] notes, the Class [B] notes, the Class [C] notes [and the Class D notes] will be the product of (i) the outstanding note balance of the related class of notes, (ii) the applicable interest rate and (iii) 30 [(or, in the case of the first payment date, the number of days from and including the closing date to but excluding [ ][ ], 20[ ] (assuming a 30-day calendar month))], divided by 360. Interest payments on all Class A notes will have the same priority. Interest payments on the Class B notes will be subordinated to interest payments and, in specified circumstances, principal payments on the Class A notes. Interest payments on the Class C notes will be subordinated to interest payments and, in specified circumstances, principal payments on the Class A notes and the Class B notes. [Interest payments on the Class D notes will be subordinated to interest payments and, in specified circumstances, principal payments on the Class A notes, the Class B notes and the Class C notes.]
A failure to pay the interest due on the notes of the controlling class on any payment date that continues for a period of five (5) business days or more will result in an event of default under the indenture.
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Principal Payments
[The issuing entity will not pay principal on the notes on any payment date during the revolving period.]
The issuing entity will generally pay principal sequentially to the earliest maturing class of notes monthly on each payment date [related to the amortization period] in accordance with the payment priorities described below under Priority of Payments.
The issuing entity will make principal payments of the notes based on the amount of collections and defaults on the receivables during the prior collection period. This prospectus describes how available funds and amounts on deposit in the reserve account are allocated to principal payments of the notes.
On each payment date, prior to the acceleration of the notes following an event of default, which is described below under Interest and Principal Payments after an Event of Default, the issuing entity will distribute funds available to pay principal of the notes in the following order of priority:
| first, to the Class A-1 noteholders, until the Class A-1 notes are paid in full; |
| second, to the Class A-2[-A] noteholders and [Class A-2-B noteholders, ratably,] until the Class A-2[-A] notes [and the Class A-2-B notes] are paid in full; |
| third, to the Class A-3 noteholders, until the Class A-3 notes are paid in full; |
| fourth, to the Class A-4 noteholders, until the Class A-4 notes are paid in full; |
| fifth, to the Class B noteholders, until the Class B notes are paid in full; [and] |
| sixth, to the Class C noteholders, until the Class C notes are paid in full; [and] |
| [seventh, to the Class D noteholders, until the Class [D] notes are paid in full]. |
[In addition, the issuing entity may make principal payments on the notes from funds on deposit in the pre-funding account, as described below under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset
Representations Review Agreement Acquisition of Subsequent Receivables During Funding Period.]
All unpaid principal of a class of notes will be due on the final scheduled payment date for that class.
Interest and Principal Payments after an Event of Default
If an event of default under the indenture were to occur and the maturity of the notes were to be accelerated, the priority of payments of principal and interest will change from the description in Interest Payments above, Principal Payments above and Priority of Payments below. The priority of payments of principal and interest after an event of default under the indenture and acceleration of the notes will depend on the nature of the event of default.
On each payment date after an event of default under the indenture occurs as a result of a payment default or a bankruptcy event relating to the issuing entity and the notes are accelerated, after payment of certain amounts to the trustees, the asset representations reviewer and the servicer [and the swap counterparty], interest on the Class A notes will be paid ratably to each class of Class A notes and then principal payments will be made first to Class A-1 noteholders until the Class A-1 notes are paid in full. Next, the noteholders of [each class of] the Class A-2 notes, the Class A-3 notes and the Class A-4 notes will receive principal payments, ratably, based on the outstanding note balance of each remaining class of Class A notes until each such class of notes is paid in full. After interest on and principal of all of the Class A notes are paid in full, interest and principal payments will be made to noteholders of the Class B notes. After interest on and principal of all of the Class B notes are paid in full, interest and principal payments will be made to noteholders of the Class C notes. [After interest on and principal of all of the Class C notes are paid in full, interest and principal payments will be made to noteholders of the Class D notes.]
On each payment date after an event of default under the indenture occurs as a result of the issuing entitys breach of a covenant (other than a payment default), representation or warranty and the maturity of the notes is accelerated, after payment of certain amounts to the trustees, the asset representations reviewer and the servicer [and the swap counterparty], interest on the Class A notes will be paid ratably to each class of Class A notes followed by interest on the Class B notes, then followed by interest on the Class C notes
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[and then followed by interest on the Class D notes]. After the payments described in the previous sentence, principal payments of each class of notes will then be made first to the Class A-1 noteholders until the Class A-1 notes are paid in full. Next, the noteholders of all other classes of Class A notes will receive principal payments, ratably, based on the outstanding note balance of each remaining class of Class A notes until those other classes of Class A notes are paid in full. Next, the Class B noteholders will receive principal payments until the Class B notes are paid in full. Next, the Class C noteholders will receive principal payments until the Class C notes are paid in full. [Finally, the Class D noteholders will receive principal payments until the Class D notes are paid in full.]
See The Indenture Rights Upon Event of Default in this prospectus.
If an event of default has occurred but the notes have not been accelerated, then interest and principal payments will be made in the priority set forth below under Priority of Payments.
Optional Redemption of the Notes
The servicer will have the right at its option to exercise a clean-up call to purchase (and/or designate one or more persons to purchase) the receivables and the other issuing entity property (other than the reserve account) from the issuing entity on any payment date if both of the following conditions are satisfied: (a) as of the last day of the related collection period, the net pool balance has declined to [10]% or less of the net pool balance as of the [initial] cut-off date [plus the principal balance of the subsequent receivables as of the related cut-off date] and (b) the purchase price (as defined below) and the available funds for such payment date would be sufficient to pay (i) the amounts required to be paid under clauses [first through twelfth] in accordance with Priority of Payments below (assuming that such payment date is not a redemption date) and (ii) the aggregate unpaid note balance of all of the outstanding notes (after giving effect to the payments described in the preceding clause (i)). We use the term net pool balance to mean, as of any date, the aggregate outstanding principal balance of all receivables (other than defaulted receivables) owned by the issuing entity on that date. If the servicer (or its designee) purchases the receivables and other issuing entity property (other than the reserve account), the
purchase price will equal the net pool balance plus accrued and unpaid interest on the receivables as of the last day of the collection period immediately preceding the redemption date, which amount (net of any collections deposited into the collection account after the last day of the collection period immediately preceding the redemption date) will be deposited by the servicer (or its designee) into the collection account on or prior to noon, New York City time, on the redemption date.
It is expected that at the time this option becomes available to the servicer, only the [Class C notes][and Class D notes] will be outstanding.
Additionally, each of the notes is subject to redemption in whole, but not in part, on any payment date on which the sum of the amounts on deposit in the reserve account and remaining available funds after the payments under clauses [first through twelfth] set forth in Priority of Payments below would be sufficient to pay in full the aggregate unpaid note balance of all of the outstanding notes as determined by the servicer. On such payment date, the outstanding notes shall be redeemed in whole, but not in part.
Notice of redemption under the indenture must be given by the indenture trustee prior to the applicable redemption date to each holder of notes as of the close of business on the record date preceding the applicable redemption date. All notices of redemption will state: (i) the redemption date; (ii) the redemption price; (iii) that the record date otherwise applicable to that redemption date is not applicable and that payments will be made only upon presentation and surrender of those notes, and the place where those notes are to be surrendered for payment of the redemption price; (iv) that interest on the notes will cease to accrue on the redemption date; and (v) the CUSIP numbers (if applicable) for the notes. Notice of redemption of the notes shall be given by the indenture trustee in the name and at the expense of the issuing entity.
The occurrence of any one of the following events will be an event of default under the indenture:
| a default in the payment of any interest on any note of the controlling class when the same becomes due and payable, and such default continues for a period of five (5) business days or more; |
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| default in the payment of the principal of any note at the related final scheduled payment date or the redemption date; |
| any failure by the issuing entity to duly observe or perform in any material respect any of its covenants or agreements in the indenture (other than (i) a covenant or agreement, a default in the observance or performance of which is elsewhere specifically addressed or (ii) a covenant or agreement pursuant to the FDIC Rule Covenant (as defined below under The IndentureFDIC Rule Covenant)), which failure materially and adversely affects the interests of the noteholders, and which continues unremedied for ninety (90) days after receipt by the issuing entity of written notice thereof from the indenture trustee or noteholders evidencing at least a majority of the outstanding principal amount of the notes of the controlling class; |
| any representation or warranty of the issuing entity made in the indenture proves to be incorrect in any material respect when made, which failure materially and adversely affects the interests of the noteholders, and which failure continues unremedied for ninety (90) days after receipt by the issuing entity of written notice thereof from the indenture trustee or noteholders evidencing at least a majority of the outstanding principal amount of the notes of the controlling class; or |
| the occurrence of certain events (which, if involuntary, remain unstayed for more than ninety (90) days) of bankruptcy, insolvency, receivership or liquidation of the issuing entity. |
Notwithstanding the foregoing, a delay in or failure of performance referred to under the first four bullet points above for a period of one-hundred twenty (120) days will not constitute an event of default if that delay or failure was caused by force majeure or other similar occurrence.
The amount of principal required to be paid to noteholders under the indenture generally will be limited to amounts available to make such payments in accordance with the priority of payments. Thus, the failure to pay principal on a class of notes due to a lack of amounts available to make such payments
will not result in the occurrence of an event of default until the final scheduled payment date or redemption date for that class of notes.
The primary assets of the issuing entity will be a pool of motor vehicle retail installment sale contracts secured by new and used automobiles, light-duty trucks, SUVs and vans. We refer to these contracts as receivables, to the pool of those receivables as the receivables pool and to the persons who financed their purchases with these contracts as obligors.
The receivables identified on the schedule of receivables delivered by CONA on the closing date [and on any funding date] will be transferred by CONA to the depositor and then transferred by the depositor to the issuing entity. The issuing entity will grant a security interest in the receivables and the other issuing entity property to the indenture trustee on behalf of the noteholders [and the swap counterparty].
The issuing entity property will include the following:
| the receivables, including collections on the receivables after [the applicable cut-off date (which, for the receivables sold to the issuing entity on the closing date is] [ ], 20[ ] which we refer to as the [initial] cut-off date, [and for the receivables sold to the issuing entity on a funding date, is the date specified in the notice relating to that funding date, which we refer to as the subsequent cut-off date)]; |
| security interests in the vehicles financed by the receivables, which we refer to as the financed vehicles; |
| all receivable files relating to the original motor vehicle retail installment sale contracts evidencing the receivables; |
| [rights under the interest rate swap agreement and payments made by the swap counterparty under the interest rate swap agreement;] |
| [rights under the interest rate cap agreement and payments made by the cap provider under the interest rate cap agreement;] |
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| rights to proceeds under insurance policies that cover the obligors under the receivables or the financed vehicles and refunds in connection with extended service agreements relating to receivables which became defaulted receivables after the applicable cut-off date; |
| any other property securing the receivables; |
| rights to amounts on deposit in the collection account, the principal distribution account, the reserve account and any other accounts owned by the issuing entity (other than the certificate distribution account), and permitted investments of those accounts; |
| rights under the administration agreement, the sale agreement, the servicing agreement and the purchase agreement; and |
| the proceeds of any and all of the above. |
Receivable Representations and Warranties
CONA will make certain representations and warranties regarding the characteristics of the receivables as of the [applicable] cut-off date. Breach of these representations may, subject to certain conditions, result in CONA being obligated to repurchase the related receivable. See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Representations and Warranties. This repurchase obligation will constitute the sole remedy available to the noteholders or the issuing entity for any uncured breach by CONA of those representations and warranties.
If an investor in the notes requests that CONA repurchase any receivable due to a breach of a representation or warranty as described above, and the repurchase request has not been fulfilled or otherwise resolved to the reasonable satisfaction of the requesting party within one-hundred eighty (180) days of the receipt of notice of the request by CONA, the requesting party will have the right to refer the matter, at its discretion, to either mediation (including nonbinding arbitration) or third-party arbitration. The terms of the mediation or arbitration, as applicable, are described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Dispute Resolution in this prospectus.
Review of Asset Representations
As more fully described in The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Asset Representations Review in this prospectus, if the aggregate amount of delinquent receivables exceeds a specified threshold, then investors holding at least 5% of the aggregate outstanding principal amount of the notes may elect to initiate a vote to determine whether the asset representations reviewer will conduct a review. If investors representing at least a majority of the voting investors vote in favor of directing a review, then the asset representations reviewer will perform a review of specified delinquent receivables for compliance with the representations and warranties made by CONA. See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Asset Representations Review in this prospectus.
The statistical information in this prospectus is based on the pool of receivables as of the [statistical] cut-off date. [The receivables sold to the issuing entity on the closing date will be the same receivables included in the pool described in this prospectus as of the statistical cut-off date except for those receivables [(i) that no longer satisfy the eligibility criteria specified in the transaction documents or (ii) for which payment in full has been received in the ordinary course, in each case, as of the cut-off date.] [The characteristics of the subsequent receivables sold to the issuing entity on each funding date may vary somewhat from the characteristics of the receivables as of the initial cut-off date.]
As of the close of business on the [statistical] cut-off date, the receivables in the pool had an aggregate initial principal balance of $[ ] and had:
| an average original principal balance of $[ ]; |
| a weighted average contract rate of approximately [ ]%;(1) |
| a weighted average original term of approximately [ ] months; (1) |
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| a weighted average remaining term of approximately [ ] months; (1) |
| a minimum FICO® score at origination of [ ]; |
| a maximum FICO® score at origination of [ ]; and |
| a weighted average FICO® score at origination of approximately [ ]; (1) and |
| a weighted average loan-to-value ratio at origination of approximately [ ]%.(1) |
For more information about the characteristics of the receivables in the pool, see The Receivables Pool in this prospectus. In connection with the offering of the notes, the depositor has performed a review of the receivables in the pool [as of the initial cut-off date] and certain disclosure in this prospectus relating to the receivables, as described under The Receivables PoolReview of the Receivables Pool in this prospectus.
As described under The OriginatorUnderwriting in this prospectus, in limited circumstances, some contracts may be approved by CONA under an exception to CONAs underwriting criteria based on a judgmental evaluation. The originators credit risk management monitors exceptions to the underwriting criteria continuously using an automated tracking tool.
[Insert data regarding the number of pool assets that would be exceptions to the underwriting criteria and a description of the nature of the exceptions.] [None of the receivables were approved as an exception to CONAs underwriting criteria.]
In addition to the purchase of receivables from the issuing entity in connection with the servicers exercise of its clean-up call option as described above under Interest and PrincipalOptional Redemption of the Notes, receivables may be purchased from the issuing entity by the sponsor, in connection with the breach of certain representations and warranties concerning the characteristics of the receivables, and by the servicer, in connection with certain specified modifications to the receivables or the breach of certain servicing covenants, as described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Representations and Warranties in this prospectus.
(1) | Weighted by outstanding principal balance as of the [statistical] cut-off date. |
[On the closing date, $[ ] of the proceeds from the sale of the notes by the issuing entity will be deposited in an account, which we refer to as the pre-funding account. The amount deposited in the pre-funding account on the closing date represents [ ]% of the initial pool balance (including the expected principal balance of the subsequent receivables). During the funding period (defined below), the issuing entity will use the amounts on deposit in the pre-funding account to acquire additional receivables from the depositor, which we refer to as subsequent receivables, for an amount equal to [ ]% of the aggregate principal balance of the subsequent receivables as of the applicable subsequent cut-off date. The issuing entity may acquire subsequent receivables on any business day during the funding period (but no more than once a week) each of which we refer to as a funding date. Subsequent receivables must meet certain eligibility criteria as described in The Receivables PoolCriteria Applicable to Selection of Receivables in this prospectus. Assuming that substantially all of the pre-funded amount is used for the purchase of subsequent receivables, the aggregate principal balance of the subsequent receivables as of their respective subsequent cut-off dates will equal approximately [__]% of the aggregate principal balance of all receivables as of their respective cut-off dates.
The funding period will begin on the closing date and will end on the earliest to occur of:
| [ ], 20[ ]; |
| the date on which the amount in the pre-funding account is $[ ] or less; or |
| the occurrence of an event of default under the indenture. |
On the first payment date following the termination of the funding period, the indenture trustee will withdraw any funds remaining on deposit in the pre-funding account (excluding investment earnings) and distribute those funds to the noteholders as payment of principal. Such payments will be made either on a sequential or a pro rata basis as described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Acquisition of Subsequent Receivables During Funding Period.]
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[The issuing entity will not make payments of principal on the notes on payment dates occurring during the revolving period.
The revolving period consists of the collection periods from the closing date through [ ], and the related payment dates. We refer to the collection periods and the related payment dates following the revolving period as the amortization period.
If an early amortization event occurs, the revolving period will terminate early, and the amortization period will begin. See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Revolving Period in this prospectus.
On each payment date related to the revolving period, amounts otherwise available to make principal payments on the notes will be applied to purchase additional receivables from the depositor for the purpose of maintaining the initial aggregate principal balance of the receivables. Such additional receivables must meet certain eligibility criteria as described in The Receivables PoolCriteria Applicable to Selection of Receivables in this prospectus.
The amount of additional receivables and percentage of asset pool will be determined by the amount of cash available from payments and prepayments on existing receivables. There are no stated limits on the amount of additional receivables allowed to be purchased during the revolving period in terms of either dollars or percentage of the initial aggregate principal balance of the receivables. [Insert the maximum amount of additional assets that may be acquired during the revolving period and the percentage of the asset pool that may be acquired during the revolving period, to the extent applicable, in accordance with Item 1103(a)(5) of Regulation AB.] See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Revolving Period in this prospectus.
To the extent that amounts allocated for the purchase of additional receivables are not so used on any payment date occurring during the revolving period, they will be deposited into the accumulation account and applied on subsequent payment dates occurring during the revolving period to purchase additional receivables from the depositor.]
[Revolving Period
During the revolving period, the issuing entity will distribute available funds in the following order of priority:
| first, to the servicer, the servicing fee (including servicing fees not previously paid); |
| second, to the indenture trustee, the owner trustee and the asset representations reviewer, the amount of any fees, expenses and indemnification amounts due to each such party, pro rata, based on amounts due to each such party, in an aggregate amount not to exceed $[ ] in any calendar year; |
| [third, to the swap counterparty, the net swap payment;] |
| [fourth,] pro rata, (1) to the Class A noteholders, interest on the Class A notes and [(2) to the swap counterparty any senior swap termination payments payable to the swap counterparty]; |
| [fifth], to the Class B noteholders, interest on the Class B notes; |
| [sixth], to the Class C noteholders, interest on the Class C notes; |
| [seventh], to the Class D noteholders, interest on the Class D notes;] |
| [eighth] reinvestments in additional receivables and deposits into the accumulation account, as applicable, in the amount by which the aggregate principal balance of the notes exceeds the aggregate receivables principal balance, |
| [ninth], to the indenture trustee, the owner trustee [and the asset representations reviewer], fees, reasonable expenses and indemnification amounts not previously paid by the servicer; |
| [tenth] to the reserve account, an amount required to cause the amount of cash on deposit in the reserve account to equal the specified reserve account balance; |
| [eleventh] reinvestments in additional receivables and deposits into the accumulation account, as applicable, in the amount by which |
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the aggregate principal balance of the notes plus the overcollateralization target amount exceeds the aggregate receivables principal balance, as increased above, plus the amounts deposited in the accumulation account above; |
| [twelfth], to the swap counterparty, any subordinate swap termination payment]; and |
| [thirteenth], any remaining funds will be distributed to the certificate distribution account for distribution to the certificateholders. |
[Amortization Period]
[During the amortization period] On each payment date, except after the acceleration of the notes following an event of default, the paying agent will make the following payments and deposits from available funds in the collection account (including funds, if any, deposited into the collection account from the reserve account [and amounts, if any, paid by the swap counterparty] to the extent described in The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Reserve Account in this prospectus) in the following amounts and order of priority:
| first, to the servicer, the servicing fee (including servicing fees not previously paid); |
| [second, to the swap counterparty, the net swap payment;] |
| [third,] pro rata, (1) to the Class A noteholders, accrued interest on the Class A notes; provided, that if there are not sufficient funds available to pay the entire amount of the accrued Class A note interest, the amount available will be applied to the payment of interest on the Class A notes on a pro rata basis based on the amount of interest payable to each class of Class A notes and [(2) to the swap counterparty any senior swap termination payments payable to the swap counterparty;]; |
| [fourth], to the principal distribution account for distribution to the noteholders, the First Allocation of Principal; |
| [fifth], to the Class B noteholders, interest on the Class B notes; |
| [sixth], to the principal distribution account for distribution to the noteholders, the Second Allocation of Principal; |
| [seventh], to the Class C noteholders, interest on the Class C notes; |
| [eighth], to the principal distribution account for distribution to the noteholders, the Third Allocation of Principal; |
| [[ninth], to the Class D noteholders, interest on the Class D notes;] |
| [[tenth], to the principal distribution account for distribution to the noteholders, the Fourth Allocation of Principal;] |
| [eleventh], to the reserve account, any additional amounts required to cause the amount of cash on deposit in the reserve account to equal the specified reserve account balance; |
| [twelfth], to the principal distribution account for distribution to the noteholders, the Regular Principal Distribution Amount; |
| [thirteenth], to the indenture trustee, the owner trustee [and the asset representations reviewer], pro rata, fees, expenses and indemnification amounts due and owing which have not been previously paid; and |
| [fourteenth, to the swap counterparty, any subordinate swap termination payment]; and |
| [fifteenth], any funds remaining, to the certificateholders, pro rata based on the percentage interest of each certificateholder, or, to the extent definitive certificates have been issued, to the certificate distribution account for distribution to the certificateholders. |
Amounts deposited in the principal distribution account will be paid to the noteholders of the notes as described under The NotesPayment of Principal.
Credit enhancement provides protection for the notes against losses and delays in payment on the receivables or other shortfalls of cash flow. The credit enhancement for the notes will be the reserve
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account, [overcollateralization [(in addition to the yield supplement overcollateralization amount) and the yield supplement overcollateralization amount]] the excess interest on the receivables and, in the case of the Class A notes, the Class B notes and the Class C notes, subordination of certain payments as described below. If the credit enhancement is not sufficient to cover all amounts payable on the notes, notes having a later final scheduled payment date generally will bear a greater risk of loss than notes having an earlier final scheduled payment date. See also The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Overcollateralization and Excess Interest in this prospectus.
The credit enhancement for the notes will be as follows:
Class A notes: | Subordination of payments on the Class B notes, the Class C notes [and the Class D notes], overcollateralization, the reserve account and excess interest on the receivables. | |
Class B notes: | Subordination of payments on the Class C notes [and the Class D notes], overcollateralization, the reserve account and excess interest on the receivables. | |
Class C notes: | [Subordination of payments on the Class D notes,] overcollateralization, the reserve account and excess interest on the receivables. | |
[Class D notes:] | [Overcollateralization, the reserve account and excess interest on the receivables.] |
Subordination of Payments on the Class B Notes
As long as the Class A notes remain outstanding, payments of interest on any payment date on the Class B notes will be subordinated to payments of interest on the Class A notes and certain other payments on that payment date (including principal payments of the Class A notes in specified circumstances), and payments of principal of the Class B notes will be subordinated to all payments of principal of and interest on the Class A notes and certain other payments on that payment date. If the notes have been accelerated after an event of default under the indenture, the priority of payments will change. For a description of these changes in priority, see Interest and Principal Interest and Principal Payments after an Event of Default above and The IndenturePriority of Payments Will Change Upon Events of Default That Result in Acceleration.
Subordination of Payments on the Class C Notes
As long as the Class A notes and the Class B notes remain outstanding, payments of interest on any payment date on the Class C notes will be subordinated to payments of interest on the Class A notes and the Class B notes and certain other payments on that payment date (including principal payments of the Class A notes and the Class B notes in specified circumstances), and payments of principal of the Class C notes will be subordinated to all payments of principal of and interest on the Class A notes and the Class B notes and certain other payments on that payment date. If the notes have been accelerated after an event of default under the indenture, the priority of payments will change. For a description of these changes in priority, see Interest and PrincipalInterest and Principal Payments after an Event of Default above and The IndenturePriority of Payments Will Change Upon Events of Default That Result in Acceleration.
[Subordination of Payments on the Class D Notes]
[As long as the Class A notes, the Class B notes and the Class C notes remain outstanding, payments of interest on any payment date on the Class D notes will be subordinated to payments of interest on the Class A notes, the Class B notes and the Class C notes and certain other payments on that payment date (including principal payments of the Class A notes, the Class B notes and the Class C notes in specified circumstances), and payments of principal of the Class D notes will be subordinated to all payments of principal of and interest on the Class A notes, the Class B notes and the Class C notes and certain other payments on that payment date. If the notes have been accelerated after an event of default under the indenture, the priority of payments will change. For a description of these changes in priority, see Interest and Principal Interest and Principal Payments after an Event of Default above and The IndenturePriority of Payments Will Change Upon Events of Default That Result in Acceleration.]
Overcollateralization
Overcollateralization is the amount by which the net pool balance [(plus, during the funding period, the amount on deposit in the pre-funding account)] exceeds the outstanding note balance of the notes.
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The initial overcollateralization level on the closing date will be approximately [ ]% of the net pool balance as of the [initial] cut-off date and is expected to build to a target overcollateralization level on each payment date equal to the greater of (a) [ ]% of the net pool balance as of the last day of the related collection period and (b) [ ]% of the [sum of (i) the] pool balance as of the [initial cut-off date plus (ii) the aggregate principal balance of all subsequent receivables as of the applicable subsequent] cut-off date; provided, however, that after the Class [ ] notes have been paid in full, the target overcollateralization level will decrease to a target overcollateralization level on each payment date equal to the greater of (a) [ ]% of the pool balance as of the last day of the related collection period and (b) [ ]% of the [sum of (i) the] pool balance as of the [initial cut-off date plus (ii) the aggregate principal balance of all subsequent receivables as of the applicable subsequent] cut-off date. See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Overcollateralization in this prospectus.
Reserve Account
On the closing date, the reserve account will initially be funded by a deposit of proceeds from the sale of the notes in an amount not less than [ ]% of the initial [adjusted] net pool balance as of the cut-off date) [, plus an amount expected to cover the negative carry with respect to the accrued interest on that portion of the note balance equal to amounts on deposit in the pre-funding account and earnings on funds, if any, on deposit in the pre-funding account]. [(We use the term adjusted pool balance to mean, as of any date, the net pool balance at that time, minus the yield supplement overcollateralization amount (as described below) as of that date.)]
On each payment date, after giving effect to any withdrawals from the reserve account, if the amount of cash on deposit in the reserve account is less than the specified reserve account balance, the deficiency will be funded by the deposit of available funds to the reserve account in accordance with the priority of payments described above. The specified reserve account balance will be, on any payment date while the notes are outstanding, [ ]% of the net pool balance as of the cut-off date. [The specified reserve account balance will be determined after the pricing of the notes but before the closing date and will be an amount not less than [ ]% of the Pool Balance as of the cut-off date.]
On each payment date, the indenture trustee will withdraw funds from the reserve account to cover any shortfall in the amounts required to be paid on that payment date with respect to clauses first through [eleventh] under Priority of Payments above.
On each payment date, after giving effect to any withdrawals from the reserve account on that payment date, any amounts of cash on deposit in the reserve account in excess of the specified reserve account balance for that payment date will constitute available funds and will be distributed in accordance with the priority of payments. See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Reserve Account.
[Yield Supplement Overcollateralization Amount]
[The yield supplement overcollateralization amount is a specified amount for each payment date based on a schedule determined as of the cut-off date.][The yield supplement overcollateralization amount is equal to the sum of the amount for each receivable equal to the excess, if any, of (x) the scheduled payments due on the receivable for each future collection period discounted to present value as of the end of the preceding collection period at the APR of that receivable over (y) the scheduled payments due on the receivable for each future collection period discounted to present value as of the end of the preceding collection period at a discount rate equal to the greater of the APR of that receivable and [ ]%.]
As of the closing date, the yield supplement overcollateralization amount will equal $[ ], which is approximately [ ]% of the initial adjusted pool balance. The yield supplement overcollateralization amount will decline on each payment date. Because the receivables include a substantial number of low APR receivables, the receivables could generate less collections of interest than the sum of the amount necessary to pay the servicing fee, interest on the notes, fees, expenses and indemnification amounts required to be paid to the indenture trustee, the owner trustee and the asset representations reviewer and any required deposits into the reserve account if low APR receivables are not adequately offset by high APR receivables. The yield supplement overcollateralization amount is intended to compensate for low APRs and is in addition to the overcollateralization referred to above.
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See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Yield Supplement Overcollateralization Amount in this prospectus for more detailed information about the yield supplement overcollateralization amount.]
[Excess Interest]
[Because more interest is expected to be paid by the obligors in respect of the receivables than is necessary to pay the servicing fee, [any net swap payment,] trustee fees, expenses and indemnity amounts (to the extent not otherwise paid by the servicer), asset representations reviewer fees, expenses and indemnity amounts (to the extent not otherwise paid by the sponsor), amounts required to be deposited in the reserve account, if any, and interest on the notes each month, there is expected to be excess interest. Any excess interest will be applied on each payment date as an additional source of available funds for distribution in accordance with Priority of Payments above.]
[Interest Rate Swap]
[On the closing date, the issuing entity will enter into a transaction pursuant to an interest rate swap agreement with the swap counterparty to hedge the floating interest rate on the [Class [ ] notes]. The interest rate swap for the [Class [ ] notes] will have an initial notional amount equal to the note balance of the [Class [ ] notes] on the closing date, and that notional amount will decrease by the amount of any principal payments made on the [Class [ ] notes]. The notional amount under the interest rate swap will at all times be equal to the note balance of the [Class [ ] notes].
In general, under the interest rate swap agreement on each payment date, the issuing entity will be obligated to pay the swap counterparty a fixed rate payment based on a per annum fixed rate of [ ]% times the notional amount of the interest rate swap, and the swap counterparty will be obligated to pay a floating interest rate payment based on a per annum floating rate of [insert applicable floating rate benchmark] plus [ ]% times the notional amount of the interest rate swap. Payments (other than swap termination payments) on the interest rate swap agreement will be exchanged on a net basis. Any net swap payment owed by the issuing entity to the swap counterparty on the interest rate swap agreement ranks higher in priority than all payments on the notes.
Any interest rate swap agreement may be terminated upon an event of default or other termination event specified in such interest rate swap agreement. If any interest rate swap agreement is terminated due to an event of default or other termination event, a termination payment may be due to the swap counterparty by the issuing entity out of available funds.
A senior swap termination payment means any payment which is pro rata with payments of interest on the notes and is higher in priority than payments of principal on the notes that may be owed by the issuing entity to the swap counterparty under the interest rate swap agreement that is not a subordinated swap termination payment. A subordinated swap termination payment means any payment which is subordinate to payments of principal and interest on the notes that may be owed by the issuing entity to the swap counterparty under the interest rate swap agreement where the swap counterparty is the defaulting party or sole affected party (other than with respect to illegality or a tax event) as each such term is defined in the interest rate swap agreement. The issuing entitys obligation to pay any net swap payment and any other amounts due under the interest rate swap agreement is secured under the indenture by the issuing entity property.
For a more detailed description of the interest rate swap agreement and the swap counterparty, see The NotesInterest Rate Swap Agreement and The Swap Counterparty in this prospectus.]
[Interest Rate Cap Agreement]
[On the closing date, the issuing entity will enter into a transaction pursuant to an interest rate cap agreement with the cap provider to hedge the floating interest rate on the [Class [ ] notes]. The interest rate cap for the [Class [ ] notes] will have an initial notional amount equal to the Note Balance of the [Class [ ] notes] on the closing date, and that notional amount will decrease by the amount of any principal payments on the [Class [ ] notes]. The notional amount under the interest rate cap will at all times be equal to the note balance of the [Class [ ] notes].
If [insert applicable floating rate benchmark] related to any payment date exceeds the cap rate of [ ]%, the cap provider will pay to the issuing entity an amount equal to the product of:
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1. | [insert applicable floating rate benchmark] for the related payment date minus the cap rate of [ ]%; |
2. | the notional amount on the cap on the first day of the interest period related to such payment date; and |
3. | a fraction, the numerator of which is the actual number of days elapsed from and including the previous payment date, to but excluding the current payment date, or with respect to the first payment date, from and including the closing date, to but excluding the first payment date, and the denominator of which is 360. |
[The obligations of the cap provider under the interest rate cap agreement(s) initially will be unsecured.]
[If the cap providers long-term senior unsecured debt ceases to be rated at a level acceptable to the hired rating agencies, the cap provider will be obligated to post collateral or establish other arrangements satisfactory to the hired rating agencies to secure its obligations under the interest rate cap agreement(s), if any, or arrange for an eligible substitute cap provider satisfactory to the issuing entity.]
Any amounts received under any interest rate cap agreement will be a source for interest payments on the floating rate notes, if any. [The issuing entity should not be required to make any payments to the cap provider under the interest rate cap agreement(s) other than an upfront payment.]
The issuing entitys rights under the interest rate cap agreement are pledged under the indenture.
For a more detailed description of the interest rate cap agreement(s) and the cap counterparty, see The NotesInterest Rate Cap agreement(s) and The Cap Provider in this prospectus.]
On the closing date, Mayer Brown LLP, special federal tax counsel to the depositor and the issuing entity, will deliver its opinion, assuming compliance with the trust agreement, the indenture and certain other transaction documents, and subject to the assumptions and qualifications therein, to the effect that, for United States federal income tax purposes, the issuing entity will not be classified as an association or a publicly traded partnership taxable as a corporation, and the offered notes (other than any notes, if any, held by (A) the issuing entity or a
person that beneficially owns more than 99% of the issuing entity for United States federal income tax purposes, (B) a member of an expanded group (as defined in Treasury Regulation Section 1.385-1(c)(4) or any successor regulation then in effect) that includes the issuing entity or a person beneficially owning a certificate, (C) a controlled partnership (as defined in Treasury Regulation Section 1.385-1(c)(1) or any successor regulation then in effect) of such expanded group or (D) a disregarded entity owned directly or indirectly by a person described in preceding clause (B) or (C)) will be characterized as debt for United States federal income tax purposes.
Each holder of a note, by acquiring a note or an interest therein, will agree to treat the note as indebtedness for federal, state and local income and franchise tax purposes.
We encourage you to consult your own tax advisor regarding the United States federal income tax consequences of the purchase, ownership and disposition of the notes and the tax consequences arising under the laws of any state or other taxing jurisdiction.
See Material United States Federal Income Tax Consequences in this prospectus.
CERTAIN CONSIDERATIONS FOR ERISA AND OTHER U.S. BENEFIT PLANS
Subject to the considerations described in Certain Considerations for ERISA and Other U.S. Benefit Plans in this prospectus, the offered notes may be purchased by employee benefit plans and other retirement accounts. An employee benefit plan, any other retirement plan and any entity deemed to hold plan assets of any employee benefit plan or other plan should consult with its counsel before purchasing the offered notes.
See Certain Considerations for ERISA and Other U.S. Benefit Plans in this prospectus.
The Class A-1 notes will be structured to be eligible securities for purchase by money market funds as defined in paragraph (a)(11) of Rule 2a-7 under the Investment Company Act of 1940, as amended (the Investment Company Act). Rule 2a-7 includes
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additional criteria for investments by money market funds, including requirements and clarifications relating to portfolio credit risk analysis, maturity, liquidity and risk diversification. If you are a money market fund contemplating a purchase of Class A-1 notes, you or your advisor should consider these requirements before making a purchase.]
The transaction contemplated by this prospectus is intended to comply with the Federal Deposit Insurance Corporation regulatory safe harbor entitled Treatment of financial assets transferred in connection with a securitization or participation (the FDIC Rule). For more information, see Risk Factors Risks related to the servicer and other transaction partiesFDIC receivership or conservatorship of CONA could result in delays in payments or losses on your notes and The IndentureFDIC Rule Covenant and Material Legal Aspects of the ReceivablesFDIC Rule.
Pursuant to the SECs credit risk retention rules, 17 C.F.R. Part 246 (Regulation RR), CONA, as the sponsor, is required to retain an economic interest in the credit risk of the receivables, either directly or through a majority-owned affiliate. CONA intends to satisfy this obligation through the retention by CONA and/or one or more of its majority-owned affiliates (which for EU risk retention purposes and UK risk retention purposes will be a wholly-owned special purpose subsidiary of CONA) of an eligible vertical interest of at least 5% of each class of notes and the certificates to be issued by the issuing entity.
The retained eligible vertical interest will take the form of at least 5% of each class of notes and certificates issued by the issuing entity, though CONA and/or one or more of its majority-owned affiliates may retain more than 5% of one or more classes of notes or of the certificates. The material terms of the notes are described in this prospectus under The Notes, and the material terms of the certificates are described in this prospectus under The SponsorU.S. Credit Risk Retention.
CONA does not intend to transfer or hedge the portion of its retained economic interest that is intended to satisfy the requirements of Regulation RR except as permitted under Regulation RR and in accordance with the SR Rules.
[Insert disclosure required by Items 1104(g), 1108(e) or 1110(a)(3) of any hedges materially related to the credit risk of the securities.]
See The SponsorU.S. Credit Risk Retention in this prospectus.
On the closing date, CONA, as originator, (as such term is defined for the purposes of each of the Securitization Regulations) will agree, with reference to the SR Rules as in effect and applicable on the closing date, to retain, upon the issuance of the notes and on an ongoing basis, for as long as the notes remain outstanding, a material net economic interest of not less than 5% in the securitization transaction described in this prospectus, in the form of retention of at least 5% of the nominal value of each of the tranches sold or transferred to investors in accordance with the text of option (a) of Article 6(3) of the EU Securitization Regulation and option (a) of Article 6(3) of the UK Securitization Regulation. CONA intends to satisfy this obligation, in each case as in effect and applicable on the closing date, by holding (a) at least 5% of the nominal value of each class of notes and (b) all the membership interest in the depositor (or one or more other wholly-owned special purpose subsidiaries of CONA), which in turn will hold at least 5% of the nominal value of the certificates, all in the manner, and on the terms, summarized in The Sponsor Securitization Regulations in this prospectus.
The transaction described in this prospectus is not being structured to ensure compliance by any person with the transparency requirements in Article 7 of the EU Securitization Regulation or Article 7 of the UK Securitization Regulation. In particular, neither CONA nor any other party to the transaction described in this prospectus shall be required to produce any information or disclosure for purposes of Article 7 of the EU Securitization Regulation or Article 7 of the UK Securitization Regulation, or to take any other action in accordance with, or in a manner contemplated by, such articles.
Except as described herein, no party to the transaction described in this prospectus is required by the transaction documents, or intends, to take or refrain from taking any action with regard to such transaction in a manner prescribed or contemplated by the SR Rules, or to take any action for purposes of, or in connection with, facilitating or enabling compliance by any person with the applicable
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Investor Requirements and any corresponding national measures that may be relevant.
Any failure by an Affected Investor to comply with the applicable Investor Requirements with respect to an investment in the offered notes may result in the imposition of a penalty regulatory capital charge on that investment or of other regulatory sanctions by the competent authority of such Affected Investor. The SR Rules and any other changes to the regulation or regulatory treatment of the notes for some or all investors may negatively impact the regulatory position of noteholders or prospective investors and have an adverse impact on the value and liquidity of the notes.
Each prospective investor that is an Affected Investor is required to independently assess and determine whether the agreement by CONA to retain a material net economic interest as described above and in The Sponsor Securitization Regulations in this prospectus and the information provided in this prospectus generally, or otherwise to be provided to noteholders in relation to this transaction or otherwise, are or will be sufficient for the purposes of such prospective investors compliance with the applicable Investor Requirements and any corresponding national measures that may be relevant.
See The Sponsor Securitization Regulations and Legal InvestmentRequirements for Certain EU and UK Regulated Persons and Affiliates in this prospectus.]
CERTAIN VOLCKER RULE CONSIDERATIONS
The issuing entity will rely on an exclusion or exemption from the definition of investment company under the Investment Company Act contained in[ Section [ ] of] [Rule [] under] the Investment Company Act, although there may be additional exclusions or exemptions available to the issuing entity. The issuing entity is being structured so as not to constitute a covered fund as defined in the regulations implementing Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly known as the Volcker Rule.
The depositor expects that each class of notes will receive credit ratings from one or more credit rating agencies hired by the sponsor to rate the notes (the hired agencies).
Although the hired agencies are not contractually obligated to monitor the ratings on the notes, we believe that the hired agencies will continue to monitor the transaction while the notes are outstanding. The hired agencies ratings on the notes may be lowered, qualified or withdrawn at any time. In addition, a rating agency not hired by the sponsor to rate the transaction or a particular class of notes may provide an unsolicited rating that differs from (or is lower than) the ratings provided by the hired agencies. A rating is based on each rating agencys independent evaluation of the receivables and the availability of any credit enhancement for the notes. [The ratings of the notes also will take into account the provisions of the interest rate swap agreement and the ratings currently assigned the debt obligations of the swap counterparty. A downgrade, suspension or withdrawal of any rating of the debt of the swap counterparty may result in the downgrade, suspension or withdrawal of the rating assigned to any class of notes. For more specific information concerning risks associated with the interest rate swap agreement, see Risk FactorsRisks associated with the interest rate swap in this prospectus.] A rating, or a change or withdrawal of a rating, by one rating agency will not necessarily correspond to a rating, or a change or a withdrawal of a rating, from any other rating agency. See Risk FactorsRisks related to certain features of the notes and financial market disruptionsThe ratings of the notes may be withdrawn or lowered, or the notes may receive an unsolicited rating, which may have an adverse effect on the liquidity or the market price of the notes in this prospectus.
REGISTRATION UNDER THE SECURITIES ACT
The depositor has filed a registration statement relating to the notes with the SEC on Form SF-3. The depositor has met the registrant requirements contained in General Instruction I.A.1 to Form SF-3.
Our affiliate, [Capital One Securities, Inc.], is participating in this offering as an underwriter. Accordingly, this offering is being conducted in compliance with the provisions of FINRA Rule 5121. [Capital One Securities, Inc.] is not permitted to sell the notes in this offering to an account over which it exercises discretionary authority without the prior specific written approval of the customer to which the account relates.]
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The notes are subject to certain risks that you should consider before making a decision to purchase any notes. This summary is included to provide an overview of the potential risks. It does not contain all of the information regarding the risks that you should consider in making your decision to purchase any notes. To understand these risks fully, you should read Risk Factors below.
Risks Related to the Characteristics, Servicing and Performance of the Receivables. The notes are subject to risks relating to the characteristics, servicing and performance of the receivables, which could result in delays in payment or losses on your notes.
| The global Coronavirus outbreak could result in delays in payment or losses on your notes. |
| Adverse economic conditions, regardless of reason, civil unrest or natural disasters in states with significant concentrations of obligors could have a more pronounced effect on the performance of the receivables and could result in delays in payments or losses on your notes. |
| To the extent the receivables pool includes receivables with annual percentage rates that are less than the interest rates on the notes, you may suffer a loss on your notes. |
| The outstanding principal balance of a receivable may be greater than the value of the related financed vehicle, which may increase the amount and severity of loss on the receivable and may result in losses on your notes. |
| A vehicle recall may result in delays in payments or losses on your notes. |
| The servicers discretion over the servicing of the receivables may impact the amount and timing of funds available to make payments on the notes. |
| Credit scores and historical loss experience may not accurately predict the likelihood of delinquencies, defaults and losses on the receivables and therefore losses on your notes. |
| Recent and future economic developments may adversely affect the performance and market value of your notes. |
| The return on your notes could be reduced by the impact of the Servicemembers Civil Relief Act. |
| Failure to comply with consumer protection or other laws may be unenforceable, which may result in losses on your notes. |
| If an obligor seeks protection under bankruptcy or debtor relief laws, a court could reduce or discharge the obligors obligations to repay amounts due and you may experience a reduced return on your notes. |
| [This prospectus provides information regarding only the receivables as of the [statistical] cut-off date, however the initial receivables and the subsequent receivables added to the receivables pool could have different characteristics] |
Risks Related to the Limited Nature of the Issuing Entitys Assets. The issuing entity has limited assets, and delays in payment or losses on your notes could arise from shortfalls or delays in amounts available to make payments on the notes.
| Only the assets of the issuing entity are available for repayment of your notes. If these assets are insufficient, you may suffer losses on your notes. |
| If the receivables are sold following an indenture event of default, the proceeds from the sale of the receivables may not be sufficient to pay the aggregate note balance of your notes. |
| Repurchase obligations are limited, and do not protect the issuing entity from all risks that could impact the performance of the receivables and the sponsor or servicer may not be financially in a position to fund its repurchase obligations, and you could suffer a loss. |
| Interest of other persons in the receivables and financed vehicles could be superior to the interests of the issuing entity, including because the issuing entity or CONA may not have a perfected security interest in the financed vehicles or in the receivables, which may affect the issuing entitys ability to receive payments on the receivables or liquidation proceeds with respect to the financed vehicles. |
Risks Related to the Servicer and Other Transaction Parties. Adverse events affecting the servicer or other transaction parties could result in losses on your notes or reduce the market value or liquidity of your notes.
| Adverse events with respect to CONA, its affiliates or a third-party service provider, including due to natural disasters, public health emergencies, economic developments and/or regulatory or other actions, could adversely affect the timing or amount of payments on your notes or may reduce the market value and/or liquidity of your notes. Interruptions or losses in the sponsors operational, technological and organizational infrastructure, including a security breach or cyber-attack, may increase the risk of loss on your notes. |
| Federal financial reform and other measures, including legislation and other actions undertaken in response to the COVID-19 pandemic, could have a significant impact on the servicer, the sponsor, the administrator, the depositor or the issuing entity and could adversely affect the timing and amount of payments on your notes. |
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| FDIC receivership or conservatorship of CONA could result in delays in payments or losses on your notes. |
| A bankruptcy of the depositor could result in delays or a reduction in payments on your notes. |
| You may suffer losses on your notes if the servicer holds collections and commingles them with its own funds. |
| You may experience loss or delays in payments on your notes resulting from delays in the transfer of servicing due to the servicing fee structure. |
| Federal tax legislative proposals could impact your investment. |
Risks Related to the Issuance of Multiple Class of Notes[, an Unknown Allocation of Notes or Retention of Notes]. The issuing entity has issued multiple class of notes, and your notes may be more sensitive to losses, be affected by conflicts of interest between classes and have reduced liquidity or voting power because of an unknowns allocation or retention.
| Classes of notes with a higher sequential numerical class designation will generally be subordinated with respect to principal payments to notes with a lower numerical designation and are exposed to a greater risk of loss. |
| Holders of more senior classes of notes will make certain decisions for certain matters, but will have different interests than holders of more junior classes of notes, so there may be a conflict of interest. |
| The failure to pay interest on a subordinated class of notes or principal of a note generally will not result in an event of default until the applicable final scheduled payment date or redemption date for the related class of notes. |
| [The initial allocation of the aggregate initial note balance between the Class A-3 notes and the Class A-4 notes is not expected to be known until pricing, which may impact the liquidity or voting power of your notes.] |
| The market value, liquidity and voting power of your notes may be adversely impacted by retention of notes by the depositor or its affiliates. |
Risks Related to Certain Features of the Notes and Financial Market Disruptions. Certain features of the notes and financial market disruptions may adversely affect the return on your notes or the market value and liquidity of your notes.
| The ratings on the notes may be withdrawn or lowered, the notes may receive an unsolicited rating or the rating agencies may be perceived as having a conflict of interest, which could adversely affect the market value of your notes and/or limit your ability to resell the notes. |
| Prepayments, repurchases, events of default or optional redemption of the notes may affect the weighted average life of, and return on, the notes. |
| Financial market disruptions and the absence of a secondary market for the notes may make it difficult for you to sell your notes and/or obtain your desired price. |
| If your notes are in book-entry form, you will only be able to exercise your rights as a noteholder indirectly through DTC, Clearstream and Euroclear and their participating organizations, which may also impact the liquidity of your notes and delay your receipt of payments. |
[Risks Relating to the Issuance of a Floating Rate Class of Notes]
| [The allocation of the principal balance of the Class A-2 notes may not be determined until the day of pricing.] |
| [The issuing entity may issue floating rate notes, but the issuing entity will not enter into any interest rate swaps and you may suffer losses on your notes if interest rates rise.] [The receivables sold to the issuing entity on the closing date will bear interest at a fixed rate, while any floating rate notes will bear interest at a floating rate based on [insert applicable floating rate benchmark] plus an applicable spread.] |
| [If the benchmark decreases below 0.00% for any interest period, the interest rate for that period, including the spread, will be reduced by the amount the benchmark is negative, but not below 0.00%.] |
| [The Class A-2-B notes accrue interest based on [insert applicable floating rate benchmark rate], which is a relatively new reference rate]. |
| [Risks associated with the interest rate swap] |
| [Risks associated with the interest rate cap agreement(s)] |
| [The rating of a [swap counterparty] [cap provider] may affect the ratings of the notes] |
[Risks Related to Pre-Funding]
| [You may experience reduced returns on your notes resulting from distribution of amounts in the pre-funding account.] |
| [Lack of availability of additional receivables during the Revolving Period could shorten the average life of your notes] |
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An investment in the notes involves significant risks. Before you decide to invest, we recommend that you carefully consider the following risk factors.
RISKS RELATED TO THE CHARACTERISTICS, SERVICING AND PERFORMANCE OF THE RECEIVABLES.
Adverse events arising from the global Coronavirus outbreak could result in delays in payment or losses on your notes
An outbreak of Coronavirus Disease 2019 (COVID-19) has spread throughout the world, including in the United States. The outbreak has led, and will likely continue to lead, to disruptions in global financial markets and the economies of many nations and is resulting in adverse impacts on the economy of the United States (which include a general curtailment of business activity and a significant increase in unemployment) and the global economy in general. The long-term impacts of the social, economic and financial disruptions caused by the outbreak of COVID-19 are unknown. The United States economy has experienced a recession as a result of the outbreak of COVID-19 and it is unclear if or when the economy will fully recover or how many obligors have been and will continue to be adversely affected by the outbreak and related efforts by the federal government and state governments to slow the spread of COVID-19 throughout the nation or whether such efforts will be successful in preventing a resurgence of COVID-19. It is likely that a higher percentage of obligors will seek protection under bankruptcy or debtor relief laws as a result of the financial and economic disruptions related to the outbreak of COVID-19 than is reflected in the sponsors historical experience. See Risks related to the characteristics, servicing and performance of the receivablesCredit scores and historical loss experience may not accurately predict the likelihood of delinquencies, defaults and losses on the receivables. If an obligor were to seek protection under federal or state bankruptcy or debtor relief laws, a court could reduce or discharge completely the obligors obligation to repay amounts due on its receivable. As a result, that receivable would be written off as uncollectible and you could suffer a loss if no funds are available from collections or from amounts on deposit in the reserve account to cover losses on the receivables.
It is unclear how many obligors have been and will continue to be adversely affected by the outbreak of COVID-19 and the related economic uncertainty, each of which could have a negative impact on the ability of obligors to make timely payments on the receivables and may result in losses on your notes. Further, certain governmental authorities, including federal, state or local governments, could enact, and in some cases already have enacted, laws, regulations, executive orders or other guidance that allow obligors to forgo making scheduled payments for some period of time, require modifications to the receivables (e.g., waiving accrued interest), or preclude creditors from exercising certain rights or taking certain actions with respect to collateral, including repossession or liquidation of the financed vehicles. The servicer has the discretion to implement a range of actions with respect to obligors affected by the outbreak or who are experiencing financial hardship, including the discretion to extend or modify the payment schedule of a receivable or to temporarily suspend involuntary repossession activity consistent with the servicers customary servicing practices. Across the nation, servicers of motor vehicle receivables, including CONA, experienced a sharp increase in requests for extensions and modifications related to COVID-19 and a significant number of such extensions and modifications have been granted, including by CONA. Although such extensions and modifications were granted by CONA across all segments of its serviced portfolio, extensions and modifications related to COVID-19 were infrequently requested by obligors of receivables classified as prime by CONA and which were considered eligible for securitization in the COPAR program based on CONAs internal scoring model compared with the number of extensions and modifications requested by other obligors of receivables serviced by CONA. Any receivable for which the servicers records as of the cut-off date indicate that the related obligor received an extension or modification related to COVID-19 will be excluded from the receivables pool transferred to the issuing entity on the closing date. Although such extensions and modifications were rare for CONAs prime portfolio, there may be a future sharp increase in requests from obligors for extensions and modifications related to COVID-19 or general financial hardship.
Because a pandemic such as COVID-19 has not occurred in recent years, and is impacting obligors nationwide, historical loss experience may not accurately predict the performance of the receivables in the receivables pool. Further, the COVID-19 pandemic and related effects on the United States economy, global financial markets, and the business or operations of the sponsor or the servicer may also have the effect of heightening many of the other risks described in this Risk Factors section, such as those related to the ability of obligors to make timely payments on the receivables, used vehicle values, the performance, market value, credit ratings and secondary market liquidity of your notes, and risks of geographic concentration of the obligors.
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All of the foregoing could have a negative impact on the performance of the receivables or the liquidity and market value of your notes and, as a result, you may experience delays in payments or losses on your notes.
The geographic concentration of the obligors in the receivables pool and varying economic circumstances may increase the risk of losses or reduce the return on your notes
The concentration of the receivables in specific geographic areas may increase the risk of loss. A deterioration in economic conditions regardless of reason, or a natural disaster or civil unrest, in the states where obligors reside may adversely affect the ability and willingness of obligors to meet their payment obligations under the receivables and may consequently adversely affect the delinquency, default, loss and repossession experience of the issuing entity with respect to the receivables of the obligors in such states. See Risks related to the characteristics, servicing and performance of the receivablesRecent and future economic developments may adversely affect the performance of the receivables and may result in reduced or delayed payments on your notes. As a result, you may experience payment delays and losses on your notes. An improvement in economic conditions could result in prepayments by the obligors of their payment obligations under the receivables. As a result, you may receive principal payments of your notes earlier than anticipated. No prediction can be made as to the effect of an economic downturn or economic growth on the rate of delinquencies, prepayments and/or losses on the receivables. See Risks related to certain features of the notes and financial market disruptionsReturns on your investments may be reduced by prepayments on the receivables, events of default, optional redemption of the notes or repurchases of receivables from the issuing entity.
As of the [statistical] cut-off date, based on the billing addresses of the obligors, approximately []%, []% and []% of the principal balance of the receivables in the receivables pool were located in [], [] and [], respectively.
No other state accounts for more than [5.00]% of the principal balance of the receivables in the receivables pool as of the [statistical] cut-off date. Because of the concentration of the obligors in certain states, any adverse economic factors, natural disasters or civil unrest in those states may have a greater effect on the performance of the receivables than if the concentration did not exist, which may result in a greater risk of losses on your notes.
You may suffer losses due to receivables with low contract rates
The receivables in the receivables pool will include receivables that have contract rates that are less than the interest rates on your notes. Interest paid on the higher contract rate receivables compensates for the lower contract rate receivables to the extent such interest is paid by the issuing entity as principal on your notes and overcollateralization is created. Excessive prepayments on the higher contract rate receivables may adversely impact your notes by reducing the interest payments available.
The rate of depreciation of a financed vehicle could exceed the amortization of the outstanding principal amount of the related receivable, which may result in losses on the receivables
The value of any financed vehicle may be less than the outstanding principal balance of the related receivable. For example, new vehicles normally experience an immediate decline in value after purchase because they are no longer considered to be new. As a result, it is highly likely that the principal balance of a receivable will exceed the value of the related financed vehicle during the early years of a receivables term. The lack of any significant equity in their vehicles may make it more likely that those obligors will default in their payment obligations if their personal financial conditions change. A default during the earlier years of a receivables term is more likely to result in losses because the proceeds of repossession of the related financed vehicle are less likely to pay the full amount of interest and principal owed on that receivable. Further, the frequency and amount of losses may be greater for receivables with longer terms because these receivables tend to have a somewhat greater frequency of delinquencies and defaults and because the slower rate of amortization of the principal balance of a longer term receivable may result in a longer period during which the value of the related financed vehicle is less than the remaining principal balance of the receivable. See The Receivables PoolPool Stratifications in this prospectus for the percentage of receivables with original terms greater than 72 months. None of the receivables will have an original term greater than 75 months.
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Additionally, although the frequency of delinquencies and defaults tends to be greater for receivables secured by used vehicles, loss severity tends to be greater with respect to receivables secured by new vehicles because of the higher rate of depreciation described above and the decline in used vehicle prices. Similarly, receivables with a higher loan-to-value ratio tend to have a higher severity of loss. Furthermore, specific makes, models and vehicle types may experience a higher rate of depreciation and a greater than anticipated decline in used vehicle prices under certain market conditions including, but not limited to, the discontinuation of a brand by a manufacturer, material vehicle recalls or the termination of dealer franchises by a manufacturer.
The pricing of used vehicles is affected by the supply and demand for those vehicles, which, in turn, is affected by consumer tastes, economic factors (including the price of gasoline), the introduction and pricing of new vehicle models and other factors, including the impact of vehicle recalls or the discontinuation of vehicle models or brands. Decisions by a manufacturer with respect to new vehicle production, pricing and incentives may affect used vehicle prices, particularly those for the same or similar models. If programs are implemented by the United States government to stimulate the sale of new vehicles, this may have the effect of further reducing the values of used vehicles, resulting in increased losses that may result in losses on your notes. Further, the insolvency of a manufacturer may negatively affect used vehicle prices for vehicles manufactured by that company. An increase in the supply or a decrease in the demand for used vehicles may impact the resale value of the financed vehicles securing the receivables. Decreases in the value of those vehicles may, in turn, reduce the incentive of obligors to make payments on the receivables and decrease the proceeds realized by the issuing entity from repossessions of financed vehicles. Additionally, the COVID-19 pandemic and the related economic and financial disruptions have affected both the supply and demand of new and used vehicles, and has affected repossession activity and the market and process for the sale of repossessed vehicles. Further, constraints in production and supply chain factors, including a shortage of key components necessary to manufacture new vehicles or to repair and maintain used vehicles, may temporarily inflate used vehicle prices. As new vehicle supply was reduced, used vehicles saw an increase in demand. As a result of the foregoing, the delinquency, repossession and credit loss figures, shown in the tables appearing under The Receivables PoolDelinquencies, Repossessions and Net Credit Losses in this prospectus, might be a less reliable indicator of the rates of delinquencies, repossessions and losses that could occur on the receivables than would otherwise be the case.
You may experience delays in payments or losses on your notes resulting from a vehicle recall
Obligors on receivables related to financed vehicles affected by a vehicle recall may be more likely to be delinquent in, or default on, payments on their receivables. Significant increases in the inventory of used motor vehicles subject to a recall may also depress the prices at which repossessed motor vehicles may be sold or delay the timing of those sales. If the default rate on the receivables increases and the price at which the related vehicles may be sold declines or if a recall delays the timing of sales, you may experience losses with respect to your notes. If any of these events materially affect collections on the receivables, you may experience delays in payments or losses on your notes.
The servicers discretion over the servicing of the receivables may impact the amount and timing of funds available to make payments on the notes
Although the servicer is obligated to service the receivables in accordance with its customary servicing practices, the servicer has broad discretion in servicing the receivables, including the ability to grant payment extensions and to determine the timing and method of collection and liquidation procedures, subject to certain limitations regarding permitted modifications. The servicer, in its own discretion, may permit an extension on, or a deferral of, payments due or halt repossession activity on a case-by-case basis or more broadly in accordance with its customary servicing practices, for example, in connection with a natural disaster or a public health emergency affecting a large group of obligors. In addition, the servicer may from time to time offer obligors a temporary reduction in payment and/or an opportunity to defer payments. See The ServicerServicing in this prospectus. Although CONA granted a significant number of extensions and modifications related to the COVID-19 outbreak across its serviced portfolio generally, extensions and modifications related to COVID-19 were infrequently requested by obligors of receivables classified as prime by CONA and which were considered eligible for securitization in the COPAR program based on CONAs internal scoring model compared with the number of extensions and modifications requested by other
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obligors of receivables serviced by CONA. CONA also temporarily suspended involuntary repossession activities nationwide. Although such extensions and modifications were not frequently requested by obligors included in CONAs prime portfolio and the servicer has resumed involuntary repossessions and other collections activity where permitted by local law, the frequency of extensions and modifications may increase in the future and the servicer may again elect (or be required) to suspend repossession activity in the future. See Risks related to the characteristics, servicing and performance of the receivables Adverse events arising from the global Coronavirus outbreak could result in delays in payment or losses on your notes. Payment deferrals or extensions or delays in initiating repossession activity may extend the maturity of the receivables, increase the weighted average life of a class of notes and reduce the yield on your notes. However, the servicer must purchase the receivable from the issuing entity if any payment deferral of a receivable extends the term of the receivable beyond the last day of the collection period preceding the final scheduled payment date for the Class [C][D] notes.
In addition, the servicers customary servicing practices may change from time to time and those changes could reduce collections on the receivables. Although the servicers customary servicing practices at any time will apply to all receivables serviced by the servicer, without regard to whether a receivable has been sold to the issuing entity, the servicer is not obligated to maximize collections from receivables. Consequently, the manner in which the servicer exercises its servicing discretion or changes its customary practices could have an impact on the amount and timing of collections on the receivables, which may impact the amount and timing of funds available to make payments on the notes.
Credit scores and historical loss experience may not accurately predict the likelihood of delinquencies, defaults and losses on the receivables
Information regarding credit scores for the obligors under the receivables in the receivables pool as of the [statistical] cut-off date obtained at the time of acquisition from the originating dealer of their contracts is presented in The Receivables Pool in this prospectus. A credit score purports only to be a measurement of the relative degree of risk a borrower represents to a lender, i.e., that a borrower with a higher score is statistically expected to be less likely to default on its payment obligations than a borrower with a lower score. Neither the sponsor nor any other party makes any representations or warranties as to any obligors current credit score or actual performance of any motor vehicle receivable or that a particular credit score should be relied upon as a basis for an expectation that a receivable will be paid in accordance with its terms.
Historical loss and delinquency information set forth in this prospectus under The Receivables Pool was affected by several variables, including general economic conditions and market interest rates, that may differ in the immediate future, and may differ in the longer term future. Consequently, the net loss experience calculated and presented in this prospectus with respect to the sponsors managed portfolio of motor vehicle retail installment sale contracts categorized as prime and which are considered eligible for securitization in the Capital One Prime Auto Receivables (COPAR) program based on CONAs internal scoring model may not reflect actual experience with respect to the receivables in the receivables pool. The sponsor has experienced variability (including increases) in delinquencies and repossessions on its motor vehicle receivables portfolio, which variability may continue (including as a result of the COVID-19 outbreak). Additionally, the prices of used vehicles, including the prices at which the servicer is able to sell repossessed vehicles, are variable, and declines in used vehicle prices will result in increased credit losses on defaulted receivables. In addition, future delinquency rates, rates of repossession, recovery rates on repossessed vehicles or loss experience of the servicer with respect to the receivables may be better or worse than that set forth in the static pool information and historical delinquency and loss information contained in this prospectus.
The CARES Act (as defined below) provided for the creation of the Federal Pandemic Unemployment Compensation program, which provided an additional $600 per week to individuals collecting traditional unemployment compensation. This benefit was available for weeks of unemployment ending on or before July 31, 2020. The president of the United States has since authorized a similar benefit, at a reduced level, as well as a deferral of certain payroll tax collections through the end of 2020. The CARES Act also provided for $953 billion in business loans through the Paycheck Protection Program. In addition, the Appropriations Act (as defined below) restored the Federal Pandemic Unemployment Compensation program, which provides an additional $300 per week to individuals collecting traditional unemployment compensation. This benefit was available for weeks of unemployment beginning after December 26, 2020 and ending on March 14, 2021. On March 11, 2021, the
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president of the United States signed the American Rescue Plan Act of 2021 (the American Rescue Plan Act), which includes a $1.9 trillion economic stimulus package. The American Rescue Plan Act builds upon the CARES Act and the Appropriations Act by extending unemployment benefits through September 6, 2021 (though some states have already discontinued, and other states may discontinue, the additional federal unemployment benefits ahead of this date), providing stimulus checks to certain individuals and families up to $1,400 per adult and eligible dependent, making the Paycheck Protection Program more accessible to businesses and nonprofits, adding $7.25 billion of additional funding to the Paycheck Protection Program and providing additional relief to state and local communities. It is not known how many obligors of the receivables may have been receiving, or may in the future receive, any such additional unemployment benefits, or what the effect of any future reduction of such benefits may be on the ability of the obligors to meet their payment obligations under the receivables and, consequently, what impact such benefits have had on recent historical loss and delinquency information and static pool experience or what impact such benefits may have on the loss and delinquency performance of the receivables in the receivables pool.
In addition, the servicers customary servicing practices have changed over time and may change from time to time in the future (including as a result of the COVID-19 outbreak), and those changes could reduce collections on the receivables. As a result, the delinquency and credit loss experience presented in this prospectus with respect to the sponsors managed portfolio of prime auto receivables or the static pool information may not reflect actual experience with respect to the receivables. If the performance of the receivables is worse than expected, the timing and amount of payments on the notes could be adversely affected.
Recent and future economic developments may adversely affect the performance of the receivables and may result in reduced or delayed payments on your notes
A deterioration in economic conditions and certain economic factors, such as reduced business activity, unemployment, interest rates, housing prices, energy prices (including the price of gasoline), increased consumer indebtedness (including of obligors on the receivables), lack of available credit, the rate of inflation and consumer perceptions of the economy, as well as other factors, such as terrorist events, civil unrest, public health emergencies, extreme weather conditions or significant changes in the political environment and/or public policy, including increased state, local or federal taxation, could adversely affect the ability and willingness of obligors to meet their payment obligations under the receivables. The issuing entitys ability to make payments on the notes could be adversely affected if obligors were unable to make timely payments or if the servicer elected to, or was required to, implement forbearance programs in connection with obligors suffering a hardship (including hardships related to the COVID-19 pandemic).
The United States experienced a recession as a result of the outbreak and the outlook for the U.S. economy remains uncertain, which may adversely affect the performance of the receivables and the performance and market value of your notes. See Risks related to the characteristics, servicing and performance of the receivables Adverse events arising from the global Coronavirus outbreak could result in delays in payment or losses on your notes. Periods of economic slowdown or recession are often characterized by high unemployment (including temporary unemployment as a result of government shutdown) and diminished availability of credit, generally resulting in increases in delinquencies, defaults, repossessions and losses on automobile loans. Further, these periods of economic slowdown may also be accompanied by decreased consumer demand for light-duty trucks, SUVs or other vehicles and declining values of automobiles securing outstanding retail installment sale contracts, which weakens collateral coverage and increases the amount of a loss in the event of default by an obligor. Significant increases in the inventory of used automobiles during periods of economic slowdown or recession may also depress the prices at which repossessed automobiles may be sold or delay the timing of these sales.
All of these factors could result in losses on your notes. If an economic downturn is experienced for a prolonged period of time, delinquencies and losses on your notes could increase, which could result in losses on your notes. An improvement in economic conditions could result in prepayments by the obligors of their payment obligations under the receivables, either because obligors elect to make payments more frequently or in larger-than-required amounts or because obligors sell the financed vehicles more frequently in connection with the purchase of new vehicles. As a result, you may receive principal payments of your notes earlier than anticipated, which may reduce your return on your notes.
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The application of the Servicemembers Civil Relief Act may lead to delays in payment or losses on your notes
The Servicemembers Civil Relief Act, as amended, and similar state legislation may limit the interest payable on a receivable during an obligors period of active military duty. This legislation, together with the servicers policies developed to comply with such legislation as well as provide additional benefits to active military personnel and, in some circumstances, their family members and certain other related parties (even where not required by law), could adversely affect the ability of the servicer to collect full amounts of interest on a receivable as well as limit the ability to repossess the financed vehicle related to an affected receivable during and for a certain time after the obligors period of active military duty. This legislation and the servicers policies may result in delays and losses in payments to holders of the notes. See Material Legal Aspects of the ReceivablesServicemembers Civil Relief Act in this prospectus.
Failure to comply with consumer protection laws may result in losses on your investment
Federal and state consumer protection laws regulate the creation, collection and enforcement of consumer contracts such as the receivables. These laws impose specific statutory liabilities upon creditors who fail to comply with the provisions of these laws. Additionally, the CARES Act includes various provisions, such as new requirements affecting credit reporting, designed to protect consumers. Although the liability of the issuing entity to the obligor for violations of applicable federal and state consumer laws may be limited, these laws may make an assignee of a receivable, such as the issuing entity, liable to the obligor for any violation by the lender. Under certain circumstances, the liability of the issuing entity to the obligor for violations of applicable federal and state consumer protection laws may be limited by the applicable law. In some cases, this liability could affect an assignees ability to enforce its rights related to secured loans such as the receivables. The sponsor may be obligated to repurchase from the issuing entity any receivable that fails to comply with these legal requirements. If the sponsor fails to repurchase that receivable, or to the extent that a court holds the issuing entity liable for violating consumer protection laws regardless of such a repurchase, you might experience delays or reductions in payments on your notes. For a discussion of federal and state consumer protection laws which may affect the receivables, you should refer to Material Legal Aspects of the ReceivablesConsumer Protection Laws in this prospectus.
Changes to federal or state bankruptcy or debtor relief laws may impede collection efforts or alter timing and amount of collections, which may result in acceleration of or reduction in payment on your notes
If an obligor sought protection under federal or state bankruptcy or debtor relief laws, a court could reduce or completely discharge the obligors obligations to repay amounts due on its receivable. As a result, that receivable would be written off as uncollectible. If no funds are available from collections or amounts on deposit in the reserve account to cover the applicable default amount or if you receive payments of principal earlier than anticipated, you may experience a reduced return on your notes or a reduction in payment on your notes.
[This prospectus provides information regarding only the receivables as of the [statistical] cut-off date, however the initial receivables and the subsequent receivables added to the receivables pool could have different characteristics]
[This prospectus describes only the characteristics of the receivables as of the [statistical] cut-off date. The initial receivables, and any subsequent receivables transferred to the issuing entity during the Funding Period, will have characteristics that differ somewhat from the characteristics of the receivables as of the [statistical] cut-off date described in this prospectus. Although we do not expect the characteristics of the initial receivables or the subsequent receivables to differ materially from the receivables as of the [statistical] cut-off date, and each initial receivable and subsequent receivable must satisfy the eligibility criteria specified in the purchase agreement, you should be aware that the initial receivables and the subsequent receivables may have been originated using credit criteria different from the criteria applied to the receivables disclosed in this prospectus and may be of a different credit quality and seasoning. If you purchase a note, you should not assume that the characteristics of the initial receivables and the subsequent receivables will be identical to the characteristics of the receivables as of the [statistical] cut-off date disclosed in this prospectus.]
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RISKS RELATED TO THE LIMITED NATURE OF THE ISSUING ENTITYS ASSETS.
You must rely for repayment only upon the issuing entitys assets, which may not be sufficient to make full payments on your notes
Your notes are secured solely by the assets of the issuing entity. The sponsor, the servicer and the depositor are not obligated to make any payments to you on your notes and do not guarantee payments on the receivables. Further, neither the notes nor the receivables will be insured or guaranteed by the United States or any governmental entity. Distributions on any class of notes will depend on the amount and timing of payments and other collections in respect of the receivables and any credit enhancement for the notes and distributions from the reserve account. These amounts may not be sufficient to make full and timely distributions on your notes. If delinquencies and losses on the receivables create shortfalls which exceed the available credit enhancement, you may experience delays in payments due to you and you could suffer a loss.
You may experience a loss or a delay in receiving payments, or a prepayment, on the notes if the assets of the issuing entity are liquidated
If an event of default under the indenture occurs and the notes are accelerated, the indenture trustee may liquidate the assets of the issuing entity as described under The IndentureRights Upon Event of Default. As a result:
| you may suffer losses on your notes if the assets of the issuing entity are insufficient to pay the amounts owed on your notes; |
| payments on your notes may be delayed until more senior classes of notes are repaid or until the liquidation of the assets is completed; and |
| your notes may be repaid earlier than scheduled. |
The issuing entity cannot predict the length of time that will be required for liquidation of the assets of the issuing entity to be completed. In addition, liquidation proceeds may not be sufficient to repay the notes in full. Even if liquidation proceeds are sufficient to repay the notes in full, any liquidation that causes the outstanding note balance of the notes to be paid before the related final scheduled payment date will involve the prepayment risks described above under Risks related to certain features of the notes and financial market disruptionsReturns on your investments may be reduced by prepayments on the receivables, events of default, optional redemption of the notes or repurchases of receivables from the issuing entity.
Repurchase obligations are limited, and do not protect the issuing entity from all risks that may impact the performance of the receivables
The sponsor will make limited representations and warranties regarding the characteristics of the receivables to be transferred to the depositor, which will then transfer the receivables and assign the sponsors representations to the issuing entity. The sponsor will be obligated to repurchase from the issuing entity (as assignee of the depositor) a receivable if there is a breach of the representations or warranties regarding the eligibility of such receivable (and such breach is not cured and materially and adversely affects the interest of the issuing entity, the noteholders or the certificateholders in such receivable). Additionally, CONA, as servicer, will be obligated to repurchase from the issuing entity a receivable if the servicer makes certain modifications to the receivable or if the servicer breaches certain servicing covenants (and such breach is not cured and materially and adversely affects the interest of the issuing entity, the noteholders or the certificateholders in such receivable). However, the representations and warranties made by the sponsor are not a guarantee of performance and do not protect the issuing entity from all risks that could impact the performance of the receivables, including the risks related to the outbreak of COVID-19. Further, the representations and warranties are made as of the cut-off date or closing date, as applicable, and are not ongoing representations or warranties with respect to the eligibility of the receivables. While the sponsor or servicer may be obligated to repurchase a receivable, the sponsor may not be financially in a position to fund its repurchase obligation and you could suffer a loss. See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Representations and Warranties and The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review AgreementModifications of Receivables and Extensions of Receivables Final Payment Dates.
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Interests of other persons in the receivables and financed vehicles could be superior to the issuing entitys interests, which may result in losses on the receivables and reduced payments on your notes
Upon the acquisition of a receivable from a dealer, CONA takes a security interest in the financed vehicle by placing a lien on the title to the financed vehicle. In connection with the sale of receivables to the depositor, CONA will assign its security interests in the financed vehicles to the depositor, who will further assign them to the issuing entity. Although the receivables will be transferred to the issuing entity and pledged to the indenture trustee, the lien certificates or certificates of title relating to the financed vehicles securing the receivables will not be amended or reissued to identify the issuing entity as the new secured party. In the absence of an amendment or reissuance, the issuing entity may not have a perfected security interest in the financed vehicles securing the receivables in some states. Additionally, the issuing entity could lose the priority of its security interest in a financed vehicle due to, among other things, liens for repairs or storage of a financed vehicle or for unpaid taxes of an obligor. None of the servicer, the sponsor, or any other person will have any obligation to purchase or repurchase a receivable if liens for repairs or storage of a financed vehicle or for unpaid taxes of an obligor result in the loss of the priority of the security interest in the financed vehicle after the issuance of notes by the issuing entity.
The sponsor or the servicer may be required to repurchase or purchase, as applicable, any receivable sold to the issuing entity as to which it failed to obtain or maintain a perfected security interest in the financed vehicle securing the receivable. All of these purchases and repurchases are limited to breaches that materially and adversely affect the interests of the issuing entity, the noteholders or the certificateholders in the related receivable and are subject to the expiration of a cure period. If the issuing entity has failed to obtain or maintain a perfected security interest in a financed vehicle, its security interest would be subordinate to, among others, a bankruptcy trustee of the obligor, a subsequent purchaser of the financed vehicle or a holder of a perfected security interest in the financed vehicle or a bankruptcy trustee of such holder. The servicer may not be able to repossess and liquidate a financed vehicle if the security interest in that vehicle created by the receivable is not perfected at the time of repossession, which could result in higher losses on defaulted receivables and reduced collections available to make payments on your notes. In addition, generally, no action will be taken to perfect the rights of the issuing entity in proceeds of any insurance policies covering individual financed vehicles or obligors. Therefore, the rights of a third party with an interest in the proceeds could prevail against the rights of the issuing entity prior to the time the proceeds are deposited by the servicer into an account controlled by the trustee for the notes. See Material Legal Aspects of the ReceivablesSecurity Interests in the Financed Vehicles in this prospectus.
The servicer will maintain possession of the original contracts for each of the receivables in tangible form or control of the authoritative copies of the contracts in electronic form, and the original contracts and authoritative copies of electronic contracts will not be segregated or marked as belonging to the issuing entity. If the servicer sells or pledges the receivables and delivers the original contracts for the receivables to another party or permits another party to obtain control of the authoritative copies of the electronic contracts, in violation of its contractual obligations under the transaction documents, this party could acquire an interest in the receivable which may have priority over the issuing entitys interest. The servicer could also lose possession or control of the contracts through fraud, forgery, negligence or error, or as a result of a computer virus or a hackers actions or otherwise (especially in a circumstance where the contracts are held in electronic form). Furthermore, if the servicer becomes the subject of an insolvency or receivership proceeding, competing claims to ownership or security interests in the receivables could arise. These claims, even if unsuccessful, could result in delays in payments on the notes. If successful, these claims could result in losses or delays in payment to you or an acceleration of the repayment of the notes.
As a result of any of the above events, the issuing entity may not have a perfected security interest in the financed vehicles or in the receivables. The possibility that the issuing entity may not have a perfected security interest in the financed vehicles or the receivables may affect the issuing entitys ability to receive payments on the receivables or liquidation proceeds with respect to the financed vehicles. Therefore, you may be subject to delays in payment and may incur losses on your notes.
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RISKS RELATED TO THE SERVICER AND OTHER TRANSACTION PARTIES.
The sponsor faces risks related to its operational, technological and organizational infrastructure, including risks arising from the theft, loss or misuse of information (including as a result of a cyber-attack), which could adversely affect the liquidity or market value of your notes and the timing and amount of payments on your notes
Similar to other large financial institutions, the sponsor is exposed to operational risk that can manifest itself in many ways, such as errors in execution or inadequate processes, inaccurate models, faulty or disabled technological infrastructure and fraud by employees or persons outside of the company. In addition, the sponsor is heavily dependent on the security, capability and continuous availability of the technology systems that it uses to manage its internal financial and other systems, monitor risk and compliance with regulatory requirements, provide services to its customers, develop and offer new products and communicate with stakeholders.
If the sponsor does not maintain the necessary operational, technological and organizational infrastructure to operate its business, including to maintain the security of that infrastructure, the sponsors business and reputation could be materially adversely affected, which could adversely affect the liquidity or market value of your notes. The sponsor is also subject to disruptions to its operating systems arising from events that are wholly or partially beyond its control, which may include, computer viruses, electrical or telecommunications outages, design flaws in foundational components or platforms, availability and quality of vulnerability patches from key vendors, cyber-attacks (including Distributed Denial of Service (DDOS) attacks and other attacks on its infrastructure), natural disasters, public health emergencies (including COVID-19 or similar outbreaks), other damage to property or physical assets, or events arising from local or larger scale politics, including terrorist acts and civil unrest. The sponsor also relies on the business infrastructure and systems of third parties with which it does business and to whom it outsources the operation, maintenance and development of its information technology and communications systems.
On July 29, 2019, the sponsors direct parent, the Corporation, announced that on March 22, 2019 and March 23, 2019, an outside individual gained unauthorized access to its systems. This individual obtained certain types of personal information relating to people who had applied for the Corporations credit card products and to the Corporations credit card customers (the Cybersecurity Incident). The Corporation may incur significant costs in connection with the Cybersecurity Incident and any future cybersecurity incidents, including infrastructure investments or remediation efforts. Technologies, systems, networks and devices of the sponsor or its employees, service providers or other third parties with whom the sponsor interacts may continue to be the subject of attempted unauthorized access, mishandling or misuse of information, DDOS attacks, computer viruses, website defacement, hacking, malware, ransomware, phishing or other forms of social engineering, and other forms of cyber-attacks designed to obtain confidential information, destroy data, disrupt or degrade service, sabotage systems or cause other damage, and other events. These threats, such as the Cybersecurity Incident, may derive from error, fraud or malice on the part of the sponsors employees, insiders or third parties or may result from accidental technological failure. In addition, the sponsors customers access its products and services using computers, smartphones, tablets and other mobile devices that are beyond the sponsors security control systems.
The methods and techniques employed by perpetrators of fraud and others to attack, disable, degrade or sabotage platforms, systems and applications change frequently, are increasingly sophisticated and often are not fully recognized or understood until after they have occurred, and some techniques could occur and persist for an extended period of time before being detected. For example, although the Corporation immediately fixed the configuration vulnerability that was exploited in the Cybersecurity Incident once it discovered the unauthorized access, a period of time elapsed between the occurrence of the unauthorized access and the time when the Corporation discovered it. The sponsor will likely face an increasing number of attempted cyber-attacks as it expands its mobile and other internet-based products and services, as well as its usage of mobile and cloud technologies and as the sponsor provides more of these services to a greater number of retail clients.
A disruption or breach, including as a result of a cyber-attack such as the Cybersecurity Incident, or media reports of perceived security vulnerabilities at the sponsor or at the sponsors third-party service providers, could result in significant legal and financial exposure, regulatory intervention, litigation and remediation costs, supervisory liability, damage to the sponsors reputation or loss of confidence in the security of the sponsors systems, products and services, which could adversely affect its business and adversely affect the market value or liquidity of your notes. If future cyber-attacks are successful or if obligors are unable to access their accounts online for other reasons, it could adversely impact the sponsors ability to service customer accounts or loans (including the receivables), complete financial transactions for obligors or customers or otherwise operate any of the sponsors
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businesses or services. In addition, a breach or attack affecting one of the sponsors third-party service providers or partners could harm its business and adversely affect the servicing of the receivables even if the sponsor does not control the service that is attacked, which could adversely affect the timing and amount of payments on your notes.
Federal financial regulatory reform could have a significant impact on the servicer, the sponsor, the administrator, the depositor or the issuing entity and could adversely affect the timing and amount of payments on your notes
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) created a framework, known as the Orderly Liquidation Authority (OLA), for the liquidation of certain bank holding companies and certain of their subsidiaries in the event such a company is in default or in danger of default and the resolution of such a company under other applicable law would have serious adverse effects on financial stability in the United States, and created the Bureau of Consumer Financial Protection, known as the Consumer Financial Protection Bureau (the CFPB), an agency responsible for, among other things, administering and enforcing the laws and regulations for consumer financial products and services and conducting examinations of large banks and their affiliates for purposes of assessing compliance with the requirements of consumer financial laws.
The Dodd-Frank Act impacts the offering, marketing and regulation of consumer financial products and services offered by financial institutions. The CFPB has supervision, examination and enforcement authority over the consumer financial products and services of certain non-depository institutions and large insured depository institutions and their respective affiliates. See Material Legal Aspects of the ReceivablesConsumer Financial Protection Bureau in this prospectus.
Compliance with the implementing regulations under the Dodd-Frank Act and the oversight of the SEC, CFPB or other government entities, as applicable, has imposed costs on, created operational constraints for, and placed limits on pricing of consumer products with respect to banks such as the sponsor. Because of the complexity of the Dodd-Frank Act, the ultimate impact of the Dodd-Frank Act and its effects on the financial markets and their participants will not be fully known for an extended period of time. In particular, requirements imposed by the Dodd-Frank Act may have a significant future impact on the servicing of the receivables, or on the regulation and supervision of the servicer, the sponsor, the depositor, the issuing entity and/or their respective affiliates.
In addition, the OLA framework could potentially apply to Capital One Financial Corporation (the Corporation) or its nonbank affiliates, the issuing entity or the depositor, and, if it were to apply, may result in a repudiation of any of the transaction documents where further performance is required or an automatic stay or similar power preventing the indenture trustee or other transaction parties from exercising their rights. This repudiation power could also affect certain transfers of receivables pursuant to the transaction documents as further described under Material Legal Aspects of the ReceivablesDodd-Frank Orderly Liquidation FrameworkFDICs Repudiation Power under OLA in this prospectus.
Application of this OLA framework could materially adversely affect the timing and amount of payments of principal and interest on your notes.
On March 25, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), was signed into law. The CARES Act is extensive and significant legislation, and the potential impact of the CARES Act on the sponsor and its affiliates or on the obligors for the receivables is not yet known. It is possible that compliance with the implementing regulations under the CARES Act may impose costs on, or create operational constraints for, the sponsor and may have an adverse impact on the ability of the servicer to effectively service the receivables. Further, certain governmental authorities, including federal, state or local governments, could enact, and in some cases already have enacted, laws, regulations, executive orders or other guidance that allow obligors to forgo making scheduled payments for some period of time, require modifications to the receivables (e.g., waiving accrued interest), preclude creditors from exercising certain rights or taking certain actions with respect to collateral, including repossession or liquidation of the financed vehicles or mandate limited operations or temporary closures of the servicer or its vendors as non-essential businesses or otherwise.
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FDIC receivership or conservatorship of CONA could result in delays in payments or losses on your notes
CONA is a national banking association and its deposits are insured by the Federal Deposit Insurance Corporation (FDIC). If CONA were to become insolvent, were to violate applicable regulations, or if other similar circumstances were to occur, the FDIC could be appointed receiver or conservator of CONA. As receiver or conservator, the FDIC would have various powers under the Federal Deposit Insurance Act, including the repudiation and automatic stay powers described under Material Legal Aspects of the Receivables Certain Matters Relating to Insolvency in this prospectus. To limit the FDICs potential use of any of these powers, CONA has structured this transaction to take advantage of a special regulatory safe harbor that the FDIC has created, entitled Treatment of financial assets transferred in connection with a securitization or participation. This FDIC regulatory safe harbor, which we refer to as the FDIC Rule, contains four separate safe harbors for transactions; in this prospectus, we describe the safe harbor applicable to securitizations that do not qualify for sale accounting treatment. If the depositor were to sell all or nearly all of the certificates, then the sponsor would record the transfer of receivables as a sale under generally accepted accounting principles at the time of such sale. Consequently, we also describe the safe harbor applicable to securitizations that qualify for sale accounting treatment in this prospectus. The depositor does not expect to sell the certificates. See Material Legal Aspects of the Receivables FDIC Rule in this prospectus. The FDIC Rule provides a greater degree of protection to noteholders in securitizations that qualify for sale accounting treatment. The FDIC Rule limits the rights of the FDIC, as conservator or receiver, to delay or prevent payments to noteholders in securitization transactions. For a description of the FDIC Rules requirements and effects, including the uncertainty regarding its application and interpretation, see Material Legal Aspects of the Receivables FDIC Rule in this prospectus.
If the FDIC were to successfully assert that this transaction does not comply with the FDIC Rule and that the transfer of receivables under the purchase agreement was not a legal true sale, then the depositor would be treated as having made a loan to CONA, secured by the transferred receivables. If the FDIC repudiated that loan, the amount of compensation that the FDIC would be required to pay would be limited to actual direct compensatory damages, as discussed under Material Legal Aspects of the Receivables Certain Matters Relating to Insolvency in this prospectus.
If the FDIC were appointed as conservator or receiver for CONA, the FDIC could:
| require the issuing entity, as assignee of the depositor, to go through an administrative claims procedure to establish its rights to payments collected on the receivables; or |
| request a stay of proceedings to liquidate claims or otherwise enforce contractual and legal remedies against CONA; or |
| repudiate without compensation CONAs ongoing servicing obligations under a servicing agreement, such as its duty to collect and remit payments or otherwise service the receivables; or |
| argue that the automatic stay prevents the indenture trustee and other transaction parties from exercising their rights, remedies and interests for up to ninety (90) days. |
If the FDIC, as conservator or receiver for CONA, were to take any of the actions described above, payments and/or distributions of principal and interest on the notes could be delayed or reduced. See Material Legal Aspects of the Receivables Certain Matters Relating to Insolvency in this prospectus.
Additionally, CONAs accounting treatment of the transfer of receivables may also affect whether the issuing entity would be a covered subsidiary of CONA under the Orderly Liquidation Authority created pursuant to the Dodd-Frank Act and thus potentially subject to an FDIC receivership under that statute in addition to potentially being a debtor in a case under the Bankruptcy Code. See Federal financial regulatory reform could have a significant impact on the servicer, the sponsor, the administrator, the depositor or the issuing entity and could adversely affect the timing and amount of payments on your notes above and Material Legal Aspects of the Receivables Certain Matters Relating to Insolvency in this prospectus.
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A depositor bankruptcy could delay or limit payments to you
Following a bankruptcy or insolvency of the depositor, a court could conclude that the receivables are owned by the depositor, instead of the issuing entity. This conclusion could be either because the court found that any transfer of the receivables was not a true sale or because the court found that the issuing entity should be treated as the same entity as the depositor for bankruptcy purposes. If this were to occur, you could experience delays in payments due to you or you may not ultimately receive all amounts due to you as a result of:
| the automatic stay, which prevents a secured creditor from exercising remedies against a debtor in bankruptcy without permission from the court, and provisions of the United States Bankruptcy Code that permit substitution of collateral in limited circumstances; |
| tax or government liens on the depositors property (that arose prior to the transfer of the receivables to the issuing entity) having a prior claim on collections before the collections are used to make payments on the notes; or |
| the fact that the issuing entity and the indenture trustee may not have a perfected security interest in any cash collections of the receivables held by the servicer at the time that a bankruptcy proceeding begins. |
For a discussion of how a bankruptcy proceeding of the depositor may affect the issuing entity and the notes, you should refer to Material Legal Aspects of the ReceivablesCertain Matters Relating to Insolvency in this prospectus. For a discussion of how an insolvency proceeding of the sponsor may affect the issuing entity and the notes, you should refer to Material Legal Aspects of the ReceivablesCertain Matters Relating to Insolvency in this prospectus.
Commingling of assets by the servicer could reduce or delay payments on the notes
The servicer will be required to deposit all collections and proceeds of the receivables collected during each collection period into the collection account within two (2) business days of receipt. Until these funds have been deposited into the collection account, the servicer may use and invest these funds at its own risk and for its own benefit and will not segregate them from its own funds. The indenture trustee may not have a perfected interest in these amounts, and thus payment could be delayed or reduced if the servicer were to become subject to a bankruptcy proceeding. Further, if the servicer were unable to remit such funds or if the servicer were to become a debtor or subject to a receivership under any insolvency laws, reductions or delays in payments on the notes could occur.
You may experience delays or reduction in payments on your notes following a servicer replacement event and replacement of the servicer
Upon the occurrence of a servicer replacement event, the indenture trustee, at the direction of holders of notes evidencing not less than a majority of the outstanding principal amount of the notes of the controlling class, will terminate the servicer. In addition, the holders of notes evidencing not less than a majority of the outstanding principal amount of the notes of the controlling class have the ability to waive any servicer replacement event.
In the event of the removal of the servicer and the appointment of a successor servicer, we cannot predict:
| the cost of the transfer of servicing to the successor servicer; or |
| the ability of the successor servicer to perform the obligations and duties of the servicer under the servicing agreement. Furthermore, there is no guarantee that a replacement servicer would be able to service the receivables with the same degree of skill as the servicer. |
In addition, during the pendency of any servicing transfer or for some time thereafter, obligors may delay making their monthly payments or may inadvertently continue making payments to the predecessor servicer, potentially resulting in delays in payments on the notes. If, during this time, the servicer were to become subject to an insolvency or receivership proceeding, delays in payments on the notes and possible reductions in the amount of such payments could occur with respect to any cash collections held or received by the servicer at the time. See Risks related to the servicer and other transaction partiesFDIC receivership or conservatorship of CONA could result in delays in payments or losses on your notes.
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Because the servicing fee is structured as a percentage of the net pool balance of the receivables, the fee the servicer receives each month will be reduced as the size of the pool of receivables decreases over time. At some point, the amount of the servicing fee payable to the servicer may be considered insufficient by a potential replacement servicer, if servicing responsibilities are required to be transferred at a time when much of the net pool balance of the receivables has been repaid. Due to the reduction in servicing fee as described above, it may be difficult to find a replacement servicer. Consequently, the time it takes to effect the transfer of servicing to a replacement servicer under such circumstances may result in delays and/or reductions in the interest and principal payments on your notes.
Federal tax legislative proposals could impact your investment
New tax legislation is from time to time introduced in the U.S. Congress and current law may change. The issuing entity cannot be certain if, when or in what form any such new tax law may be enacted and whether any such law will apply to instruments issued earlier than the effective date of such law or to entities in existence earlier than the effective date of such law. It is possible that additional legislation could be introduced and enacted by the current U.S. Congress or future Congresses that could have an adverse impact on investors in the notes. We suggest prospective investors consult with their tax advisors as to the potential impact of legislative proposals.
RISKS RELATED TO THE ISSUANCE OF MULTIPLE CLASSES OF NOTES[, AN UNKNOWN ALLOCATION OF NOTES] OR RETENTION OF NOTES.
Subordination of all classes of notes other than the Class A notes means that those classes are more sensitive to losses on the receivables and your share of losses may not be proportional
As described under The NotesPayments of Principal, principal payments on the notes generally will be made to the holders of the notes sequentially so that no principal will be paid on any class of notes until each class of notes with an earlier final scheduled payment date has been paid in full. Additionally, after an event of default and acceleration of the notes, principal and interest on more senior classes will generally be paid prior to principal and interest on more junior classes of notes. As a result, a class of notes having a later final scheduled payment date is generally more likely to suffer the consequences of delinquent payments and defaults on the receivables than the classes of notes having an earlier final scheduled payment date.
Additionally, if there are insufficient amounts available to pay all classes of notes the amounts they are owed on any payment date or following an acceleration of the notes, delays in payments or losses will be suffered by the most junior outstanding class or classes of notes even as payment is made in full to more senior classes of notes.
There may be a conflict of interest among classes of notes
As described elsewhere in this prospectus, the holders of the most senior class of notes then outstanding will make certain decisions with regard to treatment of defaults by the servicer, acceleration of payments on the notes following an event of a default under the indenture and certain other matters. For example, upon the occurrence of an event of default relating to a payment default or certain events of bankruptcy, insolvency, receivership or liquidation with respect to the issuing entity, the holders of at least 66 2/3% of the outstanding principal amount of the notes of the controlling class may consent to the sale of the receivables even if the proceeds from such a sale would not be sufficient to pay in full the principal of and accrued interest on all outstanding classes of notes. See The IndentureRights Upon Event of Default in this prospectus. In addition, the failure of the issuing entity to pay interest on any class of notes will not constitute an event of default until that class is the controlling class at the time of the failure. Because the holders of different classes of notes may have varying interests when it comes to these matters, you may find that courses of action determined by other classes of noteholders do not reflect your interests but that you are nonetheless bound by the decisions of these other noteholders.
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The failure to pay interest on the subordinated classes of notes is not an event of default, and the failure to make principal payments on any notes will generally not result in an event of default until the applicable final scheduled payment date
The indenture provides that failure to pay interest when due on the outstanding subordinated class or classes of notes for example, for so long as any of the Class A notes are outstanding, the Class B notes, Class C notes [and the Class D notes] will not be an event of default under the indenture. Under these circumstances, the holders of the subordinated classes of notes which are not the controlling class will not have any right to declare an event of default, to cause the maturity of the notes to be accelerated or to direct or consent to any remedial action under the indenture.
The amount of principal required to be paid to investors prior to the applicable final scheduled payment date set forth in this prospectus generally will be limited to amounts available for that purpose. Therefore, the failure to pay principal of a note generally will not result in an event of default under the indenture until the applicable final scheduled payment date or redemption date for the related class of notes.
[There are risks associated with the unknown initial note balance of the Class [A-3] notes and the Class [A-4] notes]
[The allocation of the aggregate initial note balance between the Class [A-3] notes and the Class [A-4] notes is not expected to be known until the day of pricing. Because the aggregate initial note balance of the Class [A-3] notes and the Class [A-4] notes is predetermined, the division between the Class [A-3] notes and the Class [A-4] notes may result in one of such classes being issued in a smaller than expected principal amount, which may reduce the liquidity of such class of notes. Conversely, if your class of notes is larger than you expected, then you will hold a smaller percentage of that class of notes and the voting power of your notes will be diluted. Further, an increase in the risk of reduced or delayed payments of principal on the Class [A-4] notes could result if the Class [A-3] notes have a note balance in the higher end of the range of note balances set forth for the Class [A-3] notes on the cover page of this prospectus.]
[Retention of some or all of one or more classes of notes by the depositor or an affiliate of the depositor may reduce the liquidity of the notes]
[In addition to the portion of each class of notes retained to satisfy the sponsors credit risk retention obligations, some or all of one or more classes of notes may be retained by the depositor or an affiliate of the depositor. Accordingly, the market for such a retained class of notes may be less liquid than would otherwise be the case. In addition, if any retained notes are subsequently sold in the secondary market, demand and market price for notes already in the market could be adversely affected. Additionally, if any retained notes are subsequently sold in the secondary market, the voting power of the noteholders of the outstanding notes may be diluted.]
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RISKS RELATED TO CERTAIN FEATURES OF THE NOTES AND FINANCIAL MARKET DISRUPTIONS
The ratings of the notes may be withdrawn or lowered, or the notes may receive an unsolicited rating, which may have an adverse effect on the liquidity or the market price of the notes
Security ratings are not recommendations to buy, sell or hold the notes. Rather, ratings are an assessment by the applicable rating agency of the likelihood that any interest on a class of notes will be paid on a timely basis and that a class of notes will be paid in full by its final scheduled payment date. A rating is not a guarantee that the notes will perform as expected. Ratings do not consider the extent to which the notes will be subject to prepayment or the principal of any class of notes will be paid prior to the final scheduled payment date for that class of notes, nor do the ratings consider the prices of the notes or their suitability to a particular investor. A rating agency may revise or withdraw the ratings at any time in its sole discretion, including as a result of a failure by the sponsor to comply with its obligation to post information provided to the hired agencies on a website that is accessible by a rating agency that is not a hired agency. The ratings of any notes may be lowered by a rating agency (including the hired agencies) following the initial issuance of the notes as a result of losses on the related receivables in excess of the levels contemplated by a rating agency at the time of its initial rating analysis. Neither the depositor nor the sponsor nor any of their respective affiliates will have any obligation to replace or supplement any credit support, or to take any other action to maintain any ratings of the notes.
Accordingly, the ratings assigned to any note on the date on which the note is originally issued may be lowered or withdrawn by any rating agency at any time thereafter, and none of the sponsor, the depositor or any underwriter is obligated to inform investors (or potential investors) if there is any change in any rating provided by any hired agency. If any rating with respect to the notes is revised or withdrawn, the liquidity or the market value of your notes may be adversely affected.
It is possible that a rating agency not hired by the sponsor to rate the transaction or a particular class of notes may provide an unsolicited rating that differs from (or is lower than) the ratings provided by the hired agencies. As of the date of this prospectus, the depositor was not aware of the existence of any unsolicited rating provided (or to be provided at a future time) by any rating agency not hired to rate the transaction or a particular class of notes. However, an unsolicited rating may be issued prior to or after the closing date, and none of the sponsor, the depositor or any underwriter is obligated to inform investors (or potential investors) in the notes if an unsolicited rating is issued after the date of this prospectus. Consequently, if you intend to purchase notes, you should monitor whether an unsolicited rating of the notes has been issued by a non-hired rating agency and should consult with your financial and legal advisors regarding the impact of an unsolicited rating on a class of notes. If any non-hired rating agency provides an unsolicited rating that differs from (or is lower than) the rating provided by the hired agencies, the liquidity or the market value of your notes may be adversely affect affected.
Potential credit rating agency conflict of interest and regulatory scrutiny
It may be perceived that the rating agencies hired by us have a conflict of interest that may have affected the ratings assigned to the notes where, as is the industry standard and the case with the ratings of the notes, the sponsor, the depositor or the issuing entity pays the fees charged by the hired agencies for their rating services. The potential conflict of interest may in turn have an adverse effect on the market value of your notes and the ability to resell your notes.
Returns on your investments may be reduced by prepayments on the receivables, events of default, optional redemption of the notes or repurchases of receivables from the issuing entity
You may receive payments on your notes earlier than you expected for various reasons, including the reasons set forth below. You may not be able to invest the amounts paid to you earlier than you expected at a rate of return that is equal to or greater than the rate of return on your notes. The notes are not a suitable investment for you if you require a regular or predictable schedule of payments or payment on any specific date.
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| The rate of return of principal is uncertain. The amount of distributions of principal of your notes and the time when you receive those distributions depend in part on the amount in which and times at which obligors make principal payments on the receivables. Those principal payments may be regularly scheduled payments or unscheduled payments resulting from prepayments or defaults on the receivables. For example, the servicer may engage in marketing practices or promotions which may result in faster than expected payments on the receivables. Additionally, if the sponsor or the servicer is required to repurchase receivables from the issuing entity because of a breach of any applicable representation, warranty or covenant as described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Collection and Other Servicing Procedures and The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Representations and Warranties, payment of principal on the notes will be accelerated. |
| You may be unable to reinvest distributions in comparable investments. Asset-backed securities, like the notes, usually produce a faster return of principal to investors if market interest rates fall below the interest rates on the receivables and produce a slower return of principal if market interest rates rise above the interest rates on the receivables. As a result, you are likely to receive more money to reinvest at a time when other investments generally are producing a lower yield than that on your notes, and you are likely to receive less money to reinvest when other investments generally are producing a higher yield than that on your notes. You will bear the risk that the timing and amount of distributions on your notes will prevent you from attaining your desired yield. |
| An optional redemption of the notes or an event of default resulting in acceleration of the notes will shorten the life of your investment which may reduce your yield to maturity. If the receivables are sold to the servicer upon exercise of a clean-up call after the net pool balance has declined to [10]% or less of the net pool balance as of the [initial] cut-off date [plus the principal balance of the subsequent receivables as of the related cut-off date], the issuing entity will redeem the notes then outstanding and you will receive the remaining principal amount of your notes plus accrued interest through the related payment date. Additionally, after an event of default, your notes may be repaid earlier than expected. Because your notes will no longer be outstanding, you will not receive the additional interest payments that you would have received had the notes remained outstanding. If you bought your notes at par or at a premium, your yield to maturity will be lower than it would have been if the clean-up call had not been exercised or if the notes had not been accelerated following an event of default. See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Optional Redemption in this prospectus. |
Financial market disruptions and the absence of a secondary market for the notes could limit your ability to resell your notes
The notes will not be listed on any securities exchange. If you want to sell your notes you must locate a purchaser that is willing to purchase those notes. The underwriters intend to make a secondary market for the notes. The underwriters will do so by offering to buy the notes from investors who wish to sell. However, the underwriters will not be obligated to make offers to buy the notes or otherwise make a market for any class of notes, and may stop making offers at any time. A market for the offered notes may not develop, or if one does develop, it may not continue or it may not provide sufficient liquidity. In addition, the prices offered, if any, may not reflect prices that other potential purchasers would be willing to pay, were they to be given the opportunity. In addition, because the offered notes will be in book-entry form, this may reduce their liquidity in the secondary market since certain potential investors may be unwilling to purchase notes for which they cannot obtain physical notes.
Additionally, events in the domestic and global financial markets could affect the performance or market value of your notes and your ability to sell your notes in the secondary market. Recent and continuing events in such markets have caused, and may again cause, a significant reduction in liquidity in the secondary market for asset-backed securities. In particular, asset-backed securities backed by sub-prime receivables and asset-backed securities in the form of subordinate notes have experienced reduced liquidity. Such illiquidity can have a severely adverse effect on the prices of securities that are especially sensitive to prepayment, credit or interest rate risk, such as the notes. As a result, you may not be able to sell your notes when you want to do so or you may not be able to obtain the price that you wish to receive.
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If your notes are in book-entry form, your rights can only be exercised indirectly, and a book-entry system may decrease liquidity and delay payment
Because your notes will initially be issued in book-entry form, you will be required to hold your interest in your notes through DTC in the United States, or Clearstream Banking Luxembourg S.A. (Clearstream) or Euroclear Bank S.A./NV as operator of the Euroclear System in Europe or Asia (Euroclear). Transfers of interests in the notes within DTC, Clearstream or Euroclear must be made in accordance with the usual rules and operating procedures of those systems. So long as the notes are in book-entry form, you will not be entitled to receive a definitive note representing your interest. The notes will remain in book-entry form except in the limited circumstances described under the caption The NotesDefinitive Notes in this prospectus. Unless and until the notes cease to be held in book-entry form, the related transaction parties will not recognize you as a holder of the related notes except in the limited circumstances relating to an investor vote with respect to an asset representations review as described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review AgreementAsset Representations Review, a request that the originator repurchase any of the receivables as described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review AgreementDispute Resolution, and a request to the depositor to communicate with other noteholders as described under The NotesNoteholder Communication.
As a result, you will only be able to exercise your rights as a noteholder indirectly through DTC (if in the United States) and its participating organizations, or Clearstream and Euroclear (in Europe or Asia) and their participating organizations.
Because transactions in the notes generally can be effected only through DTC, participants and indirect participants:
| your ability to pledge or transfer your notes to your beneficial interest in notes to persons or entities that do not participate in DTC, Clearstream or Euroclear, or to otherwise take action relating to your beneficial interest in notes, may be limited due to the lack of a physical note; |
| you may experience delays in your receipt of payments with respect to your beneficial interest in notes because payments will be made by the indenture trustee, to Cede, as nominee for DTC, rather than directly to you, and DTC will then credit payments received from the issuing entity to the accounts of its participants which, in turn, will credit those amounts to noteholders either directly or indirectly through indirect participants; and |
| you may experience delays in your receipt of payments with respect to your beneficial interest in notes in the event of misapplication of payments by DTC, participants or indirect participants or bankruptcy or insolvency of those entities and your recourse will be limited to your remedies against those entities. |
See The NotesGeneral, Delivery of Notes and Book-Entry Registration and Tax Documentation Procedures in this prospectus.
[RISKS RELATING TO THE ISSUANCE OF A FLOATING RATE CLASS OF NOTES]
[The allocation of the principal balance of the Class A-2 notes may not be determined until the day of pricing.]
[The allocation of the aggregate initial principal balance of the Class A-2 notes between the Class A-2-A notes and the Class A-2-B notes may not be known until the day of pricing and may result in any of a number of possible allocation scenarios, and we cannot predict with certainty what portion of the principal balance of the Class A-2 notes will be allocated to the fixed rate Class A-2-A notes and what portion of the principal balance will be allocated to the floating rate Class A-2-B notes, if any, although the principal balance of the Class A-2-B notes may not exceed 50% of the aggregate initial principal balance of the Class A-2 notes.
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As the allocated principal balance of the floating rate Class A-2-B notes is increased (relative to the corresponding Class A-2-A fixed rate notes), there will be a greater amount of floating rate securities issued by the issuing entity, and therefore the issuing entity will have a greater exposure to increases in the floating rate payable on the floating rate notes. [For more information on the risks associated with the issuance of floating rate notes, please see The issuing entity may issue floating rate notes, but the issuing entity will not enter into any interest rate swaps and you may suffer losses on your notes if interest rates rise.] [The receivables sold to the issuing entity on the closing date will bear interest at a fixed rate, while any floating rate notes will bear interest at a floating rate based on [insert applicable floating rate benchmark] plus an applicable spread below.]
In addition, because the aggregate amount of Class A-2 notes is fixed as set forth on the cover of this prospectus, the division of the aggregate Class A-2 principal balance between the Class A-2-A notes and the Class A-2-B notes may result in one of such classes being issued in only a very small principal amount, which may reduce the liquidity of such class of notes.]
[The issuing entity may issue floating rate notes, but the issuing entity will not enter into any interest rate swaps and you may suffer losses on your notes if interest rates rise.] [The receivables sold to the issuing entity on the closing date will bear interest at a fixed rate, while any floating rate notes will bear interest at a floating rate based on [insert applicable floating rate benchmark] plus an applicable spread.]
[The receivables sold to the issuing entity on the closing date will bear interest at a fixed rate, while any floating rate notes will bear interest at a floating rate based on [insert applicable floating rate benchmark] plus an applicable spread. Even though the issuing entity may issue floating rate notes, it will not enter into any interest rate swaps or interest rate caps in connection with the issuance of the notes.
If the floating rate payable by the issuing entity increases to the point where the amount of interest and principal due on the notes, together with other fees and expenses payable by the issuing entity, exceeds the amount of collections and other funds available to the issuing entity to make such payments, the issuing entity may not have sufficient funds to make payments on the notes. If the issuing entity does not have sufficient funds to make payments, you may experience delays or reductions in the interest and principal payments on your notes.
If market interest rates rise or other conditions change materially after the issuance of the notes, you may experience delays or reductions in interest and principal payments on your notes. The issuing entity will make payments on any floating rate notes out of its generally available fundsnot solely from funds that are dedicated to such floating rate notes. Therefore, an increase in market interest rates would reduce the amounts available for distribution to holders of all notes, not just the holders of such floating rate notes, and a decrease in market interest rates would increase the amounts available to the holders of all notes.]
[If the benchmark decreases below 0.00% for any interest period, the interest rate for that period, including the spread, will be reduced by the amount the benchmark is negative, but not below 0.00%.].
[The interest rate to be borne by the Class A-2-B notes is based on a spread over [insert applicable floating rate benchmark]. Changes in the benchmark will affect the rate at which the Class A-2-B notes accrue interest and the amount of interest payments on the Class A-2-B notes. To the extent that the benchmark decreases below 0.00% for any interest accrual period, the rate at which the Class A-2-B notes accrue interest for such interest accrual period will be reduced by the amount by which the benchmark is negative, provided that the interest rate on the Class A-2-B notes for any interest accrual period will not be less than 0.00%. A negative [insert applicable floating rate benchmark]rate could result in the interest rate applied to the Class A-2-B notes decreasing to 0.00% for the related interest accrual period.
[[Insert applicable floating rate benchmark rate] is a relatively new reference rate that may be more volatile than other benchmark or market rates [and its composition and characteristics are not the same as LIBOR]
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[Very limited market precedent exists for securities that use [insert applicable floating rate benchmark rate] as the interest rate [and the method for calculating an interest rate based upon [insert applicable floating rate benchmark rate] in those precedents varies].
The composition and characteristics of [insert applicable floating rate benchmark rate] are not the same as those of LIBOR. [Insert description of differences between benchmark rate and LIBOR.] As a result, there can be no assurance that [insert applicable floating rate benchmark rate] will perform in the same way as LIBOR would have at any time, including, without limitation, as a result of changes in interest and yield rates in the market, market volatility or global or regional economic, financial, political, regulatory, judicial or other events.
In addition, if [insert applicable floating rate benchmark rate] does not prove to be widely used as a benchmark in securities that are similar or comparable to the Class A-2-B notes, the return on and value of the Class A-2-B notes and the trading price of the Class A-2-B notes may be lower than those of securities that are linked to rates that are more widely used. Similarly, market terms for floating-rate debt securities linked to the return on and value of the Class A-2-B notes may evolve over time, and trading prices of the Class A-2-B notes may be lower than those of later-issued [insert applicable floating rate benchmark rate]-based debt securities as a result. Investors in the Class A-2-B notes may not be able to sell the Class A-2-B notes at all or may not be able to sell the Class A-2-B notes at prices that will provide them with a yield comparable to similar investments that have a developed secondary market, and may consequently suffer from increased pricing volatility and market risk.]]
[Risks associated with the interest rate swap]
[The issuing entity will enter into an interest rate swap transaction under an interest rate swap agreement because the receivables owned by the issuing entity bear interest at fixed rates while the Class A-2-B notes will bear interest at a floating rate. The issuing entity may use payments made by the swap counterparty to make interest and other payments on each payment date.
During those periods in which [insert applicable floating rate benchmark] is substantially greater than the cap rate of [ ]%, the issuing entity will be more dependent on receiving payments from the cap provider in order to make payments on the notes. If the swap counterparty fails to pay a net swap receipt and collections on the receivables and funds on deposit in the reserve account are insufficient to make payments of interest on the notes, you may experience delays and/or reductions in the interest and principal payments on your notes.
During those periods in which the floating rate payable by the swap counterparty under the interest rate swap agreement is less than the fixed rate payable by the issuing entity under the interest rate swap agreement, the issuing entity will be obligated to make a net swap payment to the swap counterparty. The issuing entitys obligation to pay a net swap payment to the swap counterparty is secured by the issuing entity property.
The swap counterpartys claim for a net swap payment will be higher in priority than all payments on the notes, and the swap counterpartys claim for any due and unpaid senior swap termination payment will be equal in priority to payments of interest on the notes and higher in priority than all payments of principal on the notes. If a net swap payment is due to the swap counterparty on a payment date and there are insufficient collections on the receivables and insufficient funds on deposit in the reserve account to make payments of interest and principal on the notes, you may experience delays and/or reductions in the interest and principal payments on your notes.
The interest rate swap agreement generally may not be terminated except upon failure of either party to the interest rate swap agreement to make payments when due, insolvency of either party to the interest rate swap agreement, the note insurers credit ratings dropping below the levels required by the interest rate swap agreement at a time when an event of default or termination event has occurred with respect to the issuing entity, illegality, the exercise of certain rights under the indenture, the note insurer fails to meet its payment obligations under the swap policy, the issuing entity amends the transaction documents without the consent of the swap counterparty if such consent is
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required, or failure of the swap counterparty to post collateral, assign the interest rate swap agreement to an eligible counterparty or take other remedial action if the swap counterpartys credit ratings drop below the levels required by the interest rate swap agreement. Depending on the reason for the termination, a termination payment may be due to the issuing entity or to the swap counterparty. Any such termination payment could, if market interest rates and other conditions have changed materially, be substantial.
If the swap counterparty fails to make a termination payment owed to the issuing entity under the interest rate swap agreement, the issuing entity may not be able to enter into a replacement interest rate swap agreement. If this occurs, the amount available to pay principal of and interest on the notes will be reduced to the extent the interest rate on the Class [ ] notes exceeds the fixed rate the issuing entity would have been required to pay the swap counterparty under the interest rate swap agreement.
If the issuing entity is required to make a Senior Swap Termination Payment to the swap counterparty, that payment will be senior to all payments on the Class [B] notes [and Class C notes and Class D notes] and principal payments on the Class [A] notes but equal in priority to interest payments on the Class A notes. A Senior Swap Termination Payment to the swap counterparty could cause a shortfall in funds available on any payment date, in which case you may experience delays or reductions on the interest and principal payments of your notes.
If the interest rate swap agreement is terminated and no replacement is entered into and collections on the receivables and funds on deposit in the reserve account are insufficient to make payments of interest and principal on your notes, you may experience delays and/or reductions in the interest and principal payments on your notes.]
[Risks associated with the interest rate cap agreement(s)]
[The amounts available to the issuing entity to pay interest on and principal of all classes of the notes depend in part on the operation of the interest rate cap agreement(s) and the performance by the cap provider of its obligations under the interest rate cap agreement(s). The ratings of all the notes take into account the provisions of the interest rate cap agreement(s) and the ratings currently assigned to the cap provider.
During those periods in which [insert applicable floating rate benchmark] is substantially greater than the cap rate of [ ]%, the issuing entity will be more dependent on receiving payments from the cap provider in order to make payments on the notes. If the cap provider fails to pay the amounts due under the interest rate cap agreement(s), the amount of credit enhancement available in the current or any future period may be reduced and you may experience delays and/or reductions in the interest on and principal of your notes. Investors should make their own determinations as to the likelihood of performance by the cap provider of its obligations under the interest rate cap agreement.]
[The rating of a [swap counterparty] [cap provider] may affect the ratings of the notes]
[The issuing entity has entered into a [swap][ interest rate cap] agreement, and the rating agencies that rate the issuing entitys notes will consider the provisions of the [swap][interest rate cap] agreement and the rating of the [swap counterparty][cap provider] in rating the notes. If a rating agency downgrades the debt rating of the [swap counterparty][cap provider], it is also likely to downgrade the rating of the notes. Any downgrade in the rating of the notes could have severe adverse consequences on their liquidity or market value.
To provide some protection against the adverse consequences of a downgrade, the [swap counterparty][cap provider] may be permitted, but generally not required, to take the following actions if the rating agencies reduce its debt ratings below certain levels:
1. | assign the [swap][interest rate cap] agreement to another party; |
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2. | obtain a replacement [swap][interest rate cap] agreement on substantially the same terms as the [swap][interest rate cap] agreement; or |
3. | establish any other arrangement satisfactory to the rating agencies. |
Any [swap][interest rate cap] involves a high degree of risk. The issuing entity will be exposed to this risk should it use this mechanism. For this reason, only investors capable of understanding these risks should invest in the notes. You are strongly urged to consult with your financial advisors before deciding to invest in the notes because a [swap][interest rate cap] is involved.]
[RISKS RELATING TO PRE-FUNDING]
[You may experience reduced returns on your notes resulting from distribution of amounts in the pre-funding account]
[On one or more occasions following the closing date until the end of the funding period, the issuing entity may purchase additional receivables from the depositor, which, in turn, will acquire these receivables from CONA, with funds on deposit in the pre-funding account.
You will receive as a prepayment of principal any amounts remaining in the pre-funding account (excluding investment earnings) that have not been used to purchase receivables by the end of the Funding Period. See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Acquisition of Subsequent Receivables During Funding Period. This prepayment of principal could have the effect of shortening the weighted average life of your notes. The inability of the depositor to obtain receivables meeting the requirements for sale to the issuing entity will increase the likelihood of a prepayment of principal. In addition, you will bear the risk that you may be unable to reinvest any principal prepayment at yields at least equal to the yield on your notes.]
[Lack of availability of additional receivables during the Revolving Period could shorten the average life of your notes]
[During the revolving period, the issuing entity will not make payments of principal on the notes. Instead, the issuing entity will purchase additional receivables from the depositor. The purchase of additional receivables by the issuing entity will lengthen the average life of the notes compared to a transaction without a revolving period. However, an unexpectedly high rate of collections on the receivables during the revolving period, a significant decline in the number of receivables available for purchase or the inability of the depositor to acquire new receivables could affect the ability of the issuing entity to purchase additional receivables. If the issuing entity is unable to reinvest available funds by the end of the revolving period, then the average life of the notes may be less than anticipated.
A variety of unpredictable economic, social and other factors may influence the availability of additional receivables. You will bear all reinvestment risk resulting from a longer or shorter than anticipated average life of the notes.]
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The depositor will use the net proceeds from the offering of the offered notes:
| to purchase the receivables from CONA; |
| [to deposit the pre-funded amount, if any, into the pre-funding account and to fund any other collateral accounts]; |
| to pay other expenses in connection with the issuance of the notes and certificates; and |
| to make the initial deposit into the reserve account. |
The depositor or its affiliates may use a portion of the net proceeds of the offering of the offered notes to pay their respective debts and for general purposes. No expenses incurred in connection with the selection and acquisition of the pool assets are payable from the proceeds of the offering of the offered notes.
Limited Purpose and Limited Assets
Capital One Prime Auto Receivables Trust 20[ ] [ ] is a [statutory trust] formed on [ ], 20[ ] under the laws of the State of [Delaware] by the depositor for the purpose of owning the receivables and issuing the notes. The issuing entity will be established and operated pursuant to a trust agreement. CONA will be the administrator of the issuing entity. [The issuing entity will also issue one or more non-interest bearing certificates in a nominal aggregate principal amount of $100,000 representing the beneficial interest in the issuing entity, which are subordinated to the notes. Only the offered notes are being offered hereby, but the depositor may transfer all or a portion of the certificates to an affiliate or sell all or a portion of the certificates on or after the closing date. However, the portion of the certificates retained by the depositor to satisfy U.S. credit risk retention rules and for purposes of the SR Rules will not be sold, transferred or hedged except as permitted under, or in accordance with, those rules. See The SponsorU.S. Credit Risk Retention, Securitization Regulations and Legal InvestmentsRegulations for Certain EU and UK Regulated Persons and Affiliates. On each payment date, the certificateholders will be entitled to any funds remaining on that payment date after all deposits and distributions of higher priority, as described in The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Priority of Payments in this prospectus.]
The issuing entity will engage in only the following activities:
| acquiring, holding and managing the receivables and other assets of the issuing entity; |
| issuing the notes and the certificates and selling, transferring and exchanging the notes and the certificates; |
| making payments on the notes and distributions on the certificates to the residual certificateholders; |
| [entering into and performing its obligations under the interest rate [swap][cap] agreement;] |
| making deposits to and withdrawals, directly or indirectly, from the trust accounts; |
| paying the organizational, start-up and transactional expenses of the issuing entity; |
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| assigning, granting, transferring, pledging, mortgaging and conveying the receivables and other assets of the issuing entity pursuant to the indenture; |
| entering into and performing its obligations under the transaction documents to which it is a party; and |
| taking any action necessary, suitable or convenient to fulfill the role of the issuing entity in connection with the foregoing activities or engaging in other activities as may be required in connection with conservation of the assets of the issuing entity and the making of payments on the notes and distributions on the certificates. |
The issuing entitys principal offices are in [Wilmington, Delaware], in care of [ ], as owner trustee, at the address listed in The TrusteesThe Owner Trustee below. The issuing entitys fiscal year ends on December 31st.
The issuing entitys trust agreement, including its permissible activities, may be amended in accordance with the procedures described in The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Amendment Provisions in this prospectus.
Capitalization and Liabilities of the Issuing Entity
The following table illustrates the expected assets of the issuing entity as of the closing date:
Net Pool Balance as of the [Statistical] Cut-off Date |
$ | |||
[Pre-funding Account] |
$ | |||
Reserve Account Initial Balance |
$ | |||
[Yield Supplement Overcollateralization Amount] |
$ |
The following table illustrates the expected liabilities of the issuing entity as of the closing date:
Class A-1 Asset Backed Notes |
$[] | |||||
Class A-2[-A] Asset Backed Notes |
} | $[] | ||||
[Class A-2-B Asset Backed Notes] |
||||||
Class A-3 Asset Backed Notes |
} | $[](1) | ||||
Class A-4 Asset Backed Notes |
||||||
Class B Asset Backed Notes(2) |
$[] | |||||
Class C Asset Backed Notes(2) |
$[] | |||||
[Class D Asset Backed Notes](2) |
$[] | |||||
Total |
$[] |
(1) | [The aggregate initial note balance of the Class A-3 notes and the Class A-4 notes will be $[], as reflected above. The initial note balance of each of the Class A-3 notes and the Class A-4 notes may change but will be determined on or prior to the day of pricing of those classes of notes. However, the respective initial note balances of the Class A-3 notes and the Class A-4 notes are expected to be within the applicable ranges set forth on the cover page of this prospectus.] |
(2) | [The Class B notes, the Class C notes and the Class D notes are not being offered hereby and will be retained by the sponsor or another majority-owned affiliate of the sponsor, but will be entitled to certain payments as described herein.] |
[The issuing entity will also be liable for payments to the swap counterparty as described in The Notes Interest Rate Swap Agreement.][The issuing entity will also be liable for the premium to the cap provider as described in The NotesInterest Rate Cap Agreement.]
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The notes will be collateralized by the issuing entity property. The primary assets of the issuing entity will be the receivables, which are amounts owed by obligors under motor vehicle retail installment sale contracts used to purchase new and used automobiles, light-duty trucks, SUVs and vans.
The issuing entity property will consist of all the right, title and interest of the issuing entity in and to:
| the receivables acquired by the issuing entity from the depositor on the closing date [and on each funding date using the amounts on deposit in the pre-funding account] and collections received [on or] after the [initial] cut-off date [and related subsequent cut-off date, as applicable]; |
| the security interests in the financed vehicles and all certificates of title to those financed vehicles; |
| all receivable files relating to the original motor vehicle retail installment sale contracts evidencing the financed vehicles; |
| any proceeds from (1) claims on any theft and physical damage insurance policy maintained by or on behalf of an obligor providing coverage against loss or damage to or theft of the related financed vehicle, (2) claims on any credit life or credit disability insurance maintained by or on behalf of an obligor in connection with any receivable or (3) refunds in connection with extended service agreements relating to receivables which became Defaulted Receivables after the [applicable] cut-off date; |
| any other property securing the receivables; |
| [rights under the interest rate swap agreement and payments made by the swap counterparty under the interest rate swap agreement;] |
| rights to amounts on deposit in the reserve account, the collection account, the principal distribution account and [the pre-funding account] and any other account established pursuant to the indenture or servicing agreement (other than the certificate distribution account) and all cash, investment property, and other property from time to time credited thereto and all proceeds thereof; |
| rights under the sale agreement, the servicing agreement, the administration agreement, the purchase agreement; |
| [an interest rate or currency swap or interest rate cap]; and |
| the proceeds of any and all of the above. |
The issuing entity will pledge the issuing entity property to the indenture trustee under the indenture. For a description of the sale and transfer of the issuing entity property as well as the creation, perfection and priority status of the security interest in that property in favor of the issuing entity, see The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Sale and Assignment of Receivables and Related Security Interests.
Prior to formation, the issuing entity will have no assets or obligations. After formation, the issuing entity will not engage in any activity other than acquiring and holding the related receivables and the issuing entity property, issuing the related securities, distributing payments in respect thereof and any other activities described in this prospectus and in the trust agreement of the issuing entity. The issuing entity will not acquire any receivables or assets other than the issuing entity property.
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[[ ] is the owner trustee of the issuing entity under the trust agreement. [__________] is a [__________] existing under the laws of [__________] authorized to exercise trust powers. The owner trustee maintains its principal office at [__________]. [__________] has served and currently is serving as owner trustee for numerous securitization transactions and programs involving pools of motor vehicle receivables.]
The owner trustees liability in connection with the issuance and sale of the notes is limited solely to the express obligations of the owner trustee set forth in the trust agreement. The owner trustee will be paid a fee, as described in The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review AgreementFees and Expenses in this prospectus, and will be indemnified against specified losses, liabilities or expenses incurred by the owner trustee in connection with the transaction documents, in each case, to the extent not paid by the servicer, by the issuing entity to the extent of Available Funds available therefor, as described in The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review AgreementPriority of Payments in this prospectus. To the extent these fees and indemnification amounts are not paid by the issuing entity, they will be payable by the servicer.
For a description of the roles and responsibilities of the owner trustee, see Role of the Owner Trustee and Indenture Trustee and The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Indemnification of the Indenture Trustee and the Owner Trustee in this prospectus.
Resignation or Removal of the Owner Trustee
The owner trustee may resign at any time, in which event the administrator and the depositor, acting jointly, will be obligated to appoint a successor owner trustee. The depositor and administrator [may also][will] remove the owner trustee if:
| the owner trustee ceases to be eligible to continue as owner trustee under the trust agreement; or |
| the owner trustee becomes insolvent or is otherwise incapable of acting. |
In such circumstances, the depositor and the administrator, acting jointly, must appoint a successor owner trustee. Any resignation or removal and appointment of a successor owner trustee will not become effective until the successor owner trustee accepts its appointment and the payment of all fees and expenses owed to the outgoing owner trustee. The depositor will provide (or cause to be provided) notice of such resignation or removal to the rating agencies hired to rate the securities.
[[ ], a [ ], is the indenture trustee under the indenture for the benefit of the noteholders. [ ], has served and currently is serving as indenture trustee for numerous securitization transactions and programs involving pools of motor vehicle receivables.]
[The corporate trust office for the indenture trustee is located at [ ].]
[The indenture trustee will make each monthly statement available to the noteholders via the indenture trustees website at [ ]. For assistance with regard to this service, investors may call the indenture trustees corporate trust office at [ ].]
The indenture trustees duties are limited to those duties specifically set forth in the indenture. The servicer will be responsible for paying the indenture trustees fees and for indemnifying the indenture trustee against specified losses, liabilities or expenses incurred by the indenture trustee in connection with the transaction documents. [The indenture trustee is an affiliate of one of the underwriters.]
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For a description of the roles and responsibilities of the indenture trustee, limitation of liability and indemnity provisions applicable to the indenture trustee, and provisions governing resignation and removal of the indenture trustee, see The Indenture, The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement and Role of the Owner Trustee and Indenture Trustee in this prospectus.
Role of the Owner Trustee and Indenture Trustee
Neither the owner trustee nor the indenture trustee will make any representations as to the validity or sufficiency of the sale agreement, the servicing agreement, the trust agreement, the administration agreement, the indenture, the asset representations review agreement, the notes, the certificates or any related receivables or related documents. As of the closing date, neither the owner trustee nor the indenture trustee will have examined the receivables. If no event of default has occurred under the indenture, the owner trustee and indenture trustee will be required to perform only those duties specifically required of them under the servicing agreement, the trust agreement, the administration agreement or the indenture, as applicable. Generally, those duties are limited to the receipt of the various certificates, reports or other instruments required to be furnished to the owner trustee or indenture trustee under the servicing agreement, the administration agreement, or the indenture, as applicable, the making of payments or distributions to noteholders and certificateholders in the amounts specified in certificates provided by the servicer.
The owner trustee and the indenture trustee will be under no obligation to exercise any of the issuing entitys powers or powers vested in it by the sale agreement, the servicing agreement, trust agreement or indenture, as applicable, or to make any investigation of matters arising thereunder or to institute, conduct or defend any litigation thereunder or in relation thereto at the request, order or direction of any of the noteholders (other than requests, demands or directions relating to an asset representations review as described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Asset Representations Review or to the investors rights to communicate with other investors described under The Indenture Noteholder Communication; Lists of Noteholders), unless those noteholders have offered to the owner trustee or the indenture trustee security or indemnity reasonably satisfactory to it against the reasonable costs, expenses and liabilities which may be incurred therein or thereby.
The owner trustee and the indenture trustee, and any of their affiliates, may hold securities in their own names. In addition, for the purpose of meeting the legal requirements of local jurisdictions or for the enforcement or conflict of interest matters, the owner trustee and indenture trustee, in some circumstances, acting jointly with the depositor or the servicer, respectively, will have the power to appoint co-trustees or separate trustees of all or any part of the issuing entity property. In the event of the appointment of co-trustees or separate trustees, all rights, powers, duties and obligations conferred or imposed upon the owner trustee or indenture trustee by the sale agreement, the servicing agreement, the trust agreement, the administration agreement or the indenture, as applicable, will be conferred or imposed upon the owner trustee or indenture trustee and the separate trustee or co-trustee jointly, or, in any jurisdiction in which the owner trustee or indenture trustee is incompetent or unqualified to perform specified acts, singly upon the separate trustee or co-trustee who will exercise and perform any rights, powers, duties and obligations solely at the direction of the owner trustee or indenture trustee.
CONA, the servicer and the depositor may maintain other banking relationships with the owner trustee and indenture trustee in the ordinary course of business.
The owner trustee and indenture trustee will be entitled to certain fees and indemnities described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Fees and Expenses in this prospectus.
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The depositor, Capital One Auto Receivables, LLC, a wholly-owned special purpose subsidiary of CONA, was formed on January 26, 2001 as a Delaware limited liability company. The principal place of business of the depositor is at [1600 Capital One Drive, Room 27907B, McLean, Virginia 22102]. The depositor was formed to purchase, accept capital contributions of or otherwise acquire motor vehicle retail installment sale contracts and motor vehicle loans; to own, sell, and assign the receivables; and to issue and sell one or more securities. Since its inception, the depositor has been engaged in these activities solely as (i) the purchaser of receivables from CONA pursuant to purchase agreements, (ii) the seller of receivables to securitization trusts pursuant to sale agreements, (iii) the depositor that formed various securitization trusts pursuant to trust agreements and (iv) the entity that executes underwriting agreements and purchase agreements in connection with issuances of asset-backed securities.
CONA will be the sponsor that initiates and organizes the issuance by the issuing entity of the notes (in such capacity, the sponsor).
CONA is a national banking association, and a wholly-owned direct subsidiary of Capital One Financial Corporation (the Corporation), a bank holding company incorporated in Delaware on July 21, 1994. CONAs principal executive offices are located at 1680 Capital One Drive, McLean, Virginia, 22102. CONA is a commercial bank offering a wide range of banking services to its customers. CONA is a member of the Federal Reserve System, and its deposits are insured up to the applicable limits by the Federal Deposit Insurance Corporation (the FDIC).
The Corporation is a financial holding company with assets totaling approximately $[]. The various subsidiaries of the Corporation, including CONA, market a variety of financial products and services.
Capital One Auto Finance, Inc. (COAF) was previously a wholly-owned subsidiary of CONA. On March 3, 2011, COAF merged with and into CONA and CONA was the surviving entity as a result of that merger. The operations of COAF continue as they did prior to the merger, but COAF is now a division of CONA. COAF has sponsored multiple securitizations of prime motor vehicle receivables in the past, but has not sponsored any such securitizations since 2007. CONAs experience in and overall procedures for originating or acquiring prime receivables is described under The Originator. No securitizations sponsored by CONA have defaulted or experienced an early amortization triggering event.
CONA has participated in the structuring of the transaction described in this prospectus and has originated the receivables to be assigned to the issuing entity. CONA is responsible for servicing the receivables included in the receivables pool as described below. CONA is also the administrator of the issuing entity.
[Capital One Securities, Inc., one of the underwriters, is an affiliate of the sponsor.]
Pursuant to Regulation RR, CONA, as the sponsor, is required to retain an economic interest in the credit risk of the receivables, either directly or through a majority-owned affiliate. CONA intends to satisfy this obligation through the retention by CONA of an eligible vertical interest of at least 5% of each class of notes and the retention by the depositor of at least 5% of the certificates to be issued by the issuing entity.
[Insert disclosure required by Items 1104(g), 1108(e) or 1110(a)(3) of any hedges materially related to the credit risk of the securities.]
The retained eligible vertical interest will take the form of at least 5% of each class of notes and certificates issued by the issuing entity, though CONA or one or more of its majority-owned affiliates may retain more than 5% of one or more classes of notes or of the certificates. The material terms of the notes are described in this prospectus under The Notes. The notes of each class retained by CONA or one or more of its majority-owned affiliates
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[(which for EU risk retention purposes and UK risk retention purposes will be a wholly-owned special purpose subsidiary of CONA)] as part of the eligible vertical interest will have the same terms as all other notes in that class, except that such retained notes will not be included for purposes of determining whether a required percentage of any class of notes have taken any action under the indenture or any other transaction document, as described in The NotesNotes Owned by Transaction Parties. As described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review AgreementPriority of Payments and The IndenturePriority of Payments Will Change Upon Events of Default that Result in Acceleration below, distributions to holders of the issuing entitys certificates on any payment date are subordinated to all payments of principal and interest on the notes by the issuing entity. On any payment date on which the issuing entity has insufficient funds to make all of the distributions described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review AgreementPriority of Payments, any resulting shortfall will, through operation of the priority of payments, reduce amounts distributable to the holders of the certificates prior to any reduction in the amounts payable for interest on, or principal of, any class of notes. The other material terms of the certificates are described in this prospectus under Summary of TermsThe Certificates.
In accordance with Regulation RR, if the amount of the eligible vertical interest retained at closing is materially different from the amount described above, within a reasonable time after the closing date we will disclose that material difference. [This disclosure will be [made on Form 8-K filed under the CIK number of the depositor][included in the first 10-D filed by the depositor after the closing date].
[For further information on the matters referred to below, and the corresponding risks, see Legal InvestmentRequirements for Certain EU and UK Regulated Persons and Affiliates in this prospectus.
On the closing date, CONA will covenant and agree, with reference to the EU Securitization Regulation and the UK Securitization Regulation, in each case, as in effect and applicable on the closing date, that:
(a) | CONA, as an originator (as such term is defined for purposes of each of the Securitization Regulations), will retain, upon the issuance of the notes and on an ongoing basis for so long as the notes remain outstanding, a material net economic interest (the Retained Interest) of not less than 5% in the securitization transaction described in this prospectus, in the form of retention of at least 5% of the nominal value of each of the tranches sold or transferred to investors in accordance with the text of option (a) of Article 6(3) of the EU Securitization Regulation and option (a) of Article 6(3) of the UK Securitization Regulation, by holding (i) at least 5% of the nominal value of each class of notes and (ii) all the membership interest in the depositor (or one or more other wholly-owned special purpose subsidiaries of CONA), which in turn will hold at least 5% of the nominal value of the certificates; |
(b) | CONA will not (and will not permit the depositor or any of its other affiliates to) hedge or otherwise mitigate its credit risk under or associated with the Retained Interest, or sell, transfer or otherwise surrender all or part of the rights, benefits or obligations arising from the Retained Interest, except, in each case, to the extent permitted by the SR Rules; |
(c) | CONA will not change the manner or form in which it retains the Retained Interest while any of the offered notes are outstanding, except as permitted by the SR Rules; and |
(d) | CONA will provide ongoing confirmation of its continued compliance with its obligations in clauses (a), (b) and (c) above in or concurrently with the delivery of each monthly report to noteholders. |
Article 6(1) of the EU Securitization Regulation and Article 6(1) of the UK Securitization Regulation each provide that an entity shall not be considered an originator within the meaning thereof if it has been established or operates for the sole purpose of securitizing exposures. In this regard, see in particular, The Sponsor and The Originator in this prospectus for information with regard to CONAs business and related operations. With regard to CONAs credit-granting criteria and processes, see The Originator Credit Risk Management in this prospectus.
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The transaction described in this prospectus is not being structured to ensure compliance by any person with the transparency requirements in Article 7 of the EU Securitization Regulation or Article 7 of the UK Securitization Regulation. In particular, neither CONA nor any other party to the transaction described in this prospectus shall be required to produce any information or disclosure for purposes of Article 7 of the EU Securitization Regulation or Article 7 of the UK Securitization Regulation, or to take any other action in accordance with, or in a manner contemplated by, such articles.
Except as described herein, no party to the transaction described in this prospectus is required by the transaction documents, or intends, to take or refrain from taking any action with regard to such transaction in a manner prescribed or contemplated by the SR Rules, or to take any action for purposes of, or in connection with, facilitating or enabling compliance by any person with the applicable Investor Requirements and any corresponding national measures that may be relevant.
Each prospective investor that is an Affected Investor is required to independently assess and determine whether the agreement by CONA to retain the Retained Interest as described above and the information provided in this prospectus generally, or otherwise to be provided to noteholders, are or will be sufficient for the purposes of such prospective investors compliance with the applicable Investor Requirements and any corresponding national measures that may be relevant. Prospective investors that are Affected Investors should be aware that the interpretation of the applicable Investor Requirements remains uncertain and that supervisory authorities and national regulators may have different views of how the applicable Investor Requirements, should be interpreted and those views are still evolving.
None of CONA, the depositor, the issuing entity, the underwriters, the indenture trustee, their respective affiliates nor any other party to the transactions described in this prospectus (a) makes any representation that the agreement by CONA to retain the Retained Interest as described above or any information provided in this prospectus generally, or otherwise to be provided to noteholders, are or will be sufficient in all circumstances for purposes of any persons compliance with the applicable Investor Requirements and any corresponding national measures that may be relevant, or with any other applicable legal, regulatory or other requirements, or that the structure of the notes, CONA (including its holding of the Retained Interest) and the transactions described herein are otherwise compliant with the SR Rules or any other applicable legal, regulatory or other requirements; (b) shall have any liability to any person with respect to any deficiency in such agreement or any such information, or with respect to any persons failure or inability to comply with the applicable Investor Requirements and any corresponding national measures that may be relevant, or with any other applicable legal, regulatory or other requirements (other than, in each case, any liability arising under a transaction document as a result of a breach by such person of that transaction document); or (c) shall have any obligation to enable any person to comply with the applicable Investor Requirements and any corresponding national measures that may be relevant, or with any other applicable legal, regulatory or other requirements, or any other obligation with respect to the SR Rules (other than, in each case, the specific obligations undertaken and/or representations made by CONA in that regard under the transaction documents).]
CONA originated all the receivables that will be included in the transaction described in this prospectus by purchasing motor vehicle retail installment sale contracts from dealers pursuant to dealer agreements between CONA and the dealers. The receivables pool will be made up of motor vehicle retail installment sale contracts with obligors classified as prime by CONA. The following is a description of the origination, underwriting and servicing procedures used by CONA with respect to the receivables originated by CONA and transferred to the issuing entity.
The standard receivable purchased by CONA is a fully amortizing, level payment receivable with the portion of principal and interest of each level payment determined on the basis of the simple interest method. The contract term is determined by a number of factors, including age and mileage of the financed vehicle and obligor preference. Interest rates may be determined on the basis of the credit history of the applicant, as well as the terms of the receivable itself and CONAs cost of funds. The interest rate is limited by the states maximum applicable interest rate of the state law applicable to that transaction (usually that of the obligors home state) at the time of origination.
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CONA provides vehicle financing to consumers indirectly through automotive dealerships. Motor vehicle retail installment sale contracts for new and used vehicles are purchased and originated through motor vehicle dealers (dealers), with dealerships in [] states. Such motor vehicle retail installment sale contracts are referred to as contracts. Each contract is secured by a financed vehicle. Each dealer is required to meet certain minimum standards and is subject to periodic review and evaluation in connection with CONAs dealer management policies.
All participating dealers must execute a dealer agreement with CONA that, among other things, sets out the guidelines and procedures of the purchasing and origination process. A dealer that originates contracts for CONA has made representations and warranties with respect to the contracts and the security interests in the motor vehicles relating thereto. These representations and warranties typically relate to the origination of a receivable and the security interest in the related financed vehicle and not to the collectability of the receivable or the creditworthiness of the related obligor. Upon a breach of any representation or warranty made by a dealer with respect to a receivable, these dealer agreements generally give CONA the right to require the dealer to repurchase the contract.
Once an application has been approved by CONA and the contract is submitted by the dealer, the contract is transferred to CONAs funding department for review. All required information regarding the borrowers and the financed vehicles is processed in the funding department. After the funding review and verification process is completed, the amount financed minus the appropriate fees is transferred to the dealer and the dealer participation is held in reserve to be paid out on a monthly basis. In some circumstances, before or after the transfer of the proceeds to the dealer, CONA will verify certain information such as proof of income, social security number and employment history. In limited circumstances, CONA may also confirm with the obligor that the motor vehicle was delivered and verify information about the vehicle, such as the make, model and accessories. If CONA discovers that the person (or persons) in possession of the financed vehicle is not the obligor (or co-obligor) under the contract, CONA may ask the dealer to repurchase that contract. If the motor vehicle was not delivered or was returned, or if the motor vehicle delivered to the obligor does not match the description provided to CONA of the motor vehicle that secures the contract, the proceeds may be returned to CONA by the dealer.
Each application related to a contract is obtained from an applicant by a dealer, forwarded by the dealer to CONA and underwritten by CONA in accordance with CONAs established underwriting policies. In some cases, an applicant may be pre-qualified by CONA through its online Auto Navigator website or other third-party websites prior to visiting a dealer; however, even for pre-qualified applicants, a dealer will still forward an application related to a specific contract to CONA for underwriting in accordance with CONAs underwriting policies. These underwriting policies are intended to assess the applicants ability and willingness to repay the amounts due on the contract and to establish the adequacy of the financed vehicle as collateral. The following is a description of CONAs underwriting processes as it relates to motor vehicle retail installment sale contracts acquired by CONA from dealers.
To evaluate the potential purchase of a receivable from a dealer, CONA must receive a completed credit application, which includes general information about the applicant such as the applicants liabilities, income, employment history and other personal information bearing on the decision to extend credit. In addition, specific information with respect to the motor vehicle to be financed that secures or will secure the contract is required to assess the adequacy of the financed vehicle as collateral. Credit applications are not made on forms provided by CONA. An electronic credit report is requested for all applicants and is used in conjunction with the applicants personal financial data and CONAs proprietary scoring model to underwrite the receivables.
Through its underwriting and risk-based pricing system, CONA is able to underwrite applications across a broad credit spectrum. In almost all cases, CONAs underwriting decisions are based on various standards that are intended to assess the obligors ability to repay all amounts due under the contract, the current and expected value of the related financed vehicle and adequacy as collateral and deal characteristics such as contract term. Underwriting decisions are made primarily on quantitative analysis of the applicants credit history and monthly income, the principal amount and term of the receivable and the age, type and market value of the related financed vehicle. Credit approval guidelines are comprised of numerous evaluation criteria, including credit history, employment stability, credit score, collateral characteristics (e.g., make, model, mileage) and deal characteristics and, as the primary criteria, CONAs proprietary scoring model discussed below. CONA may require receipt of supplementary documents such as proof of income and proof of residence.
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The underwriting criteria developed by CONA is implemented for each application submitted using a proprietary scoring model that has enabled CONA to automate the credit decisioning process. In evaluating the potential purchase of a receivable, the proprietary process will indicate automatically whether the related credit application should be approved. The standards (such as contract term, loan-to-value ratio and payment-to-income ratio) utilized by the model may be adjusted pursuant to the terms of the underwriting criteria to reflect the applicable circumstances of a particular obligor and the related receivable. For example, the underwriting criteria may allow a higher loan-to-value ratio for an obligor with a lower payment-to-income ratio. CONA may conduct additional verification investigations as it deems necessary. In 2018, CONA developed an enhancement to its credit scoring model, which was implemented in a phased approach and was fully employed in the origination process in the first quarter of 2019. CONA anticipates that it will continue making additional enhancements and modifications to its proprietary scoring model over time to optimize its predictive performance.
CONAs set of established underwriting policies and use of its automated system are intended to provide a consistent basis for credit decisions, but do not completely supersede all judgmental aspects of the credit decisioning process. CONA has limited ability to approve a credit application that does not otherwise qualify for an approval under the underwriting criteria. In limited circumstances, certain contracts may not be within the parameters of the underwriting policies and may be approved by CONA personnel with appropriate credit authority as an exception to the underwriting criteria based on a judgmental evaluation. CONAs credit risk management monitors exceptions to the underwriting criteria continuously using an automated tracking tool. [Insert data regarding the number of pool assets that would be exceptions to the underwriting criteria and a description of the nature of the exceptions.] [None of the receivables to be sold to the issuing entity on the closing date were approved as an exception to CONAs underwriting criteria.]
The underwriting criteria are continuously reviewed and updated in response to macro-economic conditions, business strategy and/or portfolio performance. CONA does not expect that any previous modifications or enhancements to its underwriting criteria would result in performance of the receivables in the pool to be materially worse than (i) performance of the vintage pools set forth on Appendix A or (ii) performance of the prior securitized pool set forth in Appendix B. See The Receivables PoolStatic Pool Data.
With respect to those applications that are approved, the amount and terms of the financing to be offered vary based on, among other things, the credit quality of the applicant, vehicle make, model and age and loan-to-value ratio. The underwriting decision is communicated to the dealer by telephone, a proprietary electronic system or industry-standard electronic means, specifying approval, counter-offer, denial or a need for additional information with respect to the application or proposed contract. If the response requires satisfaction of stipulations as a condition of the approval, these are communicated to the dealer. If CONA is the chosen source of financing by the dealer, CONA will require the dealer to provide appropriate documentation as a condition of funding, which may include, but is not limited to, the following:
| a credit application; |
| the fully executed original, electronically authenticated original or authoritative copy of the contract (in each case within the meaning of the UCC); |
| a title application or guarantee of title; and |
| any additional documentation or stipulations as required by CONA. |
Generally, a file relating to the receivable is forwarded to a funder for a pre-funding review. The funder then reviews the documents for completeness, including the fulfillment of any stipulation and consistency with the application and provides final approval for purchase of the receivable once these requirements have been satisfied. A stipulation is a requirement placed on an approval that does not alter the underlying terms of the contract and is applied during the underwriting or funding process, and may be waived by CONA personnel with the requisite level of authority.
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CONA regularly makes a detailed analysis of its portfolio of receivables to evaluate the effectiveness of CONAs underwriting guidelines. If external economic factors, credit delinquencies or credit losses change, CONA may adjust its underwriting criteria (including deal terms). Additionally, CONA requires dealers to meet certain minimum standards and periodically reviews and evaluates dealers in connection with CONAs dealer management policies. Deviations by the dealer may trigger investigations by CONA of the dealer in accordance with its dealer management policies. In some circumstances (e.g., the dealer materially breaches its dealer agreement with CONA), CONA may terminate the dealer relationship and/or may sell contracts back to the originating dealer.
Tangible and Electronic Contracting
Receivables contracts are originated in either tangible or electronic form by a dealer. Approximately [ ]% of the receivables in the receivables pool were originated as electronic contracts.
In the case of dealer-originated receivables evidenced by tangible contracts, contract packages are sent by the dealers directly to CONAs third party document processor. Upon receipt of the tangible contract documentation, that third-party reviews the contract packages for proper documentation and regulatory compliance. CONAs third-party document processor also electronically scans key documentation to create electronic images and electronically uploads those images into CONAs origination system of record. After imaging and reviewing the tangible contract documentation, the original documents are sent to CONA by a third party and stored in a fire-resistant vault located on the premises of and managed directly by CONA. Once CONA receives the key documentation from the third party, CONAs receivables processing department again reviews the documentation for certain specific regulatory compliance items.
In the case of receivables evidenced by electronic contracts, CONA has contracted with two third parties to facilitate the process of creating and storing those electronic contracts. Each third partys technology system permits transmission, storage, access and administration of electronic contracts and is comprised of proprietary and third-party software, hardware, network communications equipment, lines and services, computer servers, data centers, support and maintenance services, security devices and other related technology materials that enable electronic contracting in the automobile financing industry. Each third partys system allows for the transmission, storage, access and administration of electronic contracts. Through use of the third partys system, a dealer originates electronic retail installment sale contracts and then transfers these electronic contracts to CONA. The third-party system uses a combination of technological and administrative features that are designed to: (i) designate a single copy of the record or records comprising an electronic contract as being the single authoritative copy of the receivable; (ii) manage access to and the expression of the authoritative copy; (iii) identify CONA as the owner of record of the authoritative copy and (iv) provide a means for transferring record ownership of, and the exclusive right of access to, the authoritative copy from the current owner of record to a successor owner of record. The determination of which of the two contracted third parties is used to create and store an electronic contract is dependent upon the originating dealers preferences and systems. Once dealer-originated receivables are cleared for funding, the funds are transferred, electronically or via check, to the dealer.
COAF was previously a wholly-owned subsidiary of CONA. COAF began servicing motor vehicles receivables in 2001. On March 3, 2011, COAF merged with and into CONA and CONA was the surviving entity as a result of that merger. The operations of COAF continue as they did prior to the merger, but COAF is now a division of CONA. CONA, operating through its Capital One Auto Finance division, will be the servicer. As of [], the aggregate amount of retail installment sale contracts and installment loans serviced by CONA that were originated directly or acquired by CONA and its affiliates (including predecessors in interest) is approximately $[] billion.
The tables set forth below under The Receivables PoolDelinquencies, Repossessions and Net Credit Losses summarize the delinquency, repossession and loss experience of the portfolio of automobile contracts originated through motor vehicle dealers, classified as prime and owned and serviced by CONA and which are considered eligible for securitization in the COPAR program based on CONAs internal scoring model.
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The following is a description of CONAs servicing procedures as they relate to its prime contracts originated through motor vehicle dealers, which includes all of the receivables included in this transaction. CONA originates across a broad credit spectrum through a variety of channels, and may have different servicing procedures for other credit tiers and channels.
CONA regularly tests new servicing strategies on a small portion of its managed portfolio of auto receivables to develop and refine its servicing practices. CONA has made and continues to make adjustments to its customary servicing practices over time, particularly in the areas of collections timing, collections intensity, repossession timing and business processes and workflow. Common areas tested also include collections intensity, extension eligibility and repossessed vehicle liquidation methods. Most of these adjustments are introduced on a limited and controlled trial basis and may be implemented program-wide after CONA determines that those adjustments will result in an overall improvement in servicing and collections. The servicers specific servicing policies and practices may change over time.
[Disclose any material changes to the servicers policies or procedures in the servicing function as contemplated by Item 1108(b)(3).]
Pursuant to the servicing agreement, the servicer will service the receivables on behalf of the issuing entity in accordance with the servicing agreement and in accordance with its customary servicing practices, using the degree of skill and attention that the servicer exercises with respect to all comparable motor vehicle receivables that it services for itself or others. The servicer will have full power and authority to do any and all things in connection with servicing, collecting, enforcing and administering the receivables in accordance with its customary servicing practices, subject to certain limitations described in the servicing agreement. The servicer will make reasonable efforts to collect all payments called for under the terms and provisions of the receivables as and when the same become due in accordance with its customary servicing practices. The servicer will be responsible for determining the allocations of collections and other funds for the issuing entity to make payments on the notes and other liabilities of the issuing entity and directing the trustees and paying agents for the issuing entity to make such payments. The servicer will also be responsible for providing monthly reports and filing periodic reports with the SEC. The servicer is permitted to delegate any or all of its servicing duties to its affiliates, or specific duties to unaffiliated parties, provided that the servicer will remain obligated and liable for the performance of any duties that it delegates to another entity as if the servicer alone were servicing the receivables.
See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement for a description of the servicing agreement and the various duties under servicing agreement.
CONA, as the servicer, will be responsible for managing, administering, servicing and making collections on the receivables which may include, among other tasks and subject in all cases to the servicers customary servicing practices:
| Customer service: responding to obligor inquiries, providing obligors with payment and balance information, document file and account record keeping, vehicle title processing, collection and posting of payments, and processing rebates for cancelled products financed through the receivable. |
| Collections: monitoring delinquencies, initiating collections activities, pursuing collateral remedies including skip tracing, repossession, and liquidation of repossessed vehicles. |
| Loss Mitigation: recovery of deficiency balances, servicing of accounts in bankruptcy, and legal recourse to foreclose upon the financed vehicle when self-help repossession efforts have failed. |
| Trust-related activities: furnishing monthly and annual statements to the indenture trustee with respect to distributions on securitization transactions. |
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The servicer uses multiple technologies to provide customer service. For inbound calls from obligors, the servicer uses smart call routing to identify if the call is a collections or customer service call and to route that call to the appropriate department. With limited exceptions, the servicer also maintains an escalations group to handle calls requiring specialized handling. Obligors have the ability to perform basic servicing functions for their own accounts through a secure on-line environment or mobile application, and the servicer anticipates customary ongoing technological advancements. Obligors may make payments through a variety of methods, which may be modified from time to time, including mail payments, automatic withdrawal, the mobile application, wire transfer, check-by-phone both through an inbound voice response unit, through a live associate and through debit card with a third party service provider. The servicer also utilizes third-parties to provide services such as payment processing, insurance processing, bankruptcy processing, title perfection services and recovering deficiency balances.
The servicer utilizes several methods to contact delinquent customers including telephone contact, letters, e-mail, telephone messages and automated systems such as computer controlled telephone dialing systems to increase the number of delinquent accounts that can be managed by each collector. The servicer also utilizes third-parties to provide certain collections services.
The servicers collection system provides relevant obligor information and records of all receivables. The system also maintains a record of an obligors promise to pay and affords supervisors the ability to review collection personnel activity and to modify collection priorities with respect to contracts. The servicer may charge (or waive, in its discretion) late fees and other administrative fees or similar charges allowed by applicable law with respect to any receivable.
Willingness to Adjust Contract Terms: Contract extensions are considered an acceptable means of bringing delinquent accounts into current status. In some circumstances, the servicer, in its own discretion, may permit an extension on or deferral of payments due on receivables on a case-by-case basis or may permit extensions or deferrals more broadly in accordance with its customary servicing practices, for example, in connection with a natural disaster affecting a large group of obligors. Extensions and modifications are governed by strict guidelines, which may be changed from time to time, in accordance with the servicers customary servicing practices and are not granted to forestall an inevitable loss.
Timelines for Activation of other Collection Remedies: The decision to repossess the collateral generally depends upon the delinquency status and other risk characteristics of the account. The servicer will generally initiate repossession of the financed vehicle based on a proprietary algorithm which takes into account the number of days the account is delinquent and certain other factors relating to the receivable and the obligor.
Repossessions are conducted by third parties selected by the servicer who are engaged in the business of repossessing vehicles for secured parties. The servicer has relationships with a wide range of repossession agencies across the country that are familiar with the unique repossession laws of the jurisdictions in which they operate. When motor vehicles are repossessed, they are generally sold in various auctions across the country. Upon repossession and sale of a financed vehicle, the servicer will determine whether to pursue a deficiency judgment in accordance with its customary servicing practices and the requirements of applicable law. However, a deficiency judgment would be a personal judgment against the obligor, and a defaulting obligor generally would have few sources of income available to pay a deficiency judgment, as discussed below under Material Legal Aspects of the ReceivablesDeficiency Judgments and Excess Proceeds. The servicer uses a combination of dedicated internal departments and third parties to pursue bankruptcy and, if applicable, deficiency recovery against obligors who have defaulted on their receivables and legal recourse to secure a vehicle when self-help repossession efforts have failed. The servicer has a dedicated skip tracing department that utilizes both internal and external resources to find obligors and the collateral if a delinquent obligor and the related financed vehicle cannot be located.
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Physical Damage and Liability Insurance
Each obligor on a receivable will be contractually required to maintain insurance covering physical damage to the obligors financed vehicle until the loan is paid in full or the servicer sells the vehicle. Each contract requires that the obligor obtain coverage for the financed vehicle against loss and damage due to fire, theft, transportation, collision and other risks covered by comprehensive coverage. CONA is not required to monitor whether obligors maintain insurance policies on the related vehicles.
Prior Securitization Transactions
None of the prior motor vehicle receivables securitization transactions sponsored by CONA (or by Capital One Auto Finance, Inc., a former subsidiary of the Corporation merged with and into CONA), have experienced early amortizations, servicer defaults or events of default. Neither CONA nor the issuing entity can guarantee that there will not be any breaches of performance triggers, early amortizations, servicer defaults or events of default in the future.
THE ASSET REPRESENTATIONS REVIEWER
[ ], a [ ], will act as the asset representations reviewer pursuant to an agreement between the sponsor, the servicer, the issuing entity and the asset representations reviewer (the asset representations review agreement). [ ] has offices at [ ]. [Insert description of the extent to which the asset representations reviewer has had prior experience serving as an asset representations reviewer for asset-backed securities transactions involving motor vehicle receivables.]
The asset representations reviewer is not affiliated with the sponsor, the servicer, the depositor, the indenture trustee, the owner trustee or any of their affiliates, nor has the asset representations reviewer or any of its affiliates been hired by the sponsor or an underwriter to perform pre-closing due diligence work on the receivables. The asset representations reviewer may not resign unless (a) the asset representations reviewer is merged into or becomes an affiliate of the sponsor, the servicer, the depositor, the indenture trustee, the owner trustee or any person (or an affiliate of any person) hired by the sponsor or an underwriter to perform pre-closing due diligence work on the receivables, (b) upon determination that the performance of its duties under the asset representations review agreement is no longer permissible under applicable law or (c) if the asset representations reviewer does not receive payment in full of any amounts required to be paid to the asset representations reviewer in accordance with the terms of the asset representations review agreement. Without limiting the foregoing, the asset representations reviewer must promptly resign if it is merged into or becomes an affiliate of the sponsor, the servicer, the depositor, the indenture trustee, the owner trustee, or any person (or an affiliate of any person) hired by the sponsor or an underwriter to perform pre-closing due diligence work on the receivables. Further, the indenture trustee may, or, at the direction of the noteholders evidencing a majority of the aggregate outstanding amount of the notes shall, terminate the rights and obligations of the asset representations reviewer upon the occurrence of one of the following events:
| [the asset representations reviewer becomes affiliated with (i) the sponsor, the depositor, the servicer, the indenture trustee, the owner trustee or any of their affiliates or (ii) any person that was engaged by the sponsor or any underwriter to perform any due diligence on the receivables prior to the closing date;] |
| [the asset representations reviewer breaches any of its representations, warranties, covenants or obligations in the asset representations review agreement;] or |
| [a bankruptcy event with respect to the asset representations reviewer occurs.] |
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Following the resignation or removal of the asset representations reviewer, (i) if the Delinquency Percentage has exceeded the Delinquency Trigger as of the most recent payment date, the indenture trustee (at the direction of the noteholders, provided, that if the indenture trustee has received conflicting or inconsistent requests from two or more groups of noteholders, each representing less than the majority of the note balance, the indenture trustee shall follow the direction of the noteholders representing the greater percentage of the note balance) and (ii) if the Delinquency Percentage has not exceeded the Delinquency Trigger as of the most recent payment date, the sponsor, will appoint a successor asset representations reviewer. If the asset representations reviewer has resigned or has been removed, replaced or substituted, or if a new asset representations reviewer has been appointed, then the depositor will specify on the Form 10-D filed after the collection period in which the event occurred the date of the event and the circumstances surrounding the resignation, removal, substitution or appointment, as applicable. Except for a permitted resignation pursuant to the asset representations review agreement, the asset representations reviewer shall pay the reasonable expenses (including the fees and expenses of counsel) of transitioning the asset representations reviewers obligations under the asset representations review agreement and preparing the successor asset representations reviewer to take on such obligations.
The asset representations reviewer will be responsible for reviewing the Subject Receivables (as defined under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review AgreementAsset Representations ReviewDelinquency Trigger below) for compliance with the representations and warranties made by the sponsor on the receivables if the conditions described below under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review AgreementAsset Representations Review are satisfied. Under the asset representations review agreement, the asset representations reviewer will be entitled to be paid the fees and expenses set forth under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review AgreementAsset Representations ReviewFees and Expenses for Asset Review below and will be indemnified as described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review AgreementAsset Representations ReviewIndemnification and Limitation of Liability of Asset Representations Reviewer below. The asset representations reviewer is required to perform only those duties specifically required of it under the asset representations review agreement, as described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review AgreementAsset Representations Review below.
[THE CAP PROVIDER] [THE SWAP COUNTERPARTY]
[[ ] (the Counterparty) will be the [swap counterparty][cap provider] if any floating rate notes are issued. The Counterparty is the principal subsidiary of [ ], a [ ]. The Counterparty is a [ ] with its principal place of business located at [ ]. [To be inserted: description of the general character of the business of the swap counterparty].
[Insert disclosure required by Item 1115 of Regulation AB.]
[The long-term credit rating assigned to the swap counterparty by Moodys is currently [ ] and by Standard and Poors is currently [ ]. The short term credit rating assigned to the swap counterparty by Moodys is currently [ ] and by Standard and Poors is currently [ ].]
Upon the occurrence of an event of default or termination event specified in each Interest Rate [Cap][Swap] Agreement, if any, the Interest Rate [Cap][Swap] Agreement may be replaced with a replacement interest rate [cap][swap] agreement as described in The Notes Interest Rate [Cap][Swap] Agreement(s) in this prospectus.
[Based on a reasonable good faith estimate of maximum probable exposure, the significance percentage of the interest rate swap agreement is less than 10%].
CONA, the depositor and their respective affiliates may maintain normal commercial banking relationships with the [cap provider][swap counterparty] and its affiliates.]
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AFFILIATIONS AND CERTAIN RELATIONSHIPS
The following parties are all affiliates and are all direct or indirect subsidiaries of the Corporation: the depositor, [Capital One Securities, Inc., as one of the underwriters,] and CONA, as the originator, as servicer, as sponsor and as administrator. CONA, directly or through a majority-owned affiliate, will hold at least 5% of each class of notes and the certificates. None of the indenture trustee, the owner trustee or the asset representations reviewer is an affiliate of any of the foregoing parties or of the issuing entity. [Additionally, none of the indenture trustee, the owner trustee or the asset representations reviewer is an affiliate of one another.] [Describe any material affiliates.]
The issuing entity will own a pool of receivables consisting of motor vehicle retail installment sale contracts secured by new and used automobiles, light-duty trucks, SUVs and vans. The pool will consist of the receivables that the sponsor will sell to the depositor on the closing date, and that the depositor will simultaneously transfer to the issuing entity on the closing date. The receivables will include payments on the receivables that are made after the cut-off date. [The purchase price paid by the issuing entity for the receivables included in the issuing entity property will equal the estimated fair market value of the receivables and related property as of the closing date.]
The characteristics set forth in this section are based on the pool of receivables as of the [statistical] cut-off date.
Exceptions to Underwriting Criteria
As described under The Originator above, under CONAs origination process and based on CONAs automated underwriting process, credit applications are evaluated when received and are either approved, declined, or counter-offered. In limited circumstances, some contracts may be approved by CONA under an exception to CONAs underwriting criteria based on a judgmental evaluation.
[Insert data regarding the number of pool assets that would be exceptions to the underwriting criteria and a description of the nature of the exceptions.]
[The sponsor elected to include the receivables approved by CONA as exceptions to CONAs [automated] underwriting criteria because the existence of an underwriting exception was not an eligibility criterion used by CONA to select the pool assets [and CONA selected the pool assets randomly from eligible assets in its portfolio of retail installment sale contracts categorized as prime].] [None of the receivables to be sold to the issuing entity on the closing date were approved as an exception to CONAs underwriting criteria.]
Criteria Applicable to Selection of Receivables
The receivables sold to the issuing entity on the closing date will be selected for inclusion in the receivables pool by several criteria. These criteria include the requirement that each receivable as of the [applicable] cut-off date (or such other date as may be specifically set forth below):
| has been fully and properly executed or electronically authenticated by the obligor thereto; |
| has been originated by a dealer to finance the retail sale by that dealer of the related financed vehicle and has been purchased by CONA from that dealer; |
| as of the closing date, will be secured by a first priority validly perfected security interest in the financed vehicle in favor of CONA, as secured party, or all necessary actions have been commenced that would result in a first priority security interest in the financed vehicle in favor of CONA, as secured party; |
55
| contains customary and enforceable provisions such that the rights and remedies of the holder thereof are adequate for realization against the collateral of the benefits of the security; |
| provided, at origination, for level monthly payments which fully amortize the initial principal balance over the original term; provided, that the amount of the first or last scheduled payment may be different from the level payment but in no event more than three times the level monthly payment; |
| provides for interest at the contract rate specified on the schedule of receivables (which is the schedule identifying the receivables transferred to the issuing entity on the closing date); |
| was originated in the United States; |
| is secured by a new or used automobile, light-duty truck, SUV or van; |
| has a contract rate of at least [___]%; |
| had an original term to maturity of not more than [___]months and has a remaining term to maturity, as of the [applicable] cut-off date, of not more than [___] months and not less than [___] month[s]; |
| has an outstanding principal balance of at least $[___]; |
| has a final scheduled payment due on or before [___]; |
| was not more than [twenty-nine (29)] days past due as of the [applicable] cut-off date; |
| was not noted in the records of the servicer as being the subject of any verified bankruptcy or insolvency proceeding; |
| is a simple interest receivable; |
| provides that a prepayment by the related obligor will fully pay the principal balance and accrued interest through the date of prepayment based on the receivables contract rate; |
| complied at the time it was originated or made in all material respects with all requirements of applicable federal, state and local laws, and regulations thereunder, except where the failure to comply (i) was remediated or cured in all material respects prior to the cut-off date, or (ii) would not render such receivable unenforceable or create liability for the depositor or the issuing entity, as an assignee of such receivable; |
| constitutes the legal, valid and binding payment obligation in writing of the obligor, enforceable by the holder thereof in accordance with its terms, except (i) as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, liquidation or other similar laws and equitable principles relating to or affecting the enforcement of creditors rights generally and (ii) as such receivable may be modified by the application after the [applicable] cut-off date of the Servicemembers Civil Relief Act, as amended, to the extent applicable to the related obligor; |
| has not been satisfied, subordinated or rescinded nor do the records of the servicer indicate that the related financed vehicle has been released from the lien of such receivable in whole or in part; |
| except for payment delinquencies continuing for a period of not more than [twenty nine (29)] days as of the [applicable] cut-off date or the failure of the obligor to maintain physical damage insurance covering the related financed vehicle in accordance with the requirements of the receivable, the records of the servicer did not disclose that any default, breach, violation or event permitting acceleration under the terms of the receivable existed as of the [applicable] cut-off date; |
56
| requires that the obligor thereunder obtain physical damage insurance covering the related financed vehicle; |
| has an obligor that is not the United States or any state thereof or any local government, or any agency, department, political subdivision or instrumentality of the United States or any state thereof or any local government; |
| has not been originated in, nor is subject to the laws of, any jurisdiction under which the sale, transfer, assignment, contribution, conveyance or pledge of such receivable would be unlawful, void, or voidable; |
| as of the closing date and immediately prior to the sale and transfer contemplated in the purchase agreement, CONA had good and marketable title to and was the sole owner of the receivable free and clear of all liens created by CONA (except any lien which will be released prior to assignment of such receivable thereunder), and, immediately upon the sale and transfer by CONA to the depositor, the depositor will have good and marketable title to such receivable, free and clear of all liens created by the depositor (other than permitted liens) and immediately upon the sale and transfer by the depositor to the issuing entity pursuant to the sale agreement, the issuing entity will have good and marketable title to such receivable, free and clear of all liens created by the issuing entity (other than permitted liens); |
| constitutes either tangible chattel paper, electronic chattel paper, an account, an instrument, or a general intangible, each as defined in the UCC; |
| has only one executed original, electronically authenticated original or authoritative copy of the contract (in each case within the meaning of the UCC) related to the receivable; and |
| the records of the servicer do not reflect any material facts which have not been remediated or cured which would constitute the basis for any right of rescission, offset, claim, counterclaim or defense with respect to such receivable or the same being asserted or threatened with respect to such receivable. |
The receivables will be selected from the portfolio of retail installment sale contracts for new and used vehicles acquired by the sponsor from dealers and serviced by the servicer, in each case meeting the criteria described above. No selection procedures known or intended to be adverse to the issuing entity will be utilized in selecting the receivables. As of the [statistical] cut-off date, no receivable in the pool has a scheduled maturity later than [ ] [and none of][[ ]% of] the receivables in the pool were originated as electronic contracts.
For a description of the depositors review of the receivables in the receivables pool and the disclosure regarding those receivables included in this prospectus, see Review of the Receivables Pool below.
[Additional receivables sold to the issuing entity during the [revolving][pre-funding] period must meet substantially similar criteria. However, these criteria will not ensure that each subsequent pool of additional receivables will share the exact characteristics as the initial pool of receivables. As a result, the composition of the aggregate pool of receivables will change as additional receivables are purchased by the issuing entity on each distribution date during the [revolving][pre-funding] period. We believe that no selection procedures adverse to the noteholders will be utilized in selecting the additional receivables.]
57
The issuing entity has provided asset-level information regarding the receivables that will be owned by the issuing entity as of the closing date (the asset-level data) as an exhibit to a Form ABS-EE filed by the issuing entity by the date of filing of this prospectus, which is hereby incorporated by reference. The asset-level data comprises each of the data points required with respect to automobile loans identified on Schedule AL to Regulation AB and generally includes, with respect to each receivable, the related asset number, the reporting period covered, general information about the receivable, information regarding the related financed vehicle, information about the related obligor, information about activity on the receivable and information about modifications of the receivable during the reporting period. In addition, the issuing entity will provide updated asset-level data with respect to the receivables each month as an exhibit to the monthly distribution reports filed with the SEC on Form 10-D.
The composition, distribution by contract rate, distribution by FICO® score, distribution by outstanding principal balance, geographic distribution by state of residence of the obligor, distribution by remaining term to maturity, distribution by original term to maturity, and distribution by loan-to-value at origination, in each case of the receivables as of the [statistical] cut-off date are set forth in the tables below.
Composition of the Pool of Receivables
As of the [Statistical] Cut-off Date
Total | ||||
Aggregate Outstanding Principal Balance |
||||
Number of Receivables |
||||
Average Outstanding Principal Balance |
||||
Aggregate Original Principal Balance |
||||
Aggregate Percent of Original Principal Balance Outstanding |
||||
Average Original Principal Balance |
||||
Range of Outstanding Principal Balances |
||||
Weighted Average Contract Rate(1) |
||||
Range of Contract Rates |
||||
Weighted Average Remaining Term(1) |
||||
Range of Remaining Terms(2) |
||||
Weighted Average Original Term(1) |
||||
Range of Original Terms(2) |
||||
Percentage of Aggregate Outstanding Principal Balance of Receivables with Original Term between 73 months and 75 months |
||||
Weighted Average FICO® Score(1) |
||||
Weighted Average Loan-to-Value Ratio(1) |
||||
Percentage of New Vehicles |
||||
Percentage of Used Vehicles |
||||
Top Five Vehicle Manufacturers: |
(1) | Weighted by outstanding principal balance as of the [statistical] cut-off date. |
(2) | Characteristics in the table related to the term of the receivables may differ from the asset-level data included as an exhibit to Form ABS-EE due to differences in how term is calculated for the securitized pool (i.e., number of scheduled payments) and how term is required to be calculated for asset-level data (i.e., number of months, including partial months during the term). |
58
Distribution of the Pool of Receivables
By Contract Rate
As of the [Statistical] Cut-off Date
Range of Contract Rates (%) |
Number of Receivables |
Percentage of Total Number of Receivables(1) |
Aggregate Outstanding Principal Balance |
Percentage of Total Aggregate Outstanding Principal Balance(1) |
||||||||||||
1.00 - 1.99 |
||||||||||||||||
2.00 - 2.99 |
||||||||||||||||
3.00 - 3.99 |
||||||||||||||||
4.00 - 4.99 |
||||||||||||||||
5.00 - 5.99 |
||||||||||||||||
6.00 - 6.99 |
||||||||||||||||
7.00 - 7.99 |
||||||||||||||||
8.00 - 8.99 |
||||||||||||||||
9.00 - 9.99 |
||||||||||||||||
10.00 - 10.99 |
||||||||||||||||
11.00 - 11.99 |
||||||||||||||||
12.00 - 12.99 |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
||||||||||||||||
|
|
|
|
|
|
|
|
(1) | Sum may not equal 100% due to rounding. |
Distribution of the Pool of Receivables
By FICO® Score
[As of the [Statistical] Cut-off Date]
Range of FICO® Scores(1) |
Number of Receivables |
Percentage of Total Number of Receivables(2) |
Aggregate Outstanding Principal Balance |
Percentage of Total Aggregate Outstanding Principal Balance(2) |
||||||||||||
700 - 719 |
||||||||||||||||
720 - 739 |
||||||||||||||||
740 - 759 |
||||||||||||||||
760 - 779 |
||||||||||||||||
780 - 799 |
||||||||||||||||
800 - 819 |
||||||||||||||||
820 - 839 |
||||||||||||||||
840 and greater |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
||||||||||||||||
|
|
|
|
|
|
|
|
(1) | FICO® is a federally registered trademark of Fair Isaac Corporation. The FICO® score information in the table above was obtained at origination of the applicable receivables and does not reflect the FICO® scores of the obligors as of the [statistical] cut-off date. |
(2) | Sum may not equal 100% due to rounding. |
59
Distribution of the Pool of Receivables
By Outstanding Principal Balance
As of the [Statistical] Cut-off Date
Range of Outstanding Principal Balance |
Number of Receivables |
Percentage of Total Number of Receivables(1) |
Aggregate Outstanding Principal Balance |
Percentage of Total Aggregate Outstanding Principal Balance(1) |
||||||||||||
$0.01 - $5,000.00 |
||||||||||||||||
$5,000.01 - $10,000.00 |
||||||||||||||||
$10,000.01 - $15,000.00 |
||||||||||||||||
$15,000.01 - $20,000.00 |
||||||||||||||||
$20,000.01 - $25,000.00 |
||||||||||||||||
$25,000.01 - $30,000.00 |
||||||||||||||||
$30,000.01 - $35,000.00 |
||||||||||||||||
$35,000.01 - $40,000.00 |
||||||||||||||||
$40,000.01 - $45,000.00 |
||||||||||||||||
$45,000.01 - $50,000.00 |
||||||||||||||||
$50,000.01 - $55,000.00 |
||||||||||||||||
$55,000.01 - $60,000.00 |
||||||||||||||||
$60,000.01 - $65,000.00 |
||||||||||||||||
$65,000.01 - $70,000.00 |
||||||||||||||||
$70,000.01 - $75,000.00 |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
||||||||||||||||
|
|
|
|
|
|
|
|
(1) | Sum may not equal 100% due to rounding. |
60
Geographic Distribution of the Pool of Receivables
By State of Residence
As of the [Statistical] Cut-off Date
State of Residence(1) |
Number of Receivables |
Percentage of Total Number of Receivables(2) |
Aggregate Outstanding Principal Balance |
Percentage of Total Aggregate Outstanding Principal Balance(2) |
||||||||||||
Alabama |
||||||||||||||||
Alaska |
||||||||||||||||
Arizona |
||||||||||||||||
Arkansas |
||||||||||||||||
California |
||||||||||||||||
Colorado |
||||||||||||||||
Connecticut |
||||||||||||||||
Delaware |
||||||||||||||||
Florida |
||||||||||||||||
Georgia |
||||||||||||||||
Hawaii |
||||||||||||||||
Idaho |
||||||||||||||||
Illinois |
||||||||||||||||
Indiana |
||||||||||||||||
Iowa |
||||||||||||||||
Kansas |
||||||||||||||||
Kentucky |
||||||||||||||||
Louisiana |
||||||||||||||||
Maryland |
||||||||||||||||
Massachusetts |
||||||||||||||||
Michigan |
||||||||||||||||
Minnesota |
||||||||||||||||
Mississippi |
||||||||||||||||
Missouri |
||||||||||||||||
Montana |
||||||||||||||||
Nebraska |
||||||||||||||||
Nevada |
||||||||||||||||
New Hampshire |
||||||||||||||||
New Jersey |
||||||||||||||||
New Mexico |
||||||||||||||||
New York |
||||||||||||||||
North Carolina |
||||||||||||||||
North Dakota |
||||||||||||||||
Ohio |
||||||||||||||||
Oklahoma |
||||||||||||||||
Oregon |
||||||||||||||||
Pennsylvania |
||||||||||||||||
Rhode Island |
||||||||||||||||
South Carolina |
||||||||||||||||
South Dakota |
||||||||||||||||
Tennessee |
||||||||||||||||
Texas |
||||||||||||||||
Utah |
||||||||||||||||
Vermont |
||||||||||||||||
Virginia |
||||||||||||||||
Washington |
||||||||||||||||
Washington, D.C. |
||||||||||||||||
West Virginia |
||||||||||||||||
Wisconsin |
||||||||||||||||
Wyoming |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
||||||||||||||||
|
|
|
|
|
|
|
|
(1) | Based on the billing address of the obligor on the receivables. |
(2) | Sum may not equal 100% due to rounding. |
61
Distribution of the Pool of Receivables
By Remaining Term to Maturity
As of the [Statistical] Cut-off Date
Remaining Term to Maturity |
Number of Receivables |
Percentage of Total Number of Receivables(1) |
Aggregate Outstanding Principal Balance |
Percentage of Total Aggregate Outstanding Principal Balance(1) |
||||||||||||
1 - 12 |
||||||||||||||||
13 - 24 |
||||||||||||||||
25 - 36 |
||||||||||||||||
37 - 48 |
||||||||||||||||
49 - 60 |
||||||||||||||||
61 - 72 |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
||||||||||||||||
|
|
|
|
|
|
|
|
(1) | Sum may not equal 100% due to rounding. |
Distribution of the Pool of Receivables
By Original Term to Maturity
As of the [Statistical] Cut-off Date
Original Term to Maturity |
Number of Receivables |
Percentage of Total Number of Receivables(1) |
Aggregate Outstanding Principal Balance |
Percentage of Total Aggregate Outstanding Principal Balance(1) |
||||||||||||
1 - 12 |
||||||||||||||||
13 - 24 |
||||||||||||||||
25 - 36 |
||||||||||||||||
37 - 48 |
||||||||||||||||
49 - 60 |
||||||||||||||||
61 - 72 |
||||||||||||||||
73 - 75 |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
||||||||||||||||
|
|
|
|
|
|
|
|
(1) | Sum may not equal 100% due to rounding. |
62
Distribution of the Pool of Receivables
By Loan-to-Value at Origination
As of the [Statistical] Cut-off Date
Loan-to-Value at Origination (%) |
Number of Receivables |
Percentage of Total Number of Receivables(1) |
Aggregate Outstanding Principal Balance |
Percentage of Total Aggregate Outstanding Principal Balance(1) |
||||||||||||
0.01 - 20.00 |
||||||||||||||||
20.01 - 40.00 |
||||||||||||||||
40.01 - 60.00 |
||||||||||||||||
60.01 - 80.00 |
||||||||||||||||
80.01 - 100.00 |
||||||||||||||||
100.01 - 120.00 |
||||||||||||||||
120.01 - 140.00 |
||||||||||||||||
140.01 - 160.00 |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
||||||||||||||||
|
|
|
|
|
|
|
|
(1) | Sum may not equal 100% due to rounding. |
As described under The OriginatorUnderwriting in this prospectus, there are limited credit-related exceptions to the originators underwriting criteria. The originators credit risk management monitors exceptions to the underwriting criteria on a monthly basis. [None of the receivables to be sold to the issuing entity on the closing date were approved as an exception to CONAs underwriting criteria.]
[Insert data regarding the number of pool assets that would be exceptions to the underwriting criteria and a description of the nature of the exceptions.]
[To be included if the pool will include receivables that have been extended prior to the initial [statistical] cut-off date, if applicable:
As described under The ServicerExtensions and Modifications, the servicer may permit extensions or modifications on receivables in accordance with its customary servicing practices. As of the [statistical] cut-off date, the percentage of receivables that had been previously extended or modified was immaterial.]
[To be included if the pool will include receivables that were subject to temporary payment reductions prior to the [statistical] cut-off date, if applicable:
As described under The OriginatorUnderwriting, the originator offers certain obligors payment deferrals. As of the [statistical] cut-off date, payment deferrals were applied by the originator to less than [ ]% of the receivables (by aggregate initial [statistical] cut-off date balance).]
[To Be Inserted: For any one state or other geographic region where 10% or more of the pool assets are or will be located, description of any economic or other factors specific to such state or region that may materially impact the pool assets or pool asset cash flows.]
[To Be Inserted: For any other material concentration of receivables, description of any economic or other factors specific to that concentration that may materially impact the pool assets or pool asset cash flows.]
Delinquencies, Repossessions and Net Credit Losses
The following tables provide information relating to delinquency, repossession and credit loss experience for each period indicated with respect to all motor vehicle retail installment sale contracts originated and serviced by CONA which are considered to be in the prime category and which are considered eligible for securitization in the
63
COPAR program based on CONAs internal scoring model. The prime characterization of receivables is based on a number of factors and changes from time to time, and general economic conditions change from time to time. Consequently, the delinquency, repossession and credit loss experience with respect to the receivables in the receivables pool may not correspond to the delinquency, repossession and credit loss experience of the receivables servicing portfolio set forth in the following tables. See The OriginatorUnderwriting and Risk Factors Risks related to the characteristics, servicing and performance of the receivablesCredit scores and historical loss experience may not accurately predict the likelihood of delinquencies, defaults and losses on the receivables in this prospectus.
This information includes the delinquency, repossession and credit loss experience with respect to all prime category receivables originated and serviced by CONA and which are considered eligible for securitization in the COPAR program based on CONAs internal scoring model as of each respective date or during each listed period. Although CONA originates and services receivables classified at origination in the below-prime category, this segment of CONAs portfolio is excluded from the following delinquency and credit loss experience tables. The following statistics include receivables with a variety of payment and other characteristics that may not correspond to the receivables in the receivables pool. As a result, the delinquency, repossession and credit loss experience with respect to the receivables in the receivables pool may not correspond to the delinquency, repossession and credit loss experience of the receivables servicing portfolio set forth in the following tables.
Net dollar losses are an amount equal to gross losses minus recoveries, each for the period indicated in the charts below. Gross losses represent the arithmetic sum of all receivables that were charged off during the applicable period. However, for accounts repossessed and sold in the same month, gross losses are net of proceeds received on the repossessed vehicle. Recoveries are collections received in respect of charged-off receivables during the applicable period and represent cash payments received with respect to the deficiency balance of previously charged-off accounts and repossession proceeds for vehicles repossessed and sold in separate months. Recoveries do not include repossession proceeds received from accounts repossessed and sold in the same month. Receivables are charged off if: (i) a scheduled payment is more than one-hundred twenty (120) days past due; (ii) the vehicle is repossessed; or (iii) the receivable is deemed charged off by CONA based on CONAs policies. Receivables are only charged off at the end of the month. Receivables which meet the conditions for charge off but are cured within the same month are not considered charged off.
64
Delinquency Experience(1)(2)
As of [], | ||||||||||||||||
[] | [] | |||||||||||||||
Dollars | Percent | Dollars | Percent | |||||||||||||
Principal Outstanding at Period End |
||||||||||||||||
Delinquencies |
||||||||||||||||
30 - 59 Days |
||||||||||||||||
60 - 89 Days |
||||||||||||||||
90 - 119 Days |
||||||||||||||||
120 or More Days |
||||||||||||||||
Total 30+ Days |
||||||||||||||||
Total 60+ Days |
As of December 31, | ||||||||||||||||||||||||||||||||||||||||
[] | [] | [] | [] | [] | ||||||||||||||||||||||||||||||||||||
Dollars | Percent | Dollars | Percent | Dollars | Percent | Dollars | Percent | Dollars | Percent | |||||||||||||||||||||||||||||||
Principal Outstanding at Period End |
||||||||||||||||||||||||||||||||||||||||
Delinquencies |
||||||||||||||||||||||||||||||||||||||||
30 - 59 Days |
||||||||||||||||||||||||||||||||||||||||
60 - 89 Days |
||||||||||||||||||||||||||||||||||||||||
90 - 119 Days |
||||||||||||||||||||||||||||||||||||||||
120 or More Days |
||||||||||||||||||||||||||||||||||||||||
Total 30+ Days |
||||||||||||||||||||||||||||||||||||||||
Total 60+ Days |
(1) | CONA considers an account to be delinquent if more than $10.00 of a scheduled payment (or more than $10.00 in the aggregate with respect to more than one scheduled payment) has not been paid by the due date. |
(2) | Delinquencies include repossessions, if the receivable in question has not been charged-off in accordance with CONAs customary servicing practices. |
65
Net Credit Loss Experience
For the [] months ended [], | ||||||||
[] | [] | |||||||
Principal Outstanding at Period End |
||||||||
Average Principal Outstanding During the Period(1) |
||||||||
Number of Receivables Outstanding at Period End |
||||||||
Average Number of Receivables Outstanding During the Period(1) |
||||||||
Gross Losses(2) |
||||||||
Recoveries |
||||||||
Net Dollar Loss |
||||||||
Net Losses as a Percent of Average Principal Amount Outstanding(3) |
For the year ended December 31, |
||||||||||||||||||||
[] | [] | [] | [] | [] | ||||||||||||||||
Principal Outstanding at Period End |
||||||||||||||||||||
Average Principal Outstanding During the Period(1) |
||||||||||||||||||||
Number of Receivables Outstanding at Period End |
||||||||||||||||||||
Average Number of Receivables Outstanding During the Period(1) |
||||||||||||||||||||
Gross Losses(2) |
||||||||||||||||||||
Recoveries |
||||||||||||||||||||
Net Dollar Loss |
||||||||||||||||||||
Net Losses as a Percent of Average Principal Amount Outstanding |
(1) | Averages are computed by taking a simple average of the beginning and ending amounts for each period presented. |
(2) | Charge-offs generally represent the total aggregate balance of the receivables determined to be uncollectable during the period, less proceeds from disposition of the related vehicles, other than recoveries as described above under Delinquencies, Repossessions and Net Credit Losses. |
(3) | The percentages for the [] months ended [] and [] have been annualized to facilitate year-to-year comparisons. Actual percentages for the entire year may differ from annualized percentages. |
66
In addition to the payment and other characteristics of a pool of receivables, delinquencies, repossessions and credit losses are also affected by a number of social and economic factors, including changes in interest rates and unemployment levels, and we cannot predict the level of future total delinquencies or the severity of future credit losses as a result of these factors. Accordingly, the delinquency, repossession and credit loss experience of the receivables may differ from those shown in the foregoing tables.
See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement in this prospectus for additional information regarding the servicer.
Delinquency Experience Regarding the Pool of Receivables
The following table sets forth the delinquency experience regarding the pool of receivables as of the [statistical] cut-off date. The servicer considers a receivable delinquent if more than [$10.00] of a scheduled payment (or more than [$10.00] in the aggregate with respect to more than one scheduled payment) has not been paid by the due date. The period of delinquency is based on the number of days payments are contractually past due. As of the [statistical] cut-off date, none of the receivables in the receivables pool were delinquent by more than [twenty-nine (29) days].
The following table sets forth the delinquency experience regarding the receivables that will be in the receivables pool.
Historical Delinquency Status(1) |
Number of Receivables |
Percentage of Total Number of Receivables(2) |
Aggregate Outstanding Principal Balance |
Percentage of Total Aggregate Outstanding Principal Balance(2) |
||||||||||||
Never delinquent more than 29 days |
||||||||||||||||
Delinquent no more than once for 30-59 days |
||||||||||||||||
Delinquent more than once for 30-59 days but never for 60 days or more |
||||||||||||||||
Delinquent at least once for 60 days or more |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
|
(1) | The servicer considers a receivable delinquent if more than [$10.00] of a scheduled payment (or more than [$10.00] in the aggregate with respect to more than one scheduled payment) has not been paid by the due date. The period of delinquency is based on the number of days payments are contractually past due. |
(2) | Sum of percentages may not equal 100% due to rounding. |
Appendix A to this prospectus (Appendix A) sets forth available information regarding characteristics of motor vehicle retail installment sale contracts originated and serviced by CONA which are considered to be in the prime category and which are considered eligible for securitization in the COPAR program based on CONAs internal scoring model by vintage origination year for the past five years, including the aggregate original and month-end (as of [ ], 20[ ]) principal balance, the original and month-end (as of [ ], 20[ ]) number of receivables, the average original and month-end (as of [ ], 20[ ]) principal balance, the weighted average original and the month-end (as of [ ], 20[ ]) contract rate, the pool factor as of [ ], 20[ ], the weighted average age as of [ ], 20[ ], the weighted average original term, the weighted average remaining term as of [ ], 20[ ], the weighted average FICO® score, the percentage of new financed vehicles, the percentage of used financed vehicles and the weighted average loan-to-value. Appendix A also sets forth in tabular and graphical format static pool information with regard to delinquency rates, pool factor, prepayment speeds and cumulative net charge-offs for receivables included in CONAs managed portfolio with respect to each vintage year. The characteristics of each receivables pool described above are based on the characteristics of all of the receivables included in that pool as of their respective dates of origination and as of [ ], 20[ ].
67
Appendix B to this prospectus (Appendix B) sets forth in tabular and graphical format static pool information about prior pools of motor vehicle retail installment sale contracts that were securitized by CONA in the last five years. Static pool information consists of delinquency history, prepayment speeds and cumulative net-losses for prior securitized pools and summary information for the original characteristics of the prior securitized pools. The term securitized pool refers to the securitized pool of receivables as of the related cut-off date. [Appendix A, Appendix B and all of the information therein are incorporated into, and deemed to be part of, this prospectus and the registration statement to which this prospectus relates.]
[To the extent static pool data is filed on Form 8-K as permitted by Item 10(b) of Form SF-3: The static pool performance data filed on Form 8-K with the SEC on [ ], 20[ ], may be found under Capital One Auto Receivables, LLCs CIK 0001133438 and Capital One Prime Auto Receivables Trust 20[ ]-[ ]s CIK [ ]. [All of the information therein is incorporated by reference into, and deemed to be part of, this prospectus and the registration statement to which this prospectus relates.]
[If applicable, insert a description of how the static pool differs from pool underlying the securities, such as the extent to which the pool underlying the securities was originated with the same or differing underwriting criteria, loan terms, and risk tolerances than the static pools presented.]
Review of the Receivables Pool
In connection with the offering of the notes, the depositor has performed a review of the receivables in the receivables pool and the disclosure relating to the receivables required to be included in this prospectus by Item 1111 of Regulation AB (such disclosure, the Rule 193 Information). This review was designed and effected to provide the depositor with reasonable assurance that the Rule 193 Information is accurate in all material respects.
The depositor determined the Rule 193 Information to be covered and identified the scope and type of review procedures to be utilized for each portion of the Rule 193 Information. The Rule 193 Information consisting of factual information was reviewed and approved by responsible internal personnel at the depositor to ensure its accuracy. The depositor also reviewed the Rule 193 Information consisting of descriptions of portions of the transaction documents and compared that Rule 193 Information to the transaction documents to ensure the descriptions were accurate. The depositor also consulted with internal regulatory personnel and counsel and external counsel, with respect to the description of the legal and regulatory provisions that may materially and adversely affect the performance of the receivables or payments on the notes.
The depositor performed a review of the Rule 193 Information to confirm that the receivables in the receivables pool [as of the initial [statistical] cut-off date (and will perform such review with respect to any subsequent receivables as of the applicable subsequent cut-off date)] satisfied the criteria set forth under The Receivables PoolCriteria Applicable to Selection of Receivables in this prospectus. The depositor verified the individual receivables data contained in the depositors data tape. The data tape is an electronic record from the auto loan databases maintained by CONA, which includes certain attributes of the receivables. The depositor selected a random sample of [ ] receivable files [relating to the initial receivables [and receivables with characteristics similar to the initial receivables]] to confirm certain data points, such as FICO® score, contract rate and origination date, conformed to the applicable information on the data tape. The depositor also compared the statistical information contained in the tables under The Receivables Pool in this prospectus to data in, or derived from, the data tape. The depositor recalculated the statistical information relating to the receivables in the receivables pool using the applicable information on the data tape and verified that the recalculated information agreed to the information presented in this prospectus. The depositors control environment includes periodic internal control reviews and internal audits of various processes, including its origination and reporting system processes, and compliance with Section 404 of the Sarbanes-Oxley Act of 2002.
[As described under The Receivables Pool in this prospectus, some of the information in this prospectus pertains to a pool rather than the actual pool of receivables to be transferred to the issuing entity. The receivables sold to the issuing entity on the closing date will be the same receivables included in the pool described in this
68
prospectus as of the [statistical] cut-off date except for those receivables [(i) that no longer satisfy the eligibility criteria specified in the transaction documents or (ii) for which payment in full has been received in the ordinary course, in each case, as of the cut-off date. The characteristics of the receivables sold to the issuing entity on the closing date are not expected to vary materially from the characteristics of the receivables in the pool as described in this prospectus. The additional receivables to be added will be selected from the same or similar data tapes created from the depositors auto loan databases in the same manner as the data tape used to select the pool. The depositor believes that the verification of certain information, numeric comparisons and recalculations, internal control reviews and other review procedures described above provide similar reasonable assurance that the information in CONAs auto loan databases and data tape relating to the actual pool is reliable in all material respects.]
Portions of the review of legal matters and the review of statistical information were performed with the assistance of third parties engaged by the depositor. The depositor determined the nature, extent and timing of the review and the sufficiency of the assistance provided by the third parties for purposes of its review. The depositor had ultimate authority and control over, and assumes all responsibility for, the review and the findings and conclusions of the review. The depositor attributes all findings and conclusions of the review to itself.
After undertaking the review described above, the depositor has concluded that it has reasonable assurance that the Rule 193 Information in this prospectus is accurate in all material respects.
[No assets securitized by the sponsor in the same asset class as the transaction described in this prospectus were the subject of a demand to repurchase or replace for breach of the representations and warranties during the three-year period ending [ ], 20[ ].] Please refer to the Form ABS-15G filed by the depositor on [ ], 20[ ] for additional information. The CIK number of the depositor is 0001133438.
MATURITY AND PREPAYMENT CONSIDERATIONS
The weighted average life of the notes will generally be influenced by the rate at which the principal balances of the receivables are paid, which payments may be in the form of scheduled payments or prepayments. Each receivable is prepayable in full by the obligor at any time. [The weighted average life of the notes will also be influenced by the ability of the issuing entity to reinvest collections on the receivables during the revolving period. The ability of the issuing entity to reinvest those proceeds will be influenced by the availability of suitable receivables for the issuing entity to purchase and the rate at which the principal balances of the receivables are paid.] Full and partial prepayments on motor vehicle receivables included in the issuing entity property will be paid or distributed to the noteholders on the next payment date following the collection period in which they are received. To the extent that any receivable included in the issuing entity property is prepaid in full by the obligor, purchased by the servicer as a result of a breach of a covenant related to its servicing duties or as a result of a reduction in the contract rate of the receivable other than as required by applicable law (including, without limitation, the Servicemembers Civil Relief Act) or court order, each as described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Modifications of Receivables and Extensions of Receivables Final Payment Dates, or repurchased by CONA as a result of a breach of a representation or warranty regarding the characteristics of a receivable to be transferred to the issuing entity as described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Representations and Warranties or otherwise, the actual weighted average life of the receivables included in the issuing entity property will be shorter than a weighted average life calculation based on the assumptions that payments will be made on schedule and that no prepayments will be made. Weighted average life means the average amount of time until the entire principal amount of a receivable is repaid. Full prepayments may also result from liquidations due to default, receipt of proceeds from theft, physical damage, credit life and credit disability insurance policies or purchases made by the servicer as a result of a breach of a covenant made by it related to its servicing duties as described under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Modifications of Receivables and Extensions of Receivables Final Payment Dates. In addition, early retirement of the notes may be effected if the servicer exercises its option to purchase the remaining receivables included in the issuing entity property when the outstanding balance of the receivables has declined to or below the percentage specified in The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Optional Redemption in this prospectus.
69
The rate of full prepayments by obligors on the receivables may be influenced by a variety of economic, social and other factors. These factors include the unemployment rate, servicing decisions, seasoning of loans, destruction of vehicles by accident, loss of vehicles due to theft, sales of vehicles, market interest rates, the availability of alternative financing and restrictions on the obligors ability to sell or transfer the financed vehicle securing a receivable without the consent of the servicer. Any full prepayments or partial prepayments applied immediately will reduce the average life of the receivables.
CONA can make no prediction as to the actual prepayment rates that will be experienced on the receivables included in the issuing entity property in either stable or changing interest rate environments. Noteholders will bear all reinvestment risk resulting from the rate of prepayment of the receivables included in the issuing entity property.
The following information is provided solely to illustrate the effect of prepayments of the receivables on the unpaid note balances of the notes and the weighted average life of the notes under the assumptions stated below and is not a prediction of the prepayment rates that might actually be experienced with respect to the receivables.
Prepayments on receivables can be measured against prepayment standards or models. The model used in this prospectus, the absolute prepayment model, or ABS, assumes a rate of prepayment each month which is related to the original number of receivables in a pool of receivables. ABS also assumes that all of the receivables in a pool are the same size, that all of those receivables amortize at the same rate and that for every month that any individual receivable is outstanding, payments on that particular receivable will either be made as scheduled or the receivable will be prepaid in full. For example, in a pool of receivables originally containing 10,000 receivables, if a 1% ABS were used, that would mean that 100 receivables would prepay in full each month. The percentage of prepayments that is assumed for ABS is not a historical description of prepayment experience on pools of receivables or a prediction of the anticipated rate of prepayment on either the pool of receivables involved in this transaction or on any pool of receivables. You should not assume that the actual rate of prepayments on the receivables will be in any way related to the percentage of prepayments that was assumed for ABS.
The tables below which are captioned Percent of the Initial Note Balance at Various ABS Percentages (the ABS Tables) are based on ABS and were prepared using the following assumptions:
| the issuing entity holds [12] pools of receivables with the following characteristics: |
Pool |
Aggregate Outstanding Principal Balance |
Gross Contract Rate |
Assumed Cut-off Date |
Original Term to Maturity (in Months) |
Remaining Term to Maturity (in Months) |
|||||||||||||||
1 |
$ | % | ||||||||||||||||||
2 |
$ | % | ||||||||||||||||||
3 |
$ | % | ||||||||||||||||||
4 |
$ | % | ||||||||||||||||||
5 |
$ | % | ||||||||||||||||||
6 |
$ | % | ||||||||||||||||||
7 |
$ | % | ||||||||||||||||||
8 |
$ | % | ||||||||||||||||||
9 |
$ | % | ||||||||||||||||||
10 |
$ | % | ||||||||||||||||||
11 |
$ | % | ||||||||||||||||||
12 |
$ | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
70
| all prepayments on the receivables each month are made in full on the last day of each month (and include thirty (30) days of interest) at the specified constant percentage of ABS commencing in [_____], 20[ ] and there are no defaults, losses or repurchases; |
| [the Class A-2 notes consist of Class A-2-A notes and Class A-2-B notes;] |
| interest accrues on the notes at the following per annum interest rates: Class A-1 notes, [ ]%; Class A[1]2[-A] notes, [ ]%; [Class A-2-B notes, [insert applicable floating rate benchmark] + [ ]%]; Class A-3 notes, [ ]%; Class A-4 notes, [ ]%; Class B notes, [ ]%; [and] Class C notes, [ ]%; [and Class D notes, [ ]%]; |
| each scheduled payment on the receivables is made on the last day of each month commencing in [_____], 20[ ], and each month has thirty (30) days; |
| the initial note balance of each class of notes is equal to the applicable initial note balance for that class of notes as set forth on the front cover of this prospectus[, except that the initial principal balance of the Class A-2-A notes is $[ ] and the initial principal balance of the Class A-2-B notes is $[ ];; |
| payments on the notes are paid in cash on each payment date commencing [ ], 20[ ] and on the [ ] calendar day of each subsequent month [whether or not that day is a business day]; |
| the notes are purchased on the closing date of [ ], 20[ ]; |
| the servicing fee will be an amount equal to the product of (1) [ ]%, (2) one-twelfth [(or, in the case of the first payment date, [a fraction equal to the number of days from but not including the initial cut-off date to and including the last day of the first collection period over 360][one-sixth)]], and (3) the net pool balance of the receivables as of the first day of the related collection period (or, for the first payment date, as of the cut-off date); the indenture trustee fee, asset representations reviewer fee and owner trustee fee, in the aggregate, equal $[ ] monthly; and all other fees and expenses equal zero; |
| the Class A-1 notes will be paid interest on the basis of the actual number of days elapsed during the period for which interest is payable and a 360-day year; |
| the Class A-1 notes [and the Class A-2-B notes] will be paid interest on the basis of the actual number of days elapsed during the period for which interest is payable and a 360-day year; |
| the Class A-2[-A] notes, the Class [A-3] notes, the Class [A-4] notes, the Class B notes, [and] the Class C notes [and the Class D notes] will be paid interest on the basis of a 360-day year consisting of twelve 30-day months; |
| Available Funds from the receivables described above are distributed in accordance with the payment priorities described below under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Priority of Payments, and no event of default under the indenture occurs; |
| payments of principal on the notes are distributed in accordance with the payment priorities described below under The NotesPayments of Principal; |
| the scheduled payment for each receivable was calculated on the basis of the characteristics described in the ABS Tables and in such a way that each receivable would amortize in a manner that will be sufficient to repay the receivable balance of that receivable by its indicated remaining term to maturity; |
| except as indicated in the tables, the clean-up call option to redeem the notes will be exercised at the earliest opportunity; |
71
| [during the revolving period, the issuing entity invests all amounts available to purchase additional receivables up to the target reinvestment amount on each payment date, based on the cut-off date of such receivables being the beginning of the related month;] |
| [$[ ] will be deposited in the pre-funding account on the closing date;] |
| [all of the funds in the pre-funding account are used to purchase additional receivables; and] |
| investment income amounts equal zero. |
The ABS Tables were created relying on the assumptions listed above. The tables indicate the percentages of the initial note balance of each class of notes that would be outstanding after each of the listed payment dates if certain percentages of ABS are assumed. The ABS Tables also indicate the corresponding weighted average lives of each class of notes if the same percentages of ABS are assumed. The assumptions used to construct the ABS Tables are hypothetical and have been provided only to give a general sense of how the principal cash flows might behave under various prepayment scenarios. The actual characteristics and performance of the receivables may differ materially from the assumptions used to construct the ABS Tables.
As used in the ABS Tables, the weighted average life of a class of notes is determined by:
| multiplying the amount of each principal payment of a note by the number of years from the date of the issuance of the note to the related payment date; |
| adding the results; and |
| dividing the sum by the related initial note balance of the note. |
Percent of the Initial Note Balance at Various ABS Percentages
Class A-1 Notes
Payment Date |
[0.50]% | [1.00]% | [1.50]% | [2.00]% | [3.00]% | |||||||||||||||
Closing Date |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
Weighted Average Life (Years) to Call |
||||||||||||||||||||
Weighted Average Life (Years) to Maturity |
Percent of the Initial Note Balance at Various ABS Percentages
Class A-2[-A] [and A-2-B Notes]
Payment Date |
[0.50]% | [1.00]% | [1.50]% | [2.00]% | [3.00]% | |||||||||||||||
Closing Date |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
72
Payment Date |
[0.50]% | [1.00]% | [1.50]% | [2.00]% | [3.00]% | |||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
Weighted Average Life (Years) to Call |
||||||||||||||||||||
Weighted Average Life (Years) to Maturity |
73
Percent of the Initial Note Balance at Various ABS Percentages
Class A-3 Notes
Payment Date |
[0.50]% | [1.00]% | [1.50]% | [2.00]% | [3.00]% | |||||||||||||||
Closing Date |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
Weighted Average Life (Years) to Call |
||||||||||||||||||||
Weighted Average Life (Years) to Maturity |
74
Percent of the Initial Note Balance at Various ABS Percentages
Class A-4 Notes
Payment Date |
[0.50]% | [1.00]% | [1.50]% | [2.00]% | [3.00]% | |||||||||||||||
Closing Date |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
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[_____], 20[] |
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[_____], 20[] |
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[_____], 20[] |
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[_____], 20[] |
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[_____], 20[] |
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[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
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[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
Weighted Average Life (Years) to Call |
||||||||||||||||||||
Weighted Average Life (Years) to Maturity |
75
Percent of the Initial Note Balance at Various ABS Percentages
Class B Notes
Payment Date |
[0.50]% | [1.00]% | [1.50]% | [2.00]% | [3.00]% | |||||||||||||||
Closing Date |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
Weighted Average Life (Years) to Call |
||||||||||||||||||||
Weighted Average Life (Years) to Maturity |
76
Percent of the Initial Note Balance at Various ABS Percentages
Class C Notes
Payment Date |
[0.50]% | [1.00]% | [1.50]% | [2.00]% | [3.00]% | |||||||||||||||
Closing Date |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
Weighted Average Life (Years) to Call |
||||||||||||||||||||
Weighted Average Life (Years) to Maturity |
77
[Percent of the Initial Note Balance at Various ABS Percentages
Class D Notes]
Payment Date |
[0.50]% | [1.00]% | [1.50]% | [2.00]% | [3.00]% | |||||||||||||||
Closing Date |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
[_____], 20[] |
||||||||||||||||||||
Weighted Average Life (Years) to Call |
||||||||||||||||||||
Weighted Average Life (Years) to Maturity |
78
The following information summarizes material provisions of the notes. However, this summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the securities and the transaction documents, as applicable.
The issuing entity will issue the notes pursuant to the terms of the indenture, a form of which has been filed as an exhibit to the registration statement, to be dated as of the closing date between the issuing entity and the indenture trustee for the benefit of the noteholders [and the swap counterparty]. We will file a copy of the finalized indenture with the SEC concurrently with or prior to the time we file this prospectus with the SEC. Each noteholder will have the right to receive payments made with respect to the receivables and other assets in the issuing entity property and certain rights and benefits available to the indenture trustee under the indenture and the servicing agreement. [_____] will be the indenture trustee.
All payments required to be made on the notes will be made monthly on each payment date, which will be the [ ] day of each month or, if that day is not a business day, then the next business day beginning [ ], 20[ ].
The indenture trustee will distribute principal of and interest on the notes on each payment date to holders in whose names the notes were registered on the latest record date.
For each class of book-entry notes, the record date for each payment date or redemption date is the close of business on the business day immediately preceding that payment date. For notes issued as definitive notes, the record date for any payment date or redemption date is the close of business on the last business day of the calendar month immediately preceding the calendar month in which such payment date or redemption date occurs. See Definitive Notes below. No investor acquiring an interest in the notes issued in book-entry form, as reflected on the books of the clearing agency, or a person maintaining an account with such clearing agency (a Note Owner and together with noteholders, collectively investors) will be entitled to receive a certificate representing that owners note, except as set forth in Definitive Notes below.
The initial note balance, interest rate and final scheduled payment date for each class of the notes is set forth on the cover page to this prospectus.
Distributions to the certificateholders will be subordinated to distributions of principal of and interest on the notes to the extent described in The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Priority of Payments in this prospectus.
The notes will be issued in the minimum denomination of $[1,000] and in integral multiples of $[1,000] in excess thereof. [The Class D notes will be issued in the minimum denomination of $[1,000] and in integral multiples of $[1,000] in excess thereof]. The notes will be issued on or about the closing date in book-entry form through the facilities of The Depository Trust Company, or DTC, Clearstream and the Euroclear System against payment in immediately available funds.
Book-Entry Registration and Tax Documentation Procedures
Each class of notes offered will be available only in book-entry form except in the limited circumstances described under Definitive Notes in this prospectus. All book-entry notes will be held by DTC, in the name of Cede & Co., as nominee of DTC. Investors interests in the notes will be represented through financial institutions
79
acting on their behalf as direct and indirect participants in DTC. Investors may hold their notes through DTC, Clearstream Banking Luxembourg S.A. (Clearstream), or Euroclear Bank S.A./N.V. (Euroclear), which will hold positions on behalf of their customers or participants through their respective depositories, which in turn will hold such positions in accounts as DTC participants. The notes will be traded as home market instruments in both the U.S. domestic and European markets. Initial settlement and all secondary trades will settle in same-day funds.
Investors electing to hold their notes through DTC will follow the settlement practices applicable to U.S. corporate debt obligations. Investors electing to hold global notes through Clearstream or Euroclear accounts will follow the settlement procedures applicable to conventional eurobonds, except that there will be no temporary global notes and no lock-up or restricted period.
For notes held in book-entry form, actions of noteholders under the indenture will be taken by DTC upon instructions from its participants and all payments, notices, reports and statements to be delivered to noteholders will be delivered to DTC or its nominee as the registered holder of the book-entry notes for distribution to holders of book-entry notes in accordance with DTCs procedures.
Investors should review the procedures of DTC, Clearstream and Euroclear for clearing, settlement and withholding tax procedures applicable to their purchase of the notes.
U.S. Federal Income Tax Documentation Requirements. A beneficial owner of global notes holding notes through Clearstream or Euroclear, or through DTC if the holder has an address outside the U.S., will be required to pay the U.S. withholding tax at the currently applicable rate that generally applies to payments of interest, including original issue discount, on registered debt issued by U.S. Persons, unless:
| each clearing system, bank or other financial institution that holds customers notes in the ordinary course of its trade or business in the chain of intermediaries between that beneficial owner and the U.S. entity required to withhold tax complies with applicable certification requirements; and |
| that beneficial owner takes one of the following steps to obtain an exemption or reduced tax rate: |
Exemption for non-U.S. Persons (Form W-8BEN or W-8BEN-E). Beneficial owners of global notes that are non-U.S. Persons can obtain a complete exemption from the withholding tax by filing a signed Form W-8BEN or W-8BEN-E (or applicable successor form) and by meeting all other conditions for treating interest payments as portfolio interest. If the information shown on Form W-8BEN or W-8BEN-E changes, a new Form W-8BEN or W-8BEN-E (or applicable successor form) must be filed within thirty (30) days of that change.
Exemption for non-U.S. Persons with effectively connected income (Form W-8ECI). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S. branch, for which the interest income is effectively connected with its conduct of a trade or business in the United States, can obtain an exemption from the withholding tax by filing Form W-8ECI (or applicable successor form).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries (Form W-8BEN or W-8BEN-E). Non-U.S. Persons that are beneficial owners of global notes residing in a country that has a tax treaty with the United States can obtain an exemption or reduced tax rate, depending on the treaty terms, by filing Form W-8BEN or W-8BEN-E (or applicable successor form).
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete exemption from the withholding tax by filing Form W-9 (or applicable successor form).
This summary does not deal with all aspects of U.S. federal income tax withholding and information reporting that may be relevant to holders of the global notes who are non-U.S. Persons. In particular, special withholding considerations will apply in the case of non-U.S. Persons who hold global notes that are treated as partnership interests (see Material United States Federal Income Tax Consequences [Tax Consequences to Foreign Persons]). Security owners are advised to consult their own tax advisers for specific tax advice concerning their holding and disposing of the global notes.
80
The notes will be issued in fully registered, certificated form to owners of beneficial interests in a global note or their nominees rather than to DTC or its nominee, only if:
| the administrator advises the indenture trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as depository with respect to the notes, and the administrator or the indenture trustee, as applicable, is unable to locate a qualified successor; |
| the administrator, at its option, advises the indenture trustee in writing that it elects to terminate the book-entry system through DTC; or |
| after the occurrence of an event of default, the beneficial owners representing in the aggregate a majority of the outstanding principal amount of all the notes, voting as a single class, advise the indenture trustee through DTC (or its successor) in writing that the continuation of a book-entry system with respect to the notes through DTC (or its successor) is no longer in the best interest of those owners. |
Payments or distributions of principal of, and interest on, the notes will be made by a paying agent directly to holders of the notes in definitive registered form in accordance with the procedures set forth in this prospectus and in the indenture. Payments or distributions on each payment date and on the final scheduled payment date, as specified in this prospectus, will be made to holders in whose names the definitive notes were registered at the close of business on the Record Date. Payments or distributions will be made by check mailed to the address of each noteholder as it appears on the register maintained by the indenture trustee or by other means to the extent provided in the indenture. The final payment or distribution on any note, whether a note in definitive registered form or a note registered in the name of Cede & Co., however, will be made only upon presentation and surrender of the note at the office or agency specified in the notice of final payment or distribution to noteholders.
Notes in definitive registered form will be transferable and exchangeable at the offices of the indenture trustee, or at the offices of a transfer agent or registrar named in a notice delivered to holders of notes in definitive registered form. No service charge will be imposed for any registration of transfer or exchange, but the indenture trustee, transfer agent or registrar may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith.
Notes Owned by Transaction Parties
In determining whether noteholders holding the requisite note balance have given any request, demand, authorization, direction, notice, consent, vote or waiver under any transaction document, notes owned by the issuing entity, the depositor, any certificateholder, the servicer, the administrator, the asset representations reviewer or any of their respective affiliates will be disregarded and deemed not to be outstanding unless all of the notes are then owned by the issuing entity, the depositor, any certificateholder, the servicer, the administrator or any of their respective affiliates, except that, in determining whether the indenture trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, vote or waiver, only notes that a responsible officer of the indenture trustee knows to be so owned will be so disregarded. Notes that have been pledged in good faith may be regarded as outstanding if the pledgee of those notes establishes to the satisfaction of the indenture trustee that the pledgee has the right to act with respect to those notes and that the pledgee is not the issuing entity, the depositor, any certificateholder, the servicer, the administrator, the asset representations reviewer or any of their respective affiliates.
To the extent that definitive notes have been issued in the limited circumstances described under Definitive Notes above, the issuing entity will furnish or cause to be furnished to the indenture trustee a list of the names and addresses of the noteholders:
81
| as of each Record Date, within five (5) days of that Record Date; and |
| within thirty (30) days after receipt by the issuing entity of a written request from the owner trustee or indenture trustee for that list, as of not more than ten (10) days before that list is furnished; |
provided, however, that so long as (i) the indenture trustee is the note registrar or (ii) the notes are issued as book-entry notes, no such list will be required to be furnished to the indenture trustee.
The indenture does not provide for the holding of annual or other meetings of noteholders.
On or prior to the [third] business day preceding each payment date, the servicer will provide to the indenture trustee and the indenture trustee will, on each payment date, forward or otherwise make available to each noteholder a statement (prepared by the servicer) setting forth for that payment date and the related collection period the following information (or such other substantially similar information so long as such information satisfies the requirements of Item 1121 of Regulation AB):
| the amount of the distribution on or with respect to each class of notes allocable to principal and interest on that payment date; |
| the Class A-1 note balance, the Class A-2[-A] note balance, [the Class A-2[-B] note balance,] the Class A-3 note balance, the Class A-4 note balance, the Class B note balance, the Class C note balance [and the Class D note balance], in each case before and after giving effect to payments on that payment date; |
| (i) the amount on deposit in the reserve account, both before and after giving effect to withdrawals and deposits for that payment date, (ii) the specified reserve account balance for that payment date, (iii) the amount to be deposited in the reserve account for that payment date, if any, and (iv) the reserve account draw amount and the reserve account excess amount, if any, for that payment date; |
| the First Allocation of Principal, the Second Allocation of Principal, the Third Allocation of Principal, the Fourth Allocation of Principal and the Regular Principal Distribution Amount for that payment date; |
| [the amount of any net swap payments, senior swap payments and subordinated swap payments for that payment date;] |
| [The amount of any cap payments;] |
| the Pool Factor and the Note Factor for that payment date; |
| the amount of the servicing fee with respect to the related collection period, the amount of the servicing fee to be paid on that payment date and the amount of any unpaid servicing fees from the prior payment date; |
| the amount of the interest carryover shortfall for each class of Notes, if any, on that payment date; |
| the amount of fees, expenses and indemnities to be paid by the issuing entity to the indenture trustee, the owner trustee and the asset representations reviewer, if any, with respect to the related payment date and the amount of any unpaid fees, expenses or indemnities to the indenture trustee, the owner trustee and the asset representations reviewer; |
82
| the aggregate repurchase price with respect to repurchased receivables with respect to the related collection period; |
| the aggregate amount being distributed to the certificates for that payment date; |
| the amount of collections for the related collection period; |
| the cumulative net loss ratio for that payment date; |
| the number and aggregate principal balance of 60-Day Delinquent Receivables as of the end of the related collection period; |
| the Delinquency Percentage for the related collection period; |
| the Delinquency Trigger for that payment date; |
| [the amount, if any, reinvested in additional receivables during the Revolving Period, if any;] |
| [if applicable, whether the Revolving Period has terminated early due to the occurrence of an early amortization event;] |
| the number of receivables and the net pool balance as of the beginning and end of the related collection period; and |
| the number, dollar amount and percentage of net pool balance of receivables that are 30-59, 60-89, 90-119 and 120 or more days delinquent as of the end of the related collection period. |
The Note Factor will be, for any payment date, a six-digit decimal equal to the outstanding balance for each class of notes at the end of the month as a fraction of the initial note balance of the corresponding class of notes as of the closing date. The Note Factor for each class of notes will be 1.000000 as of the closing date; thereafter, each Note Factor will decline to reflect reductions in the outstanding balance of each class of notes. As a noteholder, your share of the note balance of a particular class of notes is the product of (1) the original denomination of your note and (2) the applicable class Note Factor.
The Pool Factor will be, for any payment date, a six-digit decimal equal to the net pool balance as of the end of the preceding collection period divided by the aggregate outstanding principal balance of the receivables as of the cut-off date. The Pool Factor will be 1.000000 as of the cut-off date; thereafter, the Pool Factor will decline to reflect reductions in the net pool balance. The amount of a noteholders pro rata share of the net pool balance for a given month can be determined by multiplying the original denomination of the holders note by the Pool Factor for that month.
DTC will supply these reports to noteholders of book-entry notes in accordance with its procedures. Since owners of beneficial interest in a global note will not be recognized as noteholder of that series, DTC will not forward monthly reports to those owners. Copies of monthly reports may be obtained by owners of beneficial interests in a global note as provided in this prospectus. Within a reasonable period of time after the end of each calendar year during the term of the issuing entity, but not later than the latest date permitted by law, the indenture trustee and paying agent will furnish information required to complete United States federal and state income tax returns to each person who on any Record Date during the calendar year was a registered noteholder. See Material United States Federal Income Tax Consequences in this prospectus.
Interest on the note balance of each class of notes will accrue at the applicable interest rate listed on the cover of this prospectus and will be due and payable monthly on each payment date. Interest will accrue during each interest period at the applicable interest rate (a) for the Class A-1 notes [and the Class A-2-B notes] from and
83
including the prior payment date (after giving effect to all payments of principal made on the prior payment date) (or from and including the closing date in the case of the first interest period) to but excluding the following payment date or (b) for each other class of notes, from and including the [ ] day of the calendar month preceding a payment date (or from and including the closing date in the case of the first interest period) to but excluding the [ ] day of the month in which that payment date occurs.
Interest will accrue and will be calculated on the various classes of notes as follows:1
| Actual/360. Interest on the Class A-1 notes [and the Class A-2-B notes] will be calculated on the basis of the actual days elapsed and a 360-day year. This means that the interest due on each payment date for the Class A-1 notes [and the Class A-2-B notes] will be the product of (i) the outstanding note balance of the related class of notes, (ii) the applicable interest rate and (iii) the actual number of days from and including the previous payment date (or, in the case of the first payment date, from and including the closing date) to but excluding the current payment date, divided by 360. |
| 30/360. Interest on the [Class A-2[-A] notes,] [the Class A-3 notes,] [the Class A-4 notes,] [the Class B notes,] [the Class C notes] [and the Class D notes] will be calculated on the basis of a 360-day year of twelve 30-day months. This means that the interest due on each payment date for the [Class A-2[-A] notes,] [the Class A-3 notes], [the Class A-4 notes,] [the Class B notes,] [the Class C notes] [and the Class D notes] will be the product of (i) the outstanding note balance of the related class of notes, (ii) the applicable interest rate and (iii) 30 (or, in the case of the first payment date, the number of days from and including the closing date to but excluding [ ][ ], 20[ ] (assuming a 30-day calendar month)), divided by 360. |
| Interest Periods. Interest will accrue on the note balance of each class of notes during the period (each, an interest period) (a) with respect to the Class A-1 notes [and the Class A-2-B notes], from and including the prior payment date (after giving effect to all payments of principal made on the prior payment date) (or in the case of the first payment date, the closing date) to but excluding the following payment date or (b) with respect to each other class of notes, from and including the [ ] day of the calendar month preceding a payment date (or in the case of the first payment date, the closing date) to but excluding the [ ] day of the month in which that payment date occurs. Interest accrued as of any payment date but not paid on such payment date will be due on the next payment date, together with interest on such amount at the applicable interest rate (to the extent lawful). |
[Interest on the floating rate notes will be calculated based on [insert applicable floating rate benchmark] plus the applicable spread set forth on the cover page to this prospectus; provided that, if the sum of [insert applicable floating rate benchmark] and such spread is less than 0.00% for any interest accrual period, then the interest rate for the Class A-2-B notes for such interest accrual period will be deemed to be 0.00%.]
For notes in book-entry form, interest on each note will be paid to noteholders of record of the notes as of the business day immediately preceding the payment date. For notes in definitive form, interest on each note will be paid to noteholders of record of the notes as of the close of business on the last business day of the calendar month preceding the related payment date. The final interest payment on each class of notes is due on the earlier of (a) the payment date (including any redemption date) on which the note balance of that class of notes is reduced to zero or (b) the applicable final scheduled payment date for that class of notes.
A failure to pay the interest due on the notes of the controlling class on any payment date that continues unremedied for a period of five (5) business days or more will result in an event of default. See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Events of Default.
1 | [The interest rate for each class of notes will be a fixed rate, a floating rate or a combination of a fixed rate and a floating rate if that class has both a fixed rate tranche and a floating rate tranche.] |
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On each payment date, prior to the acceleration of notes following an event of default, amounts deposited into the principal distribution account will be applied to make principal payments of the notes in the following order of priority (as described below under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Priority of Payments):
| first, to the Class A-1 noteholders, until the Class A-1 notes are paid in full; |
| second, to the Class A-2[-A] noteholders [and the Class A-2-B noteholders, ratably], until the Class A-2[-A] notes [and the Class A-2-B notes] are paid in full; |
| third, to the Class [A-3] noteholders, until the Class [A-3] notes are paid in full; |
| fourth, to the Class [A-4] noteholders, until the Class [A-4] are paid in full; |
| fifth, to the Class [B] noteholders, until the Class [B] notes are paid in full; and] |
| sixth, to the Class [C] noteholders, until the Class [C] notes are paid in full; [and] |
| [seventh, to the Class D noteholders, until the Class D notes are paid in full. |
Failure to pay the note balance of any class of notes on its final scheduled payment date or a redemption date will be an event of default under the indenture. At any time after the notes have been accelerated following the occurrence of an event of default under the indenture, principal payments will be made first to the Class A-1 noteholders until the Class A-1 notes are paid in full and then ratably to noteholders of [each class of] the Class A-2 notes, the Class A-3 notes and the Class A-4 notes based on the note balance of the Class A-2 notes, the Class A-3 notes and the Class A-4 notes, until each such class has been paid in full. Principal payments will then be made on the Class B notes until the Class B notes are paid in full, [and then] to the Class C notes until the Class C notes are paid in full, [and then to the Class D notes until the Class D notes are paid in full]. See The IndenturePriorities of Payments Will Change Upon Events of Default that Result in Acceleration in this prospectus.
To the extent not previously paid prior to those dates, the note balance of each class of notes will be payable in full on the payment date specified below (each, a final scheduled payment date):
| for the Class A-1 notes, [ ] payment date; |
| for the Class A-2 notes, [ ] payment date; |
| for the Class A-3 notes, [ ] payment date; |
| for the Class A-4 notes, [ ] payment date; |
| for the Class B notes, [ ] payment date; [and] |
| for the Class C notes, [ ] payment date; [and] |
[ | for the Class D notes, [ ] payment date.] |
[Principal payments will not be made on the notes during the Revolving Period. If an Early Amortization Event occurs, the revolving period will end and noteholders will receive payments of principal earlier than expected. See The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Revolving Period. [Insert the maximum amount of additional assets that may be acquired during the revolving period and the percentage of the asset pool that may be acquired during the revolving period, to the extent applicable, in accordance with Item 1111(g) of Regulation AB.]
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[Interest Rate Swap Agreement]
[On the closing date, the issuing entity will enter into an interest rate swap agreement consisting of the ISDA Master Agreement, the schedule thereto, the credit support annex thereto, if applicable, and the confirmation with the swap counterparty to hedge the floating interest rate risk on the [Class A-[ ] notes]. All terms of the interest rate swap agreement will be acceptable to each Hired Agency. The interest rate swap for the [Class A-[ ] notes] will have an initial notional amount equal to the initial Note Balance of the [Class A-[ ] notes] on the closing date and will decrease by the amount of any principal payments on the [Class A-[ ] notes]. The notional amount of the interest rate swap at all times that the interest rate swap is in place will be equal to the Note Balance of the [Class A-[ ] notes].
On each payment date the issuing entity will make and receive payments under the interest rate swap agreements calculated with respect to the preceding interest accrual period and exchanged on a net basis. The issuing entity will pay to the swap counterparty the amounts set forth below with respect to the related interest rate swap agreement, in each case on a notional amount equal to the outstanding principal balance of the related class of floating rate notes and the swap counterparty will pay to the issuing entity the following amounts on such notional amount:
Class A-[ ] Notes |
Amount Payable to Swap Counterparty |
Amount Payable to Issuing Entity |
In general, under the interest rate swap agreement on each payment date, the issuing entity will be obligated to pay the swap counterparty a per annum fixed rate payment based on a fixed rate of [ ]% times the notional amount of the interest rate swap and the swap counterparty will be obligated to pay a per annum floating rate payment based on the interest rate of the [Class A-[ ] notes] times the same notional amount. Payments on the interest rate swap (other than Swap Termination Payments) will be exchanged on a net basis. The payment obligations of the issuing entity to the swap counterparty under the interest rate swap agreement are secured under the indenture by the same lien in favor of the indenture trustee that secures payments to the noteholders. A Net Swap Payment made by the issuing entity ranks higher in priority than all payments on the notes.
An event of default under the interest rate swap agreement includes, among other things:
| failure to make payments due under the interest rate swap agreement; or |
| the occurrence of certain bankruptcy events of the issuing entity or bankruptcy and insolvency events of the swap counterparty. |
| any breach of the interest rate swap agreement or related agreements by the swap counterparty; |
| failure to post collateral or return collateral pursuant to the terms of the credit support annex by the swap counterparty or the issuing entity (solely with respect to the return of collateral); |
| misrepresentation by the swap counterparty; or |
| merger by the swap counterparty without assumption of its obligations under the interest rate swap agreement. |
A termination event under the interest rate swap agreement includes, among other things:
| illegality of the transactions contemplated by the interest rate swap agreement; |
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| any amendment to the sale and servicing agreement or the indenture by the issuing entity that has a material and adverse effect on the swap counterparty without the prior written consent of the swap counterparty to the extent such consent is required under the related agreement; |
| any redemption, acceleration, auction, clean-up call or other prepayment in full, but not in part, of the notes under the indenture or any event of default under the indenture caused by the failure of the issuing entity to make a payment or maintain its solvency that results in certain rights or remedies being exercised with respect to the collateral; |
| if an event of default or termination event under the interest rate swap agreement has occurred and is continuing with respect to the issuing entity, the withdrawal or the downgrade of the financial strength rating of the note insurer below certain thresholds; |
| failure of the swap counterparty to provide the financial information required by Regulation AB and other requested information or to assign the interest rate swap agreement to an eligible counterparty that is able to provide the information; |
| certain tax events; |
| a merger or consolidation of the swap counterparty into an entity with materially weaker creditworthiness; or |
| failure of the swap counterparty (or its credit support provider, if any) to maintain its credit rating at certain levels required by the interest rate swap agreement, which failure may not constitute a termination event if the swap counterparty maintains certain minimum credit ratings and, among other things: |
| at its own expense obtains an unconditional guarantee or similar assurance from a guarantor with the appropriate credit rating, along with a legal opinion regarding the guarantee; |
| posts collateral; or |
| assigns its rights and obligations under the interest rate swap agreement to a substitute swap counterparty that satisfies the eligibility criteria set forth in the interest rate swap agreement. |
Upon the occurrence of any event of default or termination event specified in the interest rate swap agreement, the non-defaulting or non-affected party or, in some instances, the affected party or burdened party may elect to terminate the interest rate swap agreement. If the interest rate swap agreement is terminated due to an event of default or a termination event, a Swap Termination Payment under the interest rate swap agreement may be due to the swap counterparty by the issuing entity out of Available Funds. Any Swap Termination Payment that constitutes a Subordinated Swap Termination Payment will be subordinated to payments of principal of and interest on the notes and any Swap Termination Payment that constitutes a Senior Swap Termination Payment will be paid pro rata with interest on the Class A notes. The amount of any Swap Termination Payment may be based on the actual cost or market quotations of the cost of entering into a similar swap transaction or such other methods as may be required under the interest rate swap agreement, in each case in accordance with the procedures set forth in the interest rate swap agreement. Any Swap Termination Payment could, if market rates or other conditions have changed materially, be substantial. If a replacement interest rate swap agreement is entered into, any payments made by the replacement swap counterparty in consideration for replacing the swap counterparty, will be applied to any Swap Termination Payment owed to the swap counterparty, under the interest rate swap agreement to the extent not previously paid.]
[On the closing date, for each class of floating rate notes, if any, the issuing entity will enter into an Interest Rate Cap Agreement with [ ], a [ ], as cap provider (the cap provider),
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consisting of a long form confirmation or the ISDA Master Agreement, the schedule thereto, the credit support annex thereto, if applicable, and a confirmation for such class of floating rate notes, to hedge the floating interest rate risk on such class of floating rate notes. All terms of the Interest Rate Cap Agreement(s) will be acceptable to each Hired Agency. Under each Interest Rate Cap Agreement, the issuing entity will pay an upfront premium to the cap provider and, if [insert applicable floating rate benchmark] related to any payment date exceeds the Cap Rate, the cap provider will pay to the issuing entity the Cap Receipt, an amount equal to the product of:
1. | [insert applicable floating rate benchmark] for the related payment date minus the Cap Rate; |
2. | the aggregate notional amount on the Interest Rate Cap Agreement(s), [which will equal the aggregate outstanding principal amount of the Class A-2-B notes on the first day of the Interest Period related to such payment date]; and |
3. | a fraction, the numerator of which is the actual number of days elapsed from and including the previous payment date, to but excluding the current payment date, or with respect to the first payment date, from and including the closing date, to but excluding the first payment date, and the denominator of which is 360. |
Based on a reasonable good faith estimate of maximum probable exposure, the significance percentage, as defined in Regulation AB, of the Interest Rate Cap Agreement(s) is less than 10%.
Among other things, an event of default under each Interest Rate Cap Agreement includes:
| failure of the cap provider to make payments due under such Interest Rate Cap Agreement; |
| the occurrence of certain bankruptcy and insolvency events of the cap provider or of the issuing entity; |
| any breach of such Interest Rate Cap Agreement or related agreements by the cap provider; |
| misrepresentation by the cap provider; or |
| merger by the cap provider without assumption of its obligations under such Interest Rate Cap Agreement. Among other things, a termination event under each Interest Rate Cap Agreement includes: |
| illegality of the transactions contemplated by such Interest Rate Cap Agreement; |
| failure of the cap provider to provide the financial information required by Regulation AB and other requested information or to post eligible collateral or assign such Interest Rate Cap Agreement to an eligible counterparty that is able to provide the information; |
| certain tax events that would affect the ability of the cap provider to make payments without withholding taxes therefrom to the issuing entity, that occur because of a change in tax law, an action by a court or taxing authority or a merger or consolidation of the cap provider; |
| a merger or consolidation of the cap provider into an entity with materially weaker creditworthiness; |
| failure of the cap provider (or its credit support provider, if any) to maintain its credit rating at certain levels required by such Interest Rate Cap Agreement, which failure may not constitute a termination event if the cap provider maintains certain minimum credit ratings and, among other things, as provided under such Interest Rate Cap Agreement: |
| at its own expense obtains an unconditional guarantee or similar assurance from a guarantor with the appropriate credit rating, along with a legal opinion regarding the guarantee; |
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| posts collateral; and/or |
| assigns its rights and obligations under such Interest Rate Cap Agreement to a substitute cap provider that satisfies the eligibility criteria set forth in such Interest Rate Cap Agreement. |
Upon the occurrence of any event of default or termination event specified in an Interest Rate Cap Agreement, the non-defaulting or non-affected party may elect to terminate the Interest Rate Cap Agreement. If an Interest Rate Cap Agreement is terminated due to an event of default or a termination event, or if the notional amount is reduced to match the principal amount of the notes, a Cap Termination Payment under an Interest Rate Cap Agreement may be due to the issuing entity by the cap provider. The amount of any Cap Termination Payment may be based on the actual cost or market quotations of the cost of entering into a similar cap transaction or such other methods as may be required under the Interest Rate Cap Agreement, in each case in accordance with the procedures set forth in the Interest Rate Cap Agreement. Any Cap Termination Payment could be substantial.
For purposes of this prospectus, the following terms will have the following meanings: Cap Rate means [ ]%.
Cap Termination Payment means payments due to the issuing entity by the cap provider under an Interest Rate Cap Agreement, including interest that may accrue thereon, due to a termination of such Interest Rate Cap Agreement due to an event of default or termination event under such Interest Rate Cap Agreement.
Cap Termination Payment Account means an Eligible Account held in the United States in the name of the indenture trustee which shall be held in trust for the benefit of the noteholders pursuant to the Indenture. ]
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THE TRANSFER AGREEMENTS, THE SERVICING AGREEMENT,
THE ADMINISTRATION AGREEMENT AND THE ASSET REPRESENTATIONS REVIEW
AGREEMENT
The following information in this section summarizes material provisions of the purchase agreement entered into between the originator and the depositor, and the sale agreement entered into between the depositor and the issuing entity. We sometimes refer to these agreements together as the transfer agreements. This section also summarizes the administration agreement entered into by the issuing entity, the servicer and the indenture trustee, the servicing agreement entered into by the issuing entity, CONA and the indenture trustee and the asset representations review agreement entered into by the issuing entity, CONA and the asset representations reviewer.
Forms of the transfer agreements, the servicing agreement, the asset representations review agreement and the administration agreement have been filed as exhibits to the registration statement of which this prospectus is a part. We will file a copy of the actual transfer agreements, the servicing agreement, the asset representations review agreement and the administration agreement with the SEC on Form 8-K concurrently with or prior to the time we file this prospectus with the SEC. This is not a complete description of the transfer agreements, the servicing agreement, the asset representations review agreement or the administration agreement, and the summaries thereof in this prospectus are subject to all of the provisions of the transfer agreements, the servicing agreement, the asset representations review agreement and the administration agreement.
Sale and Assignment of Receivables and Related Security Interests
Under the purchase agreement, CONA, as originator, will sell, transfer, assign and otherwise convey to the depositor all of its right, title and interest, in, to and under the receivables, collections after the cut-off date, the receivables files and the related security relating to those receivables. The purchase agreement will create a first priority ownership/security interest in the property transferred thereunder in favor of the depositor.
Under the sale agreement, the depositor will sell, transfer, assign and otherwise convey to the issuing entity all of its right, title and interest in, to and under the receivables, collections after the cut-off date, the receivable files, the related security relating to those receivables and related property. The sale agreement will create a first priority ownership/security interest in that property in favor of the issuing entity.
Under the indenture, the issuing entity will pledge all of its right, title and interest in, to and under the issuing entity property to the indenture trustee. The terms of the indenture create a first priority perfected security interest in the issuing entity property in favor of the indenture trustee for the benefit of the noteholders.
Representations and Warranties
The originator, pursuant to the purchase agreement will make certain representations and warranties regarding each receivable as of the cut-off date (the Eligibility Representations). The Eligibility Representations are set forth under The Receivables Pool in this prospectus and include, among other representations, representations regarding the economic terms of each receivable, the enforceability of the receivable against the related obligor, the security interest in the related financed vehicle, the origination and acquisition of the receivable, the characterization of the receivable under the Uniform Commercial Code and the compliance of the origination of that receivable with applicable law.
If any party to the purchase agreement discovers or receives notice of a breach of any of the Eligibility Representations with respect to any receivable which materially and adversely affects the interests of the issuing entity, the noteholders or the certificateholders, the party discovering or receiving written notice of such breach will give prompt written notice of that breach to the other parties to the purchase agreement; provided, that delivery of the monthly servicers report which identifies the receivables that are being or have been repurchased will be deemed to constitute prompt notice of that breach; provided, further, that the failure to give that notice will not affect any obligation of the originator under the purchase agreement. If the breach materially and adversely affects the interests of the issuing entity, the noteholders or the certificateholders, then the originator will either (a) correct
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or cure that breach or (b) repurchase that receivable from the issuing entity, in either case on or before the payment date following the end of the collection period which includes the [60th] day (or, if the originator elects, an earlier date) after the date the originator became aware or was notified of that breach. Such breach or failure will be deemed not to materially and adversely affect the interests of the issuing entity, the noteholders or the certificateholders if it has not affected the ability of the depositor (or its assignee) to receive and retain timely payment in full on such receivable. Any such repurchase by the sponsor will be at a repurchase price equal to the outstanding principal balance of that receivable plus unpaid accrued interest. In consideration for that repurchase, the sponsor will pay (or will cause to be paid) the repurchase price by depositing the repurchase price into the collection account on the date of repurchase, if such repurchase date is not a payment date or, if such repurchase date is a payment date, then prior to the close of business on the business day prior to such repurchase date. The repurchase obligation will constitute the sole remedy available to the issuing entity and the indenture trustee for the failure of a receivable to meet any of the eligibility criteria set forth in the purchase agreement.
An investor wishing to request a repurchase as described above may contact the sponsor in writing with the details of the purported breach of an Eligibility Representation, the identity of the related receivable and a reference to the indenture. If the requesting investor is not a noteholder as reflected on the note register, the sponsor may require that the requesting investor provide a certification from the requesting investor that it is, in fact, a beneficial owner of notes, as well as any additional piece of documentation reasonably satisfactory to the recipient, such as a trade confirmation, account statement, letter from a broker or dealer or another similar document (collectively, the verification documents). CONA will be responsible for reimbursing the indenture trustee for any expenses incurred in connection with such verification.
As discussed above under Representations and Warranties, CONA will make the Eligibility Representations regarding the receivables. The asset representations reviewer will be responsible for performing a review of certain receivables for compliance with the Eligibility Representations when the Asset Review conditions have been satisfied. In order for the Asset Review conditions to be satisfied, the following three events must have occurred:
| The Delinquency Percentage for any payment date exceeds the Delinquency Trigger, as described below under Delinquency Trigger; |
| Noteholders holding at least 5% of the outstanding principal amount have elected to hold a vote to direct a review; and |
| A majority of the voting investors have voted to direct a review of the applicable Subject Receivables pursuant to the process described below under Asset Review Voting. |
If the Asset Review conditions are satisfied (the first date on which the Asset Review conditions are satisfied is referred to as the Review Satisfaction Date), then the asset representations reviewer will perform an Asset Review as described under Asset Review below.
Delinquency Trigger
On or prior to each determination date, the servicer will calculate the Delinquency Percentage for the related collection period. The Delinquency Percentage for each payment date and the related collection period is an amount equal to the ratio (expressed as a percentage) of (i) the aggregate principal balance of all 60-Day Delinquent Receivables as of the last day of that collection period to (ii) the net pool balance as of the last day of that collection period. 60-Day Delinquent Receivables means, as of any date of determination, all receivables (other than repurchased receivables and Defaulted Receivables) that are 60 or more days delinquent as of such date (or, if such date is not the last day of a collection period, as of the last day of the collection period immediately preceding such date), as determined in accordance with the servicers customary servicing practices. The Delinquency Trigger for any payment date and the related collection period is [ ]%.
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Although COAF (later merged with and into CONA) sponsored asset-backed securitizations under the COPAR program between 2003 and 2007, CONA has limited recent history for the COPAR program and limited history with respect to the lifetime performance of motor vehicle retail installment sale contracts which are considered to be in the prime category and which are now considered eligible for securitizations in the COPAR program based on the sponsors internal credit scoring model. The Delinquency Trigger was calculated as a multiple of 2.5 times the previous historical monthly peak Delinquency Percentage (rounded up to the nearest 0.10%) for all previous COPAR-program securitizations. The sponsor believes the Delinquency Trigger is appropriate based on its experience and observation of historical 60-Day Delinquent Receivables in its previous COPAR securitizations. The Delinquency Trigger has been set at a level in excess of historical peak Delinquency Percentage to assure that the Delinquency Trigger is not exceeded due to events unrelated to the sponsors underwriting, such as ordinary fluctuations in the economy, rising oil prices, housing price declines, terrorist events, government shutdowns, extreme weather conditions or an increase of an obligors payment obligations under other indebtedness incurred by the obligor, but at a relatively low multiple of the previous historical monthly peak Delinquency Percentage in recognition of the relatively higher credit quality characteristics of the receivables owned by the issuing entity compared with the credit quality characteristics of the receivables in the COPAR transactions sponsored between 2003 and 2007.
Subject Receivables means, for any Asset Review, all receivables which are 60-Day Delinquent Receivables as of the related Review Satisfaction Date; provided that any receivable repurchased by the sponsor or the servicer or paid in full by the related obligor after the review satisfaction date is no longer a subject receivable.
Voting Trigger
The monthly distribution report filed by the depositor on Form 10-D will disclose if the Delinquency Percentage on any payment date exceeds the Delinquency Trigger. If the Delinquency Percentage on any payment date exceeds the Delinquency Trigger, then investors holding at least 5% of the aggregate outstanding principal amount of the notes (the Instituting Noteholders) may elect to initiate a vote to determine whether the asset representations reviewer will conduct the review described under Asset Review below by giving written notice to the indenture trustee of their desire to institute such a vote within ninety (90) days after the filing of the Form 10-D disclosing that the Delinquency Percentage exceeds the Delinquency Trigger has occurred. If any of the Instituting Noteholders is not a noteholder as reflected on the note register, the indenture trustee may require that investor to provide verification documents to confirm that the investor is, in fact, a beneficial owner of notes.
In addition, in determining whether the requisite percentage of investors given any direction, notice, or consent, any notes owned by the issuing entity, CONA, the depositor, the asset representations reviewer, or any of their respective affiliates will be disregarded and deemed not to be outstanding, except that, in determining whether the indenture trustee shall be protected in relying upon any such direction, notice, or consent, 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 will not be disregarded and may be regarded as outstanding if the pledgee establishes to the indenture trustees satisfaction the pledgees right so to act with respect to such notes and that the pledgee is not the issuing entity, CONA, the depositor, the asset representations reviewer, or any of their respective affiliates.
If the Instituting Noteholders initiate a vote as described above, the indenture trustee will be required submit the matter to a vote of all noteholders through DTC and the depositor will include on Form 10-D that a vote has been called. Under the current voting procedures of DTC, DTC (as the holder of record for the notes) transfers the right to vote with respect to the notes to the DTC participants that hold record date positions via an omnibus proxy. DTC notifies its participants holding positions in the security of their entitlement to vote. DTC participants are responsible for distribution of information to their customers, including any ultimate beneficial owners of interests in the notes. See Risk FactorsRisks related to certain features of the notes and financial market disruptionsIf your notes are in book-entry form, your rights can only be exercised indirectly, and a book-entry system may decrease liquidity and delay payment. The indenture trustee may set a record date for purposes of determining the identity of investors entitled to vote in accordance with Section 316(c) of the Trust Indenture Act of 1939, as amended.
The vote will remain open until the [150th] day after the filing of the Form 10-D disclosing that the Delinquency Percentage exceeds the Delinquency Trigger.
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Abstaining from, voting in favor of, or voting against directing a review will not preclude any investor from pursuing dispute resolution pursuant to the purchase agreement. Following the completion of the voting process, the next Form 10-D filed by the depositor will disclose whether or not investors representing at least a majority of the voting investors voted in favor of directing a review by the asset representations reviewer.
Within [five] business days of the Review Satisfaction Date, the indenture trustee will send a written notice to the sponsor, the depositor, the servicer and the asset representations reviewer specifying that the Asset Review conditions have been satisfied, providing the applicable Review Satisfaction Date and stating that the asset representations reviewer will conduct an Asset Review of the subject receivables. Within [ten] business days of receipt of such notice, the servicer will provide the asset representations reviewer a list of the Subject Receivables.
Fees and Expenses for Asset Review
As described under Fees and Expenses below, the asset representations reviewer will be paid an [annual][monthly] fee of $[ ] by the [sponsor][issuing entity] in accordance with the asset representations review agreement. However, that [annual][monthly] fee does not include the fees and expenses of the asset representations reviewer in connection with an Asset Review of the Subject Receivables. Under the asset representations review agreement, the asset representations reviewer will be entitled to receive a fee of $[ ] [for each Subject Receivable][per hour for its time spent conducting the Asset Review][as a flat fee for such Asset Review] [plus reasonable out-of-pocket travel expenses]. However, no review fee will be payable for any Subject Receivable which was included in a prior Asset Review or for which no tests (as described under Asset Review below) were completed prior to the asset representations reviewer being notified of a termination of the Asset Review or being notified of the payment in full or purchase of any Subject Receivable by the sponsor or the servicer, as applicable. All fees payable to, and expenses incurred by, the asset representations reviewer in connection with the Asset Review (the Review Fee) will be payable by the [sponsor][issuing entity], and to the extent the Review Expenses remain unpaid after [90] days, they will be payable by the [sponsor][issuing entity out of amounts on deposit in the collection account as described under Priority of Payments in this prospectus]. In addition, if the asset representations reviewer participates in a dispute resolution proceeding and its reasonable out-of-pocket expenses and reasonable compensation for the time it incurs in participating in the proceeding are not paid by a party to the dispute resolution within [90] days of the end of the proceeding, the [sponsor][issuing entity] will reimburse the asset representations reviewer for such expenses.
Indemnification and Limitation of Liability of Asset Representations Reviewer
The [sponsor][issuing entity] will indemnify the asset representations reviewer and its officers, directors, employees and agents, for costs, expenses, losses, damages and liabilities resulting from the performance of the asset representations reviewers obligations under the asset representations review agreement, but excluding any cost, expense, loss, damage or liability resulting from the asset representations reviewers willful misconduct, bad faith or negligence or the asset representations reviewers breach of any of its representations, warranties or covenants in the asset representations review agreement. To the extent that any such indemnities are not otherwise satisfied and outstanding for at least sixty (60) days after receipt by the indenture trustee, the sponsor, the servicer and the issuing entity of an invoice with reasonable detail of indemnification amounts, they will be paid from amounts on deposit in the collection account as described under Priority of Payments.
To the fullest extent permitted by applicable law, the asset representations reviewer will not be under any liability to the issuing entity or any other person for any action taken or for refraining from the taking of an action in its capacity as asset representations reviewer under the asset representations review agreement, although the asset representations reviewer will not be protected against any liability which would otherwise be imposed by reason of willful misconduct, bad faith, breach of the asset representations review agreement or negligence in the performance of its duties.
Asset Review
The asset representations reviewer will perform a review of the Subject Receivables for compliance with the Eligibility Representations (an Asset Review) in accordance with the procedures set forth in the asset representations review agreement. These procedures will generally consist of a comparison of the Eligibility
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Representations to certain data points contained in the data tape, the original retail installment sale contract, and certain other documents in the receivables file, and other records of the sponsor and the servicer with respect to that Subject Receivable. The review is not designed to determine why an obligor is delinquent or the creditworthiness of the obligor, either at the time of any Asset Review or at the time of origination of the related receivable. The Asset Review is also not designed to establish cause, materiality or recourse for any failure of a receivable to comply with the Eligibility Representations.
Under the asset representations review agreement, the asset representations reviewer is required to complete its review of the Subject Receivables by the [60th] day after the asset representations reviewer receives access to applicable review materials for the Subject Receivables from the servicer. However, if review materials are inaccessible, clearly unidentifiable and/or illegible, the asset representations reviewer will request that the servicer provide an updated copy of that review material and the review period will be extended for an additional [30] days. The asset representations reviewer will be required to keep all information about the receivables obtained by it in confidence and may not disclose that information other than as required by the terms of the asset representations review agreement and applicable law. Within [five] business days following the end of the applicable review period, the asset representations reviewer will provide a report to the indenture trustee, the issuing entity and the servicer of the findings and conclusions of the review of the Subject Receivables, and the depositor will file such report on the Form 10-D filed by the depositor with respect to the collection period in which the asset representations reviewers report is provided. The indenture trustee will have no obligation to forward the review report to any noteholder or to any other person.
The Asset Review will consist of performing specific tests for each Eligibility Representation and each Subject Receivable and determining whether each test was passed, failed or not able to be completed as a result of missing or incomplete review materials. If the servicer notifies the asset representations reviewer that a Subject Receivable was paid in full by or on behalf of the obligor or repurchased from the issuing entity by the sponsor or the servicer before the review report is delivered, the asset representations reviewer will immediately terminate the tests of that receivable and the Asset Review of that receivable will be considered resolved. In this case, the review report will indicate the applicable reason that the Asset Review was considered resolved. If a Subject Receivable was included in a prior Asset Review, the asset representations reviewer will not conduct additional tests on any such duplicate Subject Receivable unless such subject receivable was deemed not able to be completed as a result of the failure of the servicer and the sponsor to provide missing review materials and the sponsor elects to have such subject receivable included in the current asset review. The asset representations reviewer will not be responsible for determining whether noncompliance with the representations and warranties constitutes a breach of the Eligibility Representations with respect to any Subject Receivable. If the asset representations reviewer determines that there was a test fail for a Subject Receivable, the sponsor will evaluate whether the noncompliance of the Subject Receivable with an Eligibility Representation materially and adversely affects the interests of the issuing entity, the noteholders or the certificateholders in the Subject Receivable such that the sponsor would be required to make a repurchase pursuant to the terms of the purchase agreement. In making such evaluation, the sponsor will refer to the information available to it, including the asset representations reviewers report.
An investor in the notes wishing to request that the sponsor make a repurchase or to refer a repurchase dispute to mediation (including nonbinding arbitration) or arbitration may contact the sponsor in writing with the details of the purported breach of an Eligibility Representation or the requested method of dispute resolution, as applicable. If the requesting investor is not a noteholder as reflected on the note register, the sponsor may require that the requesting investor provide verification documents to confirm that the requesting investor is, in fact, a beneficial owner of notes. The sponsor will be responsible for reimbursing the indenture trustee for any expenses incurred in connection with such verification. If any investor requests (each such investor making a request, a requesting party) that the sponsor repurchase any receivable due to a breach of an Eligibility Representation as described above under Representations and Warranties and the repurchase request has not been fulfilled or otherwise resolved to the reasonable satisfaction of the requesting party within 180 days of the receipt of notice of the request by the sponsor, the requesting party may refer the matter, at its discretion, to either mediation (including nonbinding arbitration) or arbitration. An investor need not direct an Asset Review to be performed prior to submitting a repurchase request with respect to any receivable or using the dispute resolution proceedings with respect to that receivable. The failure of the investors to direct an Asset Review will not affect whether any investor
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can pursue dispute resolution. In addition, whether any individual investor voted affirmatively, negatively or abstained in the vote to cause an Asset Review will not affect whether that investor can use the dispute resolution proceeding. An investor also will be entitled to refer to dispute resolution a dispute related to any receivable, including any receivable that the asset representations reviewer did not review, any receivable that the asset representations reviewer reviewed and found to have failed a test and any receivable that the asset representations reviewer reviewed and determined that no tests were failed. At the end of the 180-day period described above, the sponsor may provide notice informing the requesting party of the status of its request or, in the absence of any such notice, the Requesting Party may presume that its request remains unresolved. The requesting party must provide the sponsor written notice of its intention to refer the matter to mediation or arbitration within [30] calendar days of the conclusion of the 180-day period described above. The sponsor agrees to participate in the resolution method selected by the requesting party.
If a Subject Receivable that was reviewed by the asset representations reviewer during an Asset Review is the subject of a dispute resolution proceeding, the asset representations reviewer will participate in the dispute resolution proceeding on request of a party to the proceeding. The reasonable out-of-pocket expenses and reasonable compensation of the asset representations reviewer for its participation in any dispute resolution proceeding will be considered expenses of the requesting party for the dispute resolution and will be paid by a party to the dispute resolution as determined by the arbitrator for the dispute resolution or as allocated as mutually agreed by the parties as part of a mediation, if such dispute resolution is an arbitration or mediation, respectively.
If the requesting party selects mediation (including nonbinding arbitration) as the resolution method, the mediation will be administered by the American Arbitration Association (AAA) pursuant to its Commercial Arbitration Rules and Mediation Procedures (the Rules) in effect at the time the mediation is initiated. However, if any of the provisions in the Rules are inconsistent with the procedures for the mediation or arbitration stated in the transaction documents, the procedures in the transaction documents will control. The mediator will be independent, impartial, knowledgeable about and experienced with the laws of the State of New York and an attorney or retired judge specializing in commercial litigation with at least 15 years of experience and who will be appointed from a list of neutral parties maintained by AAA (a Qualified Dispute Resolution Professional). Upon being supplied a list of at least ten potential mediators by AAA that are each Qualified Dispute Resolution Professionals, each of the Requesting Party and CONA will have the right to exercise two peremptory challenges within [14] days and to rank the remaining potential mediators in order of preference. AAA will select the mediator from the remaining potential mediators on the list respecting the preference choices of the parties to the extent possible. Each of the Requesting Party and CONA will use commercially reasonable efforts to begin the mediation within [10] business days of the selection of the mediator and to conclude the mediation within [30] days of the start of the mediation. The fees and expenses of the mediation will be allocated as mutually agreed by the Requesting Party and CONA as part of the mediation. A failure by the Requesting Party and CONA to resolve a disputed matter through mediation will not preclude either party from seeking a resolution of such matter through the initiation of a judicial proceeding in a court of competent jurisdiction, subject to the provisions specified below as applicable to both mediations and arbitrations.
If the Requesting Party selects arbitration as the resolution method, the arbitration will be held in accordance with the United States Arbitration Act, notwithstanding any choice of law provision in the purchase agreement, and under the auspices of the AAA and in accordance with the Rules.
If the repurchase request at issue involves a repurchase amount of less than 5% of the aggregate outstanding principal amount of the receivables as of the date of such repurchase request, a single arbitrator will be used. That arbitrator will be a Qualified Dispute Resolution Professional. Upon being supplied a list of at least ten potential arbitrators that are each Qualified Dispute Resolution Professionals by the AAA, each of the Requesting Party and CONA will have the right to exercise two peremptory challenges within [14] days and to rank the remaining potential arbitrators in order of preference. The AAA will select the arbitrator from the remaining potential arbitrators on the list respecting the preference choices of the parties to the extent possible.
If the repurchase request at issue involves a repurchase amount equal to or in excess of 5% of the aggregate outstanding principal amount of the receivables as of the date of such repurchase request, a three-arbitrator panel will be used. The arbitral panel will consist of Qualified Dispute Resolution Professionals, (a) one to be appointed by the Requesting Party within [five] business days of providing notice to CONA of its selection of arbitration,
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(b) one to be appointed by CONA within [five] business days of the Requesting Partys appointment of an arbitrator and (c) the third, who will preside over the arbitral panel, to be chosen by the two party-appointed arbitrators within [five] business days of CONAs appointment. If any party fails to appoint an arbitrator or the two party-appointed arbitrators fail to appoint the third within the stated time periods, then the appointments will be made by AAA pursuant to the Rules.
Each arbitrator selected for any arbitration will abide by the Code of Ethics for Arbitrators in Commercial Disputes in effect at the time the arbitration is initiated. Prior to accepting an appointment, each arbitrator must promptly disclose any circumstances likely to create a reasonable inference of bias or conflict of interest or likely to preclude completion of the hearings within the prescribed time schedule. Any arbitrator selected may be removed by AAA for cause consisting of actual bias, conflict of interest or other serious potential for conflict.
It is the parties intention that, after consulting with the parties, the arbitrator or arbitral panel, as applicable, will devise procedures and deadlines for the arbitration, to the extent not already agreed to by the parties, with the goal of expediting the proceeding and completing the arbitration within [30] days after appointment of the arbitrator or arbitral panel, as applicable. The arbitrator or the arbitral panel, as applicable, will have the authority to schedule, hear, and determine any and all motions, including dispositive and discovery motions, in accordance with New York law then in effect (including prehearing and post hearing motions), and will do so on the motion of any party to the arbitration. Notwithstanding any other discovery that may be available under the Rules, unless otherwise agreed by the parties, each party to the arbitration will be limited to the following described discovery in the arbitration. Consistent with the expedited nature of arbitration, the Requesting Party and CONA will, upon the written request of the other party, promptly provide the other with copies of documents relevant to the issues raised by any claim or counterclaim on which the producing party may rely in support of or in opposition to the claim or defense. At the request of a party, the arbitrator or arbitral panel, as applicable, will have the discretion to order examination by deposition of witnesses to the extent the arbitrator or arbitral panel deems such additional discovery relevant and appropriate. Depositions will be limited to a maximum of three per party and will be held within [30] calendar days of the making of a request. Additional depositions may be scheduled only with the permission of the arbitrator or arbitral panel, and for good cause shown. Each deposition will be limited to a maximum of three hours duration. All objections are reserved for the arbitration hearing except for objections based on privilege and proprietary or confidential information. Any dispute regarding discovery, or the relevance or scope thereof, will be determined by the arbitrator or arbitral panel, which determination will be conclusive. All discovery will be completed within [60] calendar days following the appointment of the arbitrator or the arbitral panel, as applicable; provided, that the arbitrator or the arbitral panel, as applicable, will have the ability to grant the parties, or either of them, additional discovery to the extent that the arbitrator or the arbitral panel, as applicable, determines good cause is shown that such additional discovery is reasonable and necessary.
It is the parties intention that the arbitrator or the arbitral panel, as applicable, will resolve the dispute in accordance with the terms of the purchase agreement, and may not modify or change the purchase agreement in any way. The arbitrator or the arbitral panel, as applicable, will not have the power to award punitive damages or consequential damages in any arbitration conducted and CONA will not be required to pay more than the applicable repurchase price with respect to any receivable which CONA is required to repurchase under the terms of the purchase agreement. It is the parties intention that in its final determination, the arbitrator or the arbitral panel, as applicable, will determine and award the costs of the arbitration (including the fees of the arbitrator or the arbitral panel, as applicable, cost of any record or transcript of the arbitration, and administrative fees) and reasonable attorneys fees to the parties as determined by the arbitrator or the arbitral panel, as applicable, in its reasonable discretion. The determination of the arbitrator or the arbitral panel, as applicable, will be in writing and counterpart copies will be promptly delivered to the parties. The determination of the arbitrator or the arbitral panel, as applicable, may be reconsidered once by the arbitrator or the arbitral panel, as applicable, upon the motion and at the expense of either party. Following that single reconsideration, the determination of the arbitrator or the arbitral panel, as applicable will be final and non-appealable and may be entered in and may be enforced in, any court of competent jurisdiction.
By selecting binding arbitration, the Requesting Party is giving up the right to sue in court, including the right to a trial by jury. No person may bring a putative or certified class action to arbitration.
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The following provisions will apply to both mediations (including nonbinding arbitrations) and arbitrations:
a) | Any mediation or arbitration will be held in New York, New York; |
b) | Notwithstanding the dispute resolution provisions set forth above, the parties will have the right to seek provisional or ancillary relief from a competent court of law, including a temporary restraining order, preliminary injunction or attachment order, provided such relief would otherwise be available by law; and |
c) | The details and/or existence of any unfulfilled repurchase request, any informal meetings, mediations or arbitration proceedings, including all offers, promises, conduct and statements, whether oral or written, made in the course of the parties attempt to informally resolve an unfulfilled repurchase request, and any discovery taken in connection with any arbitration, will be confidential, privileged and inadmissible for any purpose, including impeachment, in any mediation, arbitration or litigation, or other proceeding; provided, however, that any discovery taken in any arbitration will be admissible in that particular arbitration. Such information will be kept strictly confidential and will not be disclosed or discussed with any third party (excluding a partys attorneys, experts, accountants and other agents and representatives, as reasonably required in connection with the related resolution procedure), except as otherwise required by law, regulatory requirement or court order. If any party to a resolution procedure receives a subpoena or other request for information from a third party (other than a governmental regulatory body) for such confidential information, the recipient will promptly notify the other party to the resolution procedure and will provide the other party with the opportunity to object to the production of its confidential information. |
CONA will be the administrator under the administration agreement. The administrator will perform all of its duties as administrator under the administration agreement and the duties and obligations of the issuing entity and the administrator under the servicing agreement, the sale agreement, the indenture, the depository agreement and the trust agreement. However, except as otherwise provided in such documents, the administrator will have no obligation to make any payment required to be made by the issuing entity under any such document. The administrator will monitor the performance of the issuing entity and will advise the issuing entity when action is necessary to comply with the issuing entitys duties and obligations under such documents.
The administrator is permitted, at any time without notice or consent, to delegate any or all of its duties to any of its affiliates or specific duties to sub-contractors or other professional services firms who are in the business of performing such duties, although the administrator will remain liable for the performance of any duties that it delegates to another entity.
As compensation for the performance of the administrator and as a reimbursement for its related expenses, the administrator will be entitled to receive $[ ] annually, which shall be solely an obligation of the servicer.
The purchase agreement generally may be amended by the parties thereto without the consent of the noteholders or any other person; the sale agreement generally may be amended by the depositor without the consent of the noteholders or any other person; the trust agreement generally may be amended by the parties thereto without the consent of the noteholders, any certificateholder or any other person; the servicing agreement generally may be amended by the servicer without the consent of the noteholders or any other person; and the administration agreement generally may be amended by the administrator without the consent of the noteholders or any other person, in each case, if one of the following requirements is met, subject to the last paragraph of this section:
(i) an opinion of counsel or officers certificate of the depositor, servicer or administrator, as applicable, to the effect that such amendment will not materially and adversely affect the interests of the noteholders is delivered to the indenture trustee; or
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(ii) the Rating Agency Condition is satisfied with respect to such amendment and the indenture trustee is so notified in writing.
Any amendment to the trust agreement by the depositor or the owner trustee, the administration agreement by the administrator and the indenture trustee, the servicing agreement by the servicer, the purchase agreement by the parties thereto, the sale agreement by the parties thereto and the indenture by the parties thereto, also may be made with the consent of the noteholders holding not less than a majority of the note balance of the controlling class for the purpose of adding any provisions to or changing in any manner or eliminating any provision of the relevant agreement or of modifying in any manner the rights of the noteholders or the certificateholders.
Additionally, the trust agreement, the administration agreement, the transfer agreements and the servicing agreement may only be amended by the parties thereto if (i) the Majority Certificateholders or, if 100% of the aggregate Percentage Interests is then beneficially owned by CONA and/or its affiliates, such person (or persons), consent to such amendment or (ii) such amendment will not, as evidenced by an officers certificate of the appropriate party or an opinion of counsel delivered to the indenture trustee and/or the owner trustee, as applicable, materially and adversely affect the interests of the certificateholders. For purposes of classifying the issuing entity as a grantor trust under the United States Internal Revenue Code of 1986, as amended (the Code), none of the transfer agreements, the trust agreement, the administration agreement or the servicing agreement may be amended in a manner that (1) would result in a variation of the investment of the beneficial owners of the certificates for purposes of the United States Treasury Regulation Section 301.7701-4(c) without the consent of noteholders evidencing at least a majority of the note balance of the controlling class and the Majority Certificateholders, or (2) would cause the issuing entity (or any part thereof) to be classified as other than a grantor trust for United States federal income tax purposes without the consent of all of the noteholders and all of the certificateholders.
No amendment of the trust agreement, the administration agreement, the transfer agreements or the servicing agreement which materially and adversely affects the rights, protections or duties of the indenture trustee or the owner trustee, as applicable, will be effective without the prior written consent of the indenture trustee or the owner trustee, respectively.
The issuing entity will have the following non-interest bearing bank accounts, which initially will be maintained at and will be maintained under the sole dominion and control of the indenture trustee and in the name of the issuing entity for the benefit of the noteholders:
| the collection account; |
| the principal distribution account; and |
| the reserve account. |
An account will be established for distributions to the depositor, as the holder of the Retained Certificate. Neither the indenture trustee nor any noteholder will have any interest or claim to that account or funds on deposit in that account. This account will not be a trust account.
If any definitive certificates other than the Retained Certificates are issued, a certificate distribution account will be established for the benefit of the certificateholders. Neither the indenture trustee nor any noteholder will have any interest or claim to the certificate distribution account or funds on deposit in that account.
Under the servicing agreement, so long as CONA is acting as servicer, the servicer will be required to deposit an amount equal to all collections into the collection account within the time, not to exceed two business days after its receipt thereof, necessary to clear any payment received. Pending deposit in the collection account, collections may be used by the servicer at its own risk and are not required to be segregated from its own funds.
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On the business day prior to each payment date, the paying agent will, based upon written direction, withdraw from the reserve account and deposit into the collection account any amount of funds required under the indenture to be withdrawn from the reserve account and distributed on that payment date.
Principal Distribution Account
On each payment date, the indenture trustee will, based upon written direction, make payments from amounts deposited in the principal distribution account on that date in the order of priority above under The NotesPayments of Principal.
The servicer will establish the reserve account under the sole dominion and control of the indenture trustee and in the name of the issuing entity for the benefit of the noteholders. To the extent that collections on the receivables and amounts on deposit in the reserve account are insufficient to pay interest and principal of the notes, the noteholders will have no recourse to the assets of the certificateholders, the depositor, or the servicer as a source of payment.
The reserve account will be funded by an expected deposit from proceeds of the offering of the notes on the closing date in an amount equal to approximately $[ ] (which is approximately [ ]% of the net pool balance as of the cut-off date (the Specified Reserve Account Balance)); provided, that after the notes are no longer outstanding following payment in full of the principal and interest on the notes, the Specified Reserve Account Balance will be $0.
As of any payment date, the amount of funds on deposit in the reserve account may, in certain circumstances, be less than the Specified Reserve Account Balance. On each payment date, the issuing entity will, to the extent available, deposit the amount, if any, necessary to cause the amount of funds on deposit in the reserve account to equal the Specified Reserve Account Balance to the extent set forth below under Priority of Payments.
The amount of funds on deposit in the reserve account may decrease on each payment date by withdrawals of funds to cover shortfalls in the amounts required to be distributed pursuant to clauses first through ninth under Priority of Payments below.
If the amount of funds on deposit in the reserve account on any payment date, after giving effect to all deposits and withdrawals from the reserve account on that payment date, is greater than the Specified Reserve Account Balance for that payment date, then such amounts in excess of the Specified Reserve Account Balance shall constitute Available Funds and the servicer will instruct the indenture trustee to distribute the amount of the excess as specified under Priority of Payments below.
In addition, on any payment date if the sum of the amounts in the reserve account and the remaining Available Funds after the payments under clauses [first] through [ninth and eleventh] under Priority of Payments below would be sufficient to pay in full the aggregate unpaid principal amount of all of the outstanding notes, then the indenture trustee will, if instructed by the servicer, withdraw such amounts from the reserve account to the extent necessary to pay all outstanding notes in full.
Amounts on deposit in the collection account [and the reserve account] may be invested by the indenture trustee at the direction of the servicer in permitted investments. Permitted investments will be limited to highly-rated investments that meet criteria established by each hired agency. Amounts on deposit in the principal distribution account, the certificate distribution account [and the reserve account] will remain uninvested.
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[Acquisition of Subsequent Receivables During Funding Period]
[On the closing date, $[ ] (the pre-funded amount) of the proceeds from the sale of the notes will be deposited into the pre-funding account, which will be included in the issuing entity property. The pre-funded amount will not be greater than 25% of the proceeds of the offering of the notes. Subsequent receivables will be sold by CONA to the depositor under an assignment executed pursuant to the purchase agreement and will be sold by the depositor to the issuing entity under an assignment executed pursuant to the sale agreement. The amount of funds withdrawn from the pre-funding account for the acquisition of subsequent receivables on a Funding Date will be equal to the Receivables Purchase Price with respect to such subsequent receivables.
In order to acquire subsequent receivables on a Funding Date, certain conditions precedent set forth in the sale agreement must be satisfied, including that such subsequent receivables must satisfy the same eligibility criteria as the receivables transferred to the issuing entity on the closing date. Such subsequent receivables may not be acquired through the pre-funding account if the effect of such acquisition would be to (i) reduce the weighted average contract rate of all subsequent receivables to less than [ ]%, (ii) increase the weighted average loan-to-value ratio of all subsequent receivables to more than [ ]%, (iii) reduce the weighted average FICO® score at origination of all subsequent receivables to less than [ ], (iv) increase the weighted average remaining term to maturity of all subsequent receivables to greater than [ ] months or (v) increase the portion of all receivables due from obligors having a billing address in any given state to a level greater than [20]% of the net pool balance. Additionally, each subsequent receivable must satisfy, as of the applicable subsequent cut-off date, the eligibility criteria set forth in the [second] paragraph under The Receivables Pool in this prospectus.
The underwriting criteria for subsequent receivables are substantially the same as those described for the initial receivables under The Originator) and thus it is expected that the characteristics of the subsequent receivables acquired through the pre-funding account will not vary materially from the characteristics of the receivables pool on the closing date. Assuming that substantially all of the pre-funded amount is used for the purchase of subsequent receivables, the aggregate principal balance of the subsequent receivables as of their respective subsequent cut-off dates will equal approximately [ ]% of the aggregate principal balance of all receivables as of their respective cut-off dates.
On the first payment date following the end of the Funding Period, and after the application of Available Funds in accordance with the priority of payments set forth in Priority of Payments below, the indenture trustee will withdraw any remaining funds on deposit in the pre-funding account (excluding investment earnings, if any) and pay those remaining funds as principal to the noteholders after giving effect to any distributions of principal made on that payment date in sequential order of priority beginning with the Class A-1 notes until each such class is paid in full, if the aggregate of those amounts is $100,000 or less. If the remaining funds on deposit in the pre-funding account exceed $100,000, the funds will be paid as principal on a pro rata basis to all the noteholders based on the original Note Balance of each class of notes; provided, that if the pro rata portion of the remaining funds allocable to any class of notes would exceed the outstanding Note Balance of that class after giving effect to any distributions of principal made on that payment date, then the funds in excess of such outstanding Note Balance will be paid sequentially to the remaining classes of notes beginning with the Class A-1 notes until each such class is paid in full.
Amounts on deposit in the pre-funding account will be invested by the indenture trustee at the direction of the servicer in permitted investments and investment earnings thereon will be deposited into the collection account as Available Funds on each payment date. permitted investments are generally limited to obligations or securities that mature on or before the next payment date. However, if the Rating Agency Condition is satisfied, funds in the pre-funding account may be invested in securities that will not mature prior to the next payment date with respect to such notes and which meet other investment criteria.
In connection with each purchase of subsequent receivables, officers on behalf of the servicer, the depositor and the issuing entity will certify that the requirements summarized above are met with regard to that pre-funding. Neither the Hired Agencies nor any other person (other than the servicer, the depositor and the issuing entity) will provide independent verification of that certification.]
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During the Revolving Period, noteholders will not receive principal payments. The revolving period may not be longer than three years from the date of issuance of a class of notes. Instead, on each payment date during the Revolving Period, the issuing entity will seek to reinvest amounts that would otherwise be distributed as principal in additional Receivables to be purchased from the depositor.
The issuing entity will purchase additional Receivables meeting the eligibility requirements described in The ReceivablesCriteria Applicable to Selection of Receivables. The purchase price for each additional Receivable will be its aggregate receivables principal balance. The issuing entity will seek to purchase additional Receivables from the depositor in an aggregate amount equal to the Target Reinvestment Amount, to the extent of funds available in the accumulation account. The depositor will seek to make Receivables available to the issuing entity as additional Receivables in an amount approximately equal to the amount of the available funds, but it is possible that the depositor will not have sufficient additional Receivables for this purpose. Any portion of funds available in the accumulation account which is not used to purchase additional receivables on a payment date during the Revolving Period will be re-deposited into the accumulation account and applied on subsequent payment dates in the Revolving Period to purchase additional Receivables. Noteholders will be notified of the purchase of additional Receivables on Form 10-D.
The amount of additional Receivables and percentage of asset pool will be determined by the amount of cash available from payments and prepayments on existing Receivables. There are no stated limits on the amount of additional receivables allowed to be purchased during the revolving period in terms of either dollars or percentage of the initial asset pool. Further, there are no requirements regarding minimum amounts of additional receivables that can be purchased during the revolving period. [Insert the maximum amount of additional assets that may be acquired during the revolving period and the percentage of the asset pool that may be acquired during the revolving period, to the extent applicable, in accordance with Item 1111(g) of Regulation AB.]
The Revolving Period consists of the monthly periods beginning with the [ ] monthly period and ending with the [ ] monthly period and the related payment dates. Reinvestments in additional Receivables will be made on each payment date related to those monthly periods. [During an amortization period all or a portion of principal collections on the Receivables may be applied as specified above for a Revolving Period and, to the extent not so applied, will be distributed to the classes of notes or certificates.] The Revolving Period will terminate sooner if an Early Amortization Event occurs in one of those monthly periods, in which case the Amortization Period will begin and no reinvestment in additional Receivables will be made on the related payment date. During the Amortization Period, noteholders will be entitled to receive principal payments in accordance with the priorities set forth in The NotesPriority of Payments.]
An Early Amortization Event will occur if:
| the amount on deposit in the reserve account is less than the Specified Reserve Account Balance on consecutive payment dates following the application of funds on such date; |
| the amount on deposit in the accumulation account is less than the Target Reinvestment Amount on consecutive payment dates following the application of funds on such date; |
| the amount on deposit in the accumulation account is greater than [ ] % of the initial aggregate receivables principal balance on [ ] consecutive payment dates following the application of funds on such date; |
| an Event of Default occurs; or |
| a servicer replacement event occurs. |
The occurrence of an Early Amortization Event is not necessarily an Event of Default under the Indenture.]
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[Priority of Payments During the Revolving Period]
[During the revolving period,] On each payment date, except after acceleration of the notes after an event of default under the indenture [(and, with respect to the first payment date following the end of the Funding Period, prior to the application of funds in accordance with the second paragraph set forth under Acquisition of Subsequent Receivables During Funding Period above)], the paying agent will make the following deposits and distributions (in accordance with the servicers instructions), to the extent of Available Funds then on deposit in the collection account with respect to the collection period preceding such payment date and funds, if any, deposited into the collection account from the reserve account in the following order of priority:
(1) | first, to the servicer, the servicing fee and all prior unpaid servicing fees; |
(2) | second, to the indenture trustee, the owner trustee and the asset representations reviewer, the amount of any fees, expenses and indemnification amounts due to each such party, pro rata, based on amounts due to each such party, in an aggregate amount not to exceed $[ ] in any calendar year; |
(3) | [third, to the swap counterparty, the Net Swap Payment, if any, for such payment date;] |
(4) | [fourth,] pro rata [based on amounts due, (i) to the swap counterparty, any Senior Swap Termination Payments for such payment date and (ii)] to the [Class A] noteholders, pro rata, the accrued [Class A] note interest, which is the sum of (i) the aggregate amount of interest due and accrued for the related interest period on each class of the [Class A] notes at their respective interest rates on the Note Balance of each such class as of the previous payment date or the closing date, as the case may be, after giving effect to all payments of principal to noteholders of the [Class A] notes on or prior to the preceding payment date; and (ii) the excess, if any, of the amount of interest due and payable to the [Class A] noteholders on prior payment dates over the amounts in respect of interest actually paid to the [Class A] noteholders on those prior payment dates, plus interest on any such shortfall at the respective interest rates for each class of [Class A] notes (to the extent permitted by law); provided, that if there are not sufficient funds available to pay the entire amount of the accrued Class A note interest, the amount available will be applied to the payment of interest on the Class A notes on a pro rata basis based on the amount of interest payable to each class of Class A notes; |
(5) | [fifth], to the noteholders of the Class B notes, the accrued Class B note interest, which is the sum of (i) the aggregate amount of interest due and accrued for the related interest period on the Class B notes at the Class B interest rate on the Class B Note Balance as of the previous payment date or the closing date, as the case may be, after giving effect to all payments of principal to the Class B noteholders on the preceding payment date, and (ii) the excess, if any, of the amount of interest due and payable to the Class B noteholders on prior payment dates over the amounts in respect of interest actually paid to the Class B noteholders on those prior payment dates, plus interest on any such shortfall at the Class B interest rate (to the extent permitted by law); |
(6) | [sixth], to the noteholders of the Class C notes, the accrued Class C note interest, which is the sum of (i) the aggregate amount of interest due and accrued for the related interest period on the Class C notes at the Class C interest rate on the Class C Note Balance as of the previous payment date or the closing date, as the case may be, after giving effect to all payments of principal to the Class C noteholders on the preceding payment date, and (ii) the excess, if any, of the amount of interest due and payable to the Class C noteholders on prior payment dates over the amounts in respect of interest actually paid to the Class C noteholders on those prior payment dates, plus interest on any such shortfall at the Class C interest rate (to the extent permitted by law); |
[(7) | [seventh], to the noteholders of the Class D notes, the accrued Class D note interest, which is the sum of (i) the aggregate amount of interest due and accrued for the related interest period on the Class D notes at the Class D interest rate on the Class D Note Balance as of the previous payment date or the closing date, as |
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the case may be, after giving effect to all payments of principal to the Class D noteholders on the preceding payment date, and (ii) the excess, if any, of the amount of interest due and payable to the Class D noteholders on prior payment dates over the amounts in respect of interest actually paid to the Class D noteholders on those prior payment dates, plus interest on any such shortfall at the Class D interest rate (to the extent permitted by law);] |
[(8) | [eighth] reinvestments in additional receivables and deposits into the accumulation account, as applicable, in the amount by which the aggregate principal balance of the notes exceeds the aggregate receivables principal balance;] |
(9) | [ninth], to the indenture trustee, the owner trustee [and the asset representations reviewer], fees, reasonable expenses and indemnification amounts not previously paid by the servicer; |
(10) | [tenth], to the reserve account, an additional amount required to cause the amount of cash on deposit in the reserve account to equal the Specified Reserve Account Balance; |
[(11) | [eleventh], reinvestments in additional receivables and deposits into the accumulation account, as applicable, in the amount by which the aggregate principal balance of the notes plus the overcollateralization target amount exceeds the aggregate receivables principal balance, as increased above, plus the amounts deposited in the accumulation account above,] |
(12) | [twelfth], to the swap counterparty, any Subordinate Swap Termination Payment]; and |
(13) | [thirteenth], to the certificate distribution account for distribution to the certificateholders, any funds remaining. |
Upon and after any distribution to the certificateholder of any amounts, the noteholders will not have any rights in, or claims to, those amounts.
Amortization Period]
[During the amortization period,] On each payment date, except after acceleration of the notes after an event of default under the indenture, the paying agent (based solely on information in the servicers report delivered on or before the related determination date) will make the following deposits and distributions, to the extent of the Available Funds then on deposit in the collection account with respect to the collection period preceding such payment date and funds, if any, deposited into the collection account from the reserve account, in the following order of priority:
(1) | first, to the servicer, the servicing fee and all prior unpaid servicing fees; |
(2) | [second, to the swap counterparty, the Net Swap Payment, if any, for such payment date;] |
(3) | [third], pro rata [based on amounts due, (i) to the swap counterparty, any Senior Swap Termination Payments for such payment date and (ii)] to the noteholders of the [Class A] notes, pro rata, the accrued [Class A] note interest, which is the sum of (i) the aggregate amount of interest due and accrued for the related interest period on each class of the [Class A] notes at their respective interest rates on the note balance of each such class as of the previous payment date or the closing date, as the case may be, after giving effect to all payments of principal to noteholders of the [Class A] notes on or prior to the preceding payment date; and (ii) the excess, if any, of the amount of interest due and payable to the [Class A] noteholders on prior payment dates over the amounts in respect of interest actually paid to the [Class A] noteholders on those prior payment dates, plus interest on any such shortfall at the respective interest rates for each class of [Class A] notes (to the extent permitted by law); provided, that if there are not sufficient funds available to pay the entire amount of the accrued [Class A] note interest, the amount available will be applied to the payment of interest on the [Class A] notes on a pro rata basis based on the amount of interest payable to each class of [Class A] notes; |
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(4) | [fourth], to the noteholders pursuant to the first paragraph of The NotesPayments of Principal above, the First Allocation of Principal, if any; |
(5) | [fifth], to the noteholders of the Class B notes, the accrued Class B note interest, which is the sum of (i) the aggregate amount of interest due and accrued for the related interest period on the Class B notes at the Class B interest rate on the Class B note balance as of the previous payment date or the closing date, as the case may be, after giving effect to all payments of principal to the Class B noteholders on or prior to the preceding payment date, and (ii) the excess, if any, of the amount of interest due and payable to the Class B noteholders on prior payment dates over the amounts in respect of interest actually paid to the Class B noteholders on those prior payment dates, plus interest on any such shortfall at the Class B interest rate (to the extent permitted by law); |
(6) | [sixth], to the noteholders pursuant to the first paragraph of The NotesPayments of Principal above, the Second Allocation of Principal, if any; |
(7) | [seventh], to the noteholders of the Class C notes, the accrued Class C note interest, which is the sum of (i) the aggregate amount of interest due and accrued for the related interest period on the Class C notes at the Class C interest rate on the Class C note balance as of the previous payment date or the closing date, as the case may be, after giving effect to all payments of principal to the Class C noteholders on or prior to the preceding payment date, and (ii) the excess, if any, of the amount of interest due and payable to the Class C noteholders on prior payment dates over the amounts in respect of interest actually paid to the Class C noteholders on those prior payment dates, plus interest on any such shortfall at the Class C interest rate (to the extent permitted by law); |
(8) | [eighth], to the noteholders pursuant to the first paragraph of The NotesPayments of Principal above, the Third Allocation of Principal, if any; |
[(9) | [ninth], to the noteholders of the Class D notes, the accrued Class D note interest, which is the sum of (i) the aggregate amount of interest due and accrued for the related interest period on the Class D notes at the Class D interest rate on the Class D note balance as of the previous payment date or the closing date, as the case may be, after giving effect to all payments of principal to the Class D noteholders on or prior to the preceding payment date, and (ii) the excess, if any, of the amount of interest due and payable to the Class D noteholders on prior payment dates over the amounts in respect of interest actually paid to the Class D noteholders on those prior payment dates, plus interest on any such shortfall at the Class D interest rate (to the extent permitted by law);] |
[(10) | [tenth], to the noteholders pursuant to the first paragraph of The NotesPayments of Principal above, the Fourth Allocation of Principal, if any;] |
(11) | [eleventh], to the reserve account, any additional amount required to cause the amount on deposit in the reserve account to equal the Specified Reserve Account Balance; |
(12) | [twelfth], to the principal distribution account for distribution pursuant to The NotesPayments of Principal above, the Regular Principal Distribution Amount; |
(13) | [thirteenth], to the indenture trustee, the owner trustee and the asset representations reviewer, pro rata, fees, expenses and indemnification amounts due and owing under the servicing agreement, the sale agreement, the trust agreement, the asset representations review agreement and the indenture, as applicable, which have not been previously paid; |
(14) | [fourteenth], to the swap counterparty, any Subordinated Swap Termination Payments for such payment date;] and |
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(15) | [fifteenth], to the certificateholders, pro rata based on the Percentage Interest of each certificateholder, or, to the extent definitive certificates have been issued, to the certificate distribution account for distribution to the certificateholders, any funds remaining. |
Upon and after any distribution to the certificate distribution account of any amounts, the noteholders will not have any rights in, or claims to, those amounts. Amounts on deposit in the certificate distribution account will be distributed on each payment date by the certificate paying agent to the certificateholders, ratably, based on the Percentage Interest of each certificateholder.
If the sum of the amounts required to be distributed pursuant to clauses [first through tenth] above exceeds the sum of Available Funds for that payment date, the paying agent will, upon written instructions from the servicer (which may be in the form of the servicers report or a written order or request of the servicer), withdraw from the reserve account and deposit in the collection account for distribution in accordance with the payment waterfall an amount equal to the lesser of the funds in the reserve account and the shortfall.
Credit and Cash Flow Enhancement
Overcollateralization is the amount by which the net pool balance exceeds the outstanding note balance of the notes. Overcollateralization means there will be additional receivables generating collections that will be available to cover losses on the receivables and shortfalls due to any low annual percentage rate receivables. The initial amount of overcollateralization will be approximately [ ]% of the net pool balance as of the cut-off date.
This transaction is structured to make principal payments on the notes in an amount greater than the decrease in the net pool balance until a targeted level of overcollateralization is reached. After that point, principal payments on the notes will be made in an amount sufficient to maintain the targeted level of overcollateralization. The level of overcollateralization, as of each payment date, is required to increase to, and thereafter be maintained at, a target level of overcollateralization equal to [ ]%.
[Because more interest is expected to be paid by the obligors in respect of the receivables than is necessary to pay the servicing fee, [any net swap payment,] trustee fees, expenses and indemnity amounts (to the extent not paid by the servicer), asset representations reviewer fees, expenses and indemnity amounts (to the extent not otherwise paid by the sponsor), amounts required to be deposited in the reserve account, if any, and interest on the notes each month, there is expected to be excess interest. Any excess interest will be applied on each payment date as an additional source of Available Funds as described under Priority of Payments above.]
[Yield Supplement Overcollateralization Amount]
As of the closing date, the yield supplement overcollateralization amount will equal [ ], which is approximately [ ]% of the initial Adjusted Pool Balance. The yield supplement overcollateralization amount will decline on each payment date. Because the receivables include a substantial number of low APR receivables, the receivables could generate less collections of interest than the sum of the amount necessary to pay the servicing fee, interest on the notes, fees, expenses and indemnification amounts required to be paid to the indenture trustee, the owner trustee and the asset representations reviewer and any required deposits into the reserve account if low APR receivables are not adequately offset by high APR receivables. The yield supplement overcollateralization amount is intended to compensate for the low APRs and is in addition to the overcollateralization referred to in Summary of TermsCredit EnhancementOvercollateralization.
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[With respect to any payment date, the yield supplement overcollateralization amount is the amount specified below with respect to that payment date:
Payment Date |
Yield Supplement Overcollateralization Amount | |||
Amount | ||||
Closing Date [ ] |
$ | [ | ]] |
[The yield supplement overcollateralization amount for each payment date is equal to the sum of the amount for each receivable equal to the excess, if any, of (x) the scheduled payments due on the receivable for each future collection period discounted to present value as of the end of the preceding collection period at the APR of that receivable over (y) the scheduled payments due on the receivable for each future collection period discounted to present value as of the end of the preceding collection period at a discount rate equal to the greater of the APR of that receivable and [ ]%. For purposes of the preceding definition, future scheduled payments on the receivables are assumed to be made on their scheduled due dates without any delay, defaults or prepayments.]
The presence of credit enhancement for the benefit of any class of notes is intended to enhance the likelihood of receipt by the noteholders of that class of the full amount of principal and interest due thereon and to decrease the likelihood that those noteholders will experience losses. The credit enhancement for a class of notes will not provide protection against all risks of loss and may not guarantee repayment of the entire outstanding note balance and interest thereon. If losses occur which exceed the amount covered by any credit enhancement or which are not covered by any credit enhancement, noteholders may suffer a loss on their investment in those notes. In addition, if a form of credit enhancement covers more than one class of notes, noteholders of any given class will be subject to the risk that the credit enhancement will be exhausted by the claims of noteholders of other classes.
The servicer has the right to exercise its optional clean-up call to purchase (and/or to designate one or more other persons to purchase) the receivables and the other issuing entity property (other than the reserve account) from the issuing entity on any payment date if both of the following conditions are satisfied: (a) as of the last day of the related collection period, the net pool balance has declined to [10]% or less of the net pool balance as of the [initial] cut-off date [plus the principal balance of the subsequent receivables as of the related cut-off date] and (b) the purchase price (as defined below) and the Available Funds for such payment date would be sufficient to pay (i) the amounts required to be paid under clauses [first through ninth and eleventh] in accordance with Priority of Payments above (assuming that such payment date is not a redemption date) and (ii) the aggregate unpaid note balance of all of the outstanding notes (after giving effect to the payments described in the preceding clause (i)). The outstanding notes will be redeemed in whole, but not in part, on the payment date on which the servicer, exercises this option. The purchase price will be equal to the net pool balance plus accrued and unpaid interest on the receivables as of the last day of the collection period immediately preceding the redemption date, which amount (net of any collections deposited into the collection account after the last day of the collection period immediately preceding redemption date) will be deposited by the servicer (or its designee) into the collection account on or prior to noon, New York City time, on the redemption date. It is expected that, at the time this clean-up call option becomes available to the servicer, [the Class A-4 notes, Class B notes, Class C notes [and Class D notes will be outstanding]]. If the servicer (or its designee) purchases the receivables and other issuing entity property (other than the reserve account), the redemption price for the notes will equal the unpaid note balance of all the notes plus accrued and unpaid interest on the notes at the applicable interest rate through the redemption date.
Additionally, each of the notes is subject to redemption in whole, but not in part, on any payment date on which the sum of the amounts in the reserve account and the remaining Available Funds after the payments under clauses[ first through ninth and eleventh] set forth in Priority of Payments above would be sufficient to pay in full the aggregate unpaid note balance of all of the outstanding notes as determined by the servicer. On such payment date, the indenture trustee upon written direction from the servicer shall transfer all amounts on deposit in the reserve account to the collection account and on such payment date the outstanding notes shall be redeemed in whole, but not in part.
Notice of redemption under the indenture must be given by the indenture trustee (following notice thereof to the indenture trustee by the administrator or the issuing entity), at the expense of the servicer, not later than ten (10) days prior to the applicable redemption date to each holder of notes. All notices of redemption will state: (i) the redemption date; (ii) the redemption price; (iii) that the record date otherwise applicable to that redemption date is not applicable and that payments will be made only upon presentation and surrender of those notes, and the place where those notes are to be surrendered for payment of the redemption price; (iv) that interest on the notes will cease to accrue on the redemption date; and (v) the CUSIP numbers (if applicable) for the notes.
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The fees, expenses and indemnities paid or payable from Available Funds are set forth in the table below. Those fees, expenses and indemnities are paid on each payment date as described above under Priority of Payments. [These trustee fees will be payable by the servicer out of its servicing fee.]
Recipient |
Fees, Expenses and Indemnities Payable(1) | |
Servicer | The servicing fee as described below under Servicing Compensation and Expense | |
Administrator | $[ ] per annum, which is solely an expense of the servicer and will not be paid from Available Funds. | |
Indenture Trustee | $[ ] per annum plus reasonable expenses and, if applicable, certain indemnities(3) | |
Owner Trustee | $[ ] per annum plus reasonable expenses and, if applicable, certain indemnities(2)(3) | |
Asset Representations Reviewer | $[ ] per annum plus reasonable expenses and in connection with Asset Review, $[ ] per receivable reviewed as described above under Asset Representations ReviewFees and Expenses for Asset Review(4) |
(1) | The fees and expenses described above do not change upon an event of default although actual expenses incurred may be higher after an event of default. |
(2) | The owner trustee will receive a fee for certain tax and accounting services provided on behalf of the issuing entity and the certificateholders, which fee could vary based on the number of certificateholders. |
(3) | The servicer has the primary obligation to pay the fees, expenses and indemnities of the indenture trustee and the owner trustee. |
(4) | The sponsor has the primary obligation to pay the fees, expenses and indemnities of the asset representations reviewer. |
The sponsor will pay the Hired Agencies fees, which include initial fees in an amount equal to approximately $[ ] and annual surveillance fees in an amount equal to approximately $[ ]. None of these fees will be paid out of the collections on the receivables or other Available Funds. None of the Hired Agencies retain any risk of loss with respect to the receivables.]
Indemnification of the Indenture Trustee and the Owner Trustee
Under the indenture, the issuing entity will (and will cause the depositor, the administrator and the servicer to) indemnify the indenture trustee for any loss, liability or expense, tax, penalty or claim (including reasonable attorneys fees and expenses) incurred by it in connection with the administration of the transaction documents, including, with certain limitations, the reasonable costs and expenses of defending itself against any claim in connection with the exercise or performance of any of its powers or duties under the indenture and those incurred in connection with any action, claim or suit brought to enforce the indenture trustees right to indemnification. However, none of the administrator, the issuing entity, the depositor or the servicer will be liable for or required to indemnify the indenture trustee from and against any of the foregoing expenses arising or resulting from (i) the indenture trustees own willful misconduct, bad faith or negligence, (ii) the inaccuracy of certain of the indenture trustees representations and warranties or (iii) taxes, fees or other charges on, based on or measured by, any fees, commissions or compensation received by the indenture trustee. To the extent that any such indemnities are not otherwise satisfied, they will be paid from Available Funds as described above under Priority of Payments.
Under the trust agreement, the depositor will cause the servicer to indemnify the owner trustee from and against any and all loss, liability, expense, tax, penalty or claim (including reasonable legal fees and expenses) of any kind and nature whatsoever which may at any time be imposed on, incurred by or asserted against the owner
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trustee in any way relating to or arising out of the trust agreement, the other transaction documents, the issuing entity property, the administration of the issuing entity property or the action or inaction of the owner trustee and those incurred in connection with any action, claim or suit brought to enforce the owner trustees right to indemnification. However, neither the depositor nor the servicer will be liable for or required to indemnify the owner trustee from and against any of the foregoing expenses arising or resulting from (i) the owner trustees own willful misconduct, bad faith or gross negligence, (ii) the inaccuracy of certain of the owner trustees representations and warranties, (iii) liabilities arising from the failure of the owner trustee to perform certain obligations or (iv) taxes, fees or other charges on, based on or measured by, any fees, commissions or compensation received by the owner trustee. To the extent that any such indemnities are not otherwise satisfied, they will be paid from Available Funds as described above under Priority of Payments.
Collection and Other Servicing Procedures
CONA will be the servicer. So long as CONA is the servicer, it will also act as custodian of the receivables, and as the issuing entitys and indenture trustees agent will maintain possession or control, as applicable, of the receivable files. The servicer may, in accordance with its customary servicing practices, (i) maintain all or a portion of the receivables files in electronic form (including the contracts giving rise to the receivables) and (ii) maintain custody of all or any portion of the receivable files with one or more of its agents or designees. The servicer shall maintain control of all electronic chattel paper evidencing a receivable. The servicer, among other things, will manage, service, administer and make collections on the receivables in accordance with its customary servicing practices in effect from time to time, using the same degree of skill and attention that the servicer exercises with respect to all comparable motor vehicle receivables that it services for itself or others, consistent with the servicing agreement. The servicer is permitted to delegate some or all of its duties to another entity, including its affiliates and subsidiaries, although the servicer will remain liable for the performance of any duties that it delegates to another entity.
Servicing Compensation and Expenses
The servicer will be entitled to receive a servicing fee for each collection period. The servicing fee for any payment date will be an amount equal to the product of (1) one-twelfth [(or, in the case of the first payment date, [a fraction equal to the number of days from but not including the initial cut-off date to and including the last day of the first collection period over 360][one-sixth])], (2) [ ]% and (3) the net pool balance of the receivables as of the first day of the related collection period (or as of the [initial] cut-off date, in the case of the first payment date). As additional compensation, the servicer will be entitled to retain all Supplemental Servicing Fees and Reimbursements. In addition, the servicer will be entitled to receive all investment earnings (net of investment losses and expenses) from the investment of funds on deposit in the collection account, if any. The servicing fee, together with any portion of the servicing fee that remains unpaid from prior payment dates, will be payable on each payment date from funds on deposit in the collection account with respect to the collection period preceding such payment date, including funds, if any, deposited into the collection account from the reserve account. The servicer will pay all expenses (other than Liquidation Expenses) incurred by it in connection with its servicing activities (including any fees and expenses of sub-servicers to whom it has delegated servicing responsibilities) and will not be entitled to reimbursement of those expenses except for Liquidation Expenses and fees and expenses included in Supplemental Servicing Fees and Reimbursements paid to the Servicer as reimbursements. The servicer will have no responsibility, however, to pay any losses with respect to the receivables or any losses in connection with the investment of funds on deposit in the collection account and the reserve account.
Modifications of Receivables and Extensions of Receivables Final Payment Dates
Pursuant to the servicing agreement, the servicer will make reasonable efforts to collect all payments called for under the terms and provisions of the receivables as and when the same become due in accordance with its customary servicing practices. The servicer may grant Permitted Modifications (as described below), but not any other extension, deferral, amendment, modification, alteration, temporary reduction in payments or adjustment, with respect to any receivable in accordance with its customary servicing practices; provided, however, that if the servicer (i) extends the date for final payment by the obligor of any receivable beyond the last day of the collection period preceding the latest final scheduled payment date of any notes issued under the indenture or (ii) reduces the contract rate or outstanding principal balance with respect to any receivable, in either case other than (A) as required by law
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or court order, at the direction of a regulatory authority, in accordance with regulatory guidance or in accordance with the Servicers compliance procedures for complying with the Servicemembers Civil Relief Act and any similar applicable state law, or (B) in connection with a modification, adjustment or settlement in the event the receivable becomes a Severely Distressed Receivable, it will promptly purchase such receivable in the manner described below. The servicer may not make a modification described above that would trigger a purchase requirement for the sole purpose of enabling the servicer to purchase a receivable from the issuing entity. Notwithstanding anything in the preceding sentences of this paragraph to the contrary, the servicer may grant extensions, deferrals, alterations, amendments, modifications or adjustment to the terms of, or with respect to, any receivable, in accordance with its customary servicing practices only if at least one of the following conditions has been satisfied (each, a Permitted Modification): (i) any amendment, modification, alteration or adjustment, individually and collectively with any other amendment, modification, alteration or adjustment proposed to be made with respect to the receivable, is ministerial in nature (including, without limitation, any change to the due date for monthly payments that is not classified by the servicer as an extension); (ii) any amendment, modification, alteration or adjustment, individually and collectively with any other amendment, modification, alteration or adjustment that (A) is required by law, or (B) (1) is in accordance with the servicers customary servicing practices and (2) is intended by the servicer to comply with or respond to a law, government regulation or government enforcement activity pertaining to the receivable or classes of loans similar to the receivable; (iii) in the case of any extension or deferral, (A) the obligors address is within a geographic area determined by the President of the United States or the Governor of the applicable state to warrant individual, or individual and public, assistance from the federal government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act or similar state law, as the case may be, or (B) the obligor is a U.S. federal or state government employee that is furloughed on account of a shutdown of such government occurring as a result of a lapse in annual appropriations; (iv) any amendment, modification, alteration or adjustment where (A) the obligor is in payment default, the receivable is a Severely Distressed Receivable or in the judgment of the servicer, in accordance with the servicers customary servicing practices, it is reasonably foreseeable that the obligor will default (it being understood that the servicer may proactively contact any obligor whom the servicer believes may be at higher risk of a payment default under the related receivable, and it being further understood that if the obligor has notified the servicer that the obligor has been materially and adversely impacted by a natural disaster or public terror attack, then the servicer may reasonably conclude that it is reasonably foreseeable that such obligor will default) and (B) the servicer believes that such amendment, modification, alteration or adjustment is appropriate or necessary to preserve the value of the receivable and to prevent the receivable from going into default (or, where the receivable is already in default, to prevent the receivable from becoming further impaired); or (v) any other extension, deferral, amendment, modification, alteration, temporary reduction in payment, or adjustment is (A) in accordance with the servicers customary servicing practices and (B) the servicer has delivered an opinion to the issuing entity and the administrator to the effect that such extension, deferral, amendment, modification, alteration, temporary reduction in payment or adjustment will not cause the issuing entity to be treated, for United States federal income tax purposes, as an association (or a publicly traded partnership) taxable as a corporation or as other than a grantor trust for U.S. federal income tax purposes.
Severely Distressed Receivable means, as of any date of determination, a receivable (other than a repurchased receivable) (i) that is sixty (60) or more days delinquent, (ii) that is a Defaulted Receivable, (iii) for which the obligor is the subject of a bankruptcy or other insolvency proceeding, (iv) for which the related financed vehicle has been repossessed (or for which the servicer has initiated repossession proceedings) or (v) for which the related financed vehicle has been subject to theft or suffered destruction or damage that would be determined to be beyond repair in accordance with customary servicing practices,
Provided that a repurchase obligation is not triggered, the servicer and its affiliates (each in its individual capacity and not on behalf of the issuing entity) may engage in any marketing practice or promotion or any sale of any products, good or services, including insurance policy, to obligors with respect to the receivables so long as such practices, promotions or sales are offered to obligors of comparable motor vehicle receivables serviced by the servicer for itself and others, whether or not such practices, promotions or sales might result in a decrease in the aggregate amount of payments on the receivables, prepayments or faster or slower timing of the payment of the receivables. The servicer may in its discretion waive any late payment charge or any other fees that constitute Supplemental Servicing Fees and Reimbursements that may be collected in the ordinary course of servicing a receivable. The servicer will not be required to make any advances of funds or guarantees regarding collections, cash flows or distributions. The servicer and its affiliates (each in its individual capacity and not on behalf of the issuing entity) may also sell insurance that provides for payment of some or all of the amount of a receivable upon the death or disability of the obligor or any casualty with respect to the financed vehicle.
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The servicer may refinance any receivable at the request of the obligor by making a new loan to the related obligor and depositing the full outstanding principal balance of such receivable into the collection account. The receivable created by such refinancing will not be property of the issuing entity. The amount financed will be treated for all purposes, including for United States federal income tax purposes, as a payoff of all amounts owed by the related obligor with respect to such receivable.
Nothing in the servicing agreement will prevent the servicer from implementing new programs, whether on an intermediate, pilot or permanent basis, or on a regional or nationwide basis, or from modifying its standards, policies and procedures as long as, in each case, those programs or modifications (i) would be consistent with its customary servicing practices and (ii) would not cause the issuing entity to be treated, for United States federal income tax purposes, as an association (or a publicly traded partnership) taxable as a corporation or as other than a fixed investment trust described in Treasury Regulation Section 301.7701-4(c) that is treated as a grantor trust under subtitle A, chapter 1, subchapter J, part I, subpart E of the Code.
Upon discovery of a breach of certain servicing covenants set forth in the servicing agreement with respect to any receivable which materially and adversely affects the interests of the issuing entity, the certificateholders or the noteholders, the party discovering that breach will give prompt written notice of that breach to the other parties to the servicing agreement; provided, that (i) delivery of the monthly servicers report will be deemed to constitute prompt notice by the servicer and the issuing entity of that breach and (ii) the indenture trustee shall be deemed to have knowledge of such breach only if a responsible officer has actual knowledge thereof, including without limitation upon receipt of written notice; provided, further, that the failure to give that notice will not affect any obligation of the servicer under the servicing agreement.
If the breach materially and adversely affects the interests of the issuing entity, the noteholders or the certificateholders, or if the servicer is required to purchase a receivable pursuant to the servicing agreement, then the servicer will either (a) correct or cure that breach, if applicable, or (b) purchase that receivable from the issuing entity, in either case on or before the payment date following the end of the collection period which includes the 60th day (or, if the servicer elects, an earlier date) after the date the servicer became aware or was notified of that breach or obligation to repurchase, as applicable. Any such breach or failure will be deemed not to materially and adversely affect such receivable if it has not affected the ability of the issuing entity to receive and retain timely payment in full on such receivable. Any such purchase by the servicer will be at a purchase price equal to the outstanding principal balance of that receivable plus any unpaid accrued interest. In consideration for that purchase, the servicer will pay (or will cause to be paid) the purchase price by depositing such amount into the collection account on the date of such purchase, if such date is not a payment date or, if such date is a payment date, then prior to the close of business on the business day prior to such date. The purchase obligation will constitute the sole remedy available to the issuing entity and the indenture trustee for a breach by the servicer of certain of its servicing covenants under the servicing agreement.
Under the servicing agreement, the servicer will covenant not to release the financed vehicle securing each receivable from the security interest granted by that receivable in whole or in part, except (i) as required by law or court order, at the direction of a regulatory authority or in accordance with regulatory guidance, (ii) in the event of payment in full by or on behalf of the related obligor or payment in full less a deficiency which the servicer would not attempt to collect in accordance with its customary servicing practices, (iii) in connection with repossession or (iv) except as may be required by an insurer in order to receive proceeds from any insurance policy covering that financed vehicle. If this covenant is breached, under the servicing agreement, the servicer will be required to repurchase the related receivable if such breach materially and adversely affects the interests of the issuing entity, the certificateholders or the noteholders in the related receivable. In addition, if the servicer extends the date for final payment by the obligor on any receivable beyond the last day of the collection period preceding the latest the final scheduled payment date of any notes or reduces the contract rate or outstanding principal balance with respect to any receivable, in either case, other than as required by applicable law or court order or in connection with a settlement in the event the receivable becomes a Defaulted Receivable, under the servicing agreement the servicer will be required to repurchase the related receivable, if such change in the receivable would materially and adversely affect the interests of the issuing entity, the certificateholders or the noteholders in such receivable.
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Unless required by law or court order, at the direction of a regulatory authority or in accordance with regulatory guidance, the servicer will not release the financed vehicle securing each such Receivable from the security interest granted by such Receivable in whole or in part except (a) in the event of payment in full by or on behalf of the Obligor thereunder or payment in full less a deficiency which the servicer would not attempt to collect in accordance with its customary servicing practices, (b) in connection with repossession or (c) as may be required by an insurer in order to receive proceeds from any insurance policy covering such financed vehicle
The servicer, in its capacity as custodian under the servicing agreement, will hold the receivable files for the benefit of the issuing entity and the indenture trustee, as pledgee of the issuing entity. In performing its duties as custodian, the servicer will act in accordance with its customary servicing practices. The servicer may, in accordance with its customary servicing practices, (i) maintain all or a portion of the receivable files in electronic form and (ii) maintain custody of all or any portion of the receivable files with one or more of its agents or designees. The servicer will maintain each receivable file in the United States, and will make available to the issuing entity and the indenture trustee (or their authorized representatives, attorneys or auditors) a list of locations of the receivable files upon request. The servicer will provide access to the receivable files, the related accounts, records and computer systems maintained by the servicer at such times as the issuing entity or indenture trustee direct (but only upon reasonable notice, in the presence of an officer of the servicer and during normal business hours, which do not unreasonably interfere with the servicers normal operations) at the respective offices of the servicer. Further, upon written instructions from the indenture trustee, the servicer will release or caused to be released any documents in the receivable files to the indenture trustee or its agent or designee. The servicer will not be responsible for any loss resulting from the failure of the indenture trustee or its agent or designee to return any document or any delay in doing so.
Realization Upon Defaulted Receivables
On behalf of the issuing entity, the servicer will use commercially reasonable efforts, consistent with its customary servicing practices, to repossess or otherwise convert the ownership of the financed vehicle securing any receivable as to which the servicer has determined eventual payment in full is unlikely unless it determines in its sole discretion that repossession will not increase the Liquidation Proceeds by an amount greater than the expense of such repossession, that the proceeds ultimately recoverable with respect to such receivable would be increased by forbearance or that repossessing such financed vehicle would otherwise not be consistent with the servicers customary servicing practices. The servicer will follow such customary servicing practices as it deems necessary or advisable, which may include reasonable efforts to realize upon any recourse to any dealer and selling the financed vehicle at public or private sale. The foregoing will be subject to the provision that, in any case in which the financed vehicle has suffered damage, the servicer will not be required to expend funds in connection with the repair or the repossession of such financed vehicle unless it determines in its sole discretion that such repair and/or repossession will increase the Liquidation Proceeds by an amount greater than the amount of such expenses. The servicer may from time to time (but is not required to) sell any deficiency balance in accordance with its customary servicing practices; provided, however, that (i) each sale must be made at a price equal to the fair market value of such deficiency balance in cash in immediately available funds and (ii) such sale must be without recourse, representation or warranty by the issuing entity or the servicer (other than any representation or warranty regarding the absence of liens, that the issuing entity has good title to the deficiency balance, or similar representation or warranty). Net proceeds of any such sale allocable to the receivable will constitute Liquidation Proceeds, and the sole right of the issuing entity and the indenture trustee with respect to any such sold receivables will be to receive such Liquidation Proceeds. Upon such sale, the servicer will mark its computer records indicating that any such receivable sold no longer belongs to the issuing entity. The servicer is authorized to take any and all actions necessary or appropriate on behalf of the issuing entity to evidence the sale of the receivable free from any lien or other interest of the issuing entity or the indenture trustee.
The following events constitute servicer replacement events under the servicing agreement:
| any failure by the servicer to deliver or cause to be delivered any required payment to the indenture trustee or the owner trustee for deposit into the collection account by the servicer under the terms of the servicing agreement, which failure continues unremedied for a period of five (5) business days |
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after discovery thereof by a responsible officer of the servicer or receipt by a responsible officer of the servicer of written notice thereof from the indenture trustee or the noteholders evidencing at least a majority of the note balance (or, if no notes are outstanding, by the Majority Certificateholders); |
| any failure by the servicer to duly observe or perform in any material respect any covenants or agreements of the servicer set forth in the servicing agreement (other than a covenant or agreement pursuant to the FDIC Rule Covenant), which failure (i) materially and adversely affects the rights of the issuing entity, the noteholders or the certificateholders and (ii) continues unremedied for a period of ninety (90) days after discovery thereof by a responsible officer of the servicer or receipt by the servicer of written notice thereof from the indenture trustee or the noteholders evidencing at least a majority of the note balance (or, if no notes are outstanding, by the Majority Certificateholders) provided that a breach of any covenant for which the repurchase of the affected receivable is specified as the sole remedy under the Servicing Agreement will not result in a servicer replacement event; and |
| the occurrence of certain events (which, if involuntary, remain unstayed for more than ninety (90) days) of bankruptcy, insolvency, receivership or liquidation of the servicer. |
The existence or occurrence of any material instance of noncompliance (within the meaning of Item 1122 of Regulation AB) shall not create any presumptions that an event under the first three bullets above has occurred.
Notwithstanding the foregoing, (a) if any delay or failure of performance referred to in the first bullet above was caused by force majeure or other similar occurrence, the five (5) business day grace period will be extended for an additional sixty (60) calendar days and (b) if any delay or failure of performance referred to in the second or third bullet above was caused by force majeure or other similar occurrence, the ninety (90) day grace period will be extended for an additional sixty (60) calendar days.
Resignation, Removal or Replacement of the Servicer
If a servicer replacement event has occurred and is continuing, the indenture trustee or owner trustee, as applicable, at the direction of 662⁄3% of the outstanding principal amount of the controlling class (or, if no notes are outstanding, the Majority Certificateholders), will terminate all of the rights and obligations of the servicer with respect to the receivables. The indenture trustee or owner trustee, as applicable, will effect that termination by delivering notice to the servicer, the owner trustee, the issuing entity, the administrator, the certificateholders and the noteholders. In the event the servicer is removed or resigns, the indenture trustee, at the direction of 662⁄3% of the outstanding principal amount of the controlling class, shall appoint a successor servicer. Any successor servicer must be an established institution having a net worth of not less than $100,000,000 and whose regular business includes the servicing of comparable motor vehicle receivables having an aggregate outstanding principal amount of not less than $50,000,000.
The servicer may not resign from its servicing obligations and duties except upon determination that the performance of its duties under the servicing agreement is no longer permissible under applicable law. No servicer resignation will become effective until a successor servicer has assumed the servicers obligations and duties and provided in writing the information reasonably requested by the depositor to comply with the reporting obligations under the Securities Exchange Act of 1934, as amended (the Securities Exchange Act). The servicer may, at any time without notice or consent, delegate (a) any or all of its duties (including, without limitation, its duties as custodian) under the transaction documents to any of its affiliates or (b) specific duties (including, without limitation, its duties as custodian) to sub-contractors who are in the business of performing similar duties. However, no delegation to affiliates or sub-contractors will release the servicer of its responsibility with respect to its duties, and the servicer will remain obligated and liable to the issuing entity and the indenture trustee for those duties as if the servicer alone were performing those duties.
Upon the servicers receipt of notice of termination, the predecessor servicer will continue to perform its functions as servicer only until the date specified in that termination notice or, if no date is specified therein, until receipt of that notice. If a successor servicer has not been appointed at the time when the predecessor servicer ceases to act as servicer of the receivables, the indenture trustee will automatically be appointed the successor servicer. However, if the indenture trustee is legally unable or is unwilling to act, in its sole discretion, as servicer, the indenture trustee will appoint (or petition a court to appoint) a successor servicer.
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Upon appointment of a successor servicer, the successor servicer will assume all of the responsibilities, duties and liabilities of the servicer with respect to the receivables (other than the obligations of the predecessor servicer that survive its termination as servicer, including indemnification obligations against certain events arising before its replacement). In an insolvency or similar proceeding for the servicer, a bankruptcy trustee, conservator, receiver or similar official may have the power to prevent the indenture trustee, the owner trustee or the noteholders from effecting a transfer of servicing to a successor servicer. All reasonable costs and expenses incurred in connection with transferring the receivable files to the successor servicer and all other reasonable costs and expenses incurred in connection with the transfer to the successor servicer related to the performance by the servicer hereunder will be paid by the predecessor servicer upon presentation of reasonable documentation of such costs and expenses. No amounts have been set aside by the issuing entity for a servicing transfer.
Waiver of Past Servicer Replacement Events
The noteholders of a majority of the outstanding principal amount of the controlling class (or, if no notes are outstanding, the Majority Certificateholders) may waive any servicer replacement event.
The servicing agreement provides that an independent registered public accounting firm (who may also render other services to the servicer, the depositor or their respective affiliates) will annually furnish to the issuing entity, on or before the 90th day following the end of each fiscal year, with a copy to the indenture trustee, CONA and the depositor, an attestation report.
The servicing agreement will also provide for delivery on or before [March 30] of each calendar year, beginning [March 30], 20[ ], of an officers certificate stating that (i) a review of the servicers activities during the preceding calendar year and of its performance under the servicing agreement has been made under the supervision of the officer, and (ii) to the best of the officers knowledge, based on the review, the servicer has fulfilled all its obligations under the servicing agreement in all material respects throughout the year, or, if there has been a failure to fulfill any of these obligations in any material respect, specifying each failure known to the officer and the nature and status of the failure.
In addition, except as described below, the servicer and each other party that participates in the servicing function with respect to more than 5% of the receivables and other assets comprising the issuing entity will deliver annually to the issuing entity, a report (an Assessment of Compliance) that assesses compliance by that party with the servicing criteria set forth in Item 1122(d) of Regulation AB (17 C.F.R. 229.1122) and that contains the following:
| a statement of the partys responsibility for assessing compliance with the servicing criteria applicable to it; |
| a statement that the party used the criteria in Item 1122(d) of Regulation AB to assess compliance with the applicable servicing criteria; |
| the partys Assessment of Compliance with the applicable servicing criteria during and as of the end of the prior calendar year, setting forth any material instance of noncompliance identified by the party; and |
| a statement that a registered public accounting firm has issued an Attestation Report on the partys Assessment of Compliance with the applicable servicing criteria during and as of the end of the prior calendar year. |
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Further, except as described below, each party which is required to deliver an Assessment of Compliance will also be required to simultaneously deliver a report (an Attestation Report) of a registered public accounting firm, prepared in accordance with the standards for attestation engagements issued or adopted by the Public Company Accounting Oversight Board, that expresses an opinion, or states that an opinion cannot be expressed, concerning the partys assessment of compliance with the applicable servicing criteria.
An annual report on Form 10-K with respect to the issuing entity will be filed with the SEC within 90 days after the end of each fiscal year. The annual report will contain the statements, certificates and reports discussed above.
The servicer will also give the issuing entity, with a copy to the indenture trustee and the owner trustee, written notice of any servicer replacement events under the servicing agreement.
The following summary describes the material terms of the indenture pursuant to which the notes will be issued. A form of indenture has been filed as an exhibit to the registration statement of which this prospectus is a part. We will file a copy of the actual indenture with the SEC on Form 8-K concurrently with or prior to the time we file this prospectus with the SEC. This summary does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of the indenture.
The indenture provides that the issuing entity will not, among other things:
| except as expressly permitted by the indenture, the sale agreement, the servicing agreement, the trust agreement, the administration agreement or the other transaction documents, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the issuing entity or engage in any other activities other than financing, acquiring, owning, pledging and managing the receivables and other collateral; |
| claim any credit on or make any deduction from the principal and interest payable in respect of the notes (other than amounts withheld under the Code or applicable state law) or assert any claim against any present or former holder of the notes because of the payment of taxes levied or assessed upon any part of the issuing entity property; |
| dissolve or liquidate in whole or in part; |
| merge or consolidate with, or transfer substantially all of its assets to, any other person; |
| permit the validity or effectiveness of the indenture to be impaired, permit the lien of the 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 that indenture except as may be expressly permitted thereby; |
| permit any lien (except certain permitted liens) to be created on or extend to or otherwise arise upon or burden the assets of the issuing entity or any part thereof, or any interest therein or the proceeds thereof; |
| permit the lien of the indenture to not constitute a valid first priority security interest (except certain permitted liens) in the collateral; or |
| incur, assume or guarantee any indebtedness other than indebtedness incurred in accordance with the transaction documents. |
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In addition, the issuing entity will from time to time execute and deliver all supplements and amendments to the indenture and all financing statements, continuation statements, instruments of further assurance and other instruments, all as prepared by the administrator and delivered to the issuing entity, and shall take such other action necessary or advisable to (a) grant more effectively all or any portion of the collateral, (b) maintain or preserve the lien and security interest (and the priority thereof) created by the indenture or carry out more effectively the purposes of the indenture, (c) perfect, publish notice of or protect the validity of any grant made or to be made by the indenture, (d) enforce any of the collateral or (e) preserve and defend title to the collateral and the rights of the indenture trustee and the noteholders in the collateral against the claims of all persons.
Noteholder Communication; List of Noteholders
Investors may send a request to the depositor [by sending an e-mail to securitizationteam@capitalone.com] at any time notifying the depositor that the investor would like to communicate with other investors with respect to an exercise of their rights under the terms of the transaction documents. If the requesting investor is not a noteholder as reflected on the note register, the depositor may require that the requesting investor provide verification documents to confirm that the requesting investor is, in fact, a beneficial owner of notes. The depositor will disclose in each monthly distribution report on Form 10-D information regarding any request received during the related collection period from an investor to communicate with other investors related to the investors exercising their rights under the terms of the transaction documents. The disclosure in the Form 10-D regarding the request to communicate will include the name of the investor making the request, the date the request was received, a statement to the effect that the issuing entity has received a request from the investor, which states that the investor is interested in communicating with other investors with regard to the possible exercise of rights under the transaction documents and a description of the method other investors may use to contact the requesting investor. CONA and the depositor will be responsible for any expenses incurred in connection with the filing of such disclosure and the reimbursement of any costs incurred by the indenture trustee in connection with the preparation thereof.
With respect to the notes of the issuing entity, three or more holders of the notes or one or more holders of such notes evidencing not less than 25% of the aggregate note balance of the notes, voting as a single class, may, by written request to the indenture trustee accompanied by a copy of the communication that the applicant proposes to send, obtain access to the list of all noteholders maintained by the indenture trustee for the purpose of communicating with other noteholders with respect to their rights under the indenture or under the notes.
The issuing entity will be required to deliver annually to the indenture trustee [and the swap counterparty] a written officers statement as to the fulfillment of its obligations under the indenture which, among other things, will state that to the best of the officers knowledge, the issuing entity has complied in all material respects with all conditions and covenants under the indenture throughout that year, or, if there has been a default in the compliance of any condition or covenant, specifying each default known to that officer and the nature and status of that default.
Indenture Trustees Annual Report
If required by the Trust Indenture Act of 1939, as amended, the indenture trustee will be required to mail each year to all noteholders a brief report setting forth the following:
| its eligibility and qualification to continue as indenture trustee under the indenture; |
| information regarding a conflicting interest of the indenture trustee; |
| any change to the amount, interest rate and maturity date of any indebtedness owing by the issuing entity to the indenture trustee in its individual capacity; |
| any change to the property and funds physically held by the indenture trustee in its capacity as indenture trustee; |
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| any release, or release and substitution, of property subject to the lien of the indenture that has not been previously reported; |
| any additional issue of notes that has not been previously reported; and |
| any action taken by it that materially affects the notes or the trust property and that has not been previously reported. |
Documents by Indenture Trustee to Noteholders
The indenture trustee, at the expense of the issuing entity, will make available to each noteholder, not later than the latest date permitted by law, such information as may be required by the Code to enable such holder to prepare its United States federal and state income tax returns.
Satisfaction and Discharge of Indenture
The indenture will be discharged with respect to the collateral securing the notes upon the delivery to the indenture trustee for cancellation of all the notes or, subject to specified limitations, upon deposit with the indenture trustee of funds sufficient for the payment in full of all of the notes.
Resignation or Removal of the Indenture Trustee
The indenture trustee may resign at any time, in which event the issuing entity will be obligated to appoint a successor indenture trustee. The issuing entity will remove the indenture trustee if the indenture trustee ceases to be eligible to continue as such under the indenture or if the indenture trustee becomes insolvent or is otherwise incapable of acting. In such circumstances, the issuing entity will be obligated to appoint a successor indenture trustee. In addition, a majority of the outstanding note balance of the controlling class may remove the indenture trustee without cause by giving thirty (30) days prior written notice to the indenture trustee and the issuing entity and may appoint a successor indenture trustee. Any resignation or removal of the indenture trustee and appointment of a successor indenture trustee does not become effective until acceptance of the appointment by the successor indenture trustee for the issuing entity and payment of all fees, indemnities and expenses owed to the outgoing indenture trustee.
The occurrence and continuation of any one of the following events will be an event of default under the indenture:
| a default in the payment of any interest on any note of the controlling class when the same becomes due and payable, and that default continues for a period of five (5) business days or more; |
| a default in the payment of the principal of any note at the related final scheduled payment date or the redemption date; |
| any failure by the issuing entity to duly observe or perform in any material respect any of its covenants or agreements in the indenture (other than (i) a covenant or agreement, a default in the observance or performance of which is elsewhere specifically addressed by these five bullet points or (ii) a covenant or agreement pursuant to the FDIC Rule Covenant), which failure materially and adversely affects the interests of the noteholders, and which failure continues unremedied for ninety (90) days after receipt by the issuing entity of written notice thereof, by registered or certified mail, from the indenture trustee or noteholders evidencing a majority of the aggregate outstanding principal amount of the notes of the controlling class; |
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| any representation or warranty of the issuing entity made in the indenture proves to have been incorrect in any material respect when made, which failure materially and adversely affects the interests of the noteholders, and which failure continues unremedied for ninety (90) days after receipt by the issuing entity of written notice thereof, by registered or certified mail, from the indenture trustee or noteholders evidencing a majority of the aggregate outstanding principal amount of the notes of the controlling class; and |
| the occurrence of certain events (which, if involuntary, remain unstayed for a period of ninety (90) consecutive days) of bankruptcy, insolvency, receivership or liquidation of the issuing entity. |
Notwithstanding the foregoing, a delay in or failure of performance referred to under the first four bullet points above for a period of one-hundred twenty (120) days will not constitute an event of default if that delay or failure was caused by force majeure or other similar occurrence.
The amount of principal required to be paid to noteholders under the indenture, generally will be limited to amounts available to make such payments in accordance with the The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review AgreementPriority of Payments. Thus, the failure to pay principal on a class of notes due to a lack of amounts available to make such payments will not result in the occurrence of an event of default until the final scheduled payment date for that class of notes.
Upon the occurrence and continuation of any event of default (other than an event of default resulting from an event of bankruptcy, insolvency, receivership or liquidation of the issuing entity), the indenture trustee may, or if directed by the noteholders representing not less than a majority of the note balance of the controlling class, shall declare all the notes to be immediately due and payable. Upon the occurrence of an event of default resulting from an event of bankruptcy, insolvency, receivership or liquidation of the issuing entity, the notes will automatically be accelerated and all interest on and principal of the notes will be due and payable without any declaration or other act by the indenture trustee or the noteholders.
If an event of default has occurred and is continuing, the indenture trustee may institute proceedings to collect amounts due or foreclose on issuing entity property, exercise remedies as a secured party or, if the notes have been accelerated, sell the receivables. Upon the occurrence of an event of default resulting in acceleration of the notes, the indenture trustee may sell the receivables or may elect to have the issuing entity maintain possession of the receivables and apply collections as received. However, the indenture trustee is prohibited from selling the receivables following an event of default and acceleration of the notes unless:
| the holders of 100% of the outstanding note balance of [the Controlling Class of notes] [and the swap counterparty] consent to such sale; |
| the proceeds of such sale are sufficient to pay in full the principal of and the accrued interest on all outstanding notes [and all amounts owed to the swap counterparty under the interest rate swap agreement]; or |
| the event of default either (a) relates to the failure to pay interest or principal when due and payable (a payment default) and the indenture trustee determines that the collections on the receivables will not be sufficient on an ongoing basis to make all payments on the notes as such payments would have become due if the notes had not been declared due and payable or (b) relates to the occurrence of certain events (which, if involuntary, remain unstayed for a period of 90 consecutive days) of bankruptcy, insolvency, receivership or liquidation with respect to the issuing entity and, in each case, the indenture trustee obtains the consent of the holders of 662/3% of the note balance of the controlling class [and the swap counterparty]. |
Notwithstanding anything under this heading to the contrary, if the event of default does not relate to a payment default or certain events of bankruptcy, insolvency, receivership or liquidation with respect to the issuing entity, the indenture trustee may not sell the receivables unless the holders of all outstanding notes consent to such sale or the proceeds of such sale are sufficient to pay in full the principal of and accrued interest on the outstanding notes [and all amounts owed to the swap counterparty under the interest rate swap agreement].
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If an event of default occurs and is continuing, the indenture trustee will be under no obligation to exercise any of the rights or powers under the indenture at the request or direction of any of the noteholders if the indenture trustee reasonably believes it will not be adequately indemnified against the costs, expenses and liabilities which might be incurred by it in complying with such request. Subject to the provisions for indemnification and certain limitations contained in the indenture, the holders of not less than a majority of the note balance [of the controlling class] will have the right to direct the time, method and place of conducting any proceeding or any remedy available to the indenture trustee, and the holders of not less than a majority of the note balance [of the controlling class] may, in certain cases, waive any event of default, except a default in payment of principal of or interest on any of the notes, a default in respect of a covenant or provision of the indenture that cannot be modified or amended without the consent of the noteholders of all of the outstanding notes or a default arising from certain events of bankruptcy, insolvency, receivership or liquidation with respect to the issuing entity.
Priority of Payments Will Change Upon Events of Default that Result in Acceleration
Following the occurrence of an event of default under the indenture which has resulted in an acceleration of the notes, the priority of payments changes. In that instance, payments on the notes will be made from all funds available to the issuing entity in the following order of priority:
(1) | first, to the indenture trustee, the owner trustee and the asset representations reviewer, pro rata based on amounts due, any accrued and unpaid fees, indemnification amounts and reasonable expenses permitted under the transaction documents; |
(2) | second, to the servicer, the servicing fee and all prior unpaid servicing fees; |
(3) | [third, to the swap counterparty, any due and unpaid Net Swap Payments]; |
(4) | [fourth], [pro rata, (A) to the swap counterparty for any due and unpaid Senior Swap Termination Payments and (B)] based on interest amounts due to the noteholders of the Class A notes, the accrued Class A note interest; provided, that if there are not sufficient funds available to pay the entire amount of the accrued Class A note interest, the amounts available will be applied to the payment of that interest on each class of Class A notes on a pro rata basis based on the amount of interest payable to each class of Class A notes; |
(5) | [fifth], if the acceleration of the notes results from an event of default that arises from (i) a default in the payment of any interest on any note of the controlling class when the same becomes due and payable, (ii) a default in the payment of the principal of any note on the related final scheduled payment date or the redemption date or (iii) the occurrence of certain events of bankruptcy, insolvency, receivership or liquidation of the issuing entity, in the following order of priority: |
| to the Class A-1 noteholders, in respect of principal thereon, until the Class A-1 notes have been paid in full; |
| to the Class A-2[-A] noteholders, [the Class A-2-B noteholders], the Class A-3 noteholders and the Class A-4 noteholders, in respect of principal thereon, pro rata based on the note balance of each such class, until each such class of notes has been paid in full; |
| to the Class B noteholders, the accrued Class B note interest; |
| to the Class B noteholders, in respect of principal thereon, until the Class B notes have been paid in full; |
| to the Class C noteholders, the accrued Class C note interest; |
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| to the Class C noteholders, in respect of principal thereon, until the Class C notes have been paid in full; |
| [to the Class D noteholders, the accrued Class D note interest;] |
| [to the Class D noteholders, in respect of principal thereon, until the Class D notes have been paid in full;] |
(6) | [sixth], if the acceleration of the notes results from an event of default that arises from any event other than those events described above in clause fifth, in the following order of priority: |
| to the Class B noteholders, the accrued Class B note interest; |
| to the Class C noteholders, the accrued Class C note interest; |
| [to the Class D noteholders, the accrued Class D note interest;] |
| to the Class A-1 noteholders, in respect of principal thereon, until the Class A-1 notes have been paid in full; |
| to the Class A-2[-A] noteholders, [the Class A-2-B noteholders],the Class A-3 noteholders and the Class A-4 noteholders, in respect of principal thereon, pro rata, based on the note balance of each such class until all classes of the Class A notes have been paid in full; |
| to the Class B noteholders, in respect of principal thereon, until the Class B notes have been paid in full; |
| to the Class C noteholders, in respect of principal thereon, until the Class C notes have been paid in full; |
| [to the Class D noteholders, in respect of principal thereon, until the Class D notes have been paid in full;] |
(7) | [seventh, to the swap counterparty for any due and unpaid Subordinated Swap Termination Payments and any other amounts owing to the swap counterparty not previously paid;] and |
(8) | [eighth], any remaining funds to the certificateholders, pro rata based on the Percentage Interest of each certificateholder, or, to the extent definitive certificates have been issued, to the certificate distribution account for distribution to the certificateholders. |
Following the occurrence of any event of default under the indenture which has not resulted in an acceleration of the notes, the issuing entity will continue to pay interest and principal on the notes on each payment date in the manner set forth in this prospectus under The Transfer Agreements, the Servicing Agreement, the Administration Agreement and the Asset Representations Review Agreement Priority of Payments above.
The indenture may be modified as follows:
The issuing entity and, when authorized by an issuing entity request, the indenture trustee may, with prior notice from the issuing entity to each hired agency, enter into supplemental indentures, without obtaining the consent of the noteholders or any other person, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the indenture or of modifying in any manner the rights of those noteholders; provided that (1) the issuing entity delivers to the indenture trustee an opinion of counsel or an officers certificate to the effect that such supplemental indenture will not materially and adversely affect the interests of the noteholders or (2) the Rating Agency Condition is satisfied with respect to such amendment and the issuing entity so notifies the indenture trustee in writing.
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The issuing entity and the indenture trustee, when authorized by an issuing entity request, may also with prior notice from the issuing entity to each hired agency and with the consent of the noteholders of not less than a majority of the note balance of the controlling class, enter into supplemental indentures for the purpose of adding provisions to, changing in any manner or eliminating any provisions of, the indenture, or modifying in any manner the rights of the noteholders. Any such supplemental indenture that amends, modifies or supplements the rights of any noteholder in any of the following manners will require the consent of each outstanding note affected thereby:
| changes the coin or currency in which, any note or any interest thereon is payable, reduces the interest rate or principal balance of any note, delays the final scheduled payment date of any note or reduces the redemption price of any note; |
| reduces the percentage of the note balance, the consent of the holders of which is required for any supplemental indenture or the consent of the holders of which is required for any waiver of compliance with certain provisions of the indenture or of certain defaults thereunder and their consequences as provided for in the indenture; |
| modifies or alters the provisions of the indenture regarding the voting of notes held by the issuing entity, the depositor, the servicer or the administrator or an affiliate of any of them; |
| reduces the percentage of the note balance, the consent of the holders of which is required to direct the indenture trustee to direct the issuing entity to sell or liquidate the issuing entity property if the proceeds of the sale would be insufficient to pay the principal balance of and accrued but unpaid interest on the outstanding notes; |
| modifies any amendment provision requiring noteholder consent in any respect materially adverse to the interest of the noteholders; |
| permits the creation of any lien ranking prior to or on a parity with the lien of the indenture with respect to any part of the issuing entity property or, except as otherwise permitted or contemplated in the transaction documents, terminate the lien of the indenture on any property at any time or deprive the holder of any note of the security afforded by the lien of the indenture; or |
| impairs the right of the noteholders to institute suit for the enforcement of principal and interest payment on the notes that such noteholders own. |
No amendment or supplemental indenture will be effective which materially and adversely affects the rights, privileges, indemnities, protections, immunities, obligations or duties of the indenture trustee or the owner trustee, as applicable, without the prior written consent of the indenture trustee or the owner trustee, respectively.
Notwithstanding the above, if any provision of the FDIC Rule is amended, or any interpretive guidance regarding the FDIC Rule is provided by the FDIC or its staff, and the issuing entity determines that an amendment to the FDIC provisions of the indenture is necessary or desirable, then the issuing entity and the indenture trustee or the owner trustee, as applicable, will be authorized and entitled to amend the relevant provisions in accordance with such FDIC Rule amendment or guidance; provided that the issuing entity delivers to the indenture trustee or the owner trustee, as applicable, an opinion of counsel to the effect that such amendment is required to remain in compliance with the FDIC Rule.
The FDIC Rule imposes a number of requirements on an issuing entity, the depositor, the sponsor and the servicer, and each such party will agree to facilitate compliance with these requirements by complying with its obligations in the FDIC Rule Covenant. See Material Legal Aspects of the Receivables FDIC Rule in this prospectus. The indenture will contain a covenant (the FDIC Rule Covenant), which will require, among other things, that:
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(1) payment of principal and interest on the securitization obligations must be primarily based on the performance of the financial assets transferred to the issuing entity;
(2) information describing the financial assets, obligations, capital structure, compensation of the relevant parties and historical performance data must be made available to the investors, including (i) information about the obligations and securitized financial assets in compliance with Regulation AB, (ii) information about the transaction structure, performance of the obligations, priority of payments, subordination features, representations and warranties regarding the financial assets, remedies, liquidity facilities, credit enhancement, waterfall triggers or priority of payment reversal features and policies governing delinquencies, servicer advances, loss mitigation and write-offs, (iii) information with respect to the credit performance of the obligations and financial assets on an ongoing basis, and (iv) the compensation paid to the originator, sponsor, rating agency, third-party advisor, broker and servicer and changes to such amounts paid, and the extent to which the risk of loss is retained by any of them;
(3) the sponsor must retain an economic interest in a material portion (not less than five percent) of the credit risk of the financial assets;
(4) the obligations in the securitization cannot be predominantly sold to an affiliate (other than a wholly-owned subsidiary consolidated for accounting and capital purposes with the sponsor or to an affiliated broker-dealer who purchased such obligations with a view to promptly resell such obligations to persons or entities that are neither affiliates (other than a wholly-owned subsidiary consolidated for accounting and capital purposes with the sponsor) nor insiders of the sponsor in the ordinary course of such broker-dealers business) or insider of the sponsor;
(5) the sponsor must identify in its financial asset data bases and otherwise account for the financial assets transferred as specified by the FDIC Rule; and
(6) if the sponsor is acting as servicer, custodian or paying agent, the sponsor must not commingle collections for more than two business days. See Material Legal Aspects of the Receivables FDIC Rule in this prospectus.
Each noteholder and each certificateholder, by accepting a note or certificate, as applicable, will acknowledge and agree that the purpose of the FDIC Rule Covenant is to facilitate compliance with the FDIC Rule by CONA, the depositor and the issuing entity, and that the provisions set forth in the FDIC Rule Covenant will have the effect and meanings that are appropriate under the FDIC Rule as such meanings change over time on the basis of evolving interpretations of the FDIC Rule.
MATERIAL LEGAL ASPECTS OF THE RECEIVABLES
The transfer of the receivables by CONA to the depositor, and by the depositor to the issuing entity, and the pledge thereof to the indenture trustee, if any, the perfection of the security interests in the receivables and the enforcement of rights to realize on the related financed vehicles as collateral for the receivables are subject to a number of federal and state laws, including the Uniform Commercial Code and certificate of title act as in effect in various states. The servicer and the depositor will take the actions described below to perfect the rights of the issuing entity and the indenture trustee in the receivables.
Under the servicing agreement the servicer has been appointed by the issuing entity and indenture trustee to act as the custodian of the receivables. The servicer or a subservicer, as the custodian, will be designated to maintain possession of the original retail installment sale contracts relating to the receivables. While the original contracts giving rise to the receivables will not be marked to indicate the ownership interest thereof by the issuing entity, appropriate UCC-1 financing statements reflecting the transfer and assignment of the receivables by CONA to the
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depositor, the transfer and assignment of the receivables by the depositor to the issuing entity and the pledge of the receivables by the issuing entity to the indenture trustee will be filed to perfect that interest and give notice of the issuing entitys ownership interest in, and the indenture trustees security interest in, the receivables and related chattel paper. If, through inadvertence or otherwise, any of the receivables were sold or pledged to another party who purchased (or received a pledge of) the receivables in the ordinary course of its business and took possession of the original contracts in tangible form or control of the authoritative copy of the contracts in electronic form (collectively, chattel paper) giving rise to the receivables, the purchaser (or pledgee) would acquire an interest in the receivables superior to the interests of the issuing entity and the indenture trustee if the purchaser acquired the receivables for value and without knowledge that the purchase (or pledge) violates the rights of the issuing entity or the indenture trustee, which could cause investors to suffer losses on their notes.
Generally, the rights held by assignees of the receivables, including without limitation, the issuing entity and the indenture trustee, will be subject to:
| all the terms of the contracts related to or evidencing the receivable and any defense or claim in recoupment arising from the transaction that gave rise to the contracts; and |
| any other defense or claim of the obligor against the assignor of such receivable which accrues before the obligor receives notification of the assignment. Because none of CONA, the depositor or the issuing entity is obligated to give the obligors notice of the assignment of any of the receivables, the issuing entity and the indenture trustee, if any, will be subject to defenses or claims of the obligor against the assignor even if such claims are unrelated to the receivable. |
CONA typically takes physical possession of the signed original retail installment sale contracts to assure that it has priority in its rights in the receivables against the dealers and their respective creditors. Under the UCC, a purchaser of chattel paper who takes physical possession (or, in the case of electronic chattel paper, takes control) of the chattel paper has priority over the depositor and its creditors in the event of the depositors bankruptcy. If a retail installment sale contract is amended and CONA does not or is unable to take physical possession (or, in the case of electronic chattel paper, control) of the signed original amendment, there is a risk that creditors of the selling dealer could have priority over the issuing entitys rights in the contract.
Security Interests in the Financed Vehicles
Obtaining Security Interests in Financed Vehicles. In all states in which the receivables have been originated, motor vehicle retail installment sale contracts such as the receivables evidence the purchase of automobiles, light-duty trucks, SUVs, vans and/or other types of motor vehicles. The receivables also constitute personal property security agreements and include grants of security interests in the financed vehicles under the applicable Uniform Commercial Code. The receivables are tangible chattel paper or electronic chattel paper, in each case as defined in the Uniform Commercial Code.
Perfection of security interests in the financed vehicles is generally governed by the motor vehicle registration laws of the state in which the financed vehicle is located. In most states, a security interest in an automobile, a light-duty truck, SUV, van and/or another type of motor vehicle is perfected by noting the secured partys lien on the vehicles certificate of title. However, in California and in certain other states, certificates of title and the notation of the related lien may be maintained solely in the electronic records of the applicable department of motor vehicles or the analogous state office. As a result, any reference to a certificate of title in this prospectus includes certificates of title maintained in physical form and electronic form (which electronic title may also be held by or through third-party vendors). In some states, certificates of title maintained in physical form are held by the obligor and not the lienholder or a third-party vendor. CONA will represent and warrant under the transaction documents that each receivable is secured by a first priority perfected security interest in the financed vehicle or all necessary actions have been commenced that would result in a first priority security interest in the financed vehicle. If the originator fails, because of clerical errors or otherwise, to effect or maintain the notation of the security interest on the certificate of title relating to a financed vehicle, the issuing entity may not have a perfected first priority security interest in that financed vehicle.
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If the originator did not take the steps necessary to cause its security interest to be perfected as described above until more than thirty (30) days after the date the related obligor received possession of the financed vehicle, and the related obligor was insolvent on the date such steps were taken, the perfection of such security interest may be avoided as a preferential transfer under bankruptcy law if the obligor under the related receivable becomes the subject of a bankruptcy proceeding commenced within ninety (90) days of the date of such perfection, in which case the originator, and subsequently, the depositor, the issuing entity and the indenture trustee, if any, would be treated as an unsecured creditor of such obligor.
Perfection of Security Interests in Financed Vehicles. CONA will sell the receivables and assign its security interest in each financed vehicle to the depositor. The depositor will sell the receivables and assign the security interest in each financed vehicle to the issuing entity. However, because of the administrative burden and expense of retitling, the servicer, the depositor and the issuing entity will not amend any certificate of title to identify the issuing entity as the new secured party on the certificates of title relating to the financed vehicles. Accordingly, CONA or its predecessor in interest (if applicable), will continue to be named as the secured party on the certificates of title relating to the financed vehicles. In most states, assignments such as those under the transfer agreements are an effective conveyance of the security interests in the financed vehicles without amendment of the lien noted on the related certificate of title, and the new secured party succeeds to the assignors rights as the secured party. However, a risk exists in not identifying the issuing entity as the new secured party on the certificate of title because the security interest of the issuing entity could be released without the issuing entitys consent, another person could obtain a security interest in the applicable financed vehicle that is higher in priority than the interest of the issuing entity or the issuing entitys status as a secured creditor could be challenged in the event of a bankruptcy proceeding involving the obligor.
In the absence of fraud, forgery or neglect by the financed vehicle owner or administrative error by state recording officials, notation of the lien of the originator or its predecessor in interest (if applicable), generally will be sufficient to protect the issuing entity against the rights of subsequent purchasers of a financed vehicle or subsequent lenders who take a security interest in a financed vehicle. If there are any financed vehicles as to which the originator has failed to perfect the security interest assigned to the issuing entity, that security interest would be subordinate to, among others, subsequent purchasers of the financed vehicles and holders of perfected security interests.
Under the Uniform Commercial Code, if a security interest in a financed vehicle is perfected by any method under the laws of one state, and the financed vehicle is then moved to another state and titled in that other state, the security interest that was perfected under the laws of the original state remains perfected as against all persons other than a purchaser of the vehicle for value for as long as the security interest would have been perfected under the law of the original state. However, a security interest in a financed vehicle that is covered by a certificate of title from the original state becomes unperfected as against a purchaser of that financed vehicle for value and is deemed never to have been perfected as against that purchaser if the security interest in that financed vehicle is not perfected under the laws of that other state within four months after the financed vehicle became covered by a certificate of title from the other state. A majority of states require surrender of a certificate of title to re-register a vehicle. Therefore, the servicer will provide the department of motor vehicles or other appropriate state or county agency of the state of relocation with the certificate of title so that the owner can effect the re-registration. If the financed vehicle owner moves to a state that provides for notation of a lien on the certificate of title to perfect the security interests in the financed vehicle, absent clerical errors or fraud, the originator would receive notice of surrender of the certificate of title if its lien is noted thereon. Accordingly, the secured party will have notice and the opportunity to re-perfect the security interest in the financed vehicle in the state of relocation. If the financed vehicle owner moves to a state which does not require surrender of a certificate of title for registration of a motor vehicle, re-registration could defeat perfection. In the ordinary course of servicing its portfolio of motor vehicle receivables, CONA takes steps to effect re-perfection upon receipt of notice of registration or information from the obligor as to relocation. Similarly, when an obligor under a receivable sells a financed vehicle, the servicer must provide the owner with the certificate of title, or the servicer will receive notice as a result of its lien noted thereon and accordingly will have an opportunity to require satisfaction of the related receivable before release of the lien. Under the servicing agreement, the servicer will, at its expense, in accordance with its customary servicing practices, take such steps as are necessary to maintain perfection of the security interest created by each receivable in the related financed vehicle. The issuing entity will authorize the servicer to take such steps as are necessary to perfect or re- perfect the security interest on behalf of the issuing entity and the indenture trustee in the event of the relocation of a financed vehicle or for any other reason.
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The requirements for the creation, perfection, transfer and release of liens in financed vehicles generally are governed by state law, and these requirements vary on a state-by-state basis. Failure to comply with these detailed requirements could result in liability to the issuing entity or the release of the lien on the vehicle or other adverse consequences. Some states permit the release of a lien on a vehicle upon the presentation by the dealer, obligor or persons other than the servicer to the applicable state registrar of liens of various forms of evidence that the debt secured by the lien has been paid in full. For example, the State of New York passed legislation allowing a dealer of used motor vehicles to have the lien of a prior lienholder in a motor vehicle released, and to have a new certificate of title with respect to that motor vehicle reissued without the notation of the prior lienholders lien, upon submission to the Commissioner of the New York Department of Motor Vehicles of evidence that the prior lien has been satisfied without any signature or formal release by the prior lienholder. It is possible that, as a result of fraud, forgery, negligence or error, a lien on a financed vehicle could be released without prior payment in full of the receivable.
Under the laws of most states, statutory liens such as liens for unpaid taxes, liens for towing, storage and repairs performed on a motor vehicle, motor vehicle accident liens and liens arising under various state and federal criminal statutes take priority over a perfected security interest in a financed vehicle. Under the Code, federal tax liens that are filed have priority over a subsequently perfected lien of a secured party. In addition, certain states grant priority to state tax liens over a prior perfected lien of a secured party. The laws of most states and federal law permit the confiscation of motor vehicles by governmental authorities under some circumstances if used in or acquired with the proceeds of unlawful activities, which may result in the loss of a secured partys perfected security interest in a confiscated vehicle. Liens could arise, or a confiscation could occur, at any time during the term of a receivable. It is possible that no notice will be given to the servicer in the event that a lien arises or a confiscation occurs, and any lien arising or confiscation occurring after the closing date may not give rise to a repurchase obligation by CONA.
In the event of a default by an obligor, the holder of the related motor vehicle retail installment sale contract has all the remedies of a secured party under the Uniform Commercial Code, except as specifically limited by other state or federal laws. Among the Uniform Commercial Code remedies, the secured party has the right to repossess a financed vehicle by self-help means, unless those means would constitute a breach of the peace under applicable state law or is otherwise limited by applicable state law. Unless a financed vehicle is voluntarily surrendered, self-help repossession is accomplished simply by retaking possession of the financed vehicle. In cases where the obligor objects or raises a defense to repossession, or if otherwise required by applicable state law, a court order must be obtained from the appropriate state court, and the financed vehicle must then be recovered in accordance with that order. In some jurisdictions, the secured party is required to notify the obligor of the default and the intent to repossess the collateral and to give the obligor a time period within which to cure the default prior to repossession. Generally, this right to cure may only be exercised on a limited number of occasions during the term of the related receivable, although the servicer in accordance with its customary servicing practices may provide an opportunity to cure even if the obligor has no legal right to do so. Other jurisdictions permit repossession without prior notice if it can be accomplished without a breach of the peace (although in some states, a course of conduct in which the creditor has accepted late payments has been held to create a right by the obligor to receive prior notice). The law in some states provides that, after the financed vehicle has been repossessed, the obligor has a right to reinstate the related receivable by paying the delinquent installments and other amounts due. In states where the obligor is not legally entitled to reinstate the related receivable, the servicer may permit the obligor to do so in accordance with the servicers customary servicing practices.
Notice of Sale; Redemption Rights
In the event of a default by the obligor, some jurisdictions require that the obligor be notified of the default and be given a time period within which the obligor may cure the default prior to repossession. Generally, this right of reinstatement may be exercised on a limited number of occasions in any one-year period, although the servicer in accordance with its customary servicing practices may provide an opportunity to reinstate even when the obligor has no legal right to do so.
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The Uniform Commercial Code and other state laws require the secured party to provide the obligor with reasonable notice concerning the disposition of the collateral including, among other things, the date, time and place of any public sale and/or the date after which any private sale of the collateral may be held and certain additional information if the collateral constitutes consumer goods. In addition, some states also impose substantive timing requirements on the sale of repossessed vehicles and/or various substantive timing and content requirements relating to those notices. In some states, after a financed vehicle has been repossessed, the obligor may reinstate the account by paying the delinquent installments and other amounts due, in which case the financed vehicle is returned to the obligor. The obligor has the right to redeem the collateral prior to actual sale or entry by the secured party into a contract for sale of the collateral by paying the secured party the unpaid principal balance of the obligation, accrued interest thereon, reasonable expenses for repossessing, holding and preparing the collateral for disposition and arranging for its sale, plus, in some jurisdictions, reasonable attorneys fees and legal expenses.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of the repossessed vehicles generally will be applied first to the expenses of resale and repossession and then to the satisfaction of the indebtedness. While some states impose prohibitions or limitations on deficiency judgments if the net proceeds from resale do not cover the full amount of the indebtedness, a deficiency judgment can be sought in those states that do not prohibit or limit those judgments. However, the deficiency judgment would be a personal judgment against the obligor for the shortfall, and some defaulting obligors may be expected to have very little capital or sources of income available following repossession. Therefore, in some cases, it may not be useful to seek a deficiency judgment or, if one is obtained, it may be settled at a significant discount. The servicer will determine whether to pursue a deficiency judgment in accordance with its customary servicing practices and the requirements of applicable law, as well as the expected net benefits and costs of such an action. In addition to the notice requirement, the Uniform Commercial Code requires that every aspect of the sale or other disposition, including the method, manner, time, place and terms, be commercially reasonable. Generally, in the case of consumer goods, courts have held that when a sale is not commercially reasonable, the secured party loses its right to a deficiency judgment. Generally, in the case of collateral that does not constitute consumer goods, the Uniform Commercial Code provides that when a sale is not commercially reasonable, the secured party may retain its right to at least a portion of the deficiency judgment.
The Uniform Commercial Code also permits the debtor or other interested party to recover for any loss caused by noncompliance with the provisions of the Uniform Commercial Code. In particular, if the collateral is consumer goods, the Uniform Commercial Code grants the debtor the right to recover in any event an amount not less than the credit service charge plus 10% of the principal amount of the debt. In addition, prior to a sale, the Uniform Commercial Code permits the debtor or other interested person to prohibit or restrain on appropriate terms the secured party from disposing of the collateral if it is established that the secured party is not proceeding in accordance with the default provisions under the Uniform Commercial Code.
Occasionally, after resale of a repossessed vehicle and payment of all expenses and indebtedness, there is a surplus of funds. In that case, the Uniform Commercial Code requires the creditor to remit the surplus to any holder of a subordinate lien with respect to the vehicle or if no subordinate lienholder exists, the Uniform Commercial Code requires the creditor to remit the surplus to the obligor.
Numerous federal and state consumer protection laws and related regulations impose substantial requirements upon lenders and servicers involved in consumer finance, including requirements regarding the adequate disclosure of contract terms and limitations on contract terms, collection practices and creditor remedies. These laws include the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the Consumer Financial Protection Bureaus Regulations B and Z, the Gramm Leach Bliley Act, the Servicemembers Civil Relief Act, state adoptions of model consumer protection acts and of the Uniform Consumer Credit Code, state motor vehicle retail installment sales acts, consumer lending laws, unfair or deceptive practices acts including
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requirements regarding the adequate disclosure of contract terms and limitations on contract terms, collection practices and creditor remedies and other similar laws. Many states have adopted lemon laws that provide redress to consumers who purchase a vehicle that remains out of compliance with its manufacturers warranty after a specified number of attempts to correct a problem or a specified time period. Also, state laws impose finance charge ceilings and other restrictions on consumer transactions and require contract disclosures in addition to those required under federal law. These requirements impose specific statutory liabilities upon creditors who fail to comply with their provisions. In some cases, this liability could affect an assignees ability to enforce consumer finance contracts such as the receivables described above.
With respect to used vehicles, the Federal Trade Commissions Rule on Sale of Used Vehicles (FTC Rule) requires that all sellers of used vehicles prepare, complete and display a Buyers Guide that explains the warranty coverage for such vehicles. The federal Magnuson-Moss Warranty Act and state lemon laws may impose further obligations on motor vehicle dealers. Holders of the receivables may have liability for claims and defenses under those statutes, the FTC Rule and similar state statutes.
The so-called Holder-in-Due-Course rule of the Federal Trade Commission (the HDC Rule) has the effect of subjecting any assignee of the sellers in a consumer credit transaction, and related creditors and their assignees, to all claims and defenses the obligor in the transaction could assert against the sellers. Liability under the HDC Rule is limited to the amounts paid by the obligor under the receivable, and the holder of the receivable may also be unable to collect any balance remaining due thereunder from the obligor. The HDC Rule is generally duplicated by the Uniform Consumer Credit Code, other state statutes or the common law in some states. However, liability of assignees for claims under state consumer protection laws may differ.
Because the receivables constitute retail installment sale contracts, the receivables will be subject to the requirements of the HDC Rule. Accordingly, the issuing entity, as holder of the related receivables, will be subject to any claims or defenses that the purchaser of the applicable financed vehicle may assert against the seller of the financed vehicle. As to each obligor, those claims under the HDC Rule are limited to a maximum liability equal to the amounts paid by the obligor on the related receivable. CONA will represent in the purchase agreement that each of the receivables complied at the time it was originated or made in all material respects with all requirements of applicable federal, state and local laws, and regulations thereunder, except where the failure to comply (i) was remediated or cured in all material respects prior to the cut-off date, or (ii) would not render such receivable unenforceable or create liability for the depositor or the issuing entity, as an assignee of such receivable.
Any shortfalls or losses arising in connection with the matters described in the three preceding paragraphs, to the extent not covered by amounts payable to the noteholders from amounts available under a credit enhancement mechanism, could result in losses to noteholders.
Courts have applied general equitable principles to secured parties pursuing repossession and litigation involving deficiency balances. These equitable principles may have the effect of relieving an obligor from some or all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of secured parties under the Uniform Commercial Code and related laws violate the due process protections provided under the 14th Amendment to the Constitution of the United States. Courts have generally upheld the notice provisions of the Uniform Commercial Code and related laws as reasonable or have found that the repossession and resale by the creditor do not involve sufficient state action to afford constitutional protection to obligors.
Consumer Financial Protection Bureau
The Bureau of Consumer Financial Protection, known as the Consumer Financial Protection Bureau (the CFPB) is responsible for implementing and enforcing various federal consumer protection laws and supervising certain depository institutions and their affiliates and non-depository institutions offering financial products and services to consumers, including indirect automobile financing. CONA is subject to regulation, supervision and enforcement by the CFPB. The CFPB has been conducting fair lending examinations of automobile lenders and their dealer markup and compensation policies. In addition, we understand that the CFPB has also been conducting investigations concerning certain other automobile lending practices, including insurance and other add-on products.
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If any of these practices were found to violate the Equal Credit Opportunity Act or other laws with respect to a receivable, CONA may modify the terms of the underlying retail installment sale contract as described below and/or could be obligated to repurchase that receivable from the issuing entity. In addition, we, the originator or the issuing entity could also possibly be subject to claims by the obligors on those contracts, and any relief granted by a court could potentially adversely affect such issuing entity.
CONA has initiated periodic reviews of its underwriting and credit policies and procedures to analyze both dealer-specific and portfolio-wide pricing data for potential disparities resulting from dealer discretionary pricing. CONA has in the past modified, and in the future may modify, its compliance program or may reduce the interest rate, make a cash payment and/or reduce the principal balance (e.g., by reallocating previous payments made by obligors so that a greater portion of the payment is allocated to principal as a reflection of a retroactive interest rate adjustment) of an identified receivable. If CONA, as servicer, were to voluntarily reduce the interest rate or principal balance of any receivable owned by the issuing entity, it may be required under the transaction documents to purchase the affected receivable. See Risk FactorsRisks related to the characteristics, servicing and performance of the receivablesFailure to comply with consumer protection laws may result in losses on your investment in this prospectus for a discussion of the obligations of the servicer to purchase certain modified receivables and how a failure to comply with consumer protection laws may impact the issuing entity, the receivables or your investment in the notes.
Certain Matters Relating to Insolvency
CONA is a national banking association subject to regulation whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to applicable limits. CONA is subject to comprehensive regulation and periodic examination by the FDIC and the CFPB.
The depositor has been structured as a limited purpose entity and will engage only in activities permitted by its organizational documents. Under the depositors organizational documents[, at any time that any obligations of the depositor (or of any issuing trust formed by the depositor) are outstanding, the depositor may only file a voluntary petition under the United States Bankruptcy Code (the Bankruptcy Code) or any similar applicable state law with the prior unanimous written consent of its board of directors, including all of its independent directors]. However, there is a risk that the depositor could file a voluntary petition under the Bankruptcy Code or any similar applicable state law or become subject to an involuntary petition, a conservatorship or a receivership, as may be applicable in the future. See Risk Factors Risks related to the servicer and other transaction partiesA depositor bankruptcy could delay or limit payments to you.
If CONA were to become insolvent, were to violate applicable regulations, or if other similar circumstances were to occur, the FDIC could be appointed as conservator or receiver of CONA. The FDIC, as conservator or receiver, would have various powers under the Federal Deposit Insurance Act, including the power to repudiate any contract to which CONA was a party, if the FDIC determined that the performance of the contract was burdensome and that repudiation would promote the orderly administration of CONAs affairs. Among the contracts that might be repudiated are the purchase agreement, the servicing agreement, the asset representations review agreement and the administration agreement.
Also, none of the parties to those contracts could exercise any right or power to terminate, accelerate, or declare a default under those contracts, or otherwise affect CONAs rights under those contracts without the FDICs consent, for 90 days after the receiver is appointed or 45 days after the conservator is appointed, as applicable. During the same period, the FDICs consent would also be needed for any attempt to obtain possession of or exercise control over any property of CONA. The requirement to obtain the FDICs consent before taking these actions relating to a banks contracts or property is sometimes referred to as an automatic stay.
The FDICs repudiation power would enable the FDIC to repudiate CONAs obligations as servicer or administrator and any ongoing repurchase, purchase or indemnity obligations under the purchase agreement and the servicing agreement but would not empower the FDIC to repudiate transfers of receivables made under the purchase agreement prior to the appointment of the receiver or conservator. However, if those transfers were not respected as legal true sales, then the depositor, as purchaser under the purchase agreement would be treated as having made a loan to CONA, secured by the transferred receivables. The FDIC ordinarily has the power to repudiate secured loans and then recover the collateral after paying damages (as described further below) to the lenders.
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The FDIC has adopted regulations entitled Treatment of financial assets transferred in connection with a securitization or participation (the FDIC Rule). The FDIC Rule contains four different safe harbors, each of which limits the powers that the FDIC can exercise in the insolvency of an insured depository institution when it is appointed as receiver or conservator (and references in this section to the FDIC are in its capacity as such). To qualify for a safe harbor, the securitization or participation must satisfy the requirements specified for that type of transaction. If one or more of the requirements specified in the safe harbor are not met, the FDICs powers would not be limited by the FDIC Rule. The relevant safe harbor for this securitization will be either the safe harbor for securitizations that do not satisfy the requirements for sale accounting treatment or the safe harbor for securitizations that satisfy the requirements for sale accounting treatment. The discussion of the FDIC Rule in this prospectus is limited to those two safe harbors.
The requirements imposed by the FDIC Rule include provisions that are required to be contained in the documentation for the securitization. These provisions limit the structural features of the transaction in specified ways, impose obligations on one or more of the trust, the depositor and any other intermediate entities that may be a transferee (which entities are jointly considered to be the issuing entity for purposes of the FDIC Rule), require the servicer and the sponsor to make specified disclosures, provide ongoing reporting on specified items and define specified aspects of the relationships among the parties. In order to satisfy the requirements of the FDIC Rule to include these provisions in the documentation, the indenture will contain the FDIC Rule Covenant, which will contain the requisite provisions and that obligates the issuing entity to perform each of the specified obligations, other than those obligations that are specifically assigned exclusively to the servicer or the sponsor. See The Indenture FDIC Rule Covenant in this prospectus. The purchase agreement, the sale agreement, the servicing agreement and the indenture will obligate the originator, the depositor, the sponsor and the servicer to perform its specified functions under the FDIC Rule Covenant. The failure of the issuing entity to perform its obligations under the FDIC Rule Covenant will not constitute an event of default, nor will the failure of the servicer to perform its obligations under the FDIC Rule Covenant constitute a servicer replacement event. However, the noteholders, the certificateholders and the indenture trustee will retain the right to exercise any other remedies permitted by the indenture or applicable law in respect of these breaches.
If the FDIC is appointed as conservator or receiver for an insured depository institution that has effected a securitization that is covered by the FDIC Rule, but for which accounting sale treatment does not apply, there are several possible series of events that could occur. The FDIC will succeed to the obligations of the insured depository institution, whether as servicer, sponsor or otherwise. If the FDIC becomes the servicer or otherwise controls distributions of collections, the FDIC would have the choice of whether or not to pay or apply collections from the financial assets in accordance with the applicable securitization documents. If the FDIC chooses not to pay or apply the collections, it will be in monetary default, and the indenture trustee at the direction of the holders of at least a majority of the outstanding note balance of the controlling class, the servicer or the Majority Certificateholders will be entitled to deliver a notice and other information required by the FDIC Rule to the FDIC requesting the exercise of contractual rights under the transaction documents because of the FDICs monetary default. Upon delivery of such notice, the indenture trustee or the owner trustee, as applicable, may exercise any contractual rights such party may have in accordance with the transaction documents and the FDIC Rule. In exercising such contractual rights, the indenture trustee will act at the written direction of the holders of at least a majority of the outstanding note balance of the controlling class and the owner trustee will act at the written direction of the majority certificateholders. If the FDIC does not cure the monetary default within ten business days, then the FDIC will have been deemed to have consented to the exercise of those contractual rights. However, the FDIC, as receiver or conservator, is not required to take any action under the FDIC Rule after a monetary default other than providing consents, waivers and execution of transfer documents as may be reasonably requested in the ordinary course of business in order to facilitate the exercise of such contractual rights.
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Another series of events could occur if, following an insolvency, the FDIC seeks to exercise its power to repudiate contracts in connection with a transaction for which the safe harbor applicable to transactions which do not satisfy the requirements for accounting sale treatment applies. The FDIC Rule gives the FDIC the choice, following repudiation, either to pay damages within ten business days or to permit the exercise of contractual rights as described in the preceding paragraph. If the FDIC elects to pay damages, it is obligated to pay noteholders an amount equal to the par value of the notes outstanding on the date the FDIC is appointed as conservator or receiver of the insured depository institution, less any payments of principal received by the noteholders prior to and through the date of repudiation, plus unpaid, accrued interest through the date of repudiation in accordance with the transaction documents to the extent of collections actually received through the date of repudiation. If the damages paid by the FDIC do not include interest from the date of repudiation to the date of payment, the indenture will provide that the indenture trustee should apply Available Funds from the reserve account and the collection account to pay such shortfall. However, upon payment of these damages, the FDIC Rule provides that all liens or claims on the financial assets created pursuant to the securitization documents shall be released. If the FDIC were to assert successfully that the lien of the indenture trustee on the reserve account and the collection account were released and the assets in those accounts were transferred to the FDIC, then noteholders would not receive interest from the date of repudiation to the date of payment. To the extent that the certificates constitute obligations within the meaning of the FDIC Rule, the owner trustee (based on written instructions setting forth the damages calculation provided by the majority certificateholders) will notify the indenture trustee and the FDIC of the damages due to the certificateholders.
Damages paid by the FDIC will be distributed to noteholders and, if applicable, to certificateholders on the earlier of (1) the next payment date on which such damages could be distributed and (2) the earliest practicable date that the indenture trustee could declare a special payment date, subject to applicable provisions of the indenture, applicable law and the procedures of any applicable clearing agency. The indenture trustee will be authorized and instructed to maintain possession and control of any reserve account, the collection account and all amounts on deposit therein. If the date on which damages are to be distributed to noteholders and, if applicable, to certificateholders is not a regular payment date, then the amount of interest payable to the noteholders will be prorated to such date, as provided in the indenture. Subject to the risk noted above that the FDIC may attempt to assert that the amounts in any reserve account or collection account must be released to the FDIC, the indenture trustee will use amounts on deposit in any reserve account and the collection account, in addition to the amounts paid by the FDIC, to pay amounts owing to noteholders. Any damages with respect to the certificates paid by the FDIC following repudiation will be distributed by the owner trustee to the certificateholders on a pro rata basis.
If the safe harbor applicable to transactions that satisfy the requirements for accounting sale treatment under generally accepted accounting principles applies to a transaction, the FDIC as, receiver or conservator, could not exercise its statutory authority to disaffirm or repudiate contracts, reclaim, recover or recharacterize as property of the sponsor or the receivership the transferred financial assets. However, the FDIC could challenge whether the transaction satisfied the requirements for accounting sale treatment or whether the transaction satisfied the requirements of a safe harbor under the FDIC Rule. In a transaction structured to comply with the FDIC Rule, the transfers by CONA of the receivables and the issuance by each issuing entity of the notes are intended to satisfy all the applicable requirements of the FDIC Rule safe harbor applicable to securitizations that do not satisfy the requirements for sale accounting treatment, and the issuing entity will state in the indenture its belief that those requirements will have been met. As the FDIC Rule is untested regulatory safe harbor, its interpretation remains uncertain. If any provision of the FDIC Rule is amended, or any interpretive guidance regarding the FDIC Rule is provided by the FDIC or its staff, as a result of which the issuing entity determines that an amendment to the FDIC Rule Covenant is necessary or desirable, then the issuing entity and the indenture trustee will be authorized to amend the FDIC Rule Covenant in accordance with such FDIC Rule amendment or guidance without noteholder or certificateholder consent.
In addition to structuring the transaction to comply with the FDIC Rule, we will structure the transfer of receivables under the sale agreement between CONA and the depositor with the intent that it would be characterized as a legal true sale. If the transfer is so characterized, then the FDIC likely would not be able to recover the transferred receivables using its repudiation power even if the transaction does not satisfy all of the terms of the FDIC Rule. However, complying with the FDIC Rule would provide additional assurance that the FDIC would not seek to recover the transferred receivables using its repudiation power, as well as providing additional assurance that any automatic stay that could be imposed if CONA were in receivership or conservatorship would not interfere with servicing of the receivables and contractual payments relating to the notes and the certificates.
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If the FDIC were to successfully assert that the transaction described in this prospectus did not comply with the FDIC Rule and that the transfer of receivables under the purchase agreement was not a legal true sale, then the depositor would be treated as having made a loan to CONA, secured by the transferred receivables. If the FDIC repudiated that loan, the amount of compensation that the FDIC would be required to pay would be limited to actual direct compensatory damages determined as of the date of the FDICs appointment as conservator or receiver. There is no statutory definition of actual direct compensatory damages but the term does not include damages for lost profits or opportunity. Absent the application of a safe harbor under the FDIC Rule, the staff of the FDIC takes the position that upon repudiation these damages would not include interest accrued to the date of actual repudiation, so that the issuing entity would have a claim for interest only through the date of the appointment of the FDIC as conservator or receiver. Since the FDIC may delay repudiation for up to 180 days following that appointment, the issuing entity may not have a claim for interest accrued during this 180-day period. In addition, in one case involving the repudiation by the Resolution Trust Corporation, formerly a sister agency of the FDIC, of certain secured zero-coupon bonds issued by a savings association, a United States federal district court held that actual direct compensatory damages in the case of a marketable security meant the market value of the repudiated bonds as of the date of repudiation. If that courts view were applied to determine the issuing entitys actual direct compensatory damages in the event the FDIC repudiated the transfer of receivable to the issuing entity under the sale agreement, the amount paid to the issuing entity could, depending upon circumstances existing on the date of the repudiation, be less than the principal amount of the offered notes and the interest accrued thereon and unpaid to the date of payment.
Regardless of whether the FDIC Rule applies or the transfer under the purchase agreement is respected as a legal true sale, if the FDIC were appointed as conservator or receiver for CONA, the FDIC could:
| require the trustee of the issuing entity to go through an administrative claims procedure to establish its right to payments collected on the motor vehicle loans held by the issuing entity; or |
| request a stay of proceedings with respect to the issuing entitys claims against CONA; or |
| repudiate without compensation CONAs ongoing obligations under the servicing agreement, such as the duty to collect payments or otherwise service the receivables, or its obligations under an administration agreement to provide administrative services to the issuing entity; or |
| argue that the automatic stay prevents the indenture trustee and other transaction parties from exercising their rights, remedies and interests for up to 90 days. |
There are also statutory prohibitions on (1) any attachment or execution being issued by any court upon assets in the possession of the FDIC, as conservator or receiver, and (2) any property in the possession of the FDIC, as conservator or receiver, being subject to levy, attachment, garnishment, foreclosure or sale without the consent of the FDIC.
The FDIC, as conservator or receiver, may have the power to (i) prevent any of the indenture trustee or the noteholders from appointing a successor servicer under the servicing agreement or (ii) authorize CONA to stop servicing the receivables.
If the FDIC were to take any of these actions, payments of principal and interest on the offered notes could be delayed or reduced. See Risk FactorsRisks related to the servicer and other transaction partiesFDIC Receivership or Conservatorship of CONA Could Result in Delays in Payments or Losses on your Notes in this prospectus.
The operations and financial condition of the sponsor and its affiliates are subject to extensive regulation and supervision and to various requirements and restrictions under federal banking laws. The OCC, Board of Governors of the Federal Reserve System and the FDIC have broad enforcement powers over the originator, the sponsor and its affiliates. These enforcement powers may adversely affect the operations of the issuing entity and the rights of the holders of the notes issued by the issuing entity under the servicing agreement and administration agreement prior to the appointment of a receiver or conservator.
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If a federal banking agency finds that any agreement or contract, including the purchase agreement, the sale agreement, the servicing agreement or the administration agreement, of the sponsor, or the performance of any obligation under such an agreement or contract, or any activity of the sponsor that is related to its obligations under such an agreement or contract, constitutes an unsafe or unsound practice, violates any law, rule, regulation, or written condition or agreement applicable to the sponsor or would adversely affect the safety and soundness of the sponsor, that banking agency has the power to order or direct the sponsor, among other things, to rescind that agreement or contract, refuse to perform that obligation, terminate that activity, or take such other action as the banking agency determines to be appropriate. The sponsor may not be liable for contractual damages for complying with such an order or directive, and noteholders may not have any legal recourse against the applicable banking agency.
Dodd-Frank Orderly Liquidation Framework
General. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), among other things, gives the FDIC authority to act as receiver of bank holding companies, financial companies and their respective subsidiaries in specific situations under the Orderly Liquidation Authority (OLA) as described in more detail below. The OLA provisions became effective on July 22, 2010. The proceedings, standards, powers of the receiver and many other substantive provisions of OLA differ from those of the Bankruptcy Code in several respects. In addition, because the legislation remains subject to clarification through FDIC regulations and has yet to be applied by the FDIC in any receivership, it is unclear exactly what impact these provisions will have on any particular company, including the Corporation, the depositor or a particular issuing entity, or their respective creditors.
Potential Applicability to Capital One Financial Corporation, the depositor and issuing entities. There is uncertainty about which companies could be subject to OLA rather than the Bankruptcy Code. For a company to become subject to OLA, the Secretary of the Treasury (in consultation with the President of the United States) must determine, among other things, that the company is in default or in danger of default, the failure of such company and its resolution under the Bankruptcy Code would have serious adverse effects on financial stability in the United States, no viable private sector alternative is available to prevent the default of the company and a liquidation of such company pursuant to OLA would mitigate these adverse effects. Because CONA is an insured depository institution, it would not be subject to OLA, but the Corporation could be subject to OLA.
Under certain circumstances, the depositor or issuing entity could also potentially be subject to the provisions of OLA as a covered subsidiary of the Corporation. For the issuing entity or the depositor to be subject to receivership under OLA as a covered subsidiary of the Corporation (1) the FDIC would have to be appointed as receiver for the Corporation under OLA as described above, and (2) the FDIC and the Secretary of the Treasury would have to jointly determine that (a) the depositor or the issuing entity, as applicable, is in default or in danger of default, (b) appointment of the FDIC as receiver of that covered subsidiary would avoid or mitigate serious adverse effects on the financial stability or economic conditions of the United States and (c) such appointment would facilitate the orderly liquidation of the Corporation.
The Secretary of the Treasury could determine that the failure of the Corporation or any potential covered subsidiary thereof would have serious adverse effects on financial stability in the United States. In addition, OLA could apply to the depositor or the issuing entity, and, if it were to apply, the timing and amounts of payments to you with respect to your notes could be less favorable than under the Bankruptcy Code.
FDICs Repudiation Power Under OLA. If the FDIC were appointed receiver of the depositor or the issuing entity under OLA, the FDIC would have various powers under OLA, including the power to repudiate any contract to which the depositor or the issuing entity was a party, if the FDIC determined that performance of the contract was burdensome and that repudiation would promote the orderly administration of the relevant entitys affairs. In January 2011, the Acting General Counsel of the FDIC (the Acting General Counsel) issued an advisory opinion respecting, among other things, its intended application of the FDICs repudiation power under OLA. In that advisory opinion, the Acting General Counsel stated that nothing in the Dodd-Frank Act changes the existing law
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governing the separate existence of separate entities under other applicable law. As a result, the Acting General Counsel was of the opinion that the FDIC as receiver for a covered financial company, which could include the depositor or the issuing entity, cannot repudiate a contract or lease unless it has been appointed as receiver for an entity that is party to that contract or lease or the separate existence of that entity may be disregarded under other applicable law. In addition, the Acting General Counsel was of the opinion that until such time as the FDIC Board of Directors adopts a regulation further addressing the application of Section 210(c) of the Dodd-Frank Act (which, among other things, grants the FDIC, as receiver, the power to repudiate certain contracts), if the FDIC were to become receiver for a covered financial company, which could include the depositor or the issuing entity, the FDIC will not, in the exercise of its authority under Section 210(c) of the Dodd-Frank Act, reclaim, recover, or recharacterize as property of that covered financial company or the receivership assets transferred by that covered financial company prior to the end of the applicable transition period of a regulation provided that such transfer satisfies the conditions for the exclusion of such assets from the property of the estate of that covered financial company under the Bankruptcy Code. Although the Acting General Counsels advisory opinion does not bind the FDIC or its Board of Directors, and could be modified or withdrawn in the future, the advisory opinion also states that the Acting General Counsel will recommend that the FDIC Board of Directors incorporates a transition period of 90 days for any provisions in any further regulations affecting the statutory power to disaffirm or repudiate contracts. To the extent any future regulations or subsequent FDIC actions in an OLA proceeding involving the depositor or the issuing entity are contrary to this advisory opinion, payment or distributions of principal and interest on the notes issued by the issuing entity could be delayed or reduced.
We will structure the transfers of receivables under each transfer agreement with the intent that they would be treated as legal true sales under applicable state law. If the transfers are so treated, based on the Acting General Counsel of the FDICs advisory opinion rendered in January 2011 and other applicable law, CONA believes that the FDIC would not be able to recover the receivables transferred under each transfer agreement using its repudiation power. However, if those transfers were not respected as legal true sales, then the depositor under the purchase agreement would be treated as having made a loan to CONA, and the issuing entity under the sale agreement would be treated as having made a loan to the depositor, in each case secured by the transferred receivables. The FDIC, as receiver, generally has the power to repudiate secured loans and then recover the collateral after paying actual direct compensatory damages to the lenders as described below. If the depositor were placed in receivership under OLA, the FDIC could assert that the depositor effectively still owned the transferred receivables because the transfers by the depositor to the issuing entity were not true sales. In such case, the FDIC could repudiate that transfer of receivables and the issuing entity would have a secured claim for actual direct compensatory damages as described below. Furthermore, if the issuing entity were placed in receivership under OLA, this repudiation power would extend to the notes issued by such issuing entity. In such event, noteholders would have a secured claim in the receivership of such issuing entity. The amount of damages that the FDIC would be required to pay would be limited to actual direct compensatory damages determined as of the date of the FDICs appointment as receiver. There is no general statutory definition of actual direct compensatory damages in this context, but the term does not include damages for lost profits or opportunity. However, under OLA, in the case of any debt for borrowed money, actual direct compensatory damages is no less than the amount lent plus accrued interest plus any accreted original issue discount as of the date the FDIC was appointed receiver and, to the extent that an allowed secured claim is secured by property the value of which is greater than the amount of such claim and any accrued interest through the date of repudiation or disaffirmance, such accrued interest.
Regardless of whether the transfers under the transfer agreements are respected as legal true sales, as receiver for the depositor or the issuing entity, the FDIC could:
| require the issuing entity, as assignee of CONA and the depositor, to go through an administrative claims procedure to establish its rights to payments collected on the related receivables; or |
| if the FDIC were appointed receiver of the issuing entity under OLA, it could require the indenture trustee or the owner trustee to go through an administrative claims procedure to establish its right to payments on the notes or certificates, as applicable; or |
| request a stay of proceedings to liquidate claims or otherwise enforce contractual and legal remedies against the depositor or the issuing entity. |
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There are also statutory prohibitions on (1) any attachment or execution being issued by any court upon assets in the possession of the FDIC, as receiver, (2) any property in the possession of the FDIC, as receiver, being subject to levy, attachment, garnishment, foreclosure or sale without the consent of the FDIC, and (3) any person exercising any right or power to terminate, accelerate or declare a default under any contract to which the depositor or the issuing entity that is subject to OLA is a party, or to obtain possession of or exercise control over any property of the depositor or the issuing entity or affect any contractual rights of the depositor or the issuing entity that is subject to OLA, without the consent of the FDIC for 90 days after appointment of FDIC as receiver. The requirement to obtain the FDICs consent before taking these actions relating to a covered companys contracts or property is comparable to the automatic stay under the Bankruptcy Code.
If the FDIC, as receiver for the depositor or the issuing entity, were to take any of the actions described above, payments and/or distributions of principal and interest on the notes issued by the issuing entity could be delayed and may be reduced.
FDICs Avoidance Power Under OLA. The proceedings, standards and many substantive provisions of OLA relating to preferential transfers differ from those of the Bankruptcy Code. If the depositor or the issuing entity or any of their respective affiliates were to become subject to OLA, there is an interpretation under OLA that previous transfers of receivables by the depositor or the issuing entity or those affiliates perfected for purposes of state law and the Bankruptcy Code could nevertheless be avoided as preferential transfers.
In December 2010, the Acting General Counsel of the FDIC issued an advisory opinion providing an interpretation of OLA which concludes that the treatment of preferential transfers under OLA was intended to be consistent with, and should be interpreted in a manner consistent with, the related provisions under the Bankruptcy Code. In addition, on July 6, 2011, the FDIC issued a final rule that, among other things, codified the Acting General Counsels interpretation. The final rule was effective August 15, 2011. Based on the final rule, a transfer of the receivables perfected by the filing of a UCC financing statement against the depositor and the issuing entity as provided in the applicable transfer agreement would not be avoidable by the FDIC as a preference under OLA due to any inconsistency between OLA and the Bankruptcy Code in defining when a transfer has occurred under the preferential transfer provisions of OLA. To the extent subsequent FDIC actions in an OLA proceeding are contrary to the final rule, payment or distributions of principal and interest on the securities issued by the issuing entity could be delayed or reduced.
Servicemembers Civil Relief Act
Under the terms of the Servicemembers Civil Relief Act, as amended (the Relief Act), a borrower who enters military service after the origination of such obligors receivable (including a borrower who was in reserve status and is called to active duty after origination of the receivable) may not be charged interest (including fees and charges) above an annual rate of 6% during the period of such obligors active duty status, unless a court orders otherwise upon application of the lender. Interest at a rate in excess of 6% that would otherwise have been incurred but for the Relief Act is forgiven. The Relief Act applies to obligors who are service members and includes members of the Army, Navy, Air Force, Marines, National Guard, Reserves (when such enlisted person is called to active duty), Coast Guard, officers of the National Oceanic and Atmospheric Administration, officers of the U.S. Public Health Service assigned to duty with the Army or Navy and certain other persons as specified in the Relief Act. Because the Relief Act applies to obligors who enter military service (including reservists who are called to active duty) after origination of the related receivable, no information can be provided as to the number of receivables that may be affected by the Relief Act. In addition, military operations may increase the number of citizens who are in active military service, including persons in reserve status who have been called or will be called to active duty. Application of the Relief Act to receivables with annual rates (including fees and charges) greater than 6% would adversely affect, for an indeterminate period of time, the ability of the servicer to collect full amounts of interest on certain of the receivables. Additionally, the servicers customary servicing practices for the benefit of obligors who enter military service (and, in some cases, family members and certain other related parties of active military personnel, even where not required by law) has in the past and may in the future exceed the minimum requirements required by the Relief Act or other applicable law, such as by reducing the annual rate even lower than the statutory maximum annual rate of 6%. Any shortfall in interest collections resulting from the application of the Relief Act or similar legislation or regulations which would not be recoverable from the related receivables, would result in a reduction of the amounts distributable to the noteholders. In addition, the Relief Act
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and other applicable law impose limitations that would impair the ability of the servicer to repossess the vehicles financed by an affected receivable during the obligors period of active duty status, and, under certain circumstances, during an additional specified period thereafter. Also, the laws of some states impose similar limitations during the obligors period of active duty status and, under certain circumstances, during an additional period thereafter as specified under the laws of those states. Thus, in the event that the Relief Act or similar state legislation or regulations applies to any receivable which goes into default, there may be delays in payment and losses on your notes. Any other interest shortfalls, deferrals or forgiveness of payments on the receivables resulting from the application of the Relief Act or similar state legislation or regulations may result in delays in payments or losses on your notes.
Any shortfalls or losses arising in connection with the matters described above, to the extent not covered by amounts payable to the noteholders from amounts available under a credit enhancement mechanism, could result in losses to noteholders.
In addition to the laws limiting or prohibiting deficiency judgments, numerous other statutory provisions, including the Bankruptcy Code and similar state laws, may interfere with or affect the ability of a secured party to realize upon collateral or to enforce a deficiency judgment. For example, if an obligor commences bankruptcy proceedings, a bankruptcy court may prevent a creditor from repossessing a vehicle, and, as part of the rehabilitation plan, reduce the amount of the secured indebtedness to the market value of the vehicle at the time of filing of the bankruptcy petition, as determined by the bankruptcy court, leaving the creditor as a general unsecured creditor for the remainder of the indebtedness. A bankruptcy court may also reduce the monthly payments due under a receivable or change the rate of interest and time of repayment of the receivable.
State and local government bodies across the United States generally have the power to create licensing and permit requirements. It is possible that the issuing entity could fail to have some required licenses or permits. In that event, the issuing entity could be subject to liability or other adverse consequences.
Any shortfalls or losses arising in connection with the matters described above, to the extent not covered by amounts payable to the noteholders from amounts available from the reserve account or other credit enhancement, could result in losses to noteholders.
The Class A-1 notes will be structured to be eligible securities for purchase by money market funds as defined in paragraph (a)(11) of Rule 2a-7 under the Investment Company Act of 1940, as amended (the Investment Company Act). Rule 2a-7 includes additional criteria for investments by money market funds, including requirements and clarifications relating to a portfolio credit risk analysis, maturity, liquidity and risk diversification. It is the responsibility solely of the fund and its advisor to satisfy those requirements.]
Certain Volcker Rule Considerations
The issuing entity will be relying on an exclusion or exemption from the definition of investment company under the Investment Company Act contained in [Section [ ] of] [Rule [] under] the Investment Company Act, although there may be additional exclusions or exemptions available to the issuing entity. The issuing entity is being structured so as not to constitute a covered fund as defined in the regulations implementing Section 619 of the Dodd-Frank Act, commonly known as the Volcker Rule.
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Requirements for Certain EU and UK Regulated Persons and Affiliates
Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation and amending certain other European Union directives and regulations, as amended (the EU Securitization Regulation) has direct effect in member states of the EU and will be applicable in any non-EU states of the European Economic Area (the EEA) in which it has been implemented. The EU Securitization Regulation, together with all relevant implementing regulations in relation thereto, all regulatory and/or implementing technical standards in relation thereto or applicable in relation thereto pursuant to any transitional arrangements made pursuant to the EU Securitization Regulation and, in each case, any relevant guidance published in relation thereto by the European Banking Authority (the EBA), the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority (or in each case, any predecessor or any other applicable regulatory authority) or by the European Commission, in each case as amended and in effect from time to time, are referred to in this prospectus as the EU SR Rules.
Article 5 of the EU Securitization Regulation places certain conditions (the EU Investor Requirements) on investments in a securitisation (as defined in the EU Securitization Regulation) by institutional investors, defined by the EU Securitization Regulation to include (a) a credit institution or an investment firm as defined in and for purposes of Regulation (EU) No 575/2013, as amended, known as the Capital Requirements Regulation (the EU CRR), (b) an insurance undertaking or a reinsurance undertaking as defined in Directive 2009/138/EC, as amended, known as Solvency II, (c) an alternative investment fund manager as defined in Directive 2011/61/EU that manages and/or markets alternative investment funds in the EU, (d) an undertaking for collective investment in transferable securities (UCITS) management company, as defined in Directive 2009/65/EC, as amended, known as the UCITS Directive, or an internally managed UCITS, which is an investment company that is authorized in accordance with that Directive and has not designated such a management company for its management, and (e) with certain exceptions, an institution for occupational retirement provision falling within the scope of Directive (EU) 2016/2341, or an investment manager or an authorized entity appointed by such an institution for occupational retirement provision as provided in that Directive. Pursuant to Article 14 of the EU CRR, the EU Investor Requirements also apply to investments by certain consolidated affiliates, wherever established or located, of institutions regulated under the EU CRR (such affiliates, together with all such institutional investors, EU Affected Investors).
Prior to investing in (or otherwise holding an exposure to) a securitisation position (as defined in the EU Securitization Regulation), an EU Affected Investor, other than the originator, sponsor or original lender (each as defined in the EU Securitization Regulation) must, among other things, (a) verify that, where the originator or original lender is established in a third country (meaning, for purposes of the EU Securitization Regulation, not within the EU or the EEA), the originator or original lender grants all the credits giving rise to the underlying exposures on the basis of sound and well-defined criteria and clearly established processes for approving, amending, renewing and financing those credits and has effective systems in place to apply those criteria and processes to ensure that credit-granting is based on a thorough assessment of the obligors creditworthiness; (b) verify that, where the originator, sponsor or original lender is established in a third country (that is, not within the EU or the EEA), the originator, sponsor or original lender retains on an ongoing basis a material net economic interest which, in any event, shall not be less than 5%, determined in accordance with Article 6 of the EU Securitization Regulation, and discloses the risk retention to EU Affected Investors; (c) verify that the originator, sponsor or securitization special purpose entity (SSPE) has, where applicable, made available the information required by Article 7 of the EU Securitization Regulation (which sets out transparency requirements for originators, sponsors and SSPEs); and (d) carry out a due-diligence assessment which enables the EU Affected Investor to assess the risks involved, considering at least (i) the risk characteristics of the securitisation position and the underlying exposures, and (ii) all the structural features of the securitization that can materially impact the performance of the securitisation position.
In addition, while holding a securitisation position, an EU Affected Investor must also (a) establish appropriate written procedures in order to monitor, on an ongoing basis, its compliance with the foregoing requirements and the performance of the securitisation position and of the underlying exposures, (b) regularly perform stress tests on the cash flows and collateral values supporting the underlying exposures, (c) ensure internal reporting to its management body to enable adequate management of material risks, and (d) be able to demonstrate to its regulatory authorities that it has a comprehensive and thorough understanding of the securitisation position and its underlying exposures and has implemented written policies and procedures for managing risks of the securitisation position and maintaining records of the foregoing verifications and due diligence and other relevant information. It remains unclear what is and will be required for EU Affected Investors to demonstrate compliance with certain aspects of the EU Investor Requirements.
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Article 6 of the EU Securitization Regulation imposes a direct obligation on the originator, sponsor or original lender of a securitization to retain a material net economic interest in the securitization of not less than 5% (the EU Risk Retention Requirements). Certain aspects of the EU Risk Retention Requirements are to be further specified in regulatory technical standards to be adopted by the European Commission as a delegated regulation. As at the date of this prospectus no such regulatory technical standards have been adopted by the European Commission or published in final form. Pursuant to Article 43(7) of the EU Securitization Regulation, until these regulatory technical standards apply, certain provisions of Delegated Regulation (EU) No. 625/2014 shall continue to apply in respect of the EU Risk Retention Requirements.
The EU Securitization Regulation is silent as to the jurisdictional scope of the EU Risk Retention Requirements and, consequently, whether, for example, they impose a direct obligation upon U.S.-established entities, such as CONA. However (i) the explanatory memorandum to the original European Commission proposal for legislation that was ultimately enacted as the EU Securitization Regulation stated that The current proposal thus imposes a direct risk retention requirement and a reporting obligation on the originator, sponsor or the original lenders For securitisations notably in situations where the originator, sponsor nor original lender is not established in the EU the indirect approach will continue to fully apply.; and (ii) the EBA, in its Feedback on the public consultation section of the draft regulatory technical standards on risk retention dated July 31, 2018, said: The EBA agrees however that a direct obligation should apply only to originators, sponsors and original lenders established in the EU as suggested by the European Commission in the explanatory memorandum. This interpretation (the EBA Guidance Interpretation) is, however, non-binding and not legally enforceable. Notwithstanding the foregoing, on the closing date, CONA will covenant and agree, with reference to the SR Rules as in effect and applicable on the closing date, that it will, as an originator (as such term is defined for the purposes of the EU Securitization Regulation), retain upon issuance of the notes, and on an ongoing basis for as long as any notes remain outstanding, a material net economic interest of not less than 5% in the securitization transaction described in this prospectus in the form of retention of at least 5% of the nominal value of each of the tranches sold or transferred to investors in accordance with the text of option (a) of Article 6(3) of the EU Securitization Regulation and option (a) of Article 6(3) of the UK Securitization Regulation, by holding (i) at least 5% of the nominal value of each class of notes and (ii) all the membership interests in the depositor (or one or more other wholly-owned special purpose subsidiaries of CONA), which in turn will hold at least 5% of the nominal value of the certificates, and on the terms, summarized in The SponsorSecuritization Regulations in this prospectus.
The EU Securitization Regulation provides that an entity shall not be considered an originator within the meaning thereof if it has been established or operates for the sole purpose of securitizing exposures. In this regard, see in particular, The Sponsor and The Originator in this prospectus for information with regard to CONAs business and related operations. With regard to CONAs credit-granting criteria and processes, see The Originator Credit Risk Management in this prospectus.
With respect to the UK, relevant UK established or UK regulated persons (as described below) are subject to the restrictions and obligations of Regulation (EU) 2017/2402 as it forms part of UK domestic law as retained EU law by operation of the EUWA, and as amended by the Securitisation (Amendment) (EU Exit) Regulations 2019 (and as it may be further amended, supplemented or replaced, from time to time) (the UK Securitization Regulation, and together with the EU Securitization Regulation, the Securitization Regulations). The UK Securitization Regulation, together with (i) all applicable binding technical standards made under the UK Securitization Regulation, (ii) any EU regulatory technical standards or implementing technical standards relating to the EU Securitization Regulation (including such regulatory technical standards or implementing technical standards which are applicable pursuant to any transitional provisions of the EU Securitization Regulation) forming part of UK domestic law by operation of the EUWA, (iii) all relevant guidance, policy statements or directions relating to the application of the UK Securitization Regulation (or any binding technical standards) published by the Financial Conduit Authority and/or the Prudential Regulation Authority (or their successors), (iv) any guidelines relating to the application of the EU Securitization Regulation which are applicable in the UK, (v) any other transitional, saving
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or other provision relevant to the UK Securitization Regulation by virtue of the operation of the EUWA, and (vi) any other applicable laws, acts, statutory instruments, rules, guidance or policy statements published or enacted relating to the UK Securitization Regulation, in each case as amended from time to time, are referred to in this prospectus as the UK SR Rules, and together with the EU SR Rules, the SR Rules.
Article 5 of the UK Securitization Regulation places certain conditions on investments in a securitisation (as defined in the UK Securitization Regulation) (the UK Investor Requirements, and together with the EU Investor Requirements, the Investor Requirements (and references in this prospectus to the applicable Investor Requirements shall mean such Investor Requirements to which a particular Affected Investor is subject)) by an institutional investor, defined by the UK Securitization Regulation to include (a) an insurance undertaking as defined in section 417(1) of the FSMA; (b) a reinsurance undertaking as defined in section 417(1) of the FSMA; (c) an occupational pension scheme as defined in section 1(1) of the Pension Schemes Act 1993 that has its main administration in the UK, or a fund manager of such a scheme appointed under section 34(2) of the Pensions Act 1995 that, in respect of activity undertaken pursuant to that appointment, is authorized for the purposes of section 31 of the FSMA; (d) an AIFM as defined in regulation 4(1) of the Alternative Investment Fund Managers Regulations 2013 which markets or manages AIFs (as defined in regulation 3 of those Regulations) in the UK; (e) a management company as defined in section 237(2) of the FSMA; (f) a UCITS as defined by section 236A of the FSMA, which is an authorized open ended investment company as defined in section 237(3) of the FSMA; and (g) a CRR firm as defined by Article 4(1)(2A) of Regulation (EU) No 575/2013, as it forms part of UK domestic law by virtue of the EUWA. The UK Investor Requirements also apply to investments by certain consolidated affiliates, wherever established or located, of such CRR firms (such affiliates, together with all such institutional investors, UK Affected Investors, and together with EU Affected Investors, Affected Investors).
Prior to investing in (or otherwise holding an exposure to) a securitisation position (as defined in the UK Securitization Regulation), a UK Affected Investor, other than the originator, sponsor or original lender (each as defined in the UK Securitization Regulation) must, among other things: (a) verify that, where the originator or original lender is established in a third country (i.e. not within the UK), the originator or original lender grants all the credits giving rise to the underlying exposures on the basis of sound and well-defined criteria and clearly established processes for approving, amending, renewing and financing those credits and has effective systems in place to apply those criteria and processes to ensure that credit-granting is based on a thorough assessment of the obligors creditworthiness; (b) verify that, if established in the third country (i.e. not within the UK), the originator, sponsor or original lender retains on an ongoing basis a material net economic interest which, in any event, shall not be less than 5 percent, determined in accordance with Article 6 of the UK Securitization Regulation, and discloses the risk retention to the UK Affected Investors; (c) verify that, where established in a third country (i.e. not within the UK), the originator, sponsor or securitization special purpose entity, where applicable, made available information which is substantially the same as that which it would have made available under Article 7 of the UK Securitization Regulation (which sets out certain transparency requirements) if it had been established in the UK and has done so with such frequency and modalities as are substantially the same as those with which it would have made information available if it had been established in the UK; and (d) carry out a due-diligence assessment which enables the UK Affected Investor to assess the risks involved, considering at least (i) the risk characteristics of the securitisation position and the underlying exposures, and (ii) all the structural features of the securitisation that can materially impact the performance of the securitisation position.
In addition, while holding a securitisation position, a UK Affected Investor must also (a) establish appropriate written procedures in order to monitor, on an ongoing basis, its compliance with the foregoing requirements and the performance of the securitisation position and of the underlying exposures, (b) regularly perform stress tests on the cash flows and collateral values supporting the underlying exposures, (c) ensure internal reporting to its management body to enable adequate management of material risks and (d) be able to demonstrate to its regulatory authorities that it has a comprehensive and thorough understanding of the securitisation position and its underlying exposures and has implemented written policies and procedures for managing risks of the securitisation position and maintaining records of the foregoing verifications and due diligence and other relevant information.
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Certain temporary transitional arrangements are in effect, pursuant to directions made by the relevant UK regulators, with regard to the UK Investor Requirements. Under such arrangements, until March 31, 2022, subject to applicable conditions and in certain respects, a UK Affected Investor may be permitted to comply with a provision of the EU Securitization Regulation to which it would have been subject before the UK Securitization Regulation came into effect, in place of a corresponding provision of the UK Securitization Regulation. Notwithstanding the above, prospective investors that are UK Affected Investors should note the differences in the wording, as between the EU Investor Requirements and the UK Investor Requirements, with respect to the provision of information on the underlying exposures and investor reports as between the EU Investor Requirements and the UK Investor Requirements. There remains considerable uncertainty as to how UK Affected Investors should ensure compliance with certain aspects of the UK Investor Requirements, including in relation to the verification of disclosure of information and whether the information provided to the noteholders in relation to this securitization is or will be sufficient to meet such requirements, and also what view the relevant UK regulators might take.
Article 6 of the UK Securitization Regulation imposes a direct obligation on the originator, sponsor or original lender of a securitisation to retain a material net economic interest in the securitisation of not less than 5 percent (the UK Risk Retention Requirements). Certain aspects of the UK Risk Retention Requirements are to be further specified in technical standards to be adopted by the Financial Conduct Authority.
Similarly to the position under the EU Securitization Regulation as regards the EU Risk Retention Requirements (see above), the UK Securitization Regulation is silent as to the jurisdictional scope of the UK Risk Retention Requirements and, consequently, whether, for example, they impose a direct obligation upon U.S.-established entities, such as CONA. Although the wording of the UK Securitization Regulation with regard to the UK Risk Retention Requirements is similar to that of the EU Securitization Regulation with regard to the EU Risk Retention Requirements, such that the EBA Guidance Interpretation may be indicative of the position likely to be taken by the Financial Conduct Authority of the UK (the UK regulator) in the future, the EBA Guidance Interpretation is non-binding and not legally enforceable. Notwithstanding the foregoing, on the closing date, CONA will covenant and agree, with reference to the SR Rules as in effect and applicable on the closing date, that it will, as an originator (as such term is defined for the purposes of the UK Securitization Regulation), retain upon issuance of the notes, and on an ongoing basis for as long as any notes remain outstanding, a material net economic interest of not less than 5% in the securitization transaction described in this prospectus in the form of retention of at least 5% of the nominal value of each of the tranches sold or transferred to investors in accordance with the text of option (a) of Article 6(3) of the EU Securitization Regulation and option (a) of Article 6(3) of the UK Securitization Regulation, by holding (i) at least 5% of the nominal value of each class of notes and (ii) all the membership interests in the depositor (or one or more other wholly-owned special purpose subsidiaries of CONA), which in turn will hold at least 5% of the nominal value of the certificates, and on the terms, summarized in The SponsorSecuritization Regulations in this prospectus.
The UK Securitization Regulation provides that an entity shall not be considered an originator within the meaning thereof if it has been established or operates for the sole purpose of securitizing exposures. In this regard, see in particular, The Sponsor and The Originator in this prospectus for information with regard to CONAs business and related operations. With regard to CONAs credit-granting criteria and processes, see The Originator Credit Risk Management in this prospectus.
The transaction described in this prospectus is not being structured to ensure compliance by any person with the transparency requirements in Article 7 of the EU Securitization Regulation or Article 7 of the UK Securitization Regulation. In particular, neither CONA nor any other party to the transaction described in this prospectus will be required to produce any information or disclosure for purposes of Article 7 of the EU Securitization Regulation or Article 7 of the UK Securitization Regulation, or to take any other action in accordance with, or in a manner contemplated by, such articles.
Except as described herein, no party to the transaction described in this prospectus is required by the transaction documents, or intends, to take or refrain from taking any action with regard to such transaction in a manner prescribed or contemplated by the SR Rules, or to take any action for purposes of, or in connection with, facilitating or enabling compliance by any person with the applicable Investor Requirements and any corresponding national measures that may be relevant.
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Each prospective investor that is an Affected Investor is required to independently assess and determine whether the agreement by CONA to retain the Retained Interest as described in this prospectus and the information provided in this prospectus generally, or otherwise to be provided to noteholders, are or will be sufficient for the purposes of such prospective investors compliance with the applicable Investor Requirements and any corresponding national measures that may be relevant. Prospective investors that are Affected Investors should be aware that the interpretation of the applicable Investor Requirements remains uncertain and that supervisory authorities and national regulators may have different views of how the applicable Investor Requirements, should be interpreted and those views are still evolving.
None of CONA, the depositor, the issuing entity, the underwriters, the indenture trustee, their respective affiliates nor any other party to the transactions described in this prospectus (a) makes any representation that the agreement by CONA to retain the Retained Interest as described in this prospectus or any information provided in this prospectus generally, or otherwise to be provided to noteholders, are or will be sufficient in all circumstances for purposes of any persons compliance with the applicable Investor Requirements and any corresponding national measures that may be relevant, or with any other applicable legal, regulatory or other requirements, or that the structure of the notes, CONA (including its holding of a material net economic interest of not less than 5% in the securitization transaction described in this prospectus) and the transactions described herein are otherwise compliant with the SR Rules or any other applicable legal, regulatory or other requirements; (b) shall have any liability to any person with respect to any deficiency in such agreement or any such information, or with respect to any persons failure or inability to comply with the applicable Investor Requirements and any corresponding national measures that may be relevant, or with any other applicable legal, regulatory or other requirements (other than, in each case, any liability arising under a transaction document as a result of a breach by such person of that transaction document); or (c) shall have any obligation to enable any person to comply with the applicable Investor Requirements and any corresponding national measures that may be relevant, or with any other applicable legal, regulatory or other requirements, or any other obligation with respect to the SR Rules (other than, in each case, the specific obligations undertaken and/or representations made by CONA in that regard under the transaction documents).
Any failure by an Affected Investor to comply with the applicable Investor Requirements with respect to an investment in the offered notes may result in the imposition of a penalty regulatory capital charge on that investment or of other regulatory sanctions by the competent authority of such Affected Investor. The SR Rules and any other changes to the regulation or regulatory treatment of the notes for some or all investors may negatively impact the regulatory position of noteholders or prospective investors and have an adverse impact on the value and liquidity of the notes. Prospective investors should analyze their own regulatory position, and are encouraged to consult with their own investment and legal advisors, regarding application of and compliance with any applicable Investor Requirements or other applicable regulations and the suitability of the offered notes for investment.]
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a discussion of the material United States federal income tax consequences relevant to the purchase, ownership and disposition of the offered notes (and thus references to notes in this discussion generally mean the offered notes unless the context otherwise requires). This discussion is based upon current provisions of the Code, existing and proposed Treasury Regulations thereunder, current administrative rulings, judicial decisions and other applicable authorities. To the extent that the following summary relates to matters of law or legal conclusions with respect thereto, such summary represents the opinion of Mayer Brown LLP, special federal tax counsel to the depositor and the issuing entity (Special Tax Counsel), subject to the qualifications set forth in this section. There are no cases or Internal Revenue Service (the IRS) rulings on similar transactions involving both debt and equity interests issued by the issuing entity with terms similar to those of the notes. As a result, it is possible that the IRS could challenge the conclusions reached in this prospectus, and no ruling from the IRS has been or will be sought on any of the issues discussed below. Furthermore, legislative, judicial or administrative changes may occur, perhaps with retroactive effect, which could affect the accuracy of the statements and conclusions set forth in this prospectus as well as the tax consequences to noteholders.
The following discussion does not purport to deal with all aspects of United States federal income taxation that may be relevant to the noteholders in light of their personal investment circumstances nor, except for limited discussions of particular topics, to holders subject to special treatment under the United States federal income tax laws, including:
| financial institutions; |
| broker-dealers; |
| life insurance companies; |
| tax-exempt organizations; |
| persons that hold the notes or certificates as a position in a straddle or as part of a synthetic security or hedge, conversion transaction or other integrated investment; |
| persons that have a functional currency other than the U.S. dollar; and |
| investors in pass-through entities. |
This information is directed to prospective purchasers that are unrelated to the issuing entity (or a holder of a certificate) who purchase offered notes at their issue price in the initial distribution thereof, who are citizens or residents of the United States, including domestic corporations and partnerships, and who hold the notes as capital assets within the meaning of Section 1221 of the Code. We suggest that prospective investors consult with their tax advisors as to the federal, state, local, foreign and any other tax consequences to them of the purchase, ownership and disposition of the notes.
In connection with the offering of the offered notes, Special Tax Counsel has rendered its opinion, assuming compliance with the trust agreement, the indenture and certain other transaction documents, and subject to the assumptions and qualifications therein, to the effect that, for United States federal income tax purposes, the issuing entity will not be classified as an association or publicly traded partnership (PTP) taxable as a corporation, and the offered notes (other than any notes, if any, held by (A) the issuing entity or a person that beneficially owns more than 99% of the issuing entity for United States federal income tax purposes, (B) a member of an expanded group (as defined in Treasury Regulation Section 1.385-1(c)(4) or any successor regulation then in effect) that includes the issuing entity or a person beneficially owning a certificate, (C) a controlled partnership (as defined in Treasury Regulation Section 1.385-1(c)(1) or any successor regulation then in effect) of such expanded group or (D) a disregarded entity owned directly or indirectly by a person described in preceding clause (B) or (C)) will be treated as indebtedness. Noteholders should be aware that, as of the closing date, no transaction closely comparable to that contemplated herein has been the subject of any judicial decision, Treasury Regulation or IRS revenue ruling. Although Special Tax Counsel will issue tax opinions to the effect described above, the IRS may successfully take a contrary position and the tax opinions are not binding on the IRS or on any court. The discussion below assumes the characterizations provided in these opinions are correct.
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A U.S. Person or United States Person means a beneficial owner of notes that is, for United States federal income tax purposes, (i) a citizen or resident of the United States, (ii) a corporation created or organized in or under the laws of the United States, any State, or the District of Columbia, (iii) a trust that is subject to the primary supervision of a court within the United States and the substantial decisions of which are controlled by one or more U.S. Persons or (iv) an estate the income of which is subject to United States federal income taxation regardless of its source. A Foreign Person means any person other than a U.S. Person or entity or arrangement treated as a partnership.
If an entity or arrangement that is classified as a partnership for United States federal income tax purposes holds a note, the tax treatment of persons treated as its partners for United States federal income tax purposes will generally depend upon the status of the partner and the activities of the partnership. Partnerships and other entities that are classified as partnerships for United States federal income tax purposes and persons holding a note through a partnership or other entity classified as a partnership for United States federal income tax purposes are urged to consult their own tax advisors.
Characterization of the Issuing Entity and the Offered Notes
At closing, the parties will treat the issuing entity as a grantor trust for United States federal income tax purposes, pursuant to which treatment the certificates will represent a pro rata undivided interest in the income and assets of the issuing entity. Prior to or in connection with the sale of any certificates to a third party, Special Tax Counsel will have rendered its opinion, assuming compliance with the trust agreement, the indenture and certain other transaction documents, and subject to the assumptions and qualifications therein, to the effect that the issuing entity will be treated as a grantor trust under for United States federal income tax purposes. If the IRS were to contend successfully that the issuing entity is not properly classified as a grantor trust, then it likely would be treated as a business entity classified pursuant to Treasury Regulation Section 301.7701-2 or a nominee or agent for each beneficial owner of a certificate (creating a co-ownership arrangement if there is more than one beneficial owner of the certificates). If the issuing entity is treated as a business entity and there is more than one beneficial owner of the certificates, it would be a partnership and, to the extent the issuing entity failed to meet certain qualifying income tests, possibly a PTP taxable as a corporation. Although Special Tax Counsel is providing an opinion to the effect that for United States federal income tax purposes the issuing entity will not be classified as an association or a PTP taxable as a corporation, if the issuing entity were treated as a PTP taxable as a corporation, the issuing entity would be subject to corporate federal income tax on its taxable income, reducing the amount available for distribution to the holders of the notes.
Treatment of the issuing entity as a partnership that is not a PTP taxable as a corporation also could adversely affect holders of the notes. If the issuing entity were to be treated as a partnership for United States federal income tax purposes and the partners in such partnership included foreign persons, the IRS might assert that the issuing entity should have been withholding tax on amounts allocated to or distributed to such foreign persons, and if such assertion were successful, the issuing entity would be liable for such tax, and may additionally owe penalties and interest, which could adversely affect the issuing entity, the issuing entitys ability to perform its obligations under the transaction documents, and the holders of the notes. In addition, under the audit rules for partnerships, taxes arising from audit adjustments are required to be paid by the entity rather than by its partners or members unless an entity elects otherwise. It is unclear to what extent these elections will be available to the issuing entity and how any such elections may affect the procedural rules available to challenge any audit adjustment that would otherwise be available in the absence of any such elections. Any tax liability payable by the issuing entity may reduce the cash flow that would otherwise be available to make payments on all notes.
The issuing entity and each noteholder generally agree to treat the notes for United States federal income tax purposes as indebtedness. However, it is possible that the IRS may assert that the notes (or certain classes of notes) are not properly characterized as indebtedness for United States federal income tax purposes. If any notes were not characterized as debt for United States federal income tax purposes, the issuing entity may be recharacterized as a partnership and the holders of the recharacterized notes would be treated as partners in the
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issuing entity. In general, a partnership is not subject to United States federal income tax, rather, the partners are required separately to take into account their allocable share of the income, gains, losses, deductions and credits of the partnership. The allocation of these items could result in the holders of the recharacterized notes receiving income in timing and amounts different than expected, and certain expenses allocated to such holders may not be eligible for deduction or subject to limitations on deductibility. In addition, a recharacterization could result in the imposition of United States withholding tax on amounts allocated to foreign persons holding recharacterized notes, cause such foreign persons to be deemed to be engaged in a United States trade or business and/or create procedural and withholding obligations on transfers of such recharacterized notes under Section 1446(f) of the Code. Further, in the case where certain notes are recharacterized and certain notes are not recharacterized, a tax-exempt U.S. Person who holds a recharacterized note could be treated as receiving unrelated business taxable income from the issuing entity.
Prospective investors should consult with their own tax advisors with regard to the consequences to them of each possible alternative tax characterization of the issuing entity and the notes and the consequences of holding the notes in view of their particular circumstances. The remainder of the discussion below assumes that the issuing entity is treated as a grantor trust for United States federal income tax purposes and the notes will be characterized as indebtedness for United States federal income tax purposes.
Certain Tax Considerations of Holding the Offered Notes
Treatment of Stated Interest and Original Issue Discount. Stated interest on a note will be taxable to a U.S. noteholder as ordinary income when received or accrued in accordance with the U.S. noteholders regular method of tax accounting.
If the stated redemption price at maturity (generally equal to the principal amount as of the original issuance plus all interest other than qualified stated interest payments payable prior to or at maturity) of any note exceeds the issue price (as defined below) of the note by more than a de minimis amount (i.e., by an amount equal to or greater than 0.25% of the remaining weighted average maturity of the note at the time such note is acquired multiplied by the stated redemption price at maturity) the excess will constitute original issue discount (OID) for United States federal income tax purposes. A notes issue price will generally be the first price at which a substantial amount of the notes are sold (excluding sales to bond houses, brokers, or similar persons acting as underwriters, placement agents, or wholesalers) for money.
If the notes are in fact issued at a greater than de minimis discount or are treated as having been issued with OID under the Treasury Regulations, a U.S. Person must include OID in income over the term of the notes under a constant yield method. In general, OID must be included in income in advance of the receipt of the cash representing that income.
In the case of a debt instrument (such as a note) as to which the repayment of principal may be accelerated as a result of the prepayment of other obligations securing the debt instrument, under Section 1272(a)(6) of the Code, the periodic accrual of OID is determined by taking into account (i) a reasonable prepayment assumption in accruing OID (generally, the assumption used to price the debt offering) and (ii) adjustments in the accrual of OID when prepayments do not conform to the prepayment assumption, and Treasury Regulations could be adopted changing the application of these provisions to the notes. It is unclear whether those provisions would be applicable to the notes in the absence of such Treasury Regulations or whether use of a reasonable prepayment assumption may be required or permitted without reliance on these rules. If this provision applies to the notes, the amount of OID that will accrue in any given accrual period may either increase or decrease depending upon the actual prepayment rate. In the absence of such Treasury Regulations (or statutory or other administrative clarification), any information reports or returns to the IRS and the U.S. Persons regarding OID, if any, will be based on the assumption that the receivables will prepay at a rate based on the assumption used in pricing the notes offered hereunder. However, no representation will be made regarding the prepayment rate of the receivables. See Maturity And Prepayment Considerations in this prospectus. Accordingly, U.S. Persons are advised to consult their own tax advisors regarding the impact of any prepayments under the receivables (and the OID rules) if the notes offered hereunder are issued with OID.
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In the case of a note purchased with de minimis OID, generally, a portion of such OID is taken into income upon each principal payment on the note. Such portion equals the de minimis OID times a fraction whose numerator is the amount of principal payment made and whose denominator is the stated principal amount of the note. Such income generally is capital gain.
It is possible that certain notes will be treated as Short-Term Notes, which have a fixed maturity date not more than one year from the issue date. A holder of a Short-Term Note will generally not be required to include OID on the Short-Term Note in income as it accrues, provided the holder of the note is not an accrual method taxpayer, a bank, a broker or dealer that holds the note as inventory, a regulated investment company or common trust fund, or the beneficial owner of pass-through entities specified in the Code, or provided the holder does not hold the instrument as part of a hedging transaction, or as a stripped bond or stripped coupon. Instead, the holder of a Short-Term Note would include the OID accrued on the note in gross income upon a sale or exchange of the note or at maturity, or if the note is payable in installments, as principal is paid thereon. A holder of a Short-Term Note would be required to defer deductions for any interest expense on an obligation incurred to purchase or carry the note to the extent it exceeds the sum of the interest income, if any, and OID accrued on the note. However, a holder may elect to include OID in income as it accrues on all obligations having a maturity of one year or less held by the holder in that taxable year or thereafter, in which case the deferral rule of the preceding sentence will not apply. For purposes of this paragraph, OID accrues on a Short-Term Note on a ratable, straight-line basis, unless the holder irrevocably elects, under Treasury Regulations to be issued by the Treasury Department, to apply a constant interest method to such obligation, using the holders yield to maturity and daily compounding.
Special considerations apply to any U.S. Person that also beneficially owns certificates. A beneficial owner of a certificate will generally be treated as the owner of a pro rata undivided interest in the assets of the issuing entity and as the obligor of a pro rata portion of the obligations of the issuing entity. Consequently, a certificateholder would generally be treated as paying its pro rata share of each interest payment on the notes (i.e., the portion of each interest payment that corresponds to the certificateholders percentage interest in the issuing entity). If the U.S. Person also beneficially owns certificates, it is likely that the pro rata portion of such interest received on the notes by the U.S. Person that the U.S. Person would otherwise be treated as paying in its capacity as a certificateholder will be disregarded for United States federal income tax purposes and not treated as received. Under such treatment, the U.S. Person would not include in income the portion of the interest on such notes that would otherwise be treated as paid by the U.S. Person, but the remainder of interest received on the note would be unaffected by the U.S. Persons position as a certificateholder. U.S. Persons that are certificateholders should consult their tax advisors concerning the treatment of interest on their notes that is attributable to their certificates.
Disposition of Notes. If a U.S. Person sells a note, the noteholder will recognize gain or loss in an amount equal to the difference between the amount realized on the sale and the holders adjusted tax basis in the note. The adjusted tax basis of the note to a particular noteholder will equal the noteholders cost for the note, increased by any OID previously included by the noteholder in income from the note and decreased by any principal payments previously received by the noteholder on the note. Any gain or loss will be capital gain or loss if the note was held as a capital asset, except for gain representing accrued interest not previously included in income. Capital gain or loss will be long-term if the note was held by the holder for more than one year and otherwise will be short-term. Any capital losses realized generally may be used by a corporate taxpayer only to offset capital gains, and by an individual taxpayer only to the extent of capital gains plus $3,000 of other income.
Potential Acceleration of Income. Accrual method noteholders that prepare an applicable financial statement (as defined in Section 451 of the Code, which includes any GAAP financial statement, Form 10-K annual statement, audited financial statement or a financial statement filed with any federal agency for non-tax purposes) generally would be required to include certain items of income in gross income no later than the time such amounts are reflected on such a financial statement. This could result in an acceleration of income recognition for income items differing from the above description. The Treasury Department released Treasury Regulations that exclude from this rule any item of gross income for which a taxpayer uses a special method of accounting required by certain sections of the Code, including income subject to the timing rules for OID and de minimis OID, income under the contingent payment debt instrument rules, income under the variable rate debt instrument rules, and market discount (including de minimis market discount).
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Net Investment Income Tax. Certain non-corporate U.S. Persons will be subject to a 3.8 percent tax, in addition to regular tax on income and gains, on some or all of their net investment income, which generally will include interest, original issue discount, and market discount realized on a note and any net gain recognized upon a disposition of a note. U.S. Persons should consult their tax advisors regarding the applicability of this tax in respect of their notes.
Information Reporting and Backup Withholding. The issuing entity or applicable withholding agent will be required to report annually to the IRS, and to each noteholder of record, the amount of interest paid on the notes, and the amount of interest withheld for United States federal income taxes, if any, for each calendar year, except as to exempt holders which are, generally, tax-exempt organizations, qualified pension and profit-sharing trusts, individual retirement accounts, or nonresident aliens who provide certification as to their status. Each holder will be required to provide to the issuing entity, under penalties of perjury, IRS Form W-9 or other similar form containing the holders name, address, correct federal taxpayer identification number, and a statement that the holder is not subject to backup withholding. If a nonexempt noteholder fails to provide the required certification, the issuing entity will be required to withhold at the currently applicable rate from interest otherwise payable to the holder, and remit the withheld amount to the IRS as a credit against the holders federal income tax liability. Noteholders should consult their tax advisors regarding the application of the backup withholding and information reporting rules to their particular circumstances.
Because the depositor will treat the issuing entity as a grantor trust and all notes as indebtedness for United States federal income tax purposes, the depositor will not comply with the tax reporting requirements that would apply under any alternative characterizations of the issuing entity.
Tax Consequences to Foreign Persons. If interest paid to or accrued by a Foreign Person is not effectively connected with the conduct of a trade or business within the United States by the Foreign Person, subject to the below discussion regarding FATCA (defined below), interest generally will be considered portfolio interest, and generally will not be subject to United States federal income tax and withholding tax, as long as the Foreign Person:
| is not actually or constructively a 10 percent shareholder of the issuing entity or of a holder of certificates, or a controlled foreign corporation with respect to which the issuing entity or a holder of certificates is a related person within the meaning of the Code; |
| is not a bank receiving interest described in Section 881(c)(3)(A) of the Code; |
| the interest is not contingent interest described in Section 871(h)(4) of the Code; and |
| provides an appropriate statement on IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, signed under penalties of perjury, certifying that the beneficial owner of the note is a Foreign Person and providing that Foreign Persons name and address. If the information provided in this statement changes, the Foreign Person must so inform the issuing entity within thirty (30) days of change. |
If the interest were not portfolio interest or if applicable certification requirements were not satisfied, then the interest would be subject to United States federal income and withholding tax at a rate of 30 percent unless reduced or eliminated pursuant to an applicable tax treaty. Foreign Persons should consult their tax advisors with respect to the application of the withholding and information reporting regulations to their particular circumstances.
Any capital gain realized on the sale, redemption, retirement or other taxable disposition of a note by a Foreign Person will be exempt from United States federal income and withholding tax, provided that:
| the gain is not effectively connected with the conduct of a trade or business in the United States by the Foreign Person; and |
| in the case of a foreign individual, the Foreign Person is not present in the United States for 183 days or more in the taxable year. |
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If the interest, gain or income on a note held by a Foreign Person is effectively connected with the conduct of a trade or business in the United States by the Foreign Person, the holder, although exempt from the withholding tax previously discussed if an appropriate statement is furnished, generally will be subject to United States federal income tax on the interest, gain, or income at regular federal income tax rates. In addition, if the Foreign Person is a foreign corporation, it may be subject to a branch profits tax equal to the currently applicable rate of its effectively connected earnings and profits within the meaning of the Code for the taxable year, as adjusted for specified items, unless it qualifies for a lower rate under an applicable tax treaty.
Foreign Account Tax Compliance Act. Pursuant to the Sections 1471 through 1474 of the Code and the Treasury Regulations promulgated thereunder (FATCA), a United States withholding tax at the rate of 30% is imposed on payments of interest, or, under rules previously scheduled to take effect beginning on January 1, 2019, on gross proceeds from the sale or other taxable disposition of the notes, made to non-U.S. financial institutions and certain other non-U.S. non-financial entities (including, in some instances, where such an entity is acting as an intermediary) that fail to comply with certain information reporting obligations. Treasury Regulations have been published in proposed form that eliminate withholding on payments of gross proceeds from such dispositions. Pursuant to these proposed Treasury Regulations, the issuing entity and any withholding agent may rely on this change to FATCA withholding until the final regulations are issued. If an amount in respect of United States withholding tax were to be deducted or withheld from interest or principal payments on the notes as a result of a holders failure to comply with these rules or the presence in the payment chain of an intermediary that does not comply with these rules, neither the issuing entity nor any paying agent nor any other person would be required to pay additional amounts as a result of the deduction or withholding of such tax. As a result, investors may receive less interest or principal than expected. Certain countries have entered into, and other countries are expected to enter into, agreements with the United States to facilitate the type of information reporting required under FATCA. While the existence of such agreements will not eliminate the risk that notes will be subject to the withholding described above, these agreements are expected to reduce the risk of the withholding for investors in (or indirectly holding notes through financial institutions in) those countries. Foreign Persons and U.S. Persons holding notes through a non-U.S. intermediary should consult their own tax advisors regarding FATCA and whether it may be relevant to their purchase, ownership and disposition of the notes.
Tax Regulations for Related-Party Note Acquisitions. Treasury Regulations under Section 385 of the Code address the debt or equity treatment of instruments held by certain parties related to the issuer of such instrument. In particular, in certain circumstances, a note that otherwise would be treated as debt is treated as stock for United States federal income tax purposes during periods in which the note is held by an applicable related party (generally based on a group of corporations or controlled partnerships connected through 80% direct or indirect ownership links). Under the Treasury Regulations, any notes treated as stock under these rules could result in adverse consequences to such related party noteholder, including that United States federal withholding taxes could apply to distributions on the notes. If the issuing entity or a withholding agent in the payment chain were to become liable for any such withholding or failure to so withhold, the resulting impositions could reduce the cash flow that would otherwise be available to make payments on all notes. In addition, when a recharacterized note is acquired by a beneficial owner that is not an applicable related party, that note is generally treated as reissued for United States federal income tax purposes and thus may have tax characteristics differing from notes of the same class that were not previously held by a related party. The issuing entity does not intend to track such notes for this purpose. As a result of considerations arising from these rules, prospective investors should be aware that, if they purchase notes, the trust agreement will provide restrictions on their ability to invest in certificates through certain affiliates that are United States persons for United States federal income tax purposes. These Treasury Regulations are complex and we urge you to consult your tax advisors regarding the possible effects of these rules.
STATE AND LOCAL TAX CONSEQUENCES
The discussion above does not address the tax treatment of the issuing entity or holders, or the tax consequences of purchase, ownership or disposition of the notes under any state or local tax law. The activities to be undertaken by the servicer in servicing and collecting the receivables will take place throughout the United States and, therefore, many different state and local tax regimes potentially apply to different portions of these transactions. Additionally, it is possible a state or local jurisdiction may assert its right to impose tax on the issuing entity with respect to its income related to receivables collected from customers located in such jurisdiction. It is also possible that a state may require that a holder treated as an equity-owner (including non-resident holders) file state income
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tax returns with the state pertaining to receivables collected from customers located in such state (and may require withholding on related income). Certain states have also recently enacted partnership audit rules that correspond with the audit rules that now apply to partnerships for United States federal income tax purposes, and similar considerations apply to those state partnership audit rules as apply to the current United States federal partnership audit rules. Investors should consult their tax advisors regarding state and local tax consequences.
Any taxpayer that fails to timely file an information return with the IRS with respect to a reportable transaction (as defined in Section 6011 of the Code and the Treasury Regulations thereunder) will be subject to a penalty in the amount of $10,000 in the case of a natural person and $50,000 in any other case. Such penalty may be higher depending on whether the transaction is a listed transaction (as defined in Section 6011 of the Code and the Treasury Regulations thereunder). Prospective investors are advised to consult their own tax advisors regarding any possible disclosure obligations in light of their particular circumstances.
CERTAIN CONSIDERATIONS FOR ERISA AND OTHER U.S. BENEFIT PLANS
Subject to the following discussion, the offered notes may be acquired by pension, profit-sharing or other employee benefit plans, subject to the fiduciary responsibility provisions of Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), as well as individual retirement accounts, Keogh plans and other plans covered by Section 4975 of the Code and entities deemed to hold plan assets of any of the foregoing (each a benefit plan). Section 406 of ERISA and Section 4975 of the Code prohibit a benefit plan from engaging in certain transactions with persons that are parties in interest under ERISA or disqualified persons under the Code with respect to such benefit plan. A violation of these prohibited transaction rules may result in an excise tax or other penalties and liabilities under ERISA and the Code for such persons or the fiduciaries of the benefit plan. In addition, Title I of ERISA also requires fiduciaries of a benefit plan subject to ERISA to make investments that are prudent, diversified and in accordance with the governing plan documents. The prudence of a particular investment must be determined by the responsible fiduciary of a benefit plan by taking into account the particular circumstances of the benefit plan and all of the facts and circumstances of the investment, including, but not limited to, the matters discussed under Risk Factors in this prospectus and the fact that in the future, there may be no market in which such fiduciary will be able to sell or otherwise dispose of the notes should the benefit plan purchase them. Unless the context clearly indicates otherwise, any reference in this section to the acquisition, holding or disposition of the notes shall also mean the acquisition, holding or disposition of a beneficial interest in such notes.
Certain transactions involving the issuing entity might be deemed to constitute prohibited transactions under ERISA and the Code with respect to a benefit plan that purchased notes if assets of the issuing entity were deemed to be assets of the benefit plan. Under a regulation issued by the U.S. Department of Labor (the ERISA regulation), the assets of the issuing entity would be treated as plan assets of a benefit plan for the purposes of ERISA and the Code only if the benefit plan acquired an equity interest in the issuing entity and none of the exceptions to plan assets contained in the ERISA regulation were applicable. An equity interest is defined under the ERISA regulation as an interest other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features. Although there is little guidance on the subject, assuming the offered notes constitute debt for local law purposes, the depositor believes that, at the time of their issuance, the offered notes should be treated as indebtedness of the issuing entity without substantial equity features for purposes of the ERISA regulation. This determination is based upon the traditional debt features of the offered notes, including the reasonable expectation of purchasers of notes that the offered notes will be repaid when due, traditional default remedies, as well as the absence of conversion rights, warrants or other typical equity features. The debt treatment of the offered notes for ERISA purposes could change if the issuing entity incurs losses. This risk of recharacterization is enhanced for notes that are subordinated to other classes of securities. In the event of a withdrawal or downgrade to below investment grade of the ratings of the offered notes, the subsequent acquisition of the offered notes or interest therein by a benefit plan or plan subject to federal, state, local or other laws that are substantially similar to Title I of ERISA or Section 4975 of the Code (Similar Law) is prohibited.
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However, without regard to whether the offered notes are treated as an equity interest for purposes of the ERISA regulation, the acquisition or holding of the offered notes by, or on behalf of, a benefit plan could be considered to give rise to a prohibited transaction if the issuing entity, the depositor, the originator, the servicer, the administrator, the underwriters, the owner trustee, the indenture trustee or any of their affiliates is or becomes a party in interest or a disqualified person with respect to such benefit plan. Certain exemptions from the prohibited transaction rules could be applicable to the purchase and holding of the offered notes by a benefit plan depending on the type and circumstances of the plan fiduciary making the decision to acquire such notes and the relationship of the party in interest or disqualified person to the benefit plan. Included among these exemptions are: Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code for certain transactions between a benefit plan and persons who are parties in interest or disqualified persons solely by reason of providing services to the benefit plan or being affiliated with such service providers; Prohibited Transaction Class Exemption (PTCE) 96-23, (as amended), regarding transactions effected by in-house asset managers; PTCE 95-60 (as amended), regarding investments by insurance company general accounts; PTCE 91-38 (as amended), regarding investments by bank collective investment funds; PTCE 90-1, regarding investments by insurance company pooled separate accounts; and PTCE 84-14 (as amended), regarding transactions effected by qualified professional asset managers. Even if the conditions specified in one or more of these exemptions are met, the scope of the relief provided by these exemptions might or might not cover all acts which might be construed as prohibited transactions. There can be no assurance that any of these, or any other exemption, will be available with respect to any particular transaction involving the offered notes and prospective purchasers that are benefit plans should consult with their advisors regarding the applicability of any such exemption.
In addition, because the underwriters, the trustees, the depositor, the servicer or their affiliates may receive certain benefits in connection with the sale or holding of offered notes, the purchase of offered notes using plan assets over which any of these parties or their affiliates has investment authority, or renders investment advice for a fee with respect to the assets of the benefit plan, or is the employer or other sponsor of the benefit plan, might be deemed to be a violation of a provision of Title I of ERISA or Section 4975 of the Code. Accordingly, the offered notes may not be purchased using the assets of any benefit plan if any of the underwriters, the trustees, the depositor, the servicer or their affiliates has investment authority, or renders investment advice for a fee with respect to the assets of the benefit plan, or is an employer or other sponsor of the benefit plan, unless an applicable prohibited transaction exemption is available to cover such purchase or holding of the notes or the transaction is not otherwise prohibited.
Governmental plans (as defined in Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA) are not subject to Title I of ERISA and are also not subject to the prohibited transaction provisions under Section 4975 of the Code. However, such plans may be subject to Similar Law. In addition, any such plan that is qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code is subject to the prohibited transaction roles set forth in Section 503 of the Code. Accordingly, fiduciaries of governmental and church plans, in consultation with their advisors, should consider the requirements of their respective pension codes with respect to investments in the offered notes, as well as general fiduciary considerations.
By acquiring an offered note (or any interest therein), each purchaser or transferee (and, if the purchaser or transferee is, or is using the assets of, a benefit plan, any other plan or an entity deemed to hold plan assets of a plan (each, a Plan), its fiduciary) (i) will be deemed to represent and warrant that either (a) it is not acquiring and will not hold the offered notes (or any interest therein) on behalf of or with the assets of a benefit plan or any Plan subject to Similar Law or (b) the acquisition, holding and disposition of such note (or any interest therein) will not give rise to a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or a violation of any Similar Law and (ii) acknowledges and agrees if it is a benefit plan or a Plan that is subject to Similar Law, it shall not acquire such note (or any interest therein) at any time that the ratings on such note are below investment grade or if such note has been characterized as other than indebtedness for applicable local law purposes.
The sale of offered notes to a Plan is in no respect a representation that this investment meets all relevant legal requirements with respect to investments by Plans generally or by a particular Plan, or that this investment is appropriate for Plans generally or any particular Plan. A Plan fiduciary considering the acquisition of the offered notes should consult its legal advisors regarding the matters discussed above and other applicable legal requirements.
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Subject to the terms and conditions set forth in the underwriting agreement relating to the offered notes, the depositor has agreed to sell and the underwriters named below have severally but not jointly agreed to purchase the principal amount of the offered notes set forth opposite its name below subject to the satisfaction of certain conditions precedent.
Underwriters |
Principal Amount of Class A-1 Notes |
Principal Amount of Class A-2[-A] Notes |
[Principal Amount of Class A-2-B Notes] |
Principal Amount of Class A-3 Notes |
Principal Amount of Class A-4 Notes |
|||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||
$ | $ | $ | $ | $ |
The underwriting agreement provides that the obligations of the underwriters are subject to certain conditions precedent and that the underwriters will be obligated to purchase all the offered notes if any are purchased. The underwriting agreement provides that, in the event of a default by an underwriter, in certain circumstances the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated. The depositor has been advised by the underwriters that the underwriters propose to offer the offered notes to the public initially at the offering prices set forth on the cover page of this prospectus and to certain dealers at these prices less the concessions and reallowance discounts set forth below:
Selling Concession Not to Exceed |
Reallowance Discount Not to Exceed |
|||||||
Class A-1 Notes |
% | % | ||||||
Class A-2[-A] Notes |
% | % | ||||||
[Class A-2-B Notes] |
% | % | ||||||
Class A-3 Notes |
% | % | ||||||
Class A-4 Notes |
% | % |
If all of the offered notes are not sold at the initial offering price, the underwriters may change the offering price and other selling terms. After the initial public offering, the underwriters may change the public offering price and selling concessions and reallowance discounts to dealers.
There currently is no secondary market for any class of notes and there is a risk that one will not develop. The underwriters expect, but will not be obligated, to make a market in each class of notes. A market for the notes may not develop, and if one does develop, it may not continue or it may not provide sufficient liquidity.
Until the distribution of the offered notes is completed, rules of the SEC may limit the ability of the underwriters and certain selling group members to bid for and purchase the notes. As an exception to these rules, the underwriter is permitted to engage in certain transactions that stabilize the prices of the offered notes. Such transactions consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of such offered notes.
The underwriters may engage in over-allotment transactions, stabilizing transactions, syndicate covering transactions and penalty bids with respect to the offered notes in accordance with Regulation M under the Securities and Exchange Act of 1934, as amended (the Exchange Act). Over-allotment transactions involve syndicate sales in excess of the offering size, which creates a syndicate short position. Stabilizing transactions permit bids to purchase the offered notes so long as the stabilizing bids do not exceed a specified maximum. Syndicate coverage transactions involve purchases of the offered notes in the open market after the distribution has been completed in order to cover syndicate short positions. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the offered notes originally sold by the syndicate member are purchased in a syndicate
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covering transaction. These over-allotment transactions, stabilizing transactions, syndicate covering transactions and penalty bids may cause the prices of the offered notes to be higher than they would otherwise be in the absence of these transactions. Neither the depositor nor any of the underwriters will represent that they will engage in any of these transactions or that these transactions, once commenced, will not be discontinued without notice.
CONA and the depositor have agreed to indemnify the underwriters against specified liabilities, including civil liabilities under the Securities Act of 1933, as amended (the Securities Act), or contribute to payments which the underwriters may be required to make in respect thereof. In the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and may, therefore, be unenforceable.
It is expected that delivery of the offered notes will be made against payment therefor on or about the closing date. Rule 15c6-1 of the SEC under the Exchange Act generally requires trades in the secondary market to settle in two business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the offered notes on the date hereof will be required, by virtue of the fact that the offered notes initially will settle more than two business days after the date hereof, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. It is suggested that purchasers of offered notes who wish to trade offered notes on the date hereof consult their own advisors.
Upon receipt of a request by an investor who has received an electronic prospectus from an underwriter or a request by that investors representative within the period during which there is an obligation to deliver a prospectus, CONA, the depositor or the underwriters will promptly deliver, or cause to be delivered, without charge, a paper copy of this prospectus.
In the ordinary course of its business one or more of the underwriters and their respective affiliates [have provided, and in the future] may provide other investment banking and commercial banking services to the depositor, the servicer, the issuing entity and their affiliates.] [One of the underwriters, or its affiliates, may be the swap counterparty under the interest rate swap agreement.] [One of the underwriters is an affiliate of the sponsor.] [An affiliate of one of the underwriters is the owner trustee.] [An affiliate of another underwriter is the indenture trustee.]
The indenture trustee, at the direction of the servicer, on behalf of the issuing entity, may from time to time invest the funds in accounts and permitted investments acquired from the underwriters or their affiliates.
The offered notes are new issues of securities with no established trading market. The underwriters tell us that they intend to make a market in the offered notes as permitted by applicable laws and regulations. However, the underwriters are not obligated to make a market in the offered notes and any such market-making may be discontinued at any time at the sole discretion of the underwriters.
The depositor will receive aggregate proceeds of approximately $[ ] from the sale of the offered notes (representing approximately [ ]% of the initial note balance of the offered notes) after paying the aggregate underwriting discount of $[ ] on the offered notes. Additional offering expenses are estimated to be $[ ].
[In addition to the portion of each class of notes retained to satisfy the sponsors credit risk retention obligations, certain of the offered notes initially may be retained by the depositor or an affiliate of the depositor (the Retained Notes). Any Retained Notes will not be sold to the underwriters under the underwriting agreement. Retained Notes may be subsequently sold from time to time to purchasers directly by the depositor or through underwriters, broker-dealers or agents who may receive compensation in the form of discounts, concessions or commissions from the depositor or the purchasers of the Retained Notes. If the Retained Notes are sold through underwriters or broker-dealers, the depositor will be responsible for underwriting discounts or commissions or agents commissions. The Retained Notes may be sold in one or more transactions at fixed prices, prevailing market prices at the time of sale, varying prices determined at the time of sale or negotiated prices.]
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Our affiliate, [ ], is a member of FINRA and is participating in the distribution of the notes. The distribution arrangements for this offering comply with the requirements of FINRA Rule 5121, regarding a FINRA member firms participation in the distribution of securities of an affiliate. In accordance with that rule, no FINRA member firm that has a conflict of interest, as defined therein, may make sales in this offering to any discretionary account without the prior approval of the customer. Our affiliates, including [ ], may use this prospectus in connection with offers and sales of the notes in the secondary market. These affiliates may act as principal or agent in those transactions. Secondary market sales will be made at prices related to market prices at the time of sale.]
Each underwriter has severally, but not jointly, represented to and agreed with the depositor and CONA that:
| it will not offer or sell any offered notes within the United States, its territories or possessions or to persons who are citizens thereof or residents therein, except in transactions that are not prohibited by any applicable securities, bank regulatory or other applicable law; and |
| it will not offer or sell any offered notes in any other country, its territories or possessions or to persons who are citizens thereof or residents therein, except in transactions that are not prohibited by any applicable securities law. |
United Kingdom Prohibition on Offers to UK Retail Investors
Each underwriter has severally, but not jointly, represented and agreed that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any notes to any UK retail investor in the UK. For the purposes of this provision:
(a) | the expression UK retail investor means a person who is one (or more) of the following: |
(i) | a retail client, as defined in point (8) of Article 2 of Commission Delegated Regulation (EU) 2017/565 as it forms part of UK domestic law by virtue of the EUWA, and as amended; or |
(ii) | a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA (such rules and regulations as amended) to implement Directive (EU) 2016/97 (as amended), where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of UK domestic law by virtue of the EUWA, and as amended; or |
(iii) | not a qualified investor as defined in Article 2 of the UK Prospectus Regulation; and |
(b) | the expression offer includes the communication in any form and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe to the notes. |
United Kingdom Other Regulatory Restrictions
Each underwriter has severally, but not jointly, represented and agreed that:
| it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any notes in circumstances in which Section 21(1) of the FSMA does not apply to the issuing entity or the depositor; and |
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| it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any notes in, from or otherwise involving the UK. |
Each underwriter has severally, but not jointly, represented and agreed that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any notes to any EU retail investor in the EEA. For the purposes of this provision:
(a) | the expression EU retail investor means a person who is one (or more) of the following: |
(i) | a retail client as defined in point (11) of Article 4(1) of MiFID II; or |
(ii) | a customer within the meaning of Directive (EU) 2016/97 (as amended), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or |
(iii) | not a qualified investor as defined in Article 2 of the EU Prospectus Regulation; and |
(b) | the expression offer includes the communication in any form and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe to the notes. |
This prospectus, including information included or incorporated by reference in this prospectus, may contain certain forward-looking statements. In addition, certain statements made in future SEC filings by the sponsor, the issuing entity or the depositor, in press releases and in oral and written statements made by or with the sponsors, the issuing entitys or the depositors approval may constitute forward-looking statements. Statements that are not historical facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements include information relating to, among other things, continued and increased business competition, an increase in delinquencies (including increases due to worsening of economic conditions), changes in demographics, changes in local, regional or national business, economic, political and social conditions, regulatory and accounting initiatives, changes in customer preferences, costs of integrating new businesses and technologies and cybersecurity and infrastructure risks and the impact of the COVID-19 pandemic and related public health measures on the sponsors business and on the ability of obligors to make timely payment on the receivables and the performance of the receivables, many of which are beyond the control of the sponsor, the issuing entity or the depositor. Forward-looking statements also include statements using words such as expect, anticipate, hope, intend, plan, believe, estimate or similar expressions. The sponsor, the issuing entity and the depositor have based these forward-looking statements on their current plans, estimates and projections, and you should not unduly rely on them.
Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions, including the risks discussed above. Future performance and actual results may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results and values are beyond the ability of the sponsor, the issuing entity or the depositor to control or predict. The forward-looking statements made in this prospectus speak only as of the date stated on the cover of this prospectus. The sponsor, the issuing entity and the depositor undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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[Insert disclosure required by Item 1117 of Regulation AB regarding any legal proceedings pending against the sponsor, depositor, indenture trustee, owner trustee, issuing entity, servicer contemplated by Item 1108(a)(3) of Regulation AB, originator contemplated by Item 1110(b) of Regulation AB, or other party contemplated by Item 1100(d)(1) of Regulation AB, or of which any property of the foregoing is the subject, that is material to security holders. Include similar information as to any such proceedings known to be contemplated by governmental authorities.]
Relevant legal matters relating to the notes, including United States federal income tax matters, will be passed upon for the sponsor, the depositor and the issuing entity by [ ]. Certain legal matters for the underwriters will be passed upon by [ ]. [ ] from time to time renders legal services to CONA and certain of its affiliates on other matters.
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Available Funds means, for any payment date and the related collection period, an amount equal to the sum of the following amounts: (i) all collections on deposit in the collection account received by the servicer during such collection period, (ii) the sum of the repurchase prices deposited into the collection account with respect to each receivable that is to become a repurchased receivable [during the related collection period][on such Payment Date] (iii) [the investment income accrued during such collection period from the investment of funds in the issuing entitys accounts, (iv)] the optional purchase price deposited into the collection account in connection with the exercise of the optional purchase [and] (v) any amounts in the reserve account in excess of the Specified Reserve Account Balance[, (vi) the Net [Swap] [Cap] Receipts (excluding [swap] [cap] termination payments received from the [swap] [cap] counterparty and deposited into the [swap] [cap] termination payment account), (vii) amounts on deposit in the [swap] [cap] termination payment account that exceed the cost of entering into a replacement interest rate [swap] [cap] agreement or any amounts on deposit in the [swap] [cap] termination payment account if the issuing determines not to replace the initial interest rate [swap] [cap] agreement and the Rating Agency Condition is met with respect to such determination, and (viii) the amount by which any amounts received from a replacement [swap] [cap] counterparty in consideration for entering into a replacement [swap] [cap] agreement exceeds the payments due to the [swap] [cap] counterparty following the termination of the interest rate [swap] [cap] agreement following an event of default or termination event under the interest rate [swap] [cap] agreement].
certificate distribution account means the account designated as such, established and maintained pursuant to the indenture.
certificateholder means any holder of a certificate.
collection period means the period commencing on the first day of each calendar month and ending on the last day of that calendar month (or, in the case of the initial collection period, the period commencing on the close of business on the cut-off date and ending on [ ]). As used in this prospectus, the related collection period with respect to any date of determination or a payment date will be deemed to be the collection period which precedes that date of determination or such payment date.
collections means, with respect to any receivable and to the extent received by the servicer after the cut-off date, the sum of (i) any monthly payment by or on behalf of the obligor under that receivable or any other amounts received by the servicer which, in accordance with the customary servicing practices, would customarily be applied to the payment of accrued interest or to reduce the outstanding principal balance of that receivable, (ii) any full or partial prepayment of that receivable and (iii) all Liquidation Proceeds; provided, however, that the term collections in no event will include (1) for any payment date, any amounts in respect of any receivable the repurchase price of which has been included in the Available Funds on a prior payment date, (2) any Supplemental Servicing Fees and Reimbursements or (3) premiums with respect to any insurance policy, rebates of premiums with respect to the cancellation or termination of any insurance policy, extended warranty or service contract that was not financed by or is not included in the outstanding principal balance of, such receivable.
controlling class means, with respect to any notes outstanding, the Class A notes (voting together as a single class) as long as any Class A notes are outstanding, and thereafter the Class B notes as long as any Class B notes are outstanding, and thereafter the Class C notes as long as any Class C notes are outstanding [and thereafter the Class D notes as long as any Class D notes are outstanding] (excluding, in each case, notes held by the servicer, the administrator, the issuing entity, any certificateholder or any of their respective affiliates).
customary servicing practices means the customary servicing practices of the servicer or any sub-servicer with respect to all comparable motor vehicle receivables that the servicer or such sub-servicer, as applicable, services for itself or others (which includes, or is modified with respect to the receivables to include, that no modification to any receivable is permitted other than a Permitted Modification), as such practices may be changed from time to time (except to the extent any such change could result in the issuing entity being treated as other than a fixed investment trust described in Treasury Regulation Section 301.7701-4(c) that is treated as a grantor trust under subtitle A, chapter 1, subchapter J, part I, subpart E of the Code), it being understood that the servicer and the sub-servicers may not have the same customary servicing practices.
153
Defaulted Receivable means a receivable (other than a repurchased receivable) that the servicer has charged off (in whole or in part) in accordance with its customary servicing practices.
FDIC means the Federal Deposit Insurance Corporation.
FDIC Rule Covenant has the meaning set forth in The Indenture FDIC Rule in this prospectus.
First Allocation of Principal means, for any payment date, an amount not less than zero equal to the excess, if any, of (a) the note balance of the Class A notes as of such payment date (before giving effect to any principal payments made on the Class A notes on such payment date) over (b) the net pool balance as of the last day of the related collection period; provided, however, that the First Allocation of Principal on and after the final scheduled payment date for any class of Class A notes will not be less than the amount that is necessary to reduce the note balance of that class of Class A notes to zero.
[Fourth Allocation of Principal means, for any payment date, an amount not less than zero equal to the excess, if any, of (a) the sum of the note balance of the Class A notes, the Class B notes, the Class C notes and the Class D notes minus the sum of the First Allocation of Principal, the Second Allocation of Principal and the Third Allocation of Principal for that payment date as of such payment date (before giving effect to any principal payments made on the notes on such payment date) over (b) the net pool balance as of the last day of the related collection period; provided, however, that the Fourth Allocation of Principal on and after the final scheduled payment date for the Class D notes shall not be less than the amount that is necessary to reduce the note balance of the Class D notes to zero (after the application of the First Allocation of Principal, Second Allocation of Principal and Third Allocation of Principal).]
[Funding Date means each date (but not more than once per week) after the closing date on which subsequent receivables are purchased by the issuing entity. ]
[Funding Period means the period from the closing date until the earliest of (1) [ ]; (2) the date the amount on deposit in the pre-funding account is $[10,000] or less; and (3) the occurrence of an event of default under the indenture. ]
Liquidation Expenses means auction, painting, repair or refurbishment expenses in respect of the disposition of a financed vehicle and any payments required by law to be remitted to the obligor
Liquidation Proceeds means, with respect to any Defaulted Receivable, (a) insurance proceeds received by the servicer with respect to any insurance policies relating to the related financed vehicle or maintained by the obligor in connection with a receivable, (b) amounts received by the servicer in connection with that receivable pursuant to the exercise of rights under that receivable and (c) the monies collected by the servicer (from whatever source, including proceeds of a sale of the related financed vehicle, a deficiency balance recovered from the related obligor after the charge-off of that receivable or as a result of any recourse against the related dealer, if any) on that receivable, in each case net of Liquidation Expenses and any payments required by law to be remitted to the obligor; provided, however, that the repurchase price for any receivable purchased by CONA will not constitute Liquidation Proceeds.
Majority Certificateholders means certificateholders holding in the aggregate more than 50% of the Percentage Interests.
net pool balance means, as of any date, the aggregate outstanding principal balance of all receivables (other than Defaulted Receivables) owned by the issuing entity on that date.
[Net Swap Payment means for the interest rate swap agreement, the net amounts owed by the issuing entity to the swap counterparty, if any, on any payment date, excluding Swap Termination Payments.]
154
[Net Swap Receipt means for the interest rate swap agreement, the net amounts owed by the swap counterparty to the issuing entity, if any, on any date any such amount is due under the interest rate swap agreement, including, without limitation, any Swap Termination Payments.]
paying agent means (i) prior to the payment in full of principal and interest on the notes, the indenture trustee or any other person that meets the eligibility standards for the indenture trustee set forth in the indenture and is authorized by the issuing entity to make the payments to and distributions from the collection account and the principal distribution account, including the payment of principal of or interest on the notes on behalf of the issuing entity and (ii) following the payment in full of principal and interest on the notes, the certificate paying agent or any other person appointed as the successor certificate paying agent pursuant to the trust agreement.
Percentage Interest means, with respect to a certificate, the individual percentage interest of such certificate, which shall be specified on the face thereof and which shall represent the percentage of certain distributions of the issuing entity beneficially owned by the related certificateholder. The sum of the Percentage Interests for all of the certificates shall be 100%.
Rating Agency Condition means, with respect to any event or circumstance and each hired agency, either (a) written confirmation (which may be in the form of a letter, press release or other publication, or a change in such hired agencys published ratings criteria to this effect) by such hired agency that the occurrence of such event or circumstance will not cause it to downgrade, qualify or withdraw its rating assigned to any of the notes or (b) that such hired agency shall have been given notice of such event or circumstance at least ten days prior to the occurrence of such event or circumstance (or, if ten days advance notice is impracticable, as much advance notice as is practicable) and such hired agency shall not have issued any written notice that the occurrence of such event or circumstance will cause it to downgrade, qualify or withdraw its rating assigned to the notes.
Regular Principal Distribution Amount means, for any payment date, an amount not less than zero equal to the excess of (a) the excess of (A) the sum of the aggregate note balance of the notes as of such payment date (before giving effect to any principal payments made on the notes on such payment date) over (B) the net pool balance as of the last day of the related collection period minus the Target Overcollateralization Amount over (b) the sum of the First Allocation of Principal, the Second Allocation of Principal, the Third Allocation of Principal and the Fourth Allocation of Principal for that payment date; provided, however, that the Regular Principal Distribution Amount on and after the final scheduled payment date for any class of notes will not be less than the amount that is necessary to reduce the note balance of that class to zero (after the application of the First Allocation of Principal, the Second Allocation of Principal, the Third Allocation of Principal and the Fourth Allocation of Principal).
Retained Certificates means any certificates beneficially owned by the depositor or an affiliate thereof.
Second Allocation of Principal means, for any payment date, an amount not less than zero equal to the excess, if any, of (a) the sum of the note balance of the Class A notes and the Class B notes as of such payment date (before giving effect to any principal payments made on such payment date) minus the First Allocation of Principal for that payment date over (b) the net pool balance as of the last day of the related collection period; provided, however, that the Second Allocation of Principal on and after the final scheduled payment date for the Class B notes will not be less than the amount that is necessary to reduce the note balance of the Class B notes to zero (after the application of the First Allocation of Principal).
Specified Reserve Account Balance means, for any payment date while the notes are outstanding, [ ]% of the net pool balance as of the [initial] cut-off date; provided, that on any payment date after the notes are no longer outstanding following payment in full of the principal and interest on the notes, the Specified Reserve Account Balance shall be $0.
Supplemental Servicing Fees and Reimbursements means any and all (i) late fees, (ii) extension fees, (iii) non-sufficient funds charges, (iv) prepayment fees, (v) any and all other administrative fees or similar charges allowed by applicable law with respect to any receivable and (vi) repossession fees and expenses, legal fees and expenses and similar out-of-pocket fees and expenses incurred by the servicer and reimbursed to the Servicer with respect to any receivable.
155
[Subordinated Swap Termination Payment means any Swap Termination Payment owed by the issuing entity to the swap counterparty under an interest rate swap agreement where the swap counterparty is the defaulting party or sole affected party (other than with respect to illegality or a tax event), as each such term is defined in such interest rate swap agreement.]
[Swap Termination Payment means payments due to the swap counterparty by the issuing entity or to the issuing entity by the swap counterparty, including interest that may accrue thereon under the interest rate swap agreement, due to a termination of the interest rate swap agreement due to an event of default or termination event under the interest rate swap agreement.]
Target Overcollateralization Amount means, for any payment date, [[ ]% of net pool balance as of the cut-off date.]
Third Allocation of Principal means, for any payment date, an amount not less than zero equal to the excess, if any, of (a) the sum of the note balance of the Class A notes, the Class B notes and the Class C notes minus the sum of the First Allocation of Principal and Second Allocation of Principal for that payment date as of such payment date (before giving effect to any principal payments made on the notes on such payment date) over (b) the net pool balance as of the last day of the related collection period; provided, however, that the Third Allocation of Principal on and after the final scheduled payment date for the Class C notes will not be less than the amount that is necessary to reduce the note balance of the Class C notes to zero (after the application of the First Allocation of Principal and Second Allocation of Principal).
United States or U.S. means the United States of America (including all states, the District of Columbia and political subdivisions thereof)
156
60-Day Delinquent Receivables |
91 | |||
ABS |
70 | |||
ABS Tables |
70 | |||
Acting General Counsel |
131 | |||
adjusted pool balance |
12 | |||
administration agreement |
90 | |||
administrator |
1 | |||
Affected Investors |
137 | |||
American Rescue Plan Act |
23 | |||
Amortization Period |
9 | |||
Appendix A |
67 | |||
Appendix B |
68 | |||
Assessment of Compliance |
113 | |||
asset representations review agreement |
53, 90 | |||
asset representations reviewer |
2 | |||
Asset Review |
93 | |||
asset-level data |
57 | |||
Attestation Report |
114 | |||
Available Funds |
153 | |||
Bankruptcy Code |
127 | |||
benefit plan |
146 | |||
cap provider |
2, 87 | |||
Cap Rate |
89 | |||
Cap Termination Payment |
89 | |||
Cap Termination Payment Account |
89 | |||
capital assets |
140 | |||
CARES Act |
28 | |||
Cede |
vii | |||
certificate distribution account |
153 | |||
certificateholder |
153 | |||
certificateholders |
3 | |||
certificates |
3 | |||
CFPB |
28, 126 | |||
chattel paper |
122 | |||
Class A notes |
2 | |||
Class A-2 notes |
2 | |||
Clearstream |
35, 80 | |||
closing date |
3 | |||
COAF |
45 | |||
collection period |
153 | |||
collections |
153 | |||
CONA |
vii, 1 | |||
contracts |
48 | |||
controlling class |
3 | |||
Controlling Class |
153 | |||
COPAR |
22 | |||
Corporation |
28, 45 | |||
Counterparty |
54 | |||
COVID-19 |
19 | |||
customary servicing practices |
153 | |||
Cybersecurity Incident |
27 | |||
DDOS |
27 | |||
dealers |
48 |
Defaulted Receivable |
154 | |||
Delinquency Percentage |
91 | |||
Delinquency Trigger |
91 | |||
depositor |
1 | |||
Dodd-Frank Act |
28, 131 | |||
DTC |
vii, 83 | |||
Early Amortization Event |
101 | |||
EBA |
135 | |||
EBA Guidance Interpretation |
136 | |||
EEA |
ix, 135 | |||
Eligibility Representations |
90 | |||
ERISA |
146 | |||
ERISA regulation |
146 | |||
EU Affected Investors |
135 | |||
EU CRR |
135 | |||
EU Investor Requirements |
135 | |||
EU PRIIPS Regulation |
ix | |||
EU Prospectus Regulation |
ix | |||
EU Qualified Investor |
ix | |||
EU retail investor |
151 | |||
EU Retail Investor |
ix | |||
EU Risk Retention Requirements |
136 | |||
EU Securitization Regulation |
135 | |||
EU SR Rules |
135 | |||
Euroclear |
35, 80 | |||
EUWA |
viii | |||
event of default |
5, 116 | |||
excess interest |
13 | |||
Exchange Act |
148 | |||
FATCA |
145 | |||
FDIC |
29, 45, 127, 154 | |||
FDIC Rule |
15, 29, 128 | |||
FDIC Rule Covenant |
121, 154 | |||
final scheduled payment date |
85 | |||
financed vehicles |
6 | |||
First Allocation of Principal |
154 | |||
fixed rate notes |
2 | |||
floating rate notes |
2 | |||
Foreign Person |
141 | |||
Fourth Allocation of Principal |
154 | |||
FSMA |
viii | |||
FTC Rule |
126 | |||
funding date |
8 | |||
Funding Date |
154 | |||
Funding Period |
154 | |||
HDC Rule |
126 | |||
Hired Rating Agencies |
16 | |||
Holder-in-Due-Course |
126 | |||
indenture trustee |
2, 43 | |||
initial cut-off date |
6 | |||
Instituting Noteholders |
92 | |||
interest period |
84 | |||
Interest Rate Cap Agreement |
87 |
157
interest rate swap agreement |
86 | |||
Investment Company Act |
14, 134 | |||
Investor Requirements |
137 | |||
investors |
79 | |||
IRS |
140 | |||
issuing entity |
1 | |||
issuing entity property |
6 | |||
lemon laws |
126 | |||
Liquidation Expenses |
154 | |||
Liquidation Proceeds |
154 | |||
Majority Certificateholders |
154 | |||
MIFID II |
ix | |||
net pool balance |
5, 154 | |||
net swap payment |
13 | |||
Net Swap Payment |
154 | |||
Net Swap Receipt |
155 | |||
Note Factor |
83 | |||
Note Owner |
79 | |||
notes |
2 | |||
obligors |
6 | |||
offered notes |
2 | |||
OID |
142 | |||
OLA |
28, 131 | |||
Order |
viii | |||
originator |
1 | |||
owner trustee |
2, 43 | |||
paying agent |
155 | |||
payment date |
3 | |||
payment default |
117 | |||
Percentage Interest |
155 | |||
Permitted Modification |
109 | |||
Pool Factor |
83 | |||
pre-funding account |
8 | |||
pre-funding period |
100 | |||
PTCE |
147 | |||
PTP |
140 | |||
purchase agreement |
90 | |||
purchase price |
5, 106 | |||
Qualified Dispute Resolution Professional |
95 | |||
Rating Agency Condition |
155 | |||
receivables |
6 | |||
receivables pool |
6 | |||
record date |
3, 79 | |||
Regular Principal Distribution Amount |
155 | |||
Regulation RR |
15 | |||
Relevant Persons |
ix | |||
Relief Act |
133 | |||
requesting party |
94 | |||
Retained Certificates |
155 | |||
Retained Interest |
46 | |||
Retained Notes |
149 | |||
Review Fee |
93 | |||
Review Satisfaction Date |
91 | |||
revolving period |
9 |
Rule 193 Information |
68 | |||
Rules |
95 | |||
sale agreement |
90 | |||
SEC |
vii | |||
Second Allocation of Principal |
155 | |||
Securities Act |
149 | |||
Securities Exchange Act |
112 | |||
Securitization Regulations |
136 | |||
senior swap termination payment |
13 | |||
servicer |
1 | |||
servicer replacement events |
111 | |||
servicing agreement |
90 | |||
servicing fee |
1, 108 | |||
Severely Distressed Receivable |
109 | |||
Similar Law |
146 | |||
Special Tax Counsel |
140 | |||
specified reserve account balance |
12 | |||
Specified Reserve Account Balance |
99, 155 | |||
Sponsor |
45 | |||
SR Rules |
137 | |||
SSPE |
135 | |||
Subject Receivables |
92 | |||
Subordinate Swap Termination Payment |
156 | |||
subordinated swap termination payment |
13 | |||
subsequent cut-off date |
6 | |||
subsequent receivables |
8 | |||
Supplemental Servicing Fees and Reimbursements |
155 | |||
swap counterparty |
2 | |||
Swap Termination Payment |
156 | |||
Target Overcollateralization Amount |
156 | |||
the applicable Investor Requirements |
137 | |||
Third Allocation of Principal |
156 | |||
transfer agreements |
90 | |||
U.S. |
156 | |||
U.S. Person |
141 | |||
UCITS |
135 | |||
UK |
viii | |||
UK Affected Investors |
137 | |||
UK Investor Requirements |
137 | |||
UK PRIIPS Regulation |
viii | |||
UK Prospectus Regulation |
viii | |||
UK Qualified Investor |
viii | |||
UK retail investor |
150 | |||
UK Retail Investor |
viii | |||
UK Risk Retention Requirements |
138 | |||
UK Securitization Regulation |
136 | |||
UK SR Rules |
137 | |||
United States |
156 | |||
United States Person |
141 | |||
verification documents |
91 | |||
Volcker Rule |
1, 16 | |||
weighted average life |
72 | |||
yield supplement overcollateralization amount |
105 |
158
APPENDIX A STATIC POOL INFORMATION REGARDING CERTAIN VINTAGE RECEIVABLES POOLS*
This Appendix A includes charts that reflect the static pool performance of all motor vehicle retail installment sale contracts originated and serviced by CONA which are considered to be in the prime category and which are considered eligible for securitization in the COPAR program based on CONAs internal scoring model by vintage origination year for the past five years. We caution you that the receivables may not perform in a similar manner to the motor vehicle retail installment sale contracts presented in this Appendix A.
Appendix A includes the following summary information for vintage origination pools:
| aggregate original principal balance; |
| original number of receivables; |
| average original principal balance; |
| weighted average original contract rate; |
| weighted average original term; |
| weighted average FICO® score; |
| percentage of new financed vehicles; |
| percentage of used financed vehicles; |
| weighted average loan-to-value; |
| aggregate original principal balance as of [ ], 20[ ]; |
| number of receivables as of [ ], 20[ ]; |
| average original principal balance as of [ ], 20[ ]; |
| weighted average contract rate as of [ ], 20[ ]; |
| weighted average age as of [ ], 20[ ]; |
| weighted average remaining term as of [ ], 20[ ]; |
| pool factor as of [ ], 20[ ]; |
| cumulative net charge-offs with respect to each vintage quarter; |
| delinquency rates (30-59), (60-89), (90-119), (120+) with respect to each vintage quarter; |
| pool factor with respect to each vintage quarter; and |
| prepayment speeds with respect to each vintage quarter. |
* | [The information in Appendix A will be presented in tabular and graphical format.] |
159
APPENDIX B STATIC POOL INFORMATION REGARDING PRIOR SECURITIZED POOLS
This Appendix B includes static pool information about prior pools of motor vehicle retail installment sale contracts that were securitized by CONA in the last five years. Static pool information consists of delinquency history, prepayment speeds and cumulative net-losses for prior securitized pools and summary information for the original characteristics of the prior securitized pools. The term securitized pool refers to the securitized pool of receivables as of the related cut-off date. We caution you that the receivables may not be expected to perform in a similar manner to the motor vehicle retail installment sale contracts presented in this Appendix B.
160
No dealer, salesperson or other person has been authorized to give any information or to make any representations not contained in this prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by the depositor, the sponsor or the underwriters. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, the securities offered hereby to anyone in any jurisdiction in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make any such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create an implication that information herein or therein is correct as of any time since the date of this prospectus.
Capital One Prime Auto Receivables Trust 20[]-[]
Issuing Entity
Class A-1 Notes |
$ | [ | ] | |||
Class A-2[-A] Notes |
[}] |
$ | [ | ] | ||
[Class A-2-B Notes] | ||||||
Class A-3 Notes |
[}] |
$ | [ | ] | ||
Class A-4 Notes | ||||||
Class B Notes |
$ | [ | ] | |||
Class C Notes |
$ | [ | ] | |||
[Class D Notes] |
[$ | ][ | ] |
Capital One Auto Receivables, LLC
Depositor
Capital One, National Association
Sponsor and Servicer
PROSPECTUS
UNDERWRITERS
[]
[]
Until [], 20[], which is ninety days following the date of this prospectus, all dealers effecting transactions in the notes, whether or not participating in this distribution, may be required to deliver this prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 12. Other Expenses of Issuance and Distribution.
The following is an itemized list of the estimated expenses to be incurred in connection with the offering of the securities being offered hereunder other than underwriting discounts and commissions.
Registration Fee |
$ | 92.70 | ||
Accountant Fees and Expenses |
* | |||
Legal Fees and Expenses |
* | |||
Printing and Engraving Costs |
* | |||
Blue Sky Fees and Expenses |
* | |||
Trustee Fees and Expenses |
* | |||
Rating Agency Fees |
* | |||
Miscellaneous Expenses |
* | |||
|
|
|||
Total |
* | |||
|
|
* | To be provided by amendment. |
Item 13. Indemnification of Directors and Officers.
Capital One Auto Receivables, LLC
Capital One Auto Receivables, LLC is a Delaware limited liability company. Section 18-108 of the Delaware Limited Liability Company Act provides that, subject to the standards and restrictions, if any, as are described in its limited liability company agreement, a limited liability company may, and shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever.
The registrant was formed under the laws of the State of Delaware. The limited liability company agreement of the registrant provides, in effect that, subject to certain limited exceptions, it will indemnify its members, officers, directors, employees and agents of the registrant, and employees, representatives, agents or affiliates of any of the foregoing (collectively, the Covered Persons), to the fullest extent permitted by applicable law, for any loss, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the registrant and in a manner reasonably believed to be within the scope of the authority conferred on such Covered Person by the limited liability company agreement, except that no Covered Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Covered Person by reason of such Covered Persons gross negligence or willful misconduct with respect to such acts or omissions; provided, however, that any indemnity under the limited liability company agreement by the registrant shall be provided out of and to the extent of registrant assets only, and the members shall not have personal liability on account thereof; and provided further, that so long as any obligation under the limited liability agreement, the transaction documents or any related document is outstanding, no indemnity payment from funds of the registrant (as distinct from funds from other sources, such as insurance) of any indemnity under the limited liability agreement shall be payable from amounts allocable to any other person pursuant to the transaction documents.
To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by a Covered Person defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the registrant prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the registrant of an undertaking by or on behalf of the Covered Person to repay such amount if it shall be determined that the Covered Person is not entitled to be indemnified as authorized in the limited liability company agreement.
II-1
A Covered Person shall be fully protected in relying in good faith upon the records of the registrant and upon such information, opinions, reports or statements presented to the registrant by any person as to matters the Covered Person reasonably believes are within such other persons professional or expert competence and who has been selected with reasonable care by or on behalf of the registrant, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, or any other facts pertinent to the existence and amount of assets from which distributions to the member might properly be paid.
To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the registrant or to any other Covered Person, a Covered Person acting under the limited liability company agreement shall not be liable to the registrant or to any other Covered Person for its good faith reliance on the provisions of the limited liability company agreement or any approval or authorization granted by the registrant or any other Covered Person. The provisions of the limited liability company agreement, to the extent that they restrict or eliminate the duties and liabilities of a Covered Person to the registrant or its members otherwise existing at law or in equity, are agreed by the members to replace such other duties and liabilities of such Covered Person.
Insofar as indemnification by the registrant for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Underwriters
Each underwriting agreement will generally provide that the underwriters will indemnify the registrant and its directors, officers and controlling parties against specified liabilities, including liabilities under the Securities Act of 1933 relating to certain information provided or actions taken by the underwriters. The registrant has been advised that in the opinion of the Securities and Exchange Commission, this indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Other Indemnification
The registrant also maintains insurance providing for payment, subject to certain exceptions, on behalf of officers and directors of the registrant and its subsidiaries of money damages incurred as a result of legal actions instituted against them in their capacities as such officers or directors (whether or not such person could be indemnified against such expense, liabilities or loss under the Delaware Limited Liability Company Act).
Item 14. Exhibits.
II-2
10.7 | Form of Asset Representations Review Agreement between the Depositor, CONA, as sponsor and servicer, and [], as asset representations reviewer | |||
23.1 | Consent of Mayer Brown LLP (included in Exhibits 5.1 and 8.1) | |||
24.1 | Powers of Attorney (included in signature page to this registration statement) | |||
24.2 | Certified Copy of Resolutions authorizing Powers of Attorney | |||
25.1 | Statement of Eligibility and Qualification of the Indenture Trustee on Form T-1* | |||
36.1 | Form of Depositor Certification for Shelf Offerings of Asset-Backed Securities | |||
102.1 | Asset Data File** | |||
103.1 | Asset Related Documents** |
* | To be filed pursuant to Section 305(b)(2) of the Trust Indenture of Act 1939. |
** | To be incorporated by reference from the Form ABS-EE for such offering on file at the time of the Rule 424(h) or Rule 424(b) filing, as applicable, for such offering. |
Item 15. Undertakings.
The undersigned registrant hereby undertakes:
(a) As to Rule 415:
(1) To file, during any period in which offers or sales are being made of the securities registered hereby, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment hereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement;
Provided, however, that the undertakings set forth in clauses (i), (ii) and (iii) above do not apply if the information required to be included in a post-effective amendment by those clauses is contained in periodic reports filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act) that are incorporated by reference in this registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of this registration statement; and
Provided further, however, that clauses (i) and (ii) above do not apply if the information required to be included in a post-effective amendment is provided pursuant to Item 1100(c) of Regulation AB (§ 229.1100(c)).
(2) That, for the purpose of determining liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining any liability under the Securities Act to any purchaser:
(i) if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(ii) If the registrant is relying on Rule 430D:
(A) each prospectus filed by the undersigned registrant pursuant to Rule 424(b)(3) and (h) shall be deemed to be part of this registration statement as of the date the filed prospectus was deemed part of and included in this registration statement; and
(B) each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5),or (b)(7) as part of a registration statement in reliance on Rule 430D relating to an offering made pursuant to Rule 415(a)(1)(vii) or (a)(1)(xii) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430D, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or
(5) That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
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(iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(6) If the registrant is relying on Rule 430D, with respect to any offering of securities registered on Form SF-3, to file the information previously omitted from the prospectus filed as part of an effective registration statement in accordance with Rule 424(h) and Rule 430D.
(b) As to Documents Subsequently Filed that are Incorporated By Reference:
For purposes of determining any liability under the Securities Act, each filing of the registrants annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plans annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) As to Indemnification:
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 13 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
(d) As to Filings in Reliance on Rule 430(A):
(1) For purposes of determining any liability under the Securities Act, the information omitted from any form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(e) As to Qualification of Trust Indentures Under the Trust Indenture Act of 1939 for Delayed Offerings:
The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the indenture trustee to act under subsection (a) of Section 310 of the Trust Indenture Act, in accordance with the rules and regulations prescribed by the Securities and Exchange Commission under Section 305(b)(2) of the Act.
(f) As to Filings Regarding Asset-Backed Securities Incorporating by Reference Subsequent Exchange Act Documents by Third Parties:
For purposes of determining any liability under the Securities Act, each filing of the annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act of a third party that is incorporated by reference in the registration statement in accordance with Item 1100(c)(1) of Regulation AB shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SF-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of McLean, Commonwealth of Virginia, on November 3, 2021.
CAPITAL ONE AUTO RECEIVABLES, LLC, a Delaware limited liability company (Registrant) | ||
By: | /s/ Thomas A. Feil | |
Name: Thomas A. Feil | ||
Title: President |
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas A. Feil and Sean J. Flanagan, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for and in his own name, place and stead, in any and all capacities, acting alone, to sign this registration statement, any and all amendments (including post-effective amendments) to this registration statement and any or all other documents in connection therewith, and to file the same, with all exhibits thereto, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agent authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as might or could be done in person, hereby ratifying and confirming all said attorney-in-fact and agent or any of them or any substitute or substitute for any of them, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933 this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature | Title | Date | ||
/s/ Thomas A. Feil Thomas A. Feil |
President (Principal Executive Officer), Director | November 3, 2021 | ||
/s/ Sean J. Flanagan Sean J. Flanagan |
Treasurer (Principal Financial Officer), Director | November 3, 2021 | ||
/s/ Franco E. Harris Franco E. Harris |
Vice President, Treasury Capital Markets (Controller and Principal Accounting Officer) | November 3, 2021 | ||
/s/ Douglas K. Johnson Douglas K. Johnson |
Director | November 3, 2021 | ||
/s/ Karla L. Boyd Karla L. Boyd |
Director | November 3, 2021 |
Exhibit 1.1
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ]
(Issuer)
CAPITAL ONE AUTO RECEIVABLES, LLC
(Depositor)
CAPITAL ONE, NATIONAL ASSOCIATION
(Sponsor and Servicer)
Class A-1 [____]% Auto Loan Asset Backed Notes
Class A-2[-A] [___]% Auto Loan Asset Backed Notes
[Class A-2-B [Benchmark] + [___]% Auto Loan Asset Backed Notes]
Class A-3 [___]% Auto Loan Asset Backed Notes
Class A-4 [___]% Auto Loan Asset Backed Notes
[Class B [___]% Auto Loan Asset Backed Notes]
[Class C [___]% Auto Loan Asset Backed Notes]
[Class D [___]% Auto Loan Asset Backed Notes]
[FORM OF] UNDERWRITING AGREEMENT
[DATE]
[NAMES AND ADDRESSES OF UNDERWRITERS]
Ladies and Gentlemen:
Section 1. Introductory. Capital One Auto Receivables, LLC, a Delaware limited liability company (the Seller or Depositor), and Capital One, National Association, a national banking association (the Bank), confirm their agreement with [ ] (the Representatives), as representatives of the several underwriters (the Underwriters) listed in Section 2 of the Terms Exhibit attached hereto as Exhibit A (the Terms Exhibit) as follows:
Capital One Prime Auto Receivables Trust 20[ ] [ ], a Delaware statutory trust (the Issuer), will issue the notes specified in Section 1 of the Terms Exhibit (the Issued Notes) pursuant to the Indenture, to be dated as of the Closing Date (the Indenture), between the Issuer and [ ], as indenture trustee (the Indenture Trustee). The Seller proposes to sell to the Underwriters [a portion of] the Issued Notes in the amounts specified in Section 3 of the Terms Exhibit (the Notes).
The assets of the Issuer (the Trust Estate) consist of all money, accounts, chattel paper, general intangibles, goods, instruments, investment property and other property of the Issuer, including without limitation (i) the Receivables acquired by the Issuer under the Sale Agreement, to be dated as of the Closing Date (the Sale Agreement), by and among the Seller and the Issuer, the Related Security relating thereto and Collections thereon after the Cut-Off Date; (ii) the Receivable Files, (iii) the rights of the Issuer to the funds on deposit from time to time in the Trust Accounts and any other account or accounts (other than the Certificate Distribution Account) established pursuant to the Indenture or the Servicing Agreement, to be dated as of the Closing Date (the Servicing Agreement), among the Issuer, the Bank, as servicer, and the
Indenture Trustee, and all cash, investment property and other property from time to time credited thereto and all proceeds thereof, (iv) the rights of the Seller, as buyer, under the Purchase Agreement, to be dated as of the Closing Date (the Purchase Agreement), between the Bank and the Seller (including the representations and warranties of the Bank therein) and the Assignment executed by the Bank pursuant to the Purchase Agreement, (v) the rights of the Issuer under the Sale Agreement, the Assignment pursuant to the Sale Agreement and the Servicing Agreement, (vi) the rights of the Issuer under the Administration Agreement, to be dated as of the Closing Date (the Administration Agreement), among the Bank, as administrator, the Issuer and the Indenture Trustee and (vii) all proceeds of the foregoing. The Issued Notes will be collateralized by the Trust Estate.
The Receivables and related property will be conveyed to the Seller by the Bank pursuant to the Purchase Agreement and will be conveyed to the Issuer by the Seller pursuant to the Sale Agreement.
The Receivables will be subject to review, in certain circumstances, by [ ], as assets representations reviewer (the Asset Representations Reviewer), for compliance with certain of the representations and warranties made about the Receivables, pursuant to and in accordance with an Asset Representations Review Agreement, to be dated as of the Closing Date (the Asset Representations Review Agreement), among the Bank, as servicer, the Issuer, and the Asset Representations Reviewer.
The terms of the Notes are set forth in the Registration Statement (as defined below) and the related Prospectus (as defined below).
Capitalized terms used herein but not defined herein or in the Terms Exhibit shall have the meanings given such terms in Appendix A to the Sale Agreement.
The Seller has prepared and filed with the Securities and Exchange Commission (the Commission) in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the Act), a shelf registration statement on Form SF-3 (No. [333-[ ]]), including a form of prospectus, relating to the offering of asset-backed notes. The registration statement as amended was declared effective by the Commission on [ ] and remains effective as of the date hereof. If any post-effective amendment has been filed with respect thereto, prior to the execution and delivery of this Agreement, such amendment has been declared effective by the Commission. Such registration statement, as amended as of the effective date, including the form of prospectus and all material incorporated by reference therein and including all information deemed to be part of the registration statement as of the effective date pursuant to Rule 430D under the Act, is referred to in this Agreement as the Registration Statement. For purposes of this Agreement, the effective date means the later of (a) the date and time as of which the Registration Statement, or the most recent post-effective amendment thereto, if any, was declared effective by the Commission or (b) the most recent effective date as of which the Prospectus (as defined below) is deemed to be part of the Registration Statement pursuant to Rule 430D under the Act.
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Prior to the time the first Contract of Sale (as defined in Section 5(g) hereof) for the Notes (such time, the Time of Sale), the Seller has prepared a Preliminary Prospectus, dated [ ] (subject to completion), and the Ratings Issuer Free Writing Prospectus (as defined below). As used herein, Preliminary Prospectus means, with respect to any date or time referred to herein, the most recent Preliminary Prospectus relating to the Notes (as amended or supplemented, if applicable), which has been prepared and delivered by the Seller to the Underwriters in accordance with the provisions hereof. The Preliminary Prospectus, together with the Registration Statement (including the form of Prospectus), the Ratings Issuer Free Writing Prospectus (only when taken together with the Preliminary Prospectus or the Prospectus, as applicable), and each Road Show (as defined below) is hereinafter referred to as the Time of Sale Information.
The Seller proposes to file with the Commission, pursuant to Rule 424(b) under the Act (Rule 424(b)), a final prospectus relating to the Notes (such final prospectus, in the form most recently revised and filed with the Commission pursuant to Rule 424(b), together with any amendment or supplement thereto, is hereinafter referred to as the Prospectus). The Preliminary Prospectus, together with the Registration Statement (including the form of Prospectus), the Prospectus and the Ratings Issuer Free Writing Prospectus (only when taken together with the Preliminary Prospectus or the Prospectus, as applicable), is hereinafter referred to as the Disclosure Materials.
Pursuant to this Agreement and the Terms Exhibit, which is incorporated by reference herein (this Agreement including such Terms Exhibit if the context so requires, the Agreement), and subject to the terms hereof, the Seller agrees to sell the Notes to the Underwriters named in such Terms Exhibit.
Section 2. Representations and Warranties of the Bank. The Bank represents and warrants to each Underwriter as of the date hereof and as of the Closing Date (unless otherwise specified) as follows:
(a) The Bank is a national banking association validly subsisting under the laws of the United States and has, in all material respects, all power and authority to carry on its business as it is now conducted. The Bank has obtained all necessary licenses, consents, approvals, or order of, or filing with, any United States governmental agency or authority or any United States federal court in each jurisdiction where the failure to do so would materially and adversely affect the ability of the Bank to perform its obligations under the Transaction Documents.
(b) The execution, delivery and performance by the Bank of this Agreement and each Transaction Document to which it is a party, the issuance of the Issued Notes, the sale of the Notes, and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Bank. Neither the execution and delivery by the Bank of such instruments, nor the performance by the Bank of the transactions herein or therein contemplated, nor the compliance by the Bank with the provisions hereof or thereof, will (i) contravene or constitute a default under (A) any applicable order, law, rule or regulation, (B) its organizational documents or (C) any material agreement, contract, order or other instrument to which it is a party or its property is subject (other than violations which do not affect the legality, validity or enforceability of such agreements or which, individually or in the aggregate, would not materially and adversely affect the transactions contemplated by, or the Banks ability to perform its obligations under, the Transaction Documents), or (ii) result in the creation or imposition of any lien, charge or encumbrance upon any of the Banks property pursuant to the terms of any such material agreement, contract, order or other instrument.
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(c) The Bank has duly executed and delivered this Agreement and, as of the Closing Date, has duly executed and delivered each Transaction Document to which it is a party.
(d) The Bank has authorized the conveyance of the Receivables and the other related property to the Seller.
(e) [Complete and correct copies of publicly available portions of the Consolidated Reports of Condition and Income of the Bank for the year ended [ ] [and the quarter[s] ended [ ]], as submitted to the Governors of the Federal Reserve System by the Bank, are publicly available through https://cdr.ffiec.gov/public/ManageFacsimiles.aspx.] Except as set forth in or contemplated in the Preliminary Prospectus, there has been no material adverse change in the condition (financial or otherwise) of the Bank since [ ].
(f) Each Transaction Document to which the Bank is a party constitutes a legal, valid and binding obligation of the Bank, enforceable against the Bank in accordance with its terms, except to the extent that the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, receivership, conservatorship, moratorium or other similar laws now or hereafter in effect relating to creditors rights in general and the rights of creditors of national banking associations, as such laws would apply in the event of the insolvency, liquidation or reorganization or other similar occurrence with respect to the Bank or in the event of any moratorium or similar occurrence affecting the Seller and to general principles of equity.
(g) Neither the Seller nor the Issuer is now, and following the issuance of the Issued Notes, neither will be, required to be registered under the Investment Company Act of 1940, as amended (the 1940 Act) and, although there may be additional exclusions or exemptions available to the Issuer, the Issuer will rely on the exclusion or exemption from the definition of investment company under the 1940 Act contained in [Section [ ] of] [Rule [ ] of] the 1940 Act. The Issuer is structured so as not to constitute a covered fund as defined in the final regulation issued December 10, 2013, implementing the Volcker Rule (Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act).
(h) As of the Closing Date, the representations and warranties (other than the representations and warranties concerning the characteristics of the Receivables which representations and warranties will be true and correct in all material respects as of the date set forth in the applicable Transaction Documents) of the Bank in the Transaction Documents to which it is a party are true and correct in all material respects.
(i) The Bank has provided a written representation to each of the Hired NRSROs (as defined below), which satisfied the requirements of paragraph (a)(3)(iii) of Rule 17g-5 of the Exchange Act (Rule 17g-5), as amended (the 17g-5 Representation). The Bank has complied and caused the Seller to comply, and will continue to comply and to cause the Seller to comply, with the 17g-5 Representation, other than any breach of the 17g-5 Representation (i) that would not have a material adverse effect on the Notes or (ii) arising from a breach by any of the Underwriters of the representation, warranty and covenant set forth in Section 5(h) or Section 5(i) hereof.
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(j) Neither the Bank nor the Seller has engaged any person to provide third-party due diligence services (as defined in Rule 17g-10 under the Exchange Act) relating to the Notes, other than a nationally recognized independent accounting firm acceptable to the Representatives (the Accounting Firm). The Depositor obtained a third-party due diligence report (as defined in Rule 15Ga-2 under the Exchange Act (Rule 15Ga-2)), prepared by the Accounting Firm entitled [ ], dated [ ] (the Accountants Due Diligence Report), and neither the Bank nor the Seller has received any third-party due diligence report (as defined in Rule 15Ga-2) other than the Accountants Due Diligence Report.
(k) The Bank has complied, and is the appropriate entity to comply, with all requirements imposed on the sponsor of a securitization transaction in accordance with the final rules contained in Regulation RR, 17 C.F.R. §246.1, et seq. (the Credit Risk Retention Rules), in each case directly or (to the extent permitted by the Credit Risk Retention Rules) through a majority owned affiliate (as defined in the Credit Risk Retention Rules, a Majority-Owned Affiliate). On the Closing Date, the Bank or a Majority-Owned Affiliate of the Bank will retain an eligible vertical interest (as defined in the Credit Risk Retention Rules) equal to at least 5% of each class of ABS interests (as defined in the Credit Risk Retention Rules) in the Issuer issued as part of the transactions contemplated by the Transaction Documents (such interest, the Retained Interest), determined as of the Closing Date. The Preliminary Prospectus contains all of the required disclosures under 17 C.F.R. §246.4(c)(2).
Section 3. Representations, Warranties and Covenants of the Seller. The Seller represents, warrants and covenants to each Underwriter as of the date hereof and as of the Closing Date (unless otherwise specified) as follows:
(a) The Registration Statement, including the form of prospectus and such amendments thereto as may have been required to the date hereof, relating to the offering of the Notes has been filed with the Commission and the Registration Statement, as amended, has become effective and remains effective, and the conditions to the use of such Registration Statement, as set forth in the General Instructions to Form SF-3, and the conditions of Rule 415 under the Act have been satisfied with respect to the Registration Statement;
(b) As of the Closing Date, the Disclosure Materials, except with respect to any modification to which the Representatives have agreed in writing, shall be in all substantive respects in the form furnished to the Representatives before such date or, to the extent not completed on such date, shall contain only such specific additional information and other changes (beyond that contained in the latest Disclosure Materials that have previously been furnished to the Representatives) as the Seller has advised the Representatives, before such time, will be included or made therein;
(c) (A) On the effective date of the Registration Statement, the Registration Statement (1) complied in all material respects with the applicable requirements of the Act and (2) did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, (B) as of
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its date, the Prospectus (1) complied in all material respects with the applicable requirements of the Act and (2) did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (C) on the Closing Date, the Registration Statement and the Prospectus (1) will comply in all material respects with the applicable requirements of the Act and (2) will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Seller makes no representation or warranty with respect to any statements or omissions made in reliance upon and in conformity with Underwriter Information (as defined below);
(d) (A) The Time of Sale Information, did not, as of the respective dates of the components thereof and at the Time of Sale, and will not, on the Closing Date, include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (it being understood that no representation or warranty is made with respect to the omission of pricing and price-dependent information, which information shall of necessity appear only in the final Prospectus) and (B) the Preliminary Prospectus (when taken together with the Ratings Issuer Free Writing Prospectus), did not, as of the Time of Sale, and will not, on the Closing Date, include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (it being understood that no representation or warranty is made with respect to the omission of pricing and price-dependent information, which information shall of necessity appear only in the final Prospectus); provided, however, that the Seller makes no representation or warranty with respect to any statements or omissions made in reliance upon and in conformity with Underwriter Information (as defined below); and
(e) Other than the Time of Sale Information and the Prospectus, the Seller (including its co-registrants, agents and representatives, other than the Underwriters in their capacity as such) has not made, used, prepared, authorized, approved or referred to and will not prepare, make, use, authorize, approve or refer to any written communication (as defined in Rule 405 under the Act) that constitutes an offer to sell or solicitation of an offer to buy the Notes, other than any issuer free writing prospectus, as defined in Rule 433(h) under the Act, approved in advance by the Underwriters and filed by the Seller or any of its co-registrants with the Commission in accordance with Rule 433 under the Act on or about [ ] (the Ratings Issuer Free Writing Prospectus), which discloses the ratings issued on the Notes by the nationally recognized statistical rating organizations hired by the Bank to rate the Notes (the Hired NRSROs).
(f) The Seller is a limited liability company validly existing and in good standing under the laws of the State of Delaware and has, in all material respects, all power and authority to carry on its business as it is now conducted. The Seller has obtained all necessary licenses, consents, approvals, or order of, or filing with, any United States governmental agency or authority or any United States federal court in each jurisdiction where the failure to do so would materially and adversely affect the ability of the Seller to perform its obligations under the Transaction Documents.
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(g) The execution, delivery and performance by the Seller of this Agreement and each Transaction Document to which it is a party, the issuance of the Issued Notes, the sale of the Notes, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all necessary limited liability company action on the part of the Seller. Neither the execution and delivery by the Seller of such instruments, nor the performance by the Seller of the transactions herein or therein contemplated, nor the compliance by the Seller with the provisions hereof or thereof, will (i) contravene or constitute a default under (A) any applicable order, law, rule, regulation, judgment or decree, (B) its organizational documents or (C) any material agreement, contract, order or other instrument to which it is a party or its property is subject (other than violations which do not affect the legality, validity or enforceability of such agreements or which, individually or in the aggregate, would not materially and adversely affect the transactions contemplated by, or the Sellers ability to perform its obligations under, the Transaction Documents), or (ii) result in the creation or imposition of any lien, charge or encumbrance upon any of the Sellers property pursuant to the terms of any such material agreement, contract, order or other instrument.
(h) The Seller has duly executed and delivered this Agreement and, as of the Closing Date, each of the Seller and the Issuer has duly executed and delivered each Transaction Document to which it is a party.
(i) The Seller has authorized the conveyance of the Receivables and other related property to the Issuer.
(j) The Issued Notes, when validly issued pursuant to the Indenture, and the Notes, when sold to the Underwriters pursuant to this Agreement, will conform in all material respects to the descriptions thereof contained in the Preliminary Prospectus and will be validly issued and entitled to the benefits and security afforded by the Indenture. When executed and delivered by the parties thereto, each Transaction Document to which the Seller is a party will constitute a legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, except to the extent that the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, receivership, conservatorship, moratorium or other similar laws now or hereafter in effect relating to creditors rights in general, as such laws would apply in the event of the insolvency, liquidation or reorganization or other similar occurrence with respect to the Seller or in the event of any moratorium or similar occurrence affecting the Seller and to general principles of equity. All approvals, authorizations, consents, orders or other actions of any person, corporation or other organization, or of any court, governmental agency or body or official (except with respect to the securities laws of any foreign jurisdiction or the state securities or Blue Sky laws of various jurisdictions), required in connection with the valid and proper authorization and issuance of the Issued Notes pursuant to the Indenture and the sale of the Notes pursuant to this Agreement have been or will be taken or obtained on or before the Closing Date.
(k) Neither the Seller nor the Issuer is now, and following the issuance of the Issued Notes, neither will be, required to be registered under the 1940 Act and, although there may be additional exclusions or exemptions available to the Issuer, the Issuer will rely on the exclusion or exemption from the definition of investment company under the 1940 Act contained in [Section [ ] of] [Rule [ ] of] the 1940 Act. The Issuer is structured so as not to constitute a covered fund as defined in the final regulation issued December 10, 2013, implementing the Volcker Rule (Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act).
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(l) Based on information currently available to, and in the reasonable belief of, the Seller, the Seller is not engaged (whether as defendant or otherwise) in, nor has the Seller knowledge of the existence of, or any threat of, any legal, arbitration, administrative or other proceedings the result of which might have a material adverse effect on the Receivables.
(m) Except for the Underwriters, neither the Seller nor the Issuer has employed or retained no broker, finder, commission agent or other person in connection with the sale of the Notes, and neither the Seller nor the Issuer is under any obligation to pay any brokers fee or commission in connection with such sale.
(n) No Event of Default or Servicer Replacement Event or any event which after any applicable grace period or the giving of notice, or both, would constitute an Event of Default or Servicer Replacement Event, has occurred.
(o) Based on information currently available to, and in the reasonable belief of the Seller, the Seller is not engaged (whether as defendant or otherwise) in, nor has the Seller knowledge of the existence of, or any threat of, any legal, arbitration, administrative or other proceedings the result of which might have a material adverse effect on the Noteholders (as defined below).
(p) Any taxes, fees and other governmental charges in connection with the execution, delivery and performance by the Seller of this Agreement and each Transaction Document to which it is a party shall have been paid or will be paid by the Seller at or before the Closing Date to the extent then due.
(q) As of the Closing Date, the representations and warranties of the Seller and the Issuer in the Transaction Documents to which it is a party will be true and correct in all material respects.
(r) The Seller was not, on the date on which the first bona fide offer of the Notes sold pursuant to this Agreement was made, an ineligible issuer as defined in Rule 405 under the Act.
(s) The Seller has complied with Rule 193 of the Act in all material respects in connection with the offering of the Notes. Neither the Seller nor the Bank has engaged any person to provide third-party due diligence services (as defined in Rule 17g-10 under the Exchange Act) relating to the Notes, other than the Accounting Firm. The Seller obtained the Accountants Due Diligence Report, and neither the Bank nor the Seller has received any third-party due diligence report (as defined in Rule 15Ga-2) other than the Accountants Due Diligence Report.
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(t) The Seller has (i) furnished to the Commission a Form ABS-15G (the Form ABS-15G) containing the findings and conclusions of the Accountants Due Diligence Report and has complied with all other requirements of Rule 15Ga-2, including by furnishing such Form ABS-15G to the Commission on EDGAR within the time period required by Rule 15Ga-2, (ii) provided a draft of the Form ABS-15G, not materially different from the Form ABS-15G furnished to the Commission, to counsel for the Underwriters and to the Representatives a reasonable period of time prior to the furnishing of such Form ABS-15G to the Commission as set forth in clause (i) and (iii) no portion of the Form ABS-15G contains any names, addresses, other personal identifiers or zip codes with respect to any individuals, or any other personally identifiable or other information that would be associated with an individual, including without limitation any nonpublic personal information within the meaning of Title V of the Gramm-Leach-Bliley Financial Services Modernization Act of 1999.
Section 4. Purchase, Sale and Issuance of Notes. Subject to the terms and conditions herein and in reliance upon the covenants, representations and warranties herein set forth, the Seller agrees to sell and deliver to the several Underwriters as hereinafter provided, and each Underwriter agrees upon the basis of the representations, warranties and covenants herein contained, severally and not jointly, to purchase the respective initial principal amount of the Notes set forth opposite such Underwriters name in Section 3 of the Terms Exhibit. The net purchase price for the Notes, expressed as a percentage of the initial principal amount of the applicable class of Notes, shall be as set forth in Section 4 of the Terms Exhibit. Payment for the Notes shall be made to the Seller or to its order by wire transfer of same day funds on the closing date specified in the Terms Exhibit, or at such other time or place on the same or such other date, not later than the fifth Business Day thereafter, as the Representatives and the Seller may agree upon in writing (the Closing Date). The underwriting discount to the Underwriters, the selling concessions that the Underwriters may allow to certain dealers, and the discounts that such dealers may reallow to certain other dealers, each expressed as a percentage of the initial principal amount of the applicable class of Notes sold to the Underwriters, shall be as set forth in Section 4 of the Terms Exhibit. Payment for the Notes shall be made against delivery to the Representatives, for the respective accounts of the several Underwriters of the Notes, registered in the name of Cede & Co., as nominee of The Depository Trust Company and in such denominations as the Representatives shall request in writing not later than two full Business Days before the Closing Date, with any transfer taxes payable in connection with the transfer to the Underwriters of the Notes duly paid by the Seller. The Notes will be made available for inspection by the Underwriters in New York, New York not later than 1:00 p.m., New York City time, on the Business Day before the Closing Date, or such other date and time as the Representatives and the Seller may agree.
Section 5. Offering by Underwriters.
(a) The Seller and the Issuer authorize each Underwriter to take all such action as it may deem advisable in respect of all matters pertaining to sales of the Notes to dealers and to retail purchasers and to member firms and specialists, including the right to make variations in the selling arrangements with respect to such sales. Upon the authorization by the Representatives of the release of the Notes, each Underwriter will offer the Notes for sale upon the terms and conditions set forth in the Prospectus. If the Prospectus specifies an initial public offering price or a method by which the price at which such Notes are to be sold, then after the Notes are released for sale to the public, the Underwriters may vary from time to time the public offering price, selling concessions and reallowances to dealers that are members of the Financial Industry Regulatory Authority, Inc. and other terms of sale hereunder and under such selling arrangements.
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(b) Notwithstanding the foregoing, each Underwriter agrees, severally and not jointly, that it will not offer or sell any Notes within the United States, its territories or possessions or to persons who are citizens thereof or residents therein, except in transactions that are not prohibited by any applicable securities, bank regulatory or other applicable law.
(c) Notwithstanding the foregoing, each Underwriter agrees, severally and not jointly, that it will not offer or sell any Notes in any country, its territories or possessions or to persons who are citizens thereof or residents therein, except in transactions that are not prohibited by any applicable securities laws of such country, territory or possession.
(d) Each Underwriter agrees, severally and not jointly, that:
(i) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (as amended, the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer or the Depositor; and
(ii) it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom.
(e) Each Underwriter severally, but not jointly, represents and agrees that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any Notes to any UK retail investor in the United Kingdom. For the purposes of this provision:
(i) the expression UK retail investor means a person who is one (or more) of the following: (A) a retail client, as defined in point (8) of Article 2 of Commission Delegated Regulation (EU) 2017/565 as it forms part of the United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 (as amended, the EUWA); or (B) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA (such rules and regulations as amended) to implement Directive (EU) 2016/97 (as amended), where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of the United Kingdom domestic law by virtue of the EUWA, and as amended; or (C) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129 (as amended) (the Prospectus Regulation) as it forms part of the United Kingdom domestic law by virtue of the EUWA, and as amended; and
(ii) the expression offer includes the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe to the Notes.
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(f) Each Underwriter severally, but not jointly, represents and agrees that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any Notes to any EU retail investor in the European Economic Area. For the purposes of this provision:
(i) the expression EU retail investor means a person who is one (or more) of the following: (A) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, MiFID II); or (B) a customer within the meaning of Directive (EU) 2016/97 (as amended), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (C) not a qualified investor as defined in Article 2 of the Prospectus Regulation; and
(ii) the expression offer includes the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe to the Notes.
(g) If the Seller, the Bank or an Underwriter determines or becomes aware that any written communication (as defined in Rule 405 under the Act) (including without limitation the Preliminary Prospectus) or oral statement (when considered in conjunction with all information conveyed at the time of the contract of sale within the meaning of Rule 159 under the Act and all Commission guidance relating to such rule (the Contract of Sale)) made or prepared by the Seller or such Underwriter contains an untrue statement of material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading at the time that a Contract of Sale was entered into, either the Seller or such Underwriter may prepare corrective information, with notice to the other parties, and such Underwriter shall deliver such information in a manner reasonably acceptable to both parties, to any person with whom a Contract of Sale was entered into based on such written communication or oral statement, and such information shall provide any such person with the following:
(i) adequate disclosure of the contractual arrangement;
(ii) adequate disclosure of the persons rights under the existing Contract of Sale at the time termination is sought;
(iii) adequate disclosure of the new information that is necessary to correct the misstatements or omissions in the information given at the time of the original Contract of Sale; and
(iv) a meaningful ability to elect to terminate or not terminate the prior Contract of Sale and to elect to enter into or not enter into a new Contract of Sale.
Any costs or losses incurred in connection with any such termination or reformation shall be subject to Section 9 hereof.
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(h) Each Underwriter agrees, severally and not jointly, that on or prior to the Closing Date it has not and it will not provide any Rating Information (as defined below) to a Hired NRSRO or other nationally recognized statistical rating organization (within the meaning of the Exchange Act), unless a designated representative from the Seller participated in or participates in such communication; provided, however, that if an Underwriter received or receives an oral communication from a Hired NRSRO, such Underwriter was and is authorized to inform such Hired NRSRO that it will respond to the oral communication with a designated representative from the Seller or refer such Hired NRSRO to the Seller, who will respond to the oral communication. For purposes of this paragraph, Rating Information means any information provided for the purpose of determining the initial credit rating for the Issued Notes or undertaking credit rating surveillance on the Issued Notes (as contemplated by paragraph (a)(3)(iii)(C) of Rule 17g-5).
(i) Each Underwriter severally and not jointly represents that it has not engaged and will not engage any person to provide third-party due diligence services (as defined in Rule 17g-10 under the Exchange Act) relating to the Issued Notes, it being understood that the Accounting Firm has been engaged by the Bank and the Seller for the purpose of providing the Accountants Due Diligence Report.
Section 6. Covenants. The Seller and the Bank, jointly and severally, covenant and agree with the several Underwriters that:
(a) The Seller will prepare a Prospectus setting forth the amount of Notes covered thereby and the terms thereof, the price at which the Notes are to be purchased by the Underwriters from the Seller, the initial public offering price at which the Notes are to be sold, the selling concessions and allowances, if any, and such other information as the Seller deems appropriate in connection with the offering of the Notes, but the Seller will not file any amendments to the Registration Statement as in effect with respect to the Notes, or any amendments or supplements to the Preliminary Prospectus or the Prospectus, without the Representatives prior written consent (which consent may be provided by electronic mail and shall not be unreasonably withheld or delayed); the Seller will immediately advise the Representatives and their counsel (i) when notice is received from the Commission that any post-effective amendment to the Registration Statement has become or will become effective, (ii) when any supplement or amendment to the Preliminary Prospectus or the Prospectus has been filed and (iii) of any order or communication suspending or preventing, or threatening to suspend or prevent, the offer and sale of the Notes, or of any prevention or suspension of the use of the Preliminary Prospectus or the Prospectus, or of any proceedings or examinations that may lead to such an order or communication, whether by or of the Commission or any authority administering any state securities or Blue Sky law, as soon as practicable after the Seller or the Issuer is advised thereof, and will use its reasonable efforts to prevent the issuance of any such order or communication and to obtain as soon as possible its lifting, if issued.
(b) If, at any time when a Preliminary Prospectus or a Prospectus relating to the Notes is required to be delivered under the Act (or required to be delivered but for Rule 172 under the Act), any event occurs as a result of which the Preliminary Prospectus or the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the Preliminary Prospectus or the Prospectus to comply with the Act, the
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Seller will promptly prepare and (subject to review and no reasonable objection by the Representatives as described in Section 6(a) of this Agreement) file with the Commission, an amendment or supplement that will correct such statement or omission or an amendment that will effect such compliance; provided, however, that the Representatives consent to any amendment shall not constitute a waiver of any of the conditions of Section 7 of this Agreement.
(c) The Seller will make (or will cause the Issuer to make) generally available to the holders of the Notes (the Noteholders) (the sole Noteholder being the applicable clearing agency in the case of Book-Entry Notes), in each case as soon as practicable, a statement which will satisfy the provisions of Section 11(a) of the Act and Rule 158 of the Commission with respect to the Notes; provided that this covenant may be satisfied by posting the monthly Servicers Report for the Issuer on a publicly available website or filing such Servicers Report with the Commission on a Form 10-D.
(d) Upon request, the Seller will furnish to the Representatives an electronic copy of each of the Registration Statement, the Preliminary Prospectus, the Prospectus and any other Disclosure Materials, and all amendments and supplements to such documents, in each case as soon as available.
(e) The Seller will assist the Underwriters in arranging for the qualification of the Notes for sale and the determination of their eligibility for investment under the laws of such jurisdictions as the Representatives may designate and will continue to assist the Underwriters in maintaining such qualifications in effect so long as required for the distribution; provided, however, that neither the Seller nor the Issuer shall be required to qualify to do business in any jurisdiction where it is now not qualified or to take any action which would subject it to general or unlimited service of process in any jurisdiction in which it is now not subject to service of process or to file a general consent to service of process in any jurisdiction in which it is now not subject to service of process.
(f) The Seller and the Issuer have filed or will file the Preliminary Prospectus and the Prospectus, as applicable, properly completed, and any supplement thereto, pursuant to Rule 424(h) or Rule 424(b), as applicable, within the prescribed time period and have provided or will provide evidence satisfactory to the Representatives of such timely filing. If received in a timely manner in compliance with Section 16(b)(iii) of this Agreement, the Seller and the Issuer will file with the Commission any Underwriter Free Writing Prospectus (as defined below) to the extent such filing is required by Rule 433(d) of the Act.
(g) The Seller and the Issuer will cause the Indenture to be qualified pursuant to the Trust Indenture Act.
(h) The Bank will comply, and will cause each of its affiliates to comply, with the Credit Risk Retention Rules, as in effect from time to time, in connection with the Capital One Prime Auto Receivables Trust 20[ ]-[ ] transaction. The Bank is and will be solely responsible for compliance with the disclosure requirements of the Credit Risk Retention Rules, including the contents of all such disclosures and ensuring that any required post-closing disclosures are timely provided to investors by an appropriate method that does not require any involvement of the Underwriters.
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Section 7. Conditions to the Obligations of the Underwriters. The obligations of the Underwriters to purchase and pay for the Notes will be subject to the accuracy of the representations and warranties on the part of the Seller and the Bank herein as of the date hereof and the Closing Date, to the accuracy of the representations and warranties of the Issuer contained in each Transaction Document to which it is a party as of the Closing Date, to the accuracy of the statements of the Seller and the Bank made pursuant to the provisions thereof, to the performance by the Seller and the Bank in all material respects of their obligations hereunder and to the following additional conditions precedent:
(a) The Representatives shall have received, with respect to the Seller, a certificate, dated the Closing Date, of an authorized officer of the Seller in which such officer, to the best of his or her knowledge after reasonable investigation, shall state that (i) the representations and warranties of the Seller in this Agreement are true and correct in all material respects on and as of the Closing Date, (ii) the Seller has complied in all material respects with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or before the Closing Date, (iii) the Registration Statement has been declared and remains effective, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are threatened by the Commission, and (iv) since the Time of Sale, there has been no material adverse change in the condition (financial or otherwise) of the Sellers business, except as set forth in or contemplated in the Preliminary Prospectus (references to the Preliminary Prospectus in this clause include any supplements thereto).
(b) The Representatives shall have received, with respect to the Bank, a certificate, dated the Closing Date, of an authorized officer of the Bank in which such officer, to the best of his or her knowledge after reasonable investigation, shall state that (i) the representations and warranties of the Bank in this Agreement are true and correct in all material respects on and as of the Closing Date, (ii) the Bank has complied in all material respects with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or before the Closing Date, and (iii) since the Time of Sale, there has been no material adverse change in the condition (financial or otherwise) of the Sellers auto loan business, except as set forth in or contemplated in the Preliminary Prospectus (references to the Preliminary Prospectus in this clause include any amendments and supplements thereto).
(c) The Representatives shall have received an opinion of [[the general counsel, deputy general counsel, chief counsel for transactions, or senior associate general counsel] of Capital One, National Association[, or such other legal counsel that Capital One, National Association may choose (provided that such legal counsel is acceptable to the Representatives)]][Mayer Brown LLP, special counsel for the Seller and the Bank], dated the Closing Date, in form and substance reasonably satisfactory to the Representatives and their counsel, with respect to certain corporate matters relating to the Bank and the Seller.
(d) The Representatives shall have received an opinion or opinions of Mayer Brown LLP, special counsel for the Issuer, the Seller and the Bank, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives and their counsel, with respect to: certain corporate matters, perfection matters, matters related to the creation of a security interest, securities law matters, 1940 Act matters, tax matters, enforceability matters and true sale and nonconsolidation matters.
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Such counsel shall also provide a negative assurance letter, dated as of the Closing Date, covering the Registration Statement, the Preliminary Prospectus, the Ratings Issuer Free Writing Prospectus and the Prospectus in form and substance reasonably satisfactory to the Representatives and their counsel.
(e) The Representatives shall have received from [ ], counsel to the Underwriters, a negative assurance letter, dated as of the Closing Date, covering the Registration Statement, the Preliminary Prospectus, the Ratings Issuer Free Writing Prospectus and the Prospectus in form and substance reasonably satisfactory to the Representatives; and the Bank and the Seller shall have furnished to such counsel such documents as they reasonably request in connection therewith.
(f) On or before at the Closing Date, (i) a nationally recognized independent accounting firm reasonably acceptable to the Representatives shall have furnished to the Representatives a letter or letters, dated as of the date of the Preliminary Prospectus and as of the date of the Prospectus, in form and substance reasonably satisfactory to the Representatives and their counsel, confirming that they are certified independent public accountants and stating in effect that they have performed certain specified procedures with respect to the Issued Notes and the Receivables and (ii) the Accounting Firm shall have furnished to the Representatives the Accountants Due Diligence Report.
(g) The Representatives shall have received evidence satisfactory to them that, on or before the Closing Date, UCC-1 financing statements have been filed (or have been sent for filing on the Closing Date or the next Business Day) with the appropriate UCC filing offices, reflecting the transfer of Receivables and other related property from the Bank to the Seller, the transfer of Receivables and other related property from the Seller to the Issuer and the pledge of the Receivables and other related property by the Issuer in favor of the Indenture Trustee.
(h) The Representatives shall have received an opinion of [ ], counsel to the Indenture Trustee, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives and their counsel.
(i) The Representatives shall have received evidence satisfactory to them that on or before the Closing Date, all applicable UCC termination statements relating to liens of creditors of the Seller, the Issuer or the Bank or any other person on the Receivables have been filed (or have been sent for filing on the Closing Date or the next Business Day) with the appropriate filing offices, and the Representatives shall have received on or before the Closing Date contractual releases or releases terminating liens of creditors of the Seller, the Issuer, the Bank or any other person on the Receivables.
(j) The Representatives shall have received an opinion of [ ], special Delaware counsel to the Seller, subject to customary qualifications, assumptions, limitations and exceptions, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives and their counsel, with respect to (i) certain matters under Delaware law with respect to the Seller and the authority of the Seller to file a voluntary bankruptcy petition and (ii) certain corporate matters with respect to the Seller.
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(k) The Representatives shall have received an opinion of [ ], counsel to the Owner Trustee and the Issuer, subject to customary qualifications, assumptions, limitations and exceptions dated the Closing Date, in form and substance reasonably satisfactory to the Representatives and their counsel.
(l) The Ratings Issuer Free Writing Prospectus shall have been filed with the Commission, and the Representatives shall have received evidence of ratings letters that are reasonably satisfactory to the Representatives from each Hired NRSRO and that assign ratings to the Notes at least equal to the ratings specified in the Ratings Issuer Free Writing Prospectus.
(m) The Representatives shall have received such information, certificates and documents as the Representatives and their counsel may reasonably request.
(n) All actions required to be taken and all filings required to be made by the Seller or the Issuer under the Act before the Closing Date for the Notes shall have been duly taken or made; and before the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Seller or the Issuer, threatened by the Commission.
(o) The Representatives shall have received an opinion of [ ][,][in-house] counsel to the Asset Representations Reviewer, subject to customary qualifications, assumptions, limitations and exceptions, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives and their counsel.
(p) The Issuer shall have executed and delivered to DTC a standard Letter of Representations sufficient to cause DTC to qualify each class of Notes for inclusion in DTCs book-entry registration and transfer system, and each class of Notes shall have been approved by DTC for inclusion on its book-entry registration and transfer system.
If any of the conditions specified in this Section 7 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions or certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Representatives and their counsel, this Agreement and all their obligations hereunder may be canceled at, or at any time before, the Closing Date by the Representatives. Notice of such cancellation shall be given to the Issuer, the Bank and the Seller in writing or by telephone or telecopy confirmed in writing.
Section 8. Expenses.
(a) Except as expressly set forth in this Agreement, the Seller and the Bank, jointly and severally, will pay all expenses incidental to the performance of their obligations under this Agreement and will reimburse each Underwriter for any expenses reasonably incurred by it in connection with qualification of the Notes and determination of their eligibility for investment under the laws of such jurisdictions as the Representatives may designate (including reasonable fees and disbursements of their counsel) and the printing of memoranda relating thereto, for any fees charged by credit rating agencies for the rating of the Notes and for expenses incurred in preparing and distributing electronic copies of any Disclosure Materials and the Road Show
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(including any amendments and supplements thereto) to the Underwriters; provided, however, that each Underwriter will pay all of its own costs and expenses in connection with obtaining one or more printed copies of the Registration Statement, the Preliminary Prospectus or the Prospectus, or any amendments or supplement to such documents from the applicable financial printer (which may include the printing facilities of such Underwriter). Except as specifically provided in this Section 8 and in Section 9 of this Agreement, each Underwriter will pay all of its own costs and expenses (including the fees and disbursements of counsel), transfer taxes on resales of Notes by it and any advertising expenses connected with any offers it may make.
(b) If the sale of the Notes provided for herein is not consummated because any condition to the obligations of the Underwriters set forth in Section 7 of this Agreement is not satisfied or because of any refusal, inability or failure on the part of the Seller or the Bank to perform any agreement herein or to comply with any provision hereof other than by reason of a default by any Underwriter or because of any breach of a representation or warranty herein on the part of the Seller or the Bank, the Seller or the Bank, as applicable, will reimburse the Underwriters upon demand for all out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been incurred by the Underwriters in connection with the proposed purchase, sale and offering of the Notes.
Section 9. Indemnification and Contribution.
(a) The Seller and the Bank, jointly and severally, will indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of the Act or the Exchange Act and the respective officers, directors, agents and employees of each such person, against any losses, claims, damages or liabilities, joint or several, to which such Underwriter or such controlling person may become subject, under the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Time of Sale Information, the Prospectus or any amendment or supplement thereto or any Form ABS-15G furnished to the Commission on EDGAR with respect to the transactions contemplated by this Agreement (a Furnished Form ABS-15G), any data provided by the Seller, the Bank the Issuer or any of their affiliates to any Underwriter in order to prepare the Intex CDI File, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse each Underwriter and each such officer, director, employee or controlling person for any legal or other expenses reasonably incurred by each Underwriter and each such officer, director, employee or controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Seller and the Bank will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement in or omission or alleged omission made in any such documents in reliance upon and in conformity with Underwriter Information. This indemnity agreement will be in addition to any liability which the Seller or the Bank may otherwise have.
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(b) Each Underwriter, severally and not jointly, will indemnify and hold harmless the Seller and the Bank and each person, if any, who controls the Seller or the Bank within the meaning of the Act or the Exchange Act and the respective officers, directors, agents and employees of each such person, against any losses, claims, damages or liabilities to which the Seller or the Bank may become subject, under the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based (i) upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Issuer, the Seller and the Bank by such Underwriter through the Representatives specifically for use therein and (ii) with regard to any investor with whom an Underwriter enters into a Contract of Sale for the Notes prior to the filing of the final Prospectus, the failure upon the part of such Underwriter to convey (within the meaning of Rule 159 under the Act) the Preliminary Prospectus to such investor at or prior to the time of the contract of sale for such Notes; provided, however, that to the extent such Preliminary Prospectus or Prospectus, as the case may be, has been amended or supplemented, such indemnity shall not inure to the benefit of the Seller or the Bank unless such amendment or supplement shall have been delivered to such Underwriter in a reasonable period of time prior to the time of such contract of sale. Each Underwriter will reimburse any legal or other expenses reasonably incurred by the Seller or the Bank, as applicable, in connection with investigating or defending any of the losses, claims, damages, or liabilities (or actions in respect thereof) for which it has agreed to indemnify the Seller or the Bank, as applicable, in accordance with the foregoing. The Seller and the Bank agree with each Underwriter that the only written information furnished to the Issuer, the Seller and the Bank by the Underwriters specifically for use in the Registration Statement, the Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto, or the Ratings Issuer Free Writing Prospectus is the information relating to the Underwriters and the underwriting of the Notes in the [ ] paragraph[s] under the heading [Underwriting] in the Preliminary Prospectus or the Prospectus (Underwriter Information). This indemnity agreement will be in addition to any liability that each Underwriter may otherwise have.
(c) Each Underwriter, severally and not jointly, will indemnify and hold harmless the Seller and the Bank and each person, if any, who controls the Seller or the Bank within the meaning of the Act or the Exchange Act and the respective officers, directors, agents and employees of each such person, against any losses, claims, damages or liabilities to which the Seller or the Bank may become subject, under the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Underwriter Free Writing Prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse any legal or other expenses reasonably incurred by the Issuer, the Seller or the Seller in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that no Underwriter will be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission in any Underwriter Free Writing Prospectus (i) made in reliance upon and in
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conformity with any written information furnished to the related Underwriter by the Seller or the Bank expressly for use therein or (ii) as a result of any inaccurate information (including as a result of any omission therein) in the Time of Sale Information, the Prospectus or the Issuer Information, which information was not corrected by information subsequently provided by the Seller or the Bank to the related Underwriter prior to the time of use of such Underwriter Free Writing Prospectus. This indemnity agreement will be in addition to any liability that each Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this Section 9 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under clause (a), (b) or (c) of this Section 9, notify the indemnifying party of the commencement thereof; provided, that the failure to notify the indemnifying party shall not relieve the indemnifying party from any liability which it may have under this Section 9, except to the extent that it has been materially prejudiced by such failure and, provided further, that the omission and/or delay so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under clause (a), (b) or (c) of this Section 9. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may elect by written notice, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and the appointment of satisfactory counsel, including local counsel if applicable, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently incurred by such indemnified party in connection with defense thereof other than reasonable costs of investigation. If the defendants in any action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that (i) there exists actual or potential conflicting interests between the indemnifying party and the indemnified parties, or (ii) there may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel, including local counsel if applicable, to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties at the expense of the indemnifying party, subject to the approval of the indemnifying party (such approval not to be unreasonably withheld). No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to, or admission of, fault, culpability or a failure to act by or on behalf of any such indemnified party. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify any indemnified party from and against any loss or liability by reason of such settlement or judgment.
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(e) If the indemnification provided for in this Section 9 is unavailable or insufficient to hold harmless an indemnified party under this Section 9, then such indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in this Section 9, (i) in such proportion as is appropriate to reflect the relative benefits received by the Seller and the Bank on the one hand and the relevant Underwriter on the other from the offering of the Notes or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Seller and the Bank on the one hand and the relevant Underwriter on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Seller and the Bank on the one hand and the relevant Underwriter on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Issuer or the Seller bear to the total underwriting discounts and commissions received by the relevant Underwriter. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuer, the Seller or the Bank or by any Underwriter and the parties relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this clause (e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this clause (e). Notwithstanding the provisions of this clause (e), no Underwriter shall be required to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received by it in connection with such Notes underwritten by it exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligation of each Underwriter under this Section 9(e) shall be several and not joint.
(f) The obligations of the indemnifying party under this Section 9 shall be in addition to any liability which the indemnifying party may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the indemnified party within the meaning of the Act.
Section 10. Survival of Representations and Obligations. The respective agreements, representations, warranties and other statements made by the Seller or the Bank or their respective officers, including any such agreements, representations, warranties and other statements relating to the Issuer, and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of the Underwriters, the Seller or the Bank or any of their respective officers or directors or any controlling person, and will survive delivery of and payment of the Notes. The provisions of Section 8 and Section 9 of this Agreement shall survive the termination or cancellation of this Agreement and will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of the Underwriters, the Seller or the Bank or any of their respective officers or directors or any controlling person.
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Section 11. Notices. All communications hereunder shall be in writing and effective only on receipt, and, if to the Representatives or the Underwriters, will be mailed or delivered to the address for the Representatives set forth on the first page hereof, and (a) if to the Seller, will be mailed or delivered to Capital One Auto Receivables, LLC, [ ] or (b) if to the Bank, will be mailed or delivered to Capital One, National Association, [ ].
Section 12. Applicable Law and Consent to Jurisdiction; Entire Agreement.
(a) This Agreement will be governed by and construed in accordance with the law of the State of New York. This Agreement supersedes all prior agreements and understandings relating to the subject matter hereof.
(b) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT AND EACH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
(c) Each party to this Agreement hereby irrevocably and unconditionally waives all right of trial by jury in any action, proceeding or counterclaim based on, or arising out of, under or in connection with this Agreement or any matter arising hereunder or thereunder.
Section 13. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers, directors and controlling persons referred to in Section 9 hereof, and their successors and assigns, and no other person will have any right or obligation hereunder.
Section 14. Waivers; Headings. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
Section 15. Termination of the Obligations of the Underwriters. The obligations of the Underwriters to purchase the Notes on the Closing Date shall be terminable by the Representatives by written notice delivered to the Seller and the Bank if at any time on or before the Closing Date (a) trading in securities generally on the New York Stock Exchange shall have
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been suspended or materially limited, or there shall have been any setting of minimum prices for trading on such exchange, (b) a general moratorium on commercial banking activities in New York or Virginia shall have been declared by any of Federal or New York state authorities, (c) there shall have occurred any material outbreak or escalation of hostilities or other calamity or crisis, the effect of which on the financial markets of the United States is such as to make it, in the Representatives reasonable judgment, impracticable to market the Notes on the terms and in the manner contemplated in the Prospectus or (d) any change or any development involving a prospective change, materially and adversely affecting (i) the Trust Estate taken as a whole or (ii) the business or properties of the Issuer, the Seller or the Bank occurs, which, in the Representatives reasonable judgment, in the case of either clause (i) or (ii), makes it impracticable or inadvisable to market the Notes on the terms and in the manner contemplated in the Prospectus. Upon such notice being given, the parties to this Agreement shall (except for the liability of the Seller and the Bank under Section 8 and Section 9 of this Agreement and the liability of each Underwriter under Section 16 of this Agreement) be released and discharged from their respective obligations under this Agreement.
Section 16. Offering Communications.
(a) Other than the Preliminary Prospectus, the Prospectus and the Ratings Issuer Free Writing Prospectus, each Underwriter severally represents, warrants and agrees with the Seller and the Bank that it has not made, used, prepared, authorized, approved or referred to and will not prepare, make, use, authorize, approve or refer to any written communication (as defined in Rule 405 under the Act) that constitutes an offer to sell or solicitation of an offer to buy the Notes, including, but not limited to any ABS informational and computational materials as defined in Item 1101(a) of Regulation AB under the Act unless such Underwriter has obtained the prior written approval of the Seller and the Bank; provided, however, each Underwriter may prepare and convey to one or more of its potential investors one or more written communications (as defined in Rule 405 under the Act) containing no more than the following: (i) an Intex CDI file that does not contain any Issuer Information (as defined below) other than Issuer Information included in the Preliminary Prospectus or the Ratings Issuer Free Writing Prospectus previously filed with the Commission (each, an Intex CDI file), (ii) any materials included in one or more investor road shows (as defined in Rule 433 under the Act) relating to the Notes (each, a Road Show) authorized or approved by the Seller or the Bank, (iii) information contemplated by Rule 134 under the Act and included or to be included in the Preliminary Prospectus or the Prospectus, (iv) information relating to the class, size, rating, CUSIPs, coupon, yield, benchmark, spread, closing date, legal maturity, weighted average life, expected final payment date and trade date of the Notes and (v) a column or other entry showing the status of the subscriptions for the Notes and/or expected pricing parameters of the Notes (each such written communication identified in clauses (iii) (v), an Underwriter Free Writing Prospectus); provided, that no such Underwriter Free Writing Prospectus would be required to be filed with the Commission. As used herein, the term Issuer Information means any information of the type specified in clauses (1)(5) of footnote 271 of Commission Release No. 33-8591 (Securities Offering Reform), other than Underwriter Derived Information. As used herein, the term Underwriter Derived Information shall refer to information of the type described in clause (5) of footnote 271 of Commission Release No. 33-8591 (Securities Offering Reform) when prepared by any Underwriter, including traditional computational and analytical materials prepared by the Underwriter.
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(b) Each Underwriter severally represents, warrants and agrees with the Seller, the Issuer and the Seller that:
(i) each Underwriter Free Writing Prospectus prepared by it will not, as of the date such Underwriter Free Writing Prospectus was conveyed or delivered to any prospective purchaser of Notes, include any untrue statement of a material fact or omit any material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; provided, however, that no Underwriter makes such representation, warranty or agreement to the extent such misstatements or omissions were (i) made in reliance upon and in conformity with any written information furnished to the related Underwriter by the Seller or the Bank expressly for use therein or (ii) as a result of any inaccurate information (including as a result of any omission therein) in any Time of Sale Information or the Prospectus, which information was not corrected by information subsequently provided by the Seller or the Bank to the related Underwriter prior to the time of use of such Underwriter Free Writing Prospectus;
(ii) each Underwriter Free Writing Prospectus prepared by it shall contain a legend substantially in the form of and in compliance with Rule 433(c)(2)(i) of the Act, and shall otherwise conform to any requirements for free writing prospectuses under the Act; and
(iii) each Underwriter Free Writing Prospectus prepared by it shall be delivered to the Seller and the Bank no later than the Business Day prior to the required filing date.
(c) Each Underwriter severally represents and agrees that (a) it has not entered, and will not enter, into any contract of sale for the Notes (subject to the proviso to clause (ii) below) until at least the later of (i) three business days after the Preliminary Prospectus has been initially filed by the Seller with the Commission (as determined by reference to the Filing Date according to the Filing Detail webpage for the Seller related to such filing, as made available on the Commissions website) and (ii) 48 hours after any supplement to the Preliminary Prospectus that reflects a material change from the information contained in the Preliminary Prospectus has been filed by the Seller with the Commission (as determined by reference to the time such filing was Accepted according to the Filing Detail webpage for the Seller related to such filing, as made available on the Commissions website); provided, however, that in the case of any such contract of sale entered into before the filing of a supplement as referred to in this clause (ii), it will not consummate such transaction without entering into a new contract of sale in accordance with this clause (ii); (b) that it did not enter into any contract of sale for any Notes prior to the Time of Sale and (c) that it will, at any time that such Underwriter is acting as an underwriter (as defined in Section 2(a)(11) of the Act) with respect to the Notes, (A) convey to each investor to whom Notes are sold by it during the period prior to the filing of the final Prospectus (as notified to the Underwriters by the Seller), at or prior to the applicable time of any such contract of sale with respect to such investor, the Preliminary Prospectus and (B) comply with Rule 173 of the Act, including, but not limited to (I) by delivering to each investor to whom Notes are sold by it no later than two Business Days following the completion
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of such sale (i.e., the date of settlement), a copy of the final Prospectus or a notice to the effect that such sale was made pursuant to the Registration Statement and (II) if only a notice has been sent pursuant to the foregoing clause (I), by delivering to any investor to whom Notes are sold by it, upon request of such investor, a copy of the final Prospectus.
Section 17. Representation of Underwriters. The Representatives will act for the several Underwriters in connection with the transaction contemplated hereby, and any action under this Agreement taken by the Representatives will be binding upon all the Underwriters.
Section 18. Default by an Underwriter. If any one or more Underwriters shall fail to purchase and pay for any of the Notes agreed to be purchased by such Underwriter or Underwriters hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Underwriters shall be obligated severally to take up and pay for (in the respective proportions which the amount of Notes set forth opposite their names in Section 3 of the Terms Exhibit bears to the aggregate amount of Notes set forth opposite the names of all the remaining Underwriters) the Notes which the defaulting Underwriter or Underwriters agreed but failed to purchase; provided, however, that if the aggregate amount of Notes which the defaulting Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate principal amount of Notes set forth in Section 3 of Terms Exhibit, the remaining Underwriters shall have the right to purchase all, but shall not be under any obligation to purchase any, of the Notes, and if such nondefaulting Underwriters do not purchase all the Notes, this Agreement will terminate without liability (except the liability of the Seller and the Bank under Section 8(a) hereof) to any nondefaulting Underwriter, the Seller or the Bank. In the event of a default by any Underwriter as set forth in this Section 18, the Closing Date shall be postponed for such period, as is mutually agreeable to the Seller, the Bank and the Representatives (with all parties hereto agreeing that time is of the essence), in order that the required changes in the Registration Statement and the Prospectus (and any supplements thereto) or in any other documents or arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting Underwriter of its liability, if any, to the Seller, the Bank and any nondefaulting Underwriter for damages occasioned by its default hereunder.
Section 19. Arms Length Business Transactions. The Seller and the Bank acknowledge and agree that (i) the transaction contemplated by this Agreement is an arms-length commercial transaction between the Seller and the Bank, on the one hand, and each of the Underwriters, on the other, (ii) in connection therewith with respect to all aspects of the transaction contemplated herein, each Underwriter is acting as a principal and not the agent or fiduciary of the Seller and the Bank and the Seller and the Bank hereby expressly disclaim any fiduciary relationship with respect thereto, and (iii) none of the Underwriters has assumed an advisory responsibility in favor of the Seller or the Bank with respect to the transaction contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Seller or the Bank on other matters) or any other obligation to the Seller or the Bank except the obligations expressly set forth in this Agreement.
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Section 20. Recognition of the U.S. Special Resolution Regimes.
(a) In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.
(b) In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.
(c) For purposes of this Section 20:
(i) BHC Act Affiliate has the meaning assigned to the term affiliate in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).
(ii) Covered Entity means any of the following: (A) a covered entity as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (B) a covered bank as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (C) a covered FSI as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
(iii) Default Right has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
(iv) U.S. Special Resolution Regime means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
Section 21. Counterparts and Electronic Signature. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which shall together constitute one instrument. Each of the parties hereto agrees that the transaction consisting of this Agreement may be conducted by electronic means. Each party agrees, and acknowledges that it is such partys intent, that if such party signs this Agreement using an electronic signature, it is signing, adopting, and accepting this Agreement and that signing this Agreement using an electronic signature is the legal equivalent of having placed its handwritten signature on this Agreement on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Agreement in a usable format.
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If you are in agreement with the foregoing, please sign a counterpart hereof and return it to the Seller, whereupon this letter and your acceptance shall become a binding agreement among the Seller, the Bank and the Underwriters.
Very truly yours, | ||
CAPITAL ONE AUTO RECEIVABLES, LLC, as Seller | ||
By: | ||
Name: | ||
Title: |
CAPITAL ONE, NATIONAL ASSOCIATION, as Bank | ||
By: | ||
Name: | ||
Title: |
Capital One Prime Auto Receivables Trust 20[ ]-[ ]
Form of Underwriting Agreement
S-1
The foregoing Agreement is hereby confirmed and accepted as of the date first above written.
[ ],
as Underwriter and as a Representative of the Underwriters referred to in the foregoing Agreement
By: | ||
Name: | ||
Title: |
[ ],
as Underwriter and as a Representative of the Underwriters referred to in the foregoing Agreement
By: | ||
Name: | ||
Title: |
Capital One Prime Auto Receivables Trust 20[ ]-[ ]
Form of Underwriting Agreement
S-2
EXHIBIT A
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ]
ASSET BACKED NOTES
TERMS EXHIBIT
Dated: [ ], 20[ ]-[ ]
To: CAPITAL ONE, NATIONAL ASSOCIATION CAPITAL ONE AUTO RECEIVABLES, LLC
Re: Underwriting Agreement, dated [ ], 20[ ]-[ ]
1. Terms of the Notes
Class | Initial Note Balance[(1)] | [Underwritten Amount] | Interest Rate | Final Scheduled Payment Date | ||||||||
A-1 |
$ | $ | [ ]% | [] | ||||||||
A-2[-A] |
$ | $ | [ ]% | [] | ||||||||
[A-2-B] |
$ | $ | [Benchmark] + [ ]% | [] | ||||||||
A-3 |
$ | $ | [ ]% | [] | ||||||||
A-4 |
$ | $ | [ ]% | [] | ||||||||
[B |
$ | $ | [ ]% | []] | ||||||||
[C |
$ | $ | [ ]% | []] | ||||||||
[D |
$ | $ | [ ]% | []] |
[(1) | The excess of the Initial Note Balance over the Underwritten Amount for each class of the Issued Notes will be retained by the Bank or one or more majority-owned affiliates of the Bank to satisfy the obligations imposed on the sponsor under the Credit Risk Retention Rules.] |
2. | Underwriters |
The Underwriters named below are the Underwriters for the purpose of this Underwriting Agreement and for the purposes of the above-referenced Underwriting Agreement as such Underwriting Agreement is incorporated herein and made a part hereof.
[ ]
3. | Underwriting |
A-1
Underwriting Liability | Class A-1 | Class A-2[-A] | [Class A-2-B | Class A-3 | Class A-4 | [Class B | [Class C | [Class D | ||||||||||||||||||||||||
[ ] |
[ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | ||||||||||||||||
[ ] |
[ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | ||||||||||||||||
[ ] |
[ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | ||||||||||||||||
[ ] |
[ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | ||||||||||||||||
[ ] |
[ | ] | [ | ] | [ | ]] | [ | ] | [ | ] | [ | ]] | [ | ]] | [ | ]] |
4. | Purchase Price, Discounts and Concessions |
Class A-1 | Class A-2[-A] | [Class A-2-B | Class A-3 | Class A-4 | [Class B | [Class C | [Class D | |||||||||||||||||||||||||
Gross Purchase Price |
[ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | ||||||||||||||||
Underwriting Discount |
[ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | ||||||||||||||||
Net Purchase Price |
[ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | ||||||||||||||||
Maximum Dealer Selling Concessions |
[ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | [ | ] | ||||||||||||||||
Maximum Dealer Reallowance Discounts |
[ | ] | [ | ] | [ | ]] | [ | ] | [ | ] | [ | ]] | [ | ]] | [ | ]] |
5. | Time of Sale |
[ ] [p.m.] [a.m.] (Eastern Time) (U.S.) on [ ], 20[ ] (the time the first Contract of Sale was entered into as designated by the Underwriters).
6. | Closing Date |
Pursuant to Rule 15c6-1(d) under the Securities Exchange Act of 1934, as amended, the Underwriters, the Seller and the Bank hereby agree that the Closing Date shall be [ ], 20[ ] on or about [10:00] a.m., New York City time.
A-2
Exhibit 3.1
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
CAPITAL ONE AUTO RECEIVABLES, LLC
This Second Amended and Restated Limited Liability Company Agreement (together with the schedules attached hereto, this Agreement) of Capital One Auto Receivables, LLC (the Company), is entered into by Capital One, National Association (as successor in interest to Capital One Auto Finance, Inc.), as the sole equity member (the Member), and Douglas K. Johnson and Evelyn Echevarria, as the Special Members (as defined on Schedule A hereto). Capitalized terms used and not otherwise defined herein have the meanings set forth on Schedule A hereto.
The Member, by execution of this Agreement, hereby continues the Company as a limited liability company pursuant to and in accordance with the Delaware Limited Liability Company Act (6 Del. C. § 18-101 et seq.), as amended from time to time (the Act), and this Agreement, and hereby desires that this Agreement be, and hereby is, the sole governing document of the Company, superseding all prior agreements. The Special Members and Member, hereby agree as follows effective as the date hereof:
Section 1. Name.
The name of the limited liability company continued hereby is Capital One Auto Receivables, LLC.
Section 2. Principal Business Office.
The principal business office of the Company shall be located at 140 East Shore Drive, Room 1052-D, Glen Allen, Virginia 23059, or such other location as may hereafter be determined by the Member.
Section 3. Registered Office.
The address of the registered office of the Company in the State of Delaware is Corporation Service Company, 251 Little Falls Drive, Wilmington, County of New Castle, Delaware 19808.
Section 4. Registered Agent.
The name and address of the registered agent of the Company for service of process on the Company in the State of Delaware is Corporation Service Company, 251 Little Falls Drive, Wilmington, County of New Castle, Delaware 19808.
Section 5. Members.
(a) The mailing address of the Member is set forth on Schedule B attached hereto. The Member was admitted to the Company as a Member of the Company upon its execution of a counterpart signature page to the Original Limited Liability Company Agreement and shall continue as a Member of the Company upon its execution of a counterpart signature page to this Agreement.
(b) Subject to Section 9(j), the Member may act by written consent.
(c) Upon the occurrence of any event that causes the Member to cease to be a member of the Company (other than (i) upon an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee pursuant to Sections 22 and 24, or (ii) the resignation of the Member and the admission of an additional member of the Company pursuant to Sections 23 and 24), each Person acting as an Independent Director pursuant to Section 10 shall, without any action of any Person and simultaneously with the Member ceasing to be a member of the Company, automatically be admitted to the Company as a Special Member and shall continue the Company without dissolution. No Special Member may resign from the Company or transfer its rights as Special Member unless (i) a successor Special Member has been admitted to the Company as Special Member by executing a counterpart to this Agreement, and (ii) such successor has also accepted its appointment as Independent Director pursuant to Section 10; provided, however, the Special Members shall automatically cease to be members of the Company upon the admission to the Company of a substitute Member. Each Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of Company assets. Pursuant to Section 18-301 of the Act, a Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company. A Special Member, in its capacity as Special Member, may not bind the Company. Except as required by any mandatory provision of the Act, each Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company. In order to implement the admission to the Company of each Special Member, each Person acting as an Independent Director pursuant to Section 10 shall execute a counterpart to this Agreement. Prior to its admission to the Company as Special Member, each Person acting as an Independent Director pursuant to Section 10 shall not be a member of the Company.
Section 6. Certificates.
Howard Rosenberg has heretofore acted as an authorized person within the meaning of the Act, and in such capacity has executed, delivered and filed the Certificate of Formation of the Company with the Secretary of State of the State of Delaware. Upon the filing of the Certificate of Formation with the Secretary of State of the State of Delaware, his powers as an authorized person ceased, and the Member thereupon became the designated authorized person and shall continue as the designated authorized person within the meaning of the Act. The Member or an Officer shall execute, deliver and file any other certificates (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in any jurisdiction in which the Company may wish to conduct business.
The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate of Formation as provided in the Act.
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Section 7. Purposes. (a) The purpose to be conducted or promoted by the Company is to engage in the following activities:
(i) | to purchase, accept capital contributions of or otherwise acquire (A) motor vehicle retail installment sale contracts and motor vehicle installment loans, including rights to payment of any interest, finance charges or fees and any other rights with respect thereto (the Receivables), (B) security interests in the motor vehicles financed by the Receivables (the Financed Vehicles) and any accessions thereto; and (C) rights, interests and proceeds related to the foregoing (collectively, Related Assets); |
(ii) | to own, hold, service, sell, assign, transfer, pledge, grant security interests in or otherwise exercise ownership rights with respect to the Receivables and Related Assets; |
(iii) | to issue and sell one or more series of Securities; |
(iv) | to form Issuers, act as depositor or in a similar capacity with respect to Issuers, and acquire, hold and otherwise deal with interests in Issuers; |
(v) | to acquire, own, hold, transfer, assign, pledge, sell and otherwise deal with any interests in an Issuer or Securities issued by an Issuer; |
(vi) | to enter into, execute and deliver any underwriting agreement, purchase or placement agreement relating to the sale or placement of any securities issued by an Issuer, any sale agreement, servicing agreement, trust agreement, purchase agreement, administration agreement, custodial agreement, asset representations reviewer agreement or any other agreement which may be required or advisable to effect the administration or servicing of the Receivables and Related Assets or the issuance and sale of any Securities (each, a Securitization Agreement), and to perform its obligations under each Securitization Agreement to which it is a party; |
(vii) | to establish any reserve account, spread account or other credit enhancement for the benefit of Securities issued by the Company or any Issuer and to loan, transfer or otherwise invest any proceeds from Receivables and Related Assets and any other income as determined by the Board; |
(viii) | to enter into any interest rate or basis swap, cap, floor or collar agreements, currency exchange agreements or similar hedging transactions relating to any Receivables and Related Assets or for the benefit of any Security issued by the Company or any Issuer; |
(ix) | to prepare, execute and file with the Securities and Exchange Commission registration statements (including a form of prospectus), relating to Securities and any filings or reports related to Securities pursuant to the Securities Act of 1933 or the Securities and Exchange Act of 1934, each as amended, and any rules or regulations thereunder; |
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(x) | to prepare any prospectus, offering or disclosure documents relating to Securities; and |
(xi) | to engage in any lawful act or activity and to exercise any powers permitted to limited liability companies organized under the laws of the State of Delaware that are related or incidental to and necessary, convenient or advisable for the accomplishment of the above-mentioned purposes. |
(b) The Company, by or through any Director or Officer on behalf of the Company, may execute, deliver and perform its obligations under the Transaction Documents and all documents, agreements, certificates, or financing statements contemplated thereby or related thereto, and take all action that may be necessary or desirable in furtherance of the foregoing, all without any further act, vote or approval of any Member, Director, Officer or other Person notwithstanding any other provision of this Agreement, the Act or applicable law, rule or regulation. The foregoing authorization shall not be deemed a restriction on the powers of the Member or any Director or Officer to enter into other agreements on behalf of the Company.
Section 8. Powers.
Subject to Section 9(j), the Company, and the Board of Directors and the Officers of the Company on behalf of the Company, (i) shall have and exercise all powers necessary, convenient or incidental to accomplish its purposes as set forth in Section 7 and (ii) shall have and exercise all of the powers and rights conferred upon limited liability companies formed pursuant to the Act.
Section 9. Management.
(a) Board of Directors. Subject to Section 9(j), the business and affairs of the Company shall be managed by or under the direction of a Board of one or more Directors designated by the Member. Subject to Section 10, the Member may determine at any time in its sole and absolute discretion the number of Directors to constitute the Board. The authorized number of Directors may be increased or decreased by the Member at any time in its sole and absolute discretion, upon notice to all Directors, and subject in all cases to Section 10. The initial number of Directors shall be four, two of which shall be Independent Directors pursuant to Section 10. Each Director elected, designated or appointed by the Member shall hold office until a successor is elected and qualified or until such Directors earlier death, resignation, expulsion or removal. Each Director shall execute and deliver the Directors Agreement. A Director need not be a Member. As of the date hereof, the Directors designated by the Member are listed on Schedule D hereto. The Member hereby agrees that only the Board of the Company, the Officers of the Company and authorized agents of the Company shall have the authority to bind the Company. The Member shall not have any authority to act for or bind the Company by reason of its status as such, but shall have only the right to vote on and approve the actions herein specified to be voted on or approved by the Member.
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(b) Powers. Subject to Section 9(j), the Board of Directors shall have the power to do any and all acts necessary, convenient or incidental to or for the furtherance of the purposes described herein, including all powers, statutory or otherwise. Subject to Sections 7 and 9, the Board of Directors has the authority to bind the Company.
(c) Meeting of the Board of Directors. The Board of Directors of the Company may hold meetings, both regular and special, within or outside the State of Delaware. Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board. Special meetings of the Board may be called by the President on not less than one days notice to each Director by telephone, e-mail, mail or any other means of communication, and special meetings shall be called by the President or Secretary in like manner and with like notice upon the written request of any one or more of the Directors.
(d) Quorum; Acts of the Board. At all meetings of the Board, a majority of the Directors shall constitute a quorum for the transaction of business and, except as otherwise provided in any other provision of this Agreement, the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board. If a quorum shall not be present at any meeting of the Board, the Directors present at such meeting may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if all members of the Board or any such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or such committee, as the case may be.
(e) Electronic Communications. Members of the Board, or any committee designated by the Board, may participate in meetings of the Board, or of any committee, by means of telephone or video conference or similar communications equipment that allows all Persons participating in the meeting to hear each other, and such participation in a meeting shall constitute presence in Person at the meeting. If all the participants are participating by telephone or video conference or similar communications equipment, the meeting shall be deemed to be held at the principal place of business of the Company.
(f) Committees of Directors.
(i) | The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the Directors of the Company. The Board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. |
(ii) | In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another member of the Board to act at such meeting in the place of any such absent or disqualified member. |
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(iii) | Any such committee of the Board, to the extent provided in the resolution of the Board, and subject to, in all cases, Sections 9(j) and 10, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board. Each committee shall keep regular minutes of its meetings and report the same to the Board when required. |
(g) Compensation of Directors; Expenses. The Board shall have the authority to fix the compensation of Directors. The Directors may be paid their expenses, if any, of attendance at meetings of the Board, which may be a fixed sum for attendance at each meeting of the Board or a stated salary as Director. No such payment shall preclude any Director from serving the Company in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.
(h) Removal of Directors. Unless otherwise restricted by law and subject to Section 10, any Director or the entire Board of Directors may be removed or expelled, with or without cause, at any time by the Member, and, subject to Section 10, any vacancy caused by any such removal or expulsion may be filled by action of the Member.
(i) Directors as Agents. To the extent of their powers set forth in this Agreement and subject to Section 9(j), the Directors are agents of the Company for the purpose of the Companys business, and the actions of the Directors taken in accordance with such powers set forth in this Agreement shall bind the Company. Notwithstanding the last sentence of Section 18-402 of the Act, a Director may not bind the Company except as provided in this Agreement or in a resolution of the Directors.
(j) Limitations on the Companys Activities.
(i) | This Section 9(j) is being adopted in order to comply with certain provisions required in order to qualify the Company as a special purpose entity. |
(ii) | The Member shall not, so long as any Obligation is outstanding, amend, alter, change or repeal the definition of Independent Director or Sections 5(c), 7, 8, 9, 10, 16, 21, 22, 23, 24, 25, 26, 27, 31 or 32 or Schedule A of this Agreement without the unanimous written consent of the Board (including all Independent Directors). Subject to this Section 9(j), the Member reserves the right to amend, alter, change or repeal any provisions contained in this Agreement in accordance with Section 32. |
(iii) | Notwithstanding any other provision of this Agreement and any provision of law that otherwise so empowers the Company, the Member, the Board, any Officer or any other Person, so long as any Obligation is outstanding, neither the Member nor the Board nor any Officer nor any other Person shall be authorized or empowered on behalf of the Company, nor shall |
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they permit the Company, to, and the Company shall not, without the prior unanimous written consent of the Member and the Board (including all Independent Directors), take any Material Action, provided, however, that so long as any Obligation is outstanding the Board may not vote on, or authorize the taking of, any Material Action, unless there are at least two Independent Directors then serving in such capacity and all such Independent Directors have consented to such action. |
(iv) | The Board shall cause the Company to do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if: (1) the Board shall determine that the preservation thereof is no longer desirable for the conduct of its business and that the loss thereof is not disadvantageous in any material respect to the Company and (2) the Rating Agency Condition is satisfied. The Board also shall cause the Company to: |
(A) | maintain its own books and records and bank accounts separate from the Member or any other person; |
(B) | at all times hold itself out to the public and all other Persons as a legal entity separate from the Member and any other Person; |
(C) | have a Board of Directors separate from that of the Member and any other Person; |
(D) | file its own tax returns, if any, as may be required under applicable law, to the extent (1) not part of a consolidated group filing a consolidated return or returns or (2) not treated as a division for tax purposes of another taxpayer, and pay any taxes so required to be paid under applicable law; |
(E) | except as contemplated by the Transaction Documents, not commingle its assets with assets of the Member or any other Person; |
(F) | conduct its business in its own name and strictly comply with all organizational formalities to maintain its separate existence; |
(G) | maintain separate financial statements; |
(H) | pay its own liabilities only out of its own funds; |
(I) | maintain an arms length relationship with its Affiliates and the Member; |
(J) | pay the salaries of its own employees, if any; |
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(K) | not hold out its credit or assets as being available to satisfy the obligations of others; |
(L) | to the extent its office is located in the offices of any Affiliate, pay fair market rent for its office space located therein, and otherwise allocate fairly and reasonably any overhead expenses shared with any Affiliate, and not engage in any business transaction with any Affiliate unless on an arms-length basis; |
(M) | use separate stationery, invoices and checks; |
(N) | except as contemplated by the Transaction Documents, not pledge its assets for the benefit of any other Person, |
(O) | correct any known misunderstanding regarding its separate identity; |
(P) | maintain adequate capital in light of its contemplated business purpose, transactions and liabilities; |
(Q) | cause its Board of Directors to meet at least annually or act pursuant to written consent and keep minutes of such meetings and actions and observe all other Delaware limited liability company formalities; |
(R) | not acquire any securities of the Member; and |
(S) | cause the Directors, Officers, agents and other representatives of the Company to act at all times with respect to the Company consistently and in furtherance of the foregoing limitations and in the best interests of the Company. |
Failure of the Company, or the Member or the Board on behalf of the Company, to comply with any of the foregoing covenants or any other covenants contained in this Agreement shall not affect the status of the Company as a separate legal entity or the limited liability of the Member or the Directors.
(v) | So long as any Obligation is outstanding, the Board shall not cause or permit the Company to: |
(A) | except as contemplated by the Transaction Documents, guarantee or become obligated for the debts of any Person, including any Affiliate; |
(B) | engage, directly or indirectly, in any business other than the actions required or permitted to be performed under Section 7, the Transaction Documents or this Section 9(j); |
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(C) | incur, create or assume any indebtedness other than as expressly permitted hereunder and under the Transaction Documents; |
(D) | make or permit to remain outstanding any loan or advance to, or own or acquire any stock or securities of, any Person (other than any Issuer), except that the Company may invest in those investments permitted under the Transaction Documents and may make any advance required or expressly permitted to be made pursuant to any provisions of the Transaction Documents and permit the same to remain outstanding in accordance with such provisions; |
(E) | to the fullest extent permitted by law, engage in any dissolution, liquidation, consolidation, merger, asset sale or transfer of ownership interests other than such activities as are expressly permitted pursuant to any provision of the Transaction Documents; or |
(F) | form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) other than any Issuer. |
Section 10. Independent Directors.
As long as any Obligation is outstanding, the Member shall cause the Company at all times to have at least two Independent Directors who will be appointed by the Member. To the fullest extent permitted by law, including Section 18-1101(c) of the Act, the Independent Directors shall consider only the interests of the Company, including its respective creditors, in acting or otherwise voting on the matters referred to in Section 9(j)(iii). No resignation or removal of an Independent Director, and no appointment of a successor Independent Director, shall be effective until such successor (i) shall have accepted his or her appointment as an Independent Director by a written instrument, which may be a counterpart signature page to the Directors Agreement, and (ii) shall have executed a counterpart to this Agreement as required by Section 5(c). In the event of a vacancy in the position of Independent Director, the Member shall, as soon as practicable, appoint a successor Independent Director. Each Independent Director is a manager of the Company within the meaning of the Act; however, all right, power and authority of the Independent Directors shall be limited to the extent necessary to exercise those rights and perform those duties specifically set forth in this Agreement and the Independent Directors shall otherwise have no authority to bind the Company. Except as provided in the second sentence of this Section 10, in exercising their rights and performing their duties under this Agreement, any Independent Director shall have fiduciary duties identical to those of a director of a business corporation organized under the General Corporation Law of the State of Delaware. No Independent Director shall at any time serve as trustee in bankruptcy for any Affiliate of the Company.
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Section 11. Officers.
(a) Officers. The initial Officers of the Company shall be designated by the Member. The additional or successor Officers of the Company shall be chosen by the Board and shall consist of at least a President, a Secretary and a Treasurer. The Board may also choose one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers. Any number of offices may be held by the same person. The Board may appoint such other Officers and agents as it shall deem necessary or advisable who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. The salaries of all Officers and agents of the Company shall be fixed by or in the manner prescribed by the Board. The Officers of the Company shall hold office until their successors are chosen and qualified. Any Officer may be removed at any time, with or without cause, by the affirmative vote of a majority of the Board. Any vacancy occurring in any office of the Company shall be filled by the Board. As of the date hereof, the Officers of the Company designated by the Member are listed on Schedule E hereto.
(b) President. The President shall be the chief executive officer of the Company, shall preside at all meetings of the Board, shall be responsible for the general and active management of the business of the Company and shall see that all orders and resolutions of the Board are carried into effect. The President or any other Officer authorized by the President or the Board shall execute all bonds, mortgages and other contracts, except: (i) where required or permitted by law or this Agreement to be otherwise signed and executed, including Section 7(b); (ii) where signing and execution thereof shall be expressly delegated by the Board to some other Officer or agent of the Company, and (iii) as otherwise permitted in Section 11(c).
(c) Vice President. In the absence of the President or in the event of the Presidents inability to act, the Vice President, if any (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board, or in the absence of any designation, then in the order of their election), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions imposed upon the President pursuant to this Agreement and the Act. The Vice Presidents, if any, shall perform such other duties and have such other powers as the Board may from time to time prescribe.
(d) Secretary and Assistant Secretary. The Secretary shall be responsible for filing legal documents and maintaining records for the Company. The Secretary shall attend all meetings of the Board and record all the proceedings of the meetings of the Company and of the Board in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or shall cause to be given, notice of all meetings of the Member, if any, and special meetings of the Board, and shall perform such other duties as may be prescribed by the Board or the President, under whose supervision the Secretary shall serve. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board (or if there be no such determination, then in order of their election), shall, in the absence of the Secretary or in the event of the Secretarys inability to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board may from time to time prescribe.
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(e) Treasurer and Assistant Treasurer. The Treasurer shall have the custody of the Company funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Board. The Treasurer shall disburse the funds of the Company as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the President and to the Board, at its regular meetings or when the Board so requires, an account of all of the Treasurers transactions and of the financial condition of the Company. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of the Treasurers inability to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board may from time to time prescribe.
(f) Officers as Agents. The Officers, to the extent of their powers set forth in this Agreement or otherwise vested in them by action of the Board not inconsistent with this Agreement, are agents of the Company for the purpose of the Companys business and, subject to Section 9(j), the actions of the Officers taken in accordance with such powers shall bind the Company.
(g) Duties of Board and Officers. Except to the extent otherwise provided herein, each Director and Officer shall have fiduciary duties identical to those of directors and officers of business corporations organized under the General Corporation Law of the State of Delaware.
Section 12. Limited Liability.
Except as otherwise expressly provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be the debts, obligations and liabilities solely of the Company, and neither the Member nor the Special Members nor any Director or Officer shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member, Special Member, Director or Officer of the Company.
Section 13. Capital Contributions.
The Member has contributed to the Company property of an agreed value as listed on Schedule B attached hereto. In accordance with Section 5(c), the Special Members shall not be required to make any capital contributions to the Company.
Section 14. Additional Contributions.
The Member is not required to make any additional capital contribution to the Company. However, the Member may make additional capital contributions to the Company at any time. The provisions of this Agreement, including this Section 14, are intended to benefit the Member and the Special Members and, to the fullest extent permitted by law, shall not be construed as conferring any benefit upon any creditor of the Company (and no such creditor of the Company shall be a third-party beneficiary of this Agreement) and the Member and the Special Members shall not have any duty or obligation to any creditor of the Company to make any contribution to the Company or to issue any call for capital pursuant to this Agreement.
Section 15. Allocation of Profits and Losses.
The Companys profits and losses shall be allocated to the Member.
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Section 16. Distributions.
Distributions may be made to the Member at the times and in the aggregate amounts determined by the Board. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to make a distribution to the Member on account of its interest in the Company if such distribution would violate the Act or any other applicable law or any Transaction Document.
Section 17. Books and Records.
The Board shall keep or cause to be kept complete and accurate books of account and records with respect to the Companys business. The books of the Company shall at all times be maintained by the Board. The Member and its duly authorized representatives shall have the right to examine the Company books, records and documents during normal business hours. The Companys books of account shall be kept using the method of accounting determined by the Member. The Companys independent auditor, if any, shall be an independent public accounting firm selected by the Member.
Section 18. Reports.
(a) Within 60 days after the end of each fiscal quarter, the Board shall cause to be prepared an unaudited report setting forth as of the end of such fiscal quarter:
(i) | unless such quarter is the last fiscal quarter, a balance sheet of the Company; and |
(ii) | unless such quarter is the last fiscal quarter, an income statement of the Company for such fiscal quarter. |
(b) The Board shall use diligent efforts to cause to be prepared and mailed to the Member, within 90 days after the end of each fiscal year, an audited or unaudited report setting forth as of the end of such fiscal year:
(i) | a balance sheet of the Company; |
(ii) | an income statement of the Company for such fiscal year; and |
(iii) | a statement of the Members capital account. |
(c) The Board shall, after the end of each fiscal year, use reasonable efforts to cause the Companys independent accountants, if any, to prepare and transmit to the Member as promptly as possible any such tax information as may be reasonably necessary to enable the Member to prepare its federal, state and local income tax returns relating to such fiscal year. Nothing in this Section 18 shall limit the Company from hiring a person or company to perform its bookkeeping, accounting or other related services.
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Section 19. Tax Classification.
It is the intention of the Member that the Company be disregarded as an entity separate from the Member for federal income tax purposes under Section 7701 of the Internal Revenue Code of 1986, as amended, and Treasury Regulations Section 301.7701-2(c)(2)(i) for state income tax purposes under any applicable state or local income tax law or regulation and for similar purposes. Notwithstanding any other provision of this Agreement, unless required by law, no Member shall take any action inconsistent with the classification as a disregarded entity for purposes of Treasury Regulation 301,7701-3.
Section 20. Other Business.
Notwithstanding any duty otherwise existing at law or in equity, the Member, the Special Members and any Officer, Director, employee or agent of the Company and any Affiliate of the Member or the Special Members may engage in or possess an interest in other business ventures (unconnected with the Company) of every kind and description, independently or with others. The Company shall not have any rights in or to such independent ventures or the income or profits therefrom by virtue of this Agreement.
Section 21. Exculpation and Indemnification.
(a) To the fullest extent permitted by applicable law, neither the Member nor the Special Members nor any Officer, Director, Independent Director, employee or agent of the Company nor any employee, representative, agent or Affiliate of any of the foregoing (collectively, the Covered Persons) shall be liable to the Company or any other Person who has an interest in or claim against the Company for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred on such Covered Person by this Agreement, except that a Covered Person shall be liable for any such loss, damage or claim incurred by reason of such Covered Persons gross negligence or willful misconduct.
(b) To the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any loss, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred on such Covered Person by this Agreement, except that no Covered Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Covered Person by reason of such Covered Persons gross negligence or willful misconduct with respect to such acts or omissions; provided, however, that any indemnity under this Section 20 by the Company shall be provided out of and to the extent of Company assets only, and the Member and the Special Members shall not have personal liability on account thereof; and provided further, that so long as any Obligation is outstanding, no indemnity payment from funds of the Company (as distinct from funds from other sources, such as insurance) of any indemnity under this Section 21 shall be payable from amounts allocable to any other Person pursuant to the Transaction Documents.
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(c) To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by a Covered Person defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Covered Person to repay such amount if it shall be determined that the Covered Person is not entitled to be indemnified as authorized in this Section 21.
(d) A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters the Covered Person reasonably believes are within such other Persons professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, or any other facts pertinent to the existence and amount of assets from which distributions to the Member might properly be paid.
(e) To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Company or to any other Covered Person, a Covered Person acting under this Agreement shall not be liable to the Company or to any other Covered Person for its good faith reliance on the provisions of this Agreement or any approval or authorization granted by the Company or any other Covered Person. The provisions of this Agreement, to the extent that they restrict or eliminate the duties and liabilities of a Covered Person to the Company or its Members otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Covered Person.
(f) The foregoing provisions of this Section 21 shall survive any termination of this Agreement.
Section 22. Assignments.
Subject to Section 24, the Member may assign all of its limited liability company interest in the Company. If the Member transfers all of its limited liability company interest in the Company pursuant to this Section 22, the transferee shall be admitted to the Company as a member of the Company upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement. Such admission shall be deemed effective immediately prior to the transfer and, immediately following such admission, the transferor Member shall cease to be a member of the Company. Notwithstanding anything in this Agreement to the contrary, any successor to the Member by merger or consolidation in compliance with the Transaction Documents shall, without further act, be the Member hereunder, and such merger or consolidation shall not constitute an assignment for purposes of this Agreement and the Company shall continue without dissolution.
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Section 23. Resignation.
So long as any Obligation is outstanding, the Member may not resign, except as permitted under the Transaction Documents and if the Rating Agency Condition is satisfied. If the Member is permitted to resign pursuant to this Section 23, an additional member of the Company shall be admitted to the Company, subject to Section 24, upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement. Such admission shall be deemed effective immediately prior to the resignation and, immediately following such admission, the resigning Member shall cease to be a member of the Company.
Section 24. Admission of Additional Members.
One or more additional members of the Company may be admitted to the Company with the written consent of the Member; provided, however, that, notwithstanding the foregoing, so long as any Obligation is outstanding, no additional Member may be admitted to the Company unless the Rating Agency Condition is satisfied.
Section 25. Dissolution.
(a) Subject to Section 9(j) and the following sentence, the Company shall be dissolved, and its affairs shall be wound up upon the first to occur of the following: (i) the termination of the legal existence of the last remaining member of the Company or the occurrence of any other event which terminates the continued membership of the last remaining member of the Company in the Company unless the business of the Company is continued in a manner permitted by this Agreement or the Act or (ii) the entry of a decree of judicial dissolution under Section 18-802 of the Act. Upon the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company, or that causes the Member to cease to be a member of the Company (other than upon continuation of the Company without dissolution upon (i) an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee pursuant to Sections 22 and 24, or (ii) the resignation of the Member and the admission of an additional member of the Company pursuant to Sections 23 and 24), to the fullest extent permitted by law, the personal representative of such member is hereby authorized to, and shall, within 90 days after the occurrence of the event that terminated the continued membership of such member in the Company, agree in writing (i) to continue the Company and (ii) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that terminated the continued membership of such member in the Company.
(b) Notwithstanding any other provision of this Agreement or Section 18-304 of the Act, the Bankruptcy of the Member or a Special Member shall not cause the Member or Special Member, respectively, to cease to be a member of the Company and upon the occurrence of such an event, the Company shall continue without dissolution.
(c) In the event of dissolution, the Company shall conduct only such activities as are necessary to wind up its affairs (including the sale of the assets of the Company in an orderly manner), and the assets of the Company shall be applied in the manner, and in the order of priority, set forth in Section 18-804 of the Act.
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(d) The Company shall terminate when (i) all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company (including all Obligations of the Company), shall have been distributed to the Member in the manner provided for in this Agreement and (ii) the Certificate of Formation shall have been canceled in the manner required by the Act.
Section 26. Waiver of Partition; Nature of Interest.
Except as otherwise expressly provided in this Agreement, to the fullest extent permitted by law, each of the Member and the Special Members hereby irrevocably waives any right or power that such Person might have to institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or termination of the Company. The Member shall not have any interest in any specific assets of the Company, and the Member shall not have the status of a creditor with respect to any distribution pursuant to Section 16 hereof. The interest of the Member in the Company is personal property.
Section 27. Benefits of Agreement; No Third-Party Rights.
None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditor of the Company or by any creditor of the Member or a Special Member except for the provisions of Sections 5(c), 9(j), 10, 21(b), 24, 25(b) and 32(b) (such provisions the Third Party Benefit Provisions). Nothing in this Agreement other than the Third Party Benefit Provisions shall be deemed to create any right in any Person (other than Covered Persons) not a party hereto, and this Agreement shall not be construed in any respect to be a contract in whole or in part for the benefit of any third Person (except as provided in Section 30 and except for the Third Party Benefit provisions).
Section 28. Severability of Provisions.
Each provision of this Agreement shall be considered severable and if for any reason any provision or provisions herein are determined to be invalid, unenforceable or illegal under any existing or future law, such invalidity, unenforceability or illegality shall not impair the operation of or affect those portions of this Agreement which are valid, enforceable and legal.
Section 29. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof.
Section 30. Binding Agreement.
Notwithstanding any other provision of this Agreement, the Member agrees that this Agreement, including, without limitation, Sections 7, 8, 9, 10, 21, 22, 23, 24, 26, 27, 30 and 32, constitutes a legal, valid and binding agreement of the Member, and is enforceable against the Member by the Independent Directors, in accordance with its terms. In addition, the Independent Directors shall be intended beneficiaries of this Agreement.
Section 31. Governing Law.
16
This Agreement shall be governed by and construed under the laws of the State of Delaware (without regard to conflict of laws principles), all rights and remedies being governed by said laws.
Section 32. Amendments.
Subject to Section 9(j), this Agreement may be modified, altered, supplemented or amended pursuant to a written agreement executed and delivered by the Member. Notwithstanding anything to the contrary in this Agreement, so long as any Obligation is outstanding, this Agreement (other than Schedule B hereto, which may be amended by the Member without the consent of any other Person) may not be modified, altered, supplemented or amended unless one of the following conditions has been satisfied:
(i) | the Member delivers an opinion of counsel or an officers certificate to the trustee for any Securities to the effect that such amendment will not materially and adversely affect the interests of any holder of any such Security who has not consented to such amendment; |
(ii) | the Rating Agency Condition is satisfied with respect to such amendment; or |
(iii) | a Majority in Interest has consented to such amendment. |
Section 33. Counterparts.
This Agreement may be executed by the parties in any number of counterparts, each of which when so executed and delivered shall be deemed an original of this Agreement and all of which together shall constitute one and the same instrument.
Section 34. Notices.
Any notices required to be delivered hereunder shall be in writing and personally delivered, mailed or sent by electronic mail or other similar form of rapid transmission, and shall be deemed to have been duly given upon receipt (a) in the case of the Company, to the Company at its address in Section 2, (b) in the case of the Member, to the Member at its address as listed on Schedule B attached hereto and (c) in the case of either of the foregoing, at such other address as may be designated by written notice to the other party.
17
IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly executed this Agreement as of the 2nd day of August, 2018.
MEMBER:
| ||
CAPITAL ONE, NATIONAL ASSOCIATION | ||
By: | /s/ Daniel H. Rosen | |
Name: | Daniel H. Rosen | |
Title: | Managing Vice President, Treasury |
18
INDEPENDENT DIRECTORS: | ||
|
/s/ Douglas K. Johnson | |
Name: Douglas K. Johnson | ||
/s/ Evelyn Echevarria | ||
Name: Evelyn Echevarria |
19
SCHEDULE A
Definitions
A. | Definitions |
When used in this Agreement, the following terms not otherwise defined herein have the following meanings:
Act has the meaning set forth in the preamble to this Agreement.
Affiliate means, with respect to any Person, any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such Person.
Agreement means this Second Amended and Restated Limited Liability Company Agreement of the Company, together with the schedules attached hereto, as amended, restated or supplemented or otherwise modified from time to time.
Bankruptcy means, with respect to any Person, if such Person (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceedings, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature, (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties, or (vii) if 120 days after the commencement of any proceeding against the Person seeking reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, if the proceeding has not been dismissed, or if within 90 days after the appointment without such Persons consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within 90 days after the expiration of any such stay, the appointment is not vacated. The foregoing definition of Bankruptcy is intended to replace and shall supersede and replace the definition of Bankruptcy set forth in Sections 18-101(1) and 18-304 of the Act.
Board or Board of Directors means the Board of Directors of the Company.
Certificate of Formation means the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware on January 26, 2001, as amended or amended and restated from time to time.
Company means Capital One Auto Receivables, LLC, a Delaware limited liability company.
Control means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities or general partnership or managing member interests, by contract or otherwise. Controlling and Controlled shall have correlative meanings. Without limiting the generality of the foregoing, a Person shall be deemed to Control any other Person in which it owns, directly or indirectly, a majority of the ownership interests.
Sch A-1
Covered Persons has the meaning set forth in Section 20(a).
Directors means the Persons elected to the Board of Directors from time to time by the Member, including the Independent Directors, in their capacity as managers of the Company. A Director is hereby designated as a manager of the Company within the meaning of Section 18-101(10) of the Act.
Directors Agreement means the agreement of the Directors in the form attached hereto as Schedule C. The Directors Agreement shall be deemed incorporated into, and a part of, this Agreement.
Financed Vehicle has the meaning set forth in Section 7(a)(i).
Independent Director means a natural person who, for the five-year period prior to his or her appointment as Independent Director has not been, and during the continuation of his or her service as Independent Director is not: (i) an employee, director, manager, contractor, stockholder, partner or officer of the Company or any of its Affiliates (other than his or her service as an Independent Director or similar capacity of the Company or any of its Affiliates); (ii) a creditor, customer or supplier of the Company or any of its Affiliates (other than an Independent Director provided by a corporate services company that provides Independent Directors in the ordinary course of its business); (iii) any member of the immediate family of a person described in (i) or (ii); or (iv) a direct or indirect legal or beneficial owner in the Company or any of its Affiliates.
Issuer means any of, or, if the context requires, all of, the trusts or other entities that the Company may form from time to time for the purpose of, or related to, the securitization of Receivables.
Majority in Interest means the Holders of Securities evidencing more than 50% by outstanding principal amount of all Securities.
Material Action means to consolidate or merge the Company with or into any Person, or to institute proceedings to have the Company be adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against the Company or file a voluntary bankruptcy petition or any other petition seeking, or consent to, reorganization or relief with respect to the Company under any applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or a substantial part of its property, or make any assignment for the benefit of creditors of the Company, or admit in writing the Companys inability to pay its debts generally as they become due, or take action in furtherance of any such action, or, to the fullest extent permitted by law, dissolve or liquidate the Company.
Member means Capital One, National Association (as successor in interest to Capital One Auto Finance, Inc.), as the initial member of the Company, and includes any Person admitted as an additional member of the Company or a substitute member of the Company pursuant to the provisions of this Agreement, each in its capacity as a member of the Company; provided, however, the term Member shall not include the Special Members.
Sch A-2
Obligations shall mean any Securities and the indebtedness, liabilities and obligations of the Company under or in connection with this Agreement, the other Transaction Documents or any related document in effect as of any date of determination.
Officer means an officer of the Company described in Section 11.
Officers Certificate means a certificate signed by any Officer of the Company who is authorized to act for the Company in matters relating to the Company.
Original Limited Liability Company Agreement means the Limited Liability Company Agreement of the Company, together with the schedules attached thereto, dated as of July 26, 2001, as further amended as of January 1, 2008.
Person means any individual, corporation, partnership, joint venture, limited liability company, limited liability partnership, association, joint stock company, trust, unincorporated organization, or other organization, whether or not a legal entity, and any governmental authority.
Rating Agency means any nationally recognized statistical rating organization currently rating any Security.
Rating Agency Condition has, with respect to any Security, the meaning set forth in the Securitization Agreements pursuant to which such Security was issued.
Receivables has the meaning set forth in Section 7(a)(i).
Related Assets has the meaning set forth in Section 7(a)(i).
Security means any bond, note, certificate or other security issued by the Company or an Issuer and secured primarily by or evidencing beneficial ownership interest in the Receivables and Related Assets;
Securitization Agreement has the meaning set forth in Section 7(a)(vi).
Special Member means, upon such persons admission to the Company as a member of the Company pursuant to Section 5(c), a person acting as Independent Director, in such persons capacity as a member of the Company. A Special Member shall only have the rights and duties expressly set forth in this Agreement.
Transaction Documents means this Agreement, the Directors Agreement, any Securitization Agreement and all documents and certificates contemplated thereby or delivered in connection therewith.
Sch A-3
B. | Rules of Construction |
Definitions in this Agreement apply equally to both the singular and plural forms of the defined terms. The words include and including shall be deemed to be followed by the phrase without limitation. The terms herein, hereof and hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Section, paragraph or subdivision. The Section titles appear as a matter of convenience only and shall not affect the interpretation of this Agreement. All Section, paragraph, clause, Exhibit or Schedule references not attributed to a particular document shall be references to such parts of this Agreement.
Sch A-4
SCHEDULE B
Member
Name |
Mailing Address |
Agreed Value of Capital Contribution |
Membership Interest |
|||||
Capital One, National Association |
$[ ] | 100 | % |
Sch B-1
SCHEDULE C
Directors Agreement
Dated as of [ ], [ ]
Capital One Auto Receivables, LLC
140 E. Shore Drive
Room 1052-D
Glen Allen, Virginia 23059
Re: Directors Agreement Capital One Auto Receivables, LLC
Ladies and Gentlemen:
For good and valuable consideration, each of the undersigned Persons, who have been designated as directors of Capital One Auto Receivables, LLC, a Delaware limited liability company (the Company), in accordance with the Second Amended and Restated Limited Liability Company Agreement of the Company, dated as of August 2, 2018 (as it may be amended, modified, supplemented or amended and restated from time to time, the LLC Agreement), hereby agrees as follows:
1. Each of the undersigned accepts such Persons rights and authority as a Director under the LLC Agreement and agrees to perform and discharge such Persons duties and obligations as a Director under the LLC Agreement, and further agrees that such rights, authorities, duties and obligations under the LLC Agreement shall continue until such Persons successor as a Director is designated or until such Persons resignation or removal as a Director in accordance with the LLC Agreement. Each of the undersigned agrees and acknowledges that it has been designated as a manager of the Company within the meaning of the Delaware Limited Liability Company Act.
2. So long as any Obligation is outstanding, each of the undersigned agrees, solely in its capacity as a creditor of the Company on account of any indemnification or other payment owing to the undersigned by the Company, not to acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or governmental authority for the purpose of commencing or sustaining an involuntary case against the Company 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 Company or any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company.
3. THIS DIRECTORS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Sch C-1
Capitalized terms used and not otherwise defined herein have the meanings set forth in the LLC Agreement.
This Directors Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Directors Agreement and all of which together shall constitute one and the same instrument.
[The remainder of this page has been intentionally left blank.]
Sch C-2
IN WITNESS WHEREOF, the undersigned have executed this Directors Agreement as of the day and year first above written.
DIRECTORS: |
Thomas A. Feil |
Daniel H. Rosen |
Douglas K. Johnson, Independent Director |
Evelyn Echevarria, Independent Director |
Sch C-3
SCHEDULE D
Directors
1. | Daniel H. Rosen |
2. | Thomas A. Feil |
3. | Douglas K. Johnson |
4. | Evelyn Echevarria |
Sch D-1
SCHEDULE E
Officers
Officer |
Title | |
Thomas A. Feil | President | |
Eric Bauder | Assistant Vice President | |
Franco E. Harris | Assistant Vice President | |
Daniel H. Rosen | Treasurer | |
Kelly A. Ledman | Secretary | |
Michael Passaretti | Assistant Secretary | |
Pamela M. Koch | Deputy Controller | |
Pamela M. Koch | Managing Vice President, Accounting | |
Warrenetta C. Baker | Tax Officer |
Sch E-1
Exhibit 4.1
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_]
Class A-1 [____]% Auto Loan Asset Backed Notes
Class A-2[-A] [___]% Auto Loan Asset Backed Notes
[Class A-2-B [Benchmark] + [___]% Auto Loan Asset Backed Notes]
Class A-3 [___]% Auto Loan Asset Backed Notes
Class A-4 [___]% Auto Loan Asset Backed Notes
Class B [___]% Auto Loan Asset Backed Notes
Class C [___]% Auto Loan Asset Backed Notes
Class D [___]% Auto Loan Asset Backed Notes
FORM OF
INDENTURE
Dated as of [___________], 20[__]
[_______________________],
as the Indenture Trustee
20[_]-[_] Indenture |
CROSS REFERENCE TABLE1
TIA Section |
Indenture Section | |||
310 |
(a) (1) | 6.11 | ||
(a) (2) | 6.11 | |||
(a) (3) | 6.10; 6.11 | |||
(a) (4) | N.A.2 | |||
(a) (5) | 6.11 | |||
(b) | 6.8; 6.11 | |||
(c) | N.A. | |||
311 |
(a) | 6.12 | ||
(b) | 6.12 | |||
(c) | N.A. | |||
312 |
(a) | 7.1 | ||
(b) | 7.2 | |||
(c) | 7.2 | |||
313 |
(a) | 7.3 | ||
(b) (1) | 7.3 | |||
(b) (2) | 7.3 | |||
(c) | 7.3 | |||
(d) | 7.3 | |||
314 |
(a) | 3.9 | ||
(b) | 11.1, 3.6 | |||
(c) (1) | 11.1 | |||
(c) (2) | 11.1 | |||
(c) (3) | 11.1 | |||
(d) | 11.1 | |||
(e) | 11.1 | |||
(f) | N.A. | |||
315 |
(a) | 6.1(b) | ||
(b) | 6.5 | |||
(c) | 6.1(a) | |||
(d) | 6.1(c) | |||
(e) | 5.13 | |||
316 |
(a) (1) (A) |
5.11 | ||
(a) (1) (B) |
5.12 | |||
(a) (2) | N.A. | |||
(b) | 5.7 | |||
(c) | 5.6(b) | |||
317 |
(a) (1) | 5.3(b) | ||
(a) (2) | 5.3(d) | |||
(b) | 3.3 | |||
318 |
(a) | 11.7 |
1 | Note: This Cross Reference Table shall not, for any purpose, be deemed to be part of this Indenture. |
2 | N.A. means Not Applicable. |
20[_]-[_] Indenture |
TABLE OF CONTENTS
Page | ||||||
ARTICLE I |
DEFINITIONS AND INCORPORATION BY REFERENCE |
2 | ||||
Section 1.1 |
Definitions | 2 | ||||
Section 1.2 |
Incorporation by Reference of Trust Indenture Act | 2 | ||||
Section 1.3 |
Other Interpretive Provisions | 2 | ||||
ARTICLE II |
THE NOTES |
3 | ||||
Section 2.1 |
Form | 3 | ||||
Section 2.2 |
Execution, Authentication and Delivery | 3 | ||||
Section 2.3 |
Temporary Notes | 4 | ||||
Section 2.4 |
Registration of Transfer and Exchange | 4 | ||||
Section 2.5 |
Mutilated, Destroyed, Lost or Stolen Notes | 6 | ||||
Section 2.6 |
Persons Deemed Owners | 7 | ||||
Section 2.7 |
Payment of Principal and Interest; Defaulted Interest | 7 | ||||
Section 2.8 |
Cancellation | 8 | ||||
Section 2.9 |
Release of Collateral | 8 | ||||
Section 2.10 |
Book-Entry Notes | 8 | ||||
Section 2.11 |
Notices to Clearing Agency | 9 | ||||
Section 2.12 |
Definitive Notes | 9 | ||||
Section 2.13 |
Authenticating Agents | 10 | ||||
Section 2.14 |
Paying Agent | 10 | ||||
Section 2.15 |
Tax and Accounting Treatment | 11 | ||||
Section 2.16 |
Certain Transfer Restrictions on all Classes of the Notes | 12 | ||||
Section 2.17 |
Certain Transfer Restrictions | 12 | ||||
Section 2.18 |
Transfer Restrictions on Certain Notes Upon a Sale of a Certificate | 13 | ||||
Section 2.19 |
Certain Transfer Restrictions on the 144A Notes | 13 | ||||
Section 2.20 |
[Effect of [Benchmark] Transition Event | 17 | ||||
ARTICLE III |
COVENANTS |
17 | ||||
Section 3.1 |
Payment of Principal and Interest | 17 | ||||
Section 3.2 |
Maintenance of Office or Agency | 17 | ||||
Section 3.3 |
Money for Payments to Be Held in Trust | 17 |
-i- | 20[_]-[_] Indenture |
TABLE OF CONTENTS
(continued)
Page | ||||||
Section 3.4 |
Existence | 19 | ||||
Section 3.5 |
Protection of Collateral | 19 | ||||
Section 3.6 |
Opinions as to Collateral | 20 | ||||
Section 3.7 |
Performance of Obligations; Servicing of Receivables | 20 | ||||
Section 3.8 |
Negative Covenants | 21 | ||||
Section 3.9 |
Annual Compliance Statement | 22 | ||||
Section 3.10 |
Restrictions on Certain Other Activities | 23 | ||||
Section 3.11 |
Restricted Payments | 23 | ||||
Section 3.12 |
Notice of Events of Default | 23 | ||||
Section 3.13 |
Further Instruments and Acts | 23 | ||||
Section 3.14 |
Compliance with Laws | 24 | ||||
Section 3.15 |
Removal of Administrator | 24 | ||||
Section 3.16 |
Perfection Representations, Warranties and Covenants | 24 | ||||
Section 3.17 |
Investment Company Act Representation | 24 | ||||
ARTICLE IV |
SATISFACTION AND DISCHARGE |
24 | ||||
Section 4.1 |
Satisfaction and Discharge of Indenture | 24 | ||||
Section 4.2 |
Application of Trust Money | 25 | ||||
Section 4.3 |
Repayment of Monies Held by Paying Agent | 25 | ||||
ARTICLE V |
REMEDIES |
25 | ||||
Section 5.1 |
Events of Default | 25 | ||||
Section 5.2 |
Acceleration of Maturity; Waiver of Event of Default | 26 | ||||
Section 5.3 |
Collection of Indebtedness and Suits for Enforcement by the Indenture Trustee | 27 | ||||
Section 5.4 |
Remedies; Priorities | 29 | ||||
Section 5.5 |
Optional Preservation of the Collateral | 33 | ||||
Section 5.6 |
Limitation of Suits | 33 | ||||
Section 5.7 |
Rights of Noteholders to Receive Principal and Interest | 34 | ||||
Section 5.8 |
Restoration of Rights and Remedies | 34 | ||||
Section 5.9 |
Rights and Remedies Cumulative | 34 | ||||
Section 5.10 |
Delay or Omission Not a Waiver | 34 |
-ii- | 20[_]-[_] Indenture |
TABLE OF CONTENTS
(continued)
Page | ||||||
Section 5.11 |
Control by Noteholders | 34 | ||||
Section 5.12 |
Waiver of Past Defaults | 35 | ||||
Section 5.13 |
Undertaking for Costs | 35 | ||||
Section 5.14 |
Waiver of Stay or Extension Laws | 36 | ||||
Section 5.15 |
Action on Notes | 36 | ||||
Section 5.16 |
Performance and Enforcement of Certain Obligations | 37 | ||||
Section 5.17 |
Sale of Collateral | 37 | ||||
ARTICLE VI |
THE INDENTURE TRUSTEE |
38 | ||||
Section 6.1 |
Duties of the Indenture Trustee | 38 | ||||
Section 6.2 |
Rights of the Indenture Trustee | 39 | ||||
Section 6.3 |
Individual Rights of the Indenture Trustee | 41 | ||||
Section 6.4 |
The Indenture Trustees Disclaimer | 41 | ||||
Section 6.5 |
Notice of Defaults | 41 | ||||
Section 6.6 |
Reports by the Paying Agent | 41 | ||||
Section 6.7 |
Compensation and Indemnity | 42 | ||||
Section 6.8 |
Removal, Resignation and Replacement of the Indenture Trustee | 43 | ||||
Section 6.9 |
Successor Indenture Trustee by Merger | 44 | ||||
Section 6.10 |
Appointment of Co-Indenture Trustee or Separate Indenture Trustee | 44 | ||||
Section 6.11 |
Eligibility; Disqualification | 45 | ||||
Section 6.12 |
Preferential Collection of Claims Against the Issuer | 45 | ||||
Section 6.13 |
Representations and Warranties | 46 | ||||
ARTICLE VII |
NOTEHOLDERS LISTS AND REPORTS |
46 | ||||
Section 7.1 |
The Issuer to Furnish the Indenture Trustee Names and Addresses of Noteholders | 46 | ||||
Section 7.2 |
Preservation of Information; Communications to Noteholders | 46 | ||||
Section 7.3 |
Reports by the Indenture Trustee | 47 | ||||
Section 7.4 |
Statements to Certificateholders and Noteholders | 47 | ||||
Section 7.5 |
Noteholder Demand for Repurchase, Dispute Resolution | 49 | ||||
Section 7.6 |
Investor Action to Initiate an Asset Review | 49 |
-iii- | 20[_]-[_] Indenture |
TABLE OF CONTENTS
(continued)
Page | ||||||
ARTICLE VIII |
ACCOUNTS, DISBURSEMENTS AND RELEASES |
50 | ||||
Section 8.1 |
Collection of Money | 50 | ||||
Section 8.2 |
Trust Accounts | 51 | ||||
Section 8.3 |
General Provisions Regarding Accounts | 53 | ||||
Section 8.4 |
Additional Withdrawals and Deposits | 56 | ||||
Section 8.5 |
Distributions | 56 | ||||
Section 8.6 |
Release of Collateral | 58 | ||||
Section 8.7 |
Opinion of Counsel | 58 | ||||
Section 8.8 |
[Interest Rate Swap Agreement | 59 | ||||
ARTICLE IX |
SUPPLEMENTAL INDENTURES |
61 | ||||
Section 9.1 |
Supplemental Indentures Without Consent of Noteholders | 61 | ||||
Section 9.2 |
Supplemental Indentures with Consent of Noteholders | 62 | ||||
Section 9.3 |
Execution of Supplemental Indentures | 63 | ||||
Section 9.4 |
Effect of Supplemental Indenture | 64 | ||||
Section 9.5 |
Conformity with Trust Indenture Act | 64 | ||||
Section 9.6 |
Reference in Notes to Supplemental Indentures | 64 | ||||
ARTICLE X |
REDEMPTION OF NOTES |
64 | ||||
Section 10.1 |
Redemption | 64 | ||||
Section 10.2 |
Form of Redemption Notice | 65 | ||||
Section 10.3 |
Notes Payable on Redemption Date | 65 | ||||
ARTICLE XI |
MISCELLANEOUS |
66 | ||||
Section 11.1 |
Compliance Certificates and Opinions, etc. | 66 | ||||
Section 11.2 |
Form of Documents Delivered to the Indenture Trustee | 67 | ||||
Section 11.3 |
Acts of Noteholders | 68 | ||||
Section 11.4 |
Notices | 69 | ||||
Section 11.5 |
Notices to Noteholders; Waiver | 69 | ||||
Section 11.6 |
Alternate Payment and Notice Provisions | 69 | ||||
Section 11.7 |
Conflict with Trust Indenture Act | 69 | ||||
Section 11.8 |
Information Requests | 70 | ||||
Section 11.9 |
Effect of Headings and Table of Contents | 70 |
-iv- | 20[_]-[_] Indenture |
TABLE OF CONTENTS
(continued)
Page | ||||||
Section 11.10 |
Successors and Assigns | 70 | ||||
Section 11.11 |
Separability | 70 | ||||
Section 11.12 |
Benefits of Indenture | 70 | ||||
Section 11.13 |
Legal Holidays | 70 | ||||
Section 11.14 |
GOVERNING LAW | 70 | ||||
Section 11.15 |
Counterparts | 70 | ||||
Section 11.16 |
Recording of Indenture | 71 | ||||
Section 11.17 |
Trust Obligation | 71 | ||||
Section 11.18 |
No Petition | 71 | ||||
Section 11.19 |
Submission to Jurisdiction; Waiver of Jury Trial | 72 | ||||
Section 11.20 |
Subordination of Claims | 72 | ||||
Section 11.21 |
U.S.A Patriot Act | 73 | ||||
Section 11.22 |
Beneficial Ownership | 73 | ||||
Section 11.23 |
Limitation of Liability | 73 | ||||
Section 11.24 |
[Limitation of Rights | 74 | ||||
ARTICLE XII |
COMPLIANCE WITH THE FDIC RULE |
74 | ||||
Section 12.1 |
Purpose | 74 | ||||
Section 12.2 |
Requirements of the FDIC Rule | 75 | ||||
Section 12.3 |
Performance | 77 | ||||
Section 12.4 |
Actions Upon Repudiation | 77 | ||||
Section 12.5 |
Notice | 79 | ||||
Section 12.6 |
Reservation of Rights | 79 |
Schedule I Perfection Representations, Warranties and Covenants
Exhibit A Form of Notes
-v- | 20[_]-[_] Indenture |
This INDENTURE, dated as of [___________], 20[__] (as amended, supplemented, or otherwise modified and in effect from time to time, this Indenture), is between CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_], a Delaware statutory trust (the Issuer), and [_____________], a [_____________], solely as trustee and not in its individual capacity (the Indenture Trustee).
Each party agrees as follows for the benefit of the other party and the equal and ratable benefit of the Holders of the Issuers Class A-1 [_____]% Auto Loan Asset Backed Notes (the Class A-1 Notes), Class A-2[-A] [___]% Auto Loan Asset Backed Notes (the Class A-2[-A] Notes), [Class A-2-B [Benchmark] + [___]% Auto Loan Asset Backed Notes, (the Class A-2-B Notes and together with the Class-A-2-A Notes, the Class A-2 Notes)], Class A-3 [___]% Auto Loan Asset Backed Notes (the Class A-3 Notes), Class A-4 [___]% Auto Loan Asset Backed Notes (the Class A-4 Notes, and together with the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes, the Class A Notes), Class B [___]% Auto Loan Asset Backed Notes (the Class B Notes), Class C [___]% Auto Loan Asset Backed Notes (the Class A-4 Notes) [and Class D [___]% Auto Loan Asset Backed Notes (the Class D Notes] and together with the Class A-1 Notes, the Class A-2[-A] Notes, [the Class A-2-B Notes,] the Class A-3 Notes, the Class A-4 Notes, the Class B Notes and the Class C Notes, the Notes).
GRANTING CLAUSE
The Issuer, to secure the payment of principal of and interest on, and any other amounts owing in respect of, the Notes [and amounts payable by the Issuer to the Swap Counterparty under the Interest Rate Swap Agreement] equally and ratably without prejudice, priority or distinction except as set forth herein, and to secure compliance with the provisions of this Indenture, hereby Grants in trust to the Indenture Trustee on the Closing Date [and on each Funding Date], as trustee for the benefit of the Noteholders [and the Swap Counterparty], all of the Issuers right, title and interest, whether now owned or hereafter acquired, in and to (i) the Trust Estate and (ii) all present and future claims, demands, causes and choses in action in respect of any or all of the Trust Estate and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the Trust Estate, including all proceeds of the conversion, 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, securities, financial assets and other property which at any time constitute all or part of or are included in the proceeds of any of the Trust Estate (collectively, the Collateral).
The Indenture Trustee, on behalf of the Noteholders [and the Swap Counterparty], acknowledges the foregoing Grant, accepts the trusts under this Indenture and agrees to perform its duties required in this Indenture in accordance with the provisions of this Indenture.
The foregoing Grant is made in trust to secure (i) 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 except as set forth herein, [(ii) the payment of all amounts payable by the Issuer to the Swap Counterparty under the Interest Rate Swap Agreement] and (iii) compliance with the provisions of this Indenture, all as provided in this Indenture.
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Without limiting the foregoing Grant, any Receivable repurchased or purchased by (a) the Servicer pursuant to Section 3.6 of the Servicing Agreement or (b) by the Bank pursuant to Section 3.4 of the Purchase Agreement shall be deemed to be automatically released from the lien of this Indenture without any action being taken by the Indenture Trustee upon payment by the applicable purchaser of the related Repurchase Price for such Repurchased Receivable.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. Capitalized terms are used in this Indenture as defined in Appendix A to the Sale Agreement, dated as of the date hereof (as amended, supplemented, or otherwise modified and in effect from time to time, the Sale Agreement), between the Issuer and Capital One Auto Receivables, LLC, which also contains rules as to usage that are applicable herein.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the 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.
SECTION 1.3 Other Interpretive Provisions. All terms defined in this Indenture shall have the defined meanings when used in any certificate or other document delivered pursuant hereto unless otherwise defined therein. For purposes of this Indenture and all such certificates and other documents, unless the context otherwise requires: (a) accounting terms not otherwise defined in this Indenture, and accounting terms partly defined in this Indenture to the extent not defined, shall have the respective meanings given to them under GAAP (provided, that, to the extent that the definitions in this Indenture and GAAP conflict, the definitions in this
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Indenture shall control); (b) terms defined in Article 9 of the UCC as in effect in the relevant jurisdiction and not otherwise defined in this Indenture are used as defined in that Article; (c) the words hereof, herein and hereunder and words of similar import refer to this Indenture as a whole and not to any particular provision of this Indenture; (d) references to any Article, Section, Schedule, Appendix or Exhibit are references to Articles, Sections, Schedules, Appendices and Exhibits in or to this Indenture and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (e) the term including and all variations thereof means including without limitation; (f) except as otherwise expressly provided herein, references to any law or regulation refer to that law or regulation as amended from time to time and include any successor law or regulation; (g) references to any Person include that Persons successors and assigns and (h) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof.
ARTICLE II
THE NOTES
SECTION 2.1 Form. The Class A-1 Notes, Class A-2[-A] Notes, [Class A-2-B Notes,] Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes [and Class D Notes], in each case together with the Indenture Trustees certificate of authentication, shall be in substantially the form set forth in Exhibit A hereto, 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 the Note.
Each Note shall be dated the date of its authentication. The terms of the Notes set forth in Exhibit A hereto are part of the terms of this Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The Notes shall be executed on behalf of the Issuer by any of its Authorized Officers.
Notes bearing the 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 Initial Note Balance of $[_________], Class A-2[-A] Notes for original issue in an Initial Note Balance of $[_________], [Class A-2-B Notes for original issue in an Initial Note Balance of $[_________],] Class A-3 Notes for original issue in an Initial Note Balance of $[_________], Class A-4 Notes for original issue in an Initial Note Balance of $[_________], Class B Notes for original issue in an Initial Note Balance of $[_________], Class C Notes for original issue in an Initial Note Balance of $[_________] [and Class D Notes] for original issue in an Initial Note Balance of $[_________]. The Note Balance of Class A-1 Notes, Class A-2[-A] Notes, [Class A-2-B Notes,] Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes [and Class D Notes] Outstanding at any time may not exceed such amounts except as provided in Section 2.5.
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Each Note shall be dated the date of its authentication. The Notes shall be issuable as registered Notes in the minimum denomination of $[1,000] and in integral multiples of $[1,000] in excess thereof (except for one Note of each Class which may be issued in a denomination other than an integral multiple of $[1,000]).
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 2.3 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 which 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 3.2, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Issuer shall execute and the Indenture Trustee upon Issuer Order 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 2.4 Registration of Transfer and Exchange.
(a) The Issuer shall cause to be kept a register (the Note Register) in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Notes and the registration of transfers of Notes. The Indenture Trustee shall initially 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 shall give the Indenture Trustee 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 shall have the right to inspect the Note Register at all reasonable times and to obtain copies thereof, and the Indenture Trustee shall have the right to conclusively rely upon a certificate executed on behalf of the Note Registrar by a Responsible Officer thereof as to the names and addresses of the Noteholders and the principal amounts and number of such Notes.
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Notwithstanding the foregoing, for so long as [_______________] is acting as the Indenture Trustee hereunder, it shall also act as the Note Registrar.
(b) Upon surrender for registration of transfer of any Note at the office or agency of the Issuer to be maintained as provided in Section 3.2, if the requirements of Section 8-401 of the UCC are met, the Issuer shall execute and upon its written request 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, in any authorized denominations, of the same Class and a like Outstanding Note Balance.
At the option of the related Noteholder, Notes may be exchanged for other Notes in any authorized denominations, of the same Class and a like Outstanding Note Balance, 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 of the UCC are met the Issuer shall execute and, upon Issuer Request, the Indenture Trustee shall authenticate and the related Noteholder shall obtain from the Indenture Trustee, the Notes which the Noteholder making the exchange is entitled to receive.
(c) 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.
(d) Every Note presented or surrendered for registration of transfer or exchange shall be (i) duly endorsed by, or be accompanied by, a written instrument of transfer in form and substance satisfactory to the Issuer and the Indenture Trustee duly executed by the Noteholder thereof or its attorney-in-fact duly authorized in writing, with such signature guaranteed by an eligible grantor institution meeting the requirements of the Note Registrar which requirements include membership or participation in the Securities Transfer Agents 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 and (ii) accompanied by such other documents as the Indenture Trustee may require, including but not limited to the applicable IRS Form W-8 or W-9.
(e) No service charge shall be made to a Noteholder 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 2.3 or Section 9.6 not involving any transfer.
(f) The Indenture Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
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(g) The preceding provisions of this Section 2.4 notwithstanding, the Issuer shall not be required to make and the Note Registrar need not register transfers or exchanges of any Notes selected for redemption or of any Note for a period of fifteen (15) days preceding the Redemption Date or any Payment Date, as applicable.
SECTION 2.5 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 such security or indemnity as may be required by it to hold the Issuer and the Indenture Trustee 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 protected purchaser (as contemplated by Article 8 of the UCC), and provided that the requirements of Section 8-405 of the UCC are met, the Issuer shall execute and upon its written request 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; provided that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall have become or within seven (7) days shall be due and payable, or shall have been called for redemption, instead of issuing a replacement Note, the Issuer may upon delivery of the security or indemnity herein required 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 pursuant to the proviso to the preceding sentence, a protected purchaser (as contemplated by Article 8 of the UCC) 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 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 protected purchaser (as contemplated by Article 8 of the UCC), 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 or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 2.5, the Issuer or the Indenture Trustee may require the payment by the Noteholder 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 or the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section 2.5 in replacement of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.
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The provisions of this Section 2.5 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 2.6 Persons Deemed Owners. Prior to due presentment for registration of transfer of any Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee shall 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 neither the Issuer, the Indenture Trustee nor any agent of the Issuer or the Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest.
(a) Each of the Notes shall accrue interest at its respective Interest Rate, and such interest shall be payable on each Payment Date as specified therein, subject to Sections 3.1 and 8.2. Any installment of interest or principal, if any, payable on any Note which is punctually paid or duly provided for by the Issuer on the applicable Payment 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 wire transfer in immediately available funds to the account designated in writing to the Indenture Trustee by such Person (or, if no such account is designated in writing to the Indenture Trustee by such Person, then by check mailed first-class, postage prepaid, to such Persons 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 will be made by wire transfer in immediately available funds to the account designated by such nominee and except for the final installment of principal payable with respect to such Note on a Payment Date or on the Final Scheduled Payment Date for such Class (and except for the Redemption Price for any Note called for redemption pursuant to Section 10.1) which shall be payable as provided below. The funds represented by any such checks returned undelivered shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments on each Payment Date as provided in Section 8.2. Notwithstanding the foregoing, the entire unpaid Note Balance and all accrued interest thereon shall be due and payable, if not previously paid, on the earlier of (i) the date on which an Event of Default shall have occurred and be continuing, if the Indenture Trustee or the Holders of a majority of the Outstanding Note Balance of the Controlling Class have declared the Notes to be immediately due and payable in the manner provided in Section 5.2 and (ii) with respect to any Class of Notes, on the Final Scheduled Payment Date for that Class. All principal payments on each Class of Notes shall be made pro rata to the Noteholders of such Class entitled thereto. 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 Payment Date on which Indenture Trustee expects that the final installment of principal of and interest on such Note will be paid. Such notice shall be transmitted prior to such final Payment Date and 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 10.2.
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(c) If the Issuer defaults on a payment of interest on any Class of Notes, the Issuer shall pay defaulted interest (plus interest on such defaulted interest to the extent lawful at the applicable Interest Rate for such Class of Notes), which shall be due and payable on the Payment Date following such default. The Issuer shall pay such defaulted interest to the Persons who are Noteholders on the Record Date for such following Payment Date.
SECTION 2.8 Cancellation. 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. The Issuer may at any time deliver to the Indenture Trustee for cancellation any Notes previously authenticated and delivered hereunder which 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. 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 that such Notes have not been previously disposed of by the Indenture Trustee.
SECTION 2.9 Release of Collateral. Except as contemplated by Section 11.1(b)(v), the Indenture Trustee shall release property from the lien of this Indenture only upon receipt of an Issuer Request accompanied by an Officers Certificate, an Opinion of Counsel and unless the Notes have been redeemed in accordance with Section 10.1, Independent Certificates in accordance with TIA Sections 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. If the Commission shall issue an exemptive order under TIA Section 304(d) modifying the Issuers obligations under TIA Sections 314(c) and 314(d)(1), subject to Section 11.1 and the terms of the Transaction Documents, the Indenture Trustee shall release property from the lien of this Indenture in accordance with the conditions and procedures set forth in such exemptive order.
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 Indenture Trustee, as agent for DTC, the initial Clearing Agency, by, or on behalf of, the Issuer. One fully registered Book-Entry Note shall be issued with respect to each $[500] million in principal amount of each Class of Notes and any such lesser amount. Such Notes shall initially be registered on the Note Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Note Owner shall receive a Definitive Note representing such Note Owners 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 Note Owners pursuant to Section 2.12:
(a) the provisions of this Section shall be in full force and effect;
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(b) 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 Noteholders, and shall have no obligation to the Note Owners;
(c) to the extent that the provisions of this Section conflict with any other provisions of this Indenture, the provisions of this Section shall control;
(d) 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 or among such Note Owners and the Clearing Agency and/or the Clearing Agency Participants or Persons acting through Clearing Agency Participants. Pursuant to the 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
(e) whenever this Indenture requires or permits actions to be taken based upon instructions or directions of Noteholders evidencing a specified percentage of the Outstanding Note Balance, 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 and/or Clearing Agency Participants or Persons acting through 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 Note Owners pursuant to Section 2.12, the Indenture Trustee shall give all such notices and communications specified herein to be given to the Noteholders to the Clearing Agency, and shall have no obligation to the Note Owners.
SECTION 2.12 Definitive Notes. If (a) 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 Notes, and the Administrator or the Indenture Trustee is unable to locate a qualified successor, (b) the Administrator at its option advises the Indenture Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency or (c) an Event of Default shall have occurred, and Note Owners representing beneficial interests aggregating at least a majority of the Outstanding Note Balance of the Controlling Class, voting together as a single Class, advise the Indenture Trustee through the Clearing Agency or its successor in writing that the continuation of a book entry system through the Clearing Agency or its successor is no longer in the best interests of the Note Owners, then the Clearing Agency shall notify all Note Owners 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 Note or Notes representing the Book-Entry Notes by the Clearing Agency or the custodian holding the Book-Entry Notes on behalf of the Clearing Agency at its direction, accompanied by registration instructions, the Issuer shall execute and the Indenture Trustee shall authenticate the Definitive Notes in accordance with the instructions of the Clearing Agency. None of the Issuer, the Note Registrar 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.
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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.
SECTION 2.13 Authenticating Agents.
(a) Upon the request of the Issuer, the Indenture Trustee shall, and if the Indenture Trustee so chooses, the Indenture Trustee may appoint one or more Persons (each, an Authenticating Agent) with power to act on its behalf and subject to its direction in the authentication of Notes in connection with issuance, transfers and exchanges under Sections 2.2, 2.3, 2.4, 2.5 and 9.6, as fully to all intents and purposes as though each such Authenticating Agent had been expressly authorized by those Sections to authenticate such Notes. For all purposes of this Indenture, the authentication of Notes by an Authenticating Agent pursuant to this Section shall be deemed to be the authentication of Notes by the Indenture Trustee. The Indenture Trustee shall be the Authenticating Agent in the absence of any appointment thereof.
(b) Any entity which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any entity resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any entity succeeding to all or substantially all of the corporate trust business of any Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, without the execution or filing of any further act on the part of the parties hereto or such Authenticating Agent or such successor entity.
(c) Any Authenticating Agent may at any time resign by giving written notice of resignation to the Indenture Trustee and the Issuer. The Indenture Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Issuer. Upon receiving such notice of resignation or upon such termination, the Indenture Trustee may appoint a successor Authenticating Agent and shall give written notice of any such appointment to the Issuer.
(d) The provisions of Section 6.4 and, for so long as the Indenture Trustee is the Authenticating Agent, all other rights, benefits and protections afforded to the Indenture Trustee hereunder, shall be applicable to any Authenticating Agent.
SECTION 2.14 Paying Agent. (a) The Indenture Trustee may appoint a Paying Agent with respect to the Notes. Initially, the Paying Agent shall be the Indenture Trustee. The Paying Agent shall have the revocable power to withdraw funds from the Collection Account and the Principal Distribution Account and to make distributions to the Noteholders, to the Certificate Distribution Account, to the Servicer, to the Administrator and to the Owner Trustee pursuant to Section 8.4 of this Indenture. The Indenture Trustee may revoke such power and remove the Paying Agent if the Indenture Trustee determines in its sole discretion that the Paying Agent shall have failed to perform its obligations under this Indenture in any material respect or for other good cause. Any Paying Agent shall be permitted to resign as Paying Agent
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upon thirty (30) days written notice to the Seller and the Indenture Trustee. In the event that the Paying Agent shall have been removed or resigned, the Indenture Trustee shall appoint a successor to act as Paying Agent (which shall be a bank or trust company and may be the Indenture Trustee) with the consent of the Seller, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, for so long as [_________________________] is acting as the Indenture Trustee hereunder, it shall also act as the Paying Agent, and be entitled to the rights, benefits, protection and immunities afforded to the Indenture Trustee hereunder.
(b) The Indenture Trustee in its capacity as initial Paying Agent hereunder agrees that it (i) will hold all sums held by it hereunder for payment to the Noteholders in trust for the benefit of the Noteholders entitled thereto until such sums shall be paid to such Person and (ii) shall comply with all requirements of the Code regarding the withholding of payments in respect of United States federal income taxes due from the Noteholders or Note Owners.
(c) An institution succeeding to the corporate trust or agency business of the Paying Agent shall continue to be the Paying Agent without the execution or filing of any paper or any further act on the part of the Indenture Trustee or such Paying Agent.
SECTION 2.15 Tax and Accounting Treatment.
(a) The parties hereto acknowledge and agree that it is their mutual intent that the Notes constitute and be treated as indebtedness for U.S. federal and all applicable state and local income and franchise tax purposes (other than any Notes that are owned during any period of time either by the Issuer or by a Person that is considered to be the same Person as the Issuer for U.S. federal income tax purposes). Further, each party hereto, and each Noteholder by accepting and holding a Note (other than a Noteholder that is the Issuer or a Person that is considered to be the same Person as the Issuer for U.S. federal income tax purposes), hereby covenants to every other party hereto and to every other Noteholder to treat the Notes as indebtedness for U.S. federal and all applicable state and local income and franchise tax purposes in all tax filings, reports and returns and otherwise, and further covenants that neither it nor any of its Affiliates will take, or participate in the taking of or permit to be taken, any action that is inconsistent with such tax treatment and tax reporting of the Notes, unless required by applicable law. All successors and assignees of the parties hereto shall be bound by the provisions hereof.
(b) The parties hereto agree that it is their mutual intent that, for all applicable purposes the Certificates will not constitute indebtedness.
(c) Prior to the first Payment Date, at any time required by law and/or promptly upon request, each Noteholder shall provide to the Indenture Trustee, Paying Agent and/or the Issuer (or other person responsible for withholding of taxes) with its Tax Information. Each Noteholder is deemed to understand that by acceptance of a Note, such Noteholder agrees to supply the foregoing information. Further, each Noteholder is deemed to understand that the Issuer, Indenture Trustee and Paying Agent have the right to withhold as required on amounts payable with respect to the Note (without any corresponding gross-up) on any beneficial owner of an interest in a Note that fails to comply with both of the preceding sentences.
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(d) It is the intent of the Issuer that the Notes constitute indebtedness for all financial accounting purposes and the Issuer agrees and each purchaser of a Note (by virtue of the acquisition of such Note or an interest therein) shall be deemed to have agreed, to treat the Notes as indebtedness for all financial accounting purposes.
SECTION 2.16 Certain Transfer Restrictions on all Classes of the Notes.
(a) By acquiring a Note (or any interest therein), each purchaser and transferee (and, if the purchaser or transferee is a Plan, its fiduciary) (i) shall be deemed to represent and warrant that either (x) it is not acquiring and will not hold such Note (or any interest therein) on behalf of, or with any assets of, a Benefit Plan or any Plan that is subject to Similar Law or (y) the acquisition, holding and disposition of such Note (or any interest therein) will not give rise to a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or a violation of any Similar Law and (ii) acknowledges and agrees if it is a Benefit Plan or a Plan that is subject to Similar Law, it shall not acquire such Note (or any interest therein) at any time that the ratings on such Note are below investment grade or if such Note has been characterized as other than indebtedness for applicable local law purposes.
(b) Any purported transfer of a Note not in accordance with this Section 2.16 or not in accordance with Sections 2.17, 2.18 or 2.19 shall be null and void ab initio and shall not be given effect for any purpose hereunder. The Issuer may sell, or direct the Indenture Trustee to sell on its behalf, any Notes acquired in violation of the foregoing at the cost and risk of the purported transferee. If the transferee fails to transfer such Note or such beneficial interests in such Note within thirty (30) days after notice of the voided transfer, then the Issuer shall cause such Noteholders interest or Note Owners interest in such Note to be transferred in a commercially reasonable sale arranged by the Issuer (conducted by the Issuer or an agent of the Issuer in accordance with Section 9-610(b) of the UCC as applied to securities that are sold on a recognized market or that may decline speedily in value).
SECTION 2.17 Certain Transfer Restrictions.
(a) Any Notes (or interests therein) beneficially owned by the Issuer or a Person that is considered to be the same Person as the Issuer for United States federal income tax purposes after the Closing Date may not be transferred for United States federal income tax purposes to another Person (other than a Person that is considered to be the same Person as the Issuer for United States federal income tax purposes) unless the Administrator shall cause an Opinion of Counsel, of nationally recognized tax counsel, to be delivered to the Seller and the Indenture Trustee to the effect that (x) such Notes will be treated as debt for United States federal income tax purposes and (y) the sale of such Notes will not cause the Issuer to be treated as other than a grantor trust for United States federal income tax purposes. The transferee acknowledges that any transfer in violation of the foregoing will be of no force and effect, will be void ab initio, and will not operate to transfer any rights to the transferee. In addition, if for tax or other reasons it may be necessary to track such Notes (e.g., the Notes have original issue discount), tracking conditions such as requiring that such Notes be in definitive registered form or have a different CUSIP may be required by the Administrator as a condition to such transfer.
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(b) Other than as described in clause (a) above, after the Closing Date, a Note (or beneficial interest therein) may not be sold or transferred to a Person that beneficially owns more than 99% of the Certificates of the Issuer (and any other interest in the Issuer treated as equity for United States federal income tax purposes), provided, however, that such sale or transfer shall be permitted if such Person covenants and agrees in writing, in form and substance satisfactory to the Issuer and Indenture Trustee, that it will not transfer its Certificates or Notes except upon prior delivery to the Indenture Trustee of an Opinion of Counsel substantially to the effect described in clause (a) and subject to any tracking conditions that may be imposed by the Administrator with respect to such Notes pursuant to clause (a).
SECTION 2.18 Transfer Restrictions on Certain Notes Upon a Sale of a Certificate. The restrictions on transfer of Notes retained by the Issuer or a Person that is considered the same Person as the Issuer for United States federal income tax purposes provided in Section 2.17(a) shall not continue to apply in the event the Indenture Trustee and the Seller have received the Initial Certificate Transfer Opinion.
SECTION 2.19 Certain Transfer Restrictions on the 144A Notes.
(a) None of the Issuer, the Indenture Trustee nor any other Person may register the 144A Notes under the Securities Act or any state securities laws. No 144A Note or any interest therein may be sold or transferred (including by pledge or hypothecation) to any other Person unless such sale or transfer is to a Qualified Institutional Buyer in accordance with Rule 144A (except for transfers of 144A Notes to the Seller or any of its Affiliates and by the Seller or any of its Affiliates as part of the initial distribution or any redistribution of the 144A Notes by the Seller or any of its Affiliates pursuant to a note purchase agreement or any similar agreement).
(b) Prior to any sale or transfer of any 144A Note (or any interest therein) each prospective transferee of such 144A Note (or any interest therein) (except for transfers of Notes to the Seller or any of its Affiliates and by the Seller or any of its Affiliates as part of the initial distribution or any redistribution of the Notes by the Seller or any of its Affiliates pursuant to the Note Purchase Agreement or any similar agreement) shall be deemed to make the following representations to the Indenture Trustee, the Note Registrar and the Seller:
(i) The transferee (A) is a Qualified Institutional Buyer, (B) is aware that the sale of the 144A Notes to it is being made in reliance on the exemption from registration provided by Rule 144A and (C) is acquiring the 144A Notes for its own account or for one or more accounts, each of which is a Qualified Institutional Buyer, and as to each of which the owner exercises sole investment discretion, and in a principal amount of not less than the minimum denomination of such 144A Note for the purchaser and for each such account.
(ii) The 144A Notes may not at any time be held by or on behalf of any Person (other than the Seller or an Affiliate of the Seller) that is not a Qualified Institutional Buyer.
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(iii) The transferee understands that the 144A Notes are being offered only in a transaction not involving any public offering in the United States within the meaning of the Securities Act, none of the 144A Notes have been or will be registered under the Securities Act, and, if in the future the transferee decides to offer, resell, pledge or otherwise transfer the 144A Notes, such 144A Notes may only be offered, resold, pledged or otherwise transferred in accordance with this Indenture and the applicable legend on such 144A Notes set forth below. The transferee acknowledges that no representation is made by the Issuer as to the availability of any exemption under the Securities Act or any applicable State securities laws for resale of the 144A Notes.
(iv) The transferee understands that an investment in the 144A Notes involves certain risks, including the risk of loss of all or a substantial part of its investment under certain circumstances. The transferee has had access to such financial and other information concerning the Issuer and the 144A Notes as it deemed necessary or appropriate in order to make an informed investment decision with respect to its purchase of the 144A Notes, including an opportunity to ask questions of and request information from the Servicer, the Seller and the Issuer. The transferee has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the 144A Notes, and the transferee and any accounts for which it is acting are each able to bear the economic risk of the holders or of its investment.
(v) In connection with the transfer of the 144A Notes (a) none of the Issuer, the Servicer, the Seller, any initial purchaser of the 144A Notes, nor the Indenture Trustee is acting as a fiduciary or financial or investment adviser for the transferee, (b) the transferee is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel or representations (whether written or oral) of any initial purchaser of the 144A Notes, the Issuer, the Servicer, the Seller, or the Indenture Trustee other than in the most current offering memorandum for such 144A Notes and any representations expressly set forth in a written agreement with such party, (c) none of any initial purchaser of the 144A Notes, the Issuer, the Servicer, the Seller, or the Indenture Trustee has given to the transferee (directly or indirectly through any other person) any assurance, guarantee, or representation whatsoever as to the expected or projected success, profitability, return, performance, result, effect, consequence, or benefit (including legal, regulatory, tax, financial, accounting, or otherwise) of its purchase or the documentation for the 144A Notes, (d) the transferee has consulted with its own legal, regulatory, tax, business, investment, financial, and accounting advisers to the extent it has deemed necessary, and it has made its own investment decisions (including decisions regarding the suitability of any transaction pursuant to this Indenture) based upon its own judgment and upon any advice from such advisers as it has deemed necessary and not upon any view expressed by any initial purchaser of the 144A Notes, the Issuer, the Servicer, the Seller, or the Indenture Trustee, (e) the transferee has determined that the rates, prices or amounts and other terms of the purchase and sale of the 144A Notes reflect those in the relevant market for similar transactions, (f) the transferee is purchasing the 144A Notes with a full understanding of all of the terms, conditions and risks thereof (economic and otherwise), and is capable of assuming and willing to assume (financially and otherwise) these risks and (g) the transferee is a sophisticated investor familiar with transactions similar to its investment in the 144A Notes.
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(vi) The transferee understands that the 144A Notes will bear the legend(s) substantially similar to those set forth in Section 2.17(c) unless the Issuer determines otherwise in compliance with applicable law.
(vii) The transferee will not, at any time, offer to buy or offer to sell the 144A Notes by any form of general solicitation or advertising, including, but not limited to, any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio or at a seminar or meeting whose attendees have been invited by general solicitations or advertising.
(viii) The transferee is not acquiring the 144A Notes with a view to the resale, distribution or other disposition thereof in violation of the Securities Act.
(ix) The transferee will provide notice to each Person to whom it proposes to transfer any interest in the 144A Notes of the transfer restrictions and representations set forth in this Indenture.
(x) The transferee acknowledges that any transfer in violation of the foregoing will be of no force and effect, will be void ab initio, and will not operate to transfer any rights to the transferee.
(c) Each 144A Note will bear a legend to the following effect:
THIS NOTE OR ANY INTEREST HEREIN HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND THE ISSUER HAS NOT BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE INVESTMENT COMPANY ACT). THIS NOTE OR ANY INTEREST HEREIN MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT (A) (1) TO A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (A QUALIFIED INSTITUTIONAL BUYER) WHO IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, IN A PRINCIPAL AMOUNT OF NOT LESS THAN [FOR CLASS A, CLASS B, CLASS C [AND CLASS D NOTES]: $[1,000] AND IN GREATER WHOLE NUMBER DENOMINATIONS OF $[1,000] IN EXCESS THEREOF (EXCEPT FOR TWO SUCH NOTES WHICH MAY BE ISSUED IN INTEGRAL MULTIPLES IN EXCESS THEREOF OF OTHER THAN $[1,000])] FOR THE PURCHASER AND FOR EACH SUCH ACCOUNT, IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, SUBJECT TO THE
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SATISFACTION OF CERTAIN CONDITIONS SPECIFIED IN THE INDENTURE, OR (2) TO THE SELLER OR ANY OF ITS U.S. CORPORATE AFFILIATES (OR DISREGARDED ENTITIES THEREOF) AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. EACH PURCHASER WILL BE DEEMED TO HAVE MADE CERTAIN REPRESENTATIONS AND AGREEMENTS SET FORTH IN THE INDENTURE. ANY TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE INDENTURE TRUSTEE, OR ANY INTERMEDIARY. IF AT ANY TIME, THE ISSUER DETERMINES OR IS NOTIFIED THAT THE HOLDER OF SUCH NOTE OR BENEFICIAL INTEREST IN SUCH NOTE WAS IN BREACH, AT THE TIME GIVEN, OF ANY OF THE REPRESENTATIONS SET FORTH IN THE INDENTURE, THE ISSUER AND THE INDENTURE TRUSTEE MAY CONSIDER THE ACQUISITION OF THIS NOTE OR SUCH INTEREST IN SUCH NOTE VOID AND REQUIRE THAT THIS NOTE OR SUCH INTEREST HEREIN BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER.
BY ACQUIRING THIS NOTE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND, IF THE PURCHASER OR TRANSFEREE IS A PLAN (AS DEFINED BELOW), ITS FIDUCIARY) (I) WILL BE DEEMED TO REPRESENT AND WARRANT THAT EITHER (A) SUCH PURCHASER OR TRANSFEREE IS NOT ACQUIRING AND WILL NOT HOLD THIS NOTE (OR ANY INTEREST HEREIN) ON BEHALF OF, OR WITH ANY ASSETS OF, A PLAN THAT IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (ERISA), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE CODE) (EACH, A BENEFIT PLAN), OR A PLAN THAT IS SUBJECT TO A LAW THAT IS SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (SIMILAR LAW) OR (B) THE ACQUISITION, HOLDING AND DISPOSITION OF THIS NOTE (OR ANY INTEREST HEREIN) WILL NOT GIVE RISE TO A NONEXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A VIOLATION OF ANY SIMILAR LAW AND (II) ACKNOWLEDGES AND AGREES IF IT IS A BENEFIT PLAN OR A PLAN THAT IS SUBJECT TO SIMILAR LAW, IT SHALL NOT ACQUIRE THIS NOTE (OR INTEREST HEREIN) AT ANY TIME THAT THE RATINGS ON THIS NOTE ARE BELOW INVESTMENT GRADE OR IF THIS NOTE HAS BEEN CHARACTERIZED AS OTHER THAN INDEBTEDNESS FOR APPLICABLE LOCAL LAW PURPOSES. FOR PURPOSES OF THE FOREGOING, PLAN MEANS AN EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3) OF ERISA WHETHER OR NOT SUBJECT TO TITLE I OF ERISA, A PLAN AS DEFINED IN SECTION 4975 OF THE CODE, OR AN ENTITY OR ACCOUNT DEEMED TO HOLD THE PLAN ASSETS OF ANY OF THE FOREGOING.
TRANSFERS OF THIS NOTE MUST GENERALLY BE ACCOMPANIED BY APPROPRIATE TAX TRANSFER DOCUMENTATION AND ARE SUBJECT TO RESTRICTIONS AS PROVIDED IN THE INDENTURE.
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SECTION 2.20 [Effect of [Benchmark] Transition Event. [Include relevant language with respect to any [Benchmark] replacement]]
ARTICLE III
COVENANTS
SECTION 3.1 Payment of Principal and Interest. The Issuer will duly and punctually pay the principal of and interest on the Notes in accordance with the terms of the Notes and this Indenture. Without limiting the foregoing and subject to Section 8.2, on each Payment Date the Issuer shall cause to be paid all amounts on deposit in the Collection Account which represent the Reserve Account Draw Amount and Available Funds for such Payment Date received by the Servicer during the preceding Collection Period. Amounts properly withheld under the Code by any Person from a payment to any Noteholder of interest and/or principal shall be considered to have been paid by the Issuer to such Noteholder for all purposes of this Indenture. Interest accrued on the Notes shall be due and payable on each Payment Date. The final interest payment on each Class of Notes is due on the earlier of (a) the Payment Date (including any Redemption Date) on which the principal amount of that Class of Notes is reduced to zero or (b) the applicable Final Scheduled Payment Date for that Class of Notes.
SECTION 3.2 Maintenance of Office or Agency. As long as any of the Notes remain Outstanding, the Issuer shall maintain at the Corporate Trust Office of the Indenture Trustee, 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. The Issuer hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes. The Issuer shall give prompt written notice to the Indenture Trustee 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 3.3 Money for Payments to Be Held in Trust. (a) As provided in Sections 5.4 and 8.2, all payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the Trust Accounts shall be made on behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn therefrom for payments on the Notes shall be paid over to the Issuer except as provided in this Section and Section 8.5.
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(b) On or prior to noon, New York City time, on the Business Day prior to each Payment Date, and on or prior to noon, New York City time on the Redemption Date, the Issuer shall deposit or cause to be deposited into the Collection Account Available Funds with respect to the related Collection Period and the Paying Agent shall hold such sum in trust for the benefit of the Persons entitled thereto pursuant to the Transaction Documents and (unless the Paying Agent is the Indenture Trustee) shall promptly notify the Indenture Trustee in writing of its action or failure so to act.
(c) The Issuer shall cause each Paying Agent, other than the Indenture Trustee, to execute and deliver to the Indenture Trustee 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 to the extent relevant), 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 provided in the Transaction Documents;
(ii) give the Indenture Trustee written notice of any default by the Issuer 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;
(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, including FATCA Withholding Tax (including obtaining and retaining from Persons entitled to payments with respect to the Notes any Tax Information and making any withholdings with respect to the Notes as required by the Code (including FATCA) and paying over such withheld amounts to the appropriate governmental authority); and
(vi) comply with respect to any applicable reporting requirements in connection with any payments made by it on any Notes and any withholding of taxes therefrom, and, upon request, provide any Tax Information to the Issuer.
(d) 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 sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which such sums were held by such Paying Agent; and upon such a payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money.
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(e) Subject to applicable laws with respect to the 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 distributed by the Indenture Trustee to the Issuer upon receipt of an Issuer Request and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof 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 payment, shall at the reasonable expense of the Issuer cause to be published once, in an Authorized Newspaper, notice that such money remains unclaimed and that, after a date specified therein, which date shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining shall be paid to the Issuer. The Indenture Trustee may also adopt and employ, at the written direction of and at the expense 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 monies 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 Noteholder).
SECTION 3.4 Existence. The Issuer will keep in full effect its existence, rights and franchises as a statutory trust under the laws of the State of Delaware and shall 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 3.5 Protection of Collateral. The Issuer intends the security interest Granted pursuant to this Indenture in favor of the Indenture Trustee on behalf of the Noteholders [and the Swap Counterparty] to be prior to all other Liens in respect of the Collateral, and the Issuer shall take all actions necessary to obtain and maintain, for the benefit of the Indenture Trustee on behalf of the Noteholders [and the Swap Counterparty], a first Lien on and a first priority, perfected security interest in the Collateral (except to the extent that the interest of the Indenture Trustee therein cannot be perfected by the filing of a financing statement). The Issuer shall from time to time execute and deliver all such supplements and amendments hereto, shall file or authorize the filing of all such financing statements, continuation statements, instruments of further assurance and other instruments, all as prepared by the Administrator and delivered to the Issuer, and shall take such other action necessary or advisable to:
(a) Grant more effectively all or any portion of the Collateral;
(b) maintain or preserve the lien and security interest (and the priority thereof) created by this Indenture or carry out more effectively the purposes hereof;
(c) perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture;
(d) enforce any of the Collateral; or
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(e) preserve and defend title to the Collateral and the rights of the Indenture Trustee and the Noteholders in the Collateral against the claims of all Persons.
The Issuer hereby designates the Indenture Trustee as its agent and attorney-in-fact and hereby authorizes the Indenture Trustee to file all financing statements, continuation statements or other instruments required to be filed (if any) pursuant to this Section; provided, however, the Indenture Trustee shall have no duty and shall not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest and shall have no liability in connection with taking or failing to take such action. Notwithstanding any statement to the contrary contained herein or in any other Transaction Document, the Issuer shall not be required to notify any Dealer or any insurer with respect to any Insurance Policy about any aspect of the transactions contemplated by the Transaction Documents.
SECTION 3.6 Opinions as to Collateral.
(a) On the Closing Date, the Issuer shall furnish or cause to be furnished to the Indenture Trustee [and the Swap Counterparty] an Opinion of Counsel to the effect that, in the opinion of such counsel, either (i) 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 filing of any financing statements and continuation statements, as are necessary to perfect and make effective the first priority lien and security interest of this Indenture, and reciting the details of such action, or (ii) no such action is necessary to make such lien and security interest effective.
(b) Within one hundred twenty (120) days after the beginning of each calendar year, beginning with [April 30, 20[__]], the Issuer shall furnish to the Indenture Trustee [and the Swap Counterparty] an Opinion of Counsel to the effect that, in the opinion of such counsel, either (i) 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 filing of any financing statements and continuation statements as are necessary to maintain the lien and security interest created by this Indenture, and reciting the details of such actions or (ii) 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 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 April 30 in the following calendar year.
SECTION 3.7 Performance of Obligations; Servicing of Receivables.
(a) The Issuer shall not take any action and shall use its reasonable efforts not to permit any action to be taken by others, including the Administrator, that would release any Person from any of such Persons material covenants or obligations under any instrument or agreement included in the Collateral 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 ordered by any bankruptcy or other court or as expressly provided in this Indenture, the other Transaction Documents or such other instrument or agreement.
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(b) The Issuer may contract with other Persons to assist it in performing its duties under this Indenture, and any performance of such duties by a Person identified to the Indenture Trustee in an Officers Certificate of the Issuer shall be deemed to be action taken by the Issuer. Initially, the Issuer has contracted with the Administrator, and the Administrator has agreed, to assist the Issuer in performing its duties under this Indenture.
(c) The Issuer shall, and shall cause the Administrator and the Servicer to, punctually perform and observe all of its respective obligations and agreements contained in this Indenture, the other Transaction Documents and the instruments and agreements included in the Collateral, including but not limited to preparing (or causing to be prepared) and 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 other Transaction Documents 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 Transaction Document or any provision thereof other than in accordance with the amendment provisions set forth in such Transaction Document.
SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding, the Issuer shall not:
(a) engage in any activities other than financing, acquiring, owning, pledging and managing the Receivables and the other Collateral as contemplated by this Indenture and the other Transaction Documents;
(b) except as expressly permitted by this Indenture or in the other Transaction Documents, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Issuer;
(c) 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 applicable state law) 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;
(d) dissolve or liquidate in whole or in part;
(e) (i) 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, (ii) permit any Lien (other than Permitted Liens) to be created on or extend to or otherwise arise upon or burden the assets of the Issuer or any part thereof or any interest therein or the proceeds thereof or (iii) permit the lien of this Indenture not to constitute a valid first priority (other than with respect to any Permitted Lien) security interest in the Collateral (it being understood that (A) either each
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Receivable constituting part of the Collateral is secured by a first priority validly perfected security interest in the Financed Vehicle in favor of the Originator, as secured party, or all necessary actions with respect to the Receivable have been taken or will be taken to perfect a first priority security interest in the Financed Vehicle in favor of the Originator, as secured party and (B) the Issuer shall not be required to notify any insurer with respect to any Insurance Policy obtained by an Obligor about any aspect of the transactions contemplated by the Transaction Documents);
(f) incur, assume or guarantee any indebtedness other than indebtedness incurred in accordance with the Transaction Documents; or
(g) merge or consolidate with, or transfer substantially all of its assets to, any other Person.
SECTION 3.9 Annual Compliance Statement.
(a) The Issuer shall deliver to the Indenture Trustee [and the Swap Counterparty] on or before [March 30th] of each calendar year beginning with [March 30], 20[__], an Officers Certificate stating, as to the Authorized Officer signing such Officers Certificate, that:
(i) a review of the activities of the Issuer during the preceding 12-month period (or since the Closing Date, in the case of the first such Officers Certificate) and of its performance under this Indenture has been made under such Authorized Officers supervision; and
(ii) to the best of such Authorized Officers knowledge, based on such review, the Issuer has complied in all material respects with all conditions and covenants under this Indenture throughout such period, or, if there has been a default in the compliance of any such condition or covenant, specifying each such default known to such Authorized Officer and the nature and status thereof.
(b) The Issuer shall:
(i) file with the Indenture Trustee, within fifteen (15) days after the Issuer is required (if at all) to file the same with the Commission, copies of the annual reports and such other information, documents and reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) as the Issuer may be required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act or such other reports required pursuant to TIA Section 314(a)(1);
(ii) file with the Indenture Trustee and the Commission in accordance with rules and regulations prescribed from time to time by the Commission such other 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
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(iii) supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Noteholders as required by 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 3.9(b) as may be required pursuant to rules and regulations prescribed from time to time by the Commission.
(c) Unless the Issuer otherwise determines, the fiscal year of the Issuer shall be the same as the fiscal year of the Servicer [(which shall end on the December 31st of each year)].
SECTION 3.10 Restrictions on Certain Other Activities. The Issuer shall not: (i) engage in any activities other than financing, acquiring, owning, pledging and managing the Trust Estate and the other Collateral in the manner contemplated by the Transaction Documents; (ii) issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness other than the Notes; (iii) make any loan, advance or credit to, guarantee (directly or indirectly or by an instrument having the effect of assuring anothers 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, 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 other Person; or (iv) make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty).
SECTION 3.11 Restricted Payments. The Issuer shall not, directly or indirectly, (a) 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 or the Administrator, (b) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or security or (c) set aside or otherwise segregate any amounts for any such purpose; provided that the Issuer may cause to be made distributions to the Servicer, the Administrator, the Owner Trustee, [the Swap Counterparty,] the Indenture Trustee, the Noteholders and the Certificateholders as permitted by, and to the extent funds are available for such purpose under, this Indenture, the Servicing Agreement, the Administration Agreement or the Trust Agreement. Other than as set forth in the preceding sentence, the Issuer will not, directly or indirectly, make distributions from the Trust Accounts.
SECTION 3.12 Notice of Events of Default. The Issuer shall promptly deliver to the Indenture Trustee[, the Swap Counterparty] and each Rating Agency written notice, in the form of an Officers Certificate, of an Event of Default or any event which with the giving of notice, the lapse of time or both would become an Event of Default, its status and what action the Issuer is taking or proposes to take with respect thereto.
SECTION 3.13 Further Instruments and Acts. Upon request of the Indenture Trustee, the Issuer shall 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.
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SECTION 3.14 Compliance with Laws. The Issuer shall comply with the requirements of all applicable laws, the non-compliance with which would, individually or in the aggregate, materially and adversely affect the ability of the Issuer to perform its obligations under the Notes, this Indenture or any other Transaction Document.
SECTION 3.15 Removal of Administrator. For so long as any Notes are Outstanding, the Issuer shall not remove the Administrator without cause unless the Rating Agency Condition shall have been satisfied in connection therewith.
SECTION 3.16 Perfection Representations, Warranties and Covenants. The perfection representations, warranties and covenants attached hereto as Schedule I shall be deemed to be part of this Indenture for all purposes.
SECTION 3.17 Investment Company Act Representation. The Issuer hereby represents and warrants to the Indenture Trustee that it is not an investment company that is registered or required to be registered under, or otherwise subject to the restrictions of, the Investment Company Act of 1940, as amended.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect with respect to the Notes except as to (a) rights of registration of transfer and exchange, (b) substitution of mutilated, destroyed, lost or stolen Notes, (c) rights of Noteholders to receive payments of principal thereof and interest thereon, (d) Sections 3.3, 3.4, 3.5, 3.8, 3.10 and 3.11, (e) the rights, protections, indemnities and immunities of the Indenture Trustee hereunder and (f) 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 (i) all Notes theretofore authenticated and delivered (other than (1) Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.5 and (2) Notes for which payment 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 3.3) have been delivered to the Indenture Trustee for cancellation or (ii) all Notes not theretofore delivered to the Indenture Trustee for cancellation (1) have become due and payable, (2) will become due and payable at the latest occurring Final Scheduled Payment Date within one year, or (3) 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 clauses (1), (2) or (3), 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 (which 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 such Notes not theretofore delivered to the Indenture Trustee for cancellation, when due, to the latest occurring Final Scheduled Payment Date or Redemption Date (if Notes shall have been called for redemption pursuant to Section 10.1), as the case may be;
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(b) the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer (but without taking into account any distributions to the Certificate Distribution Account) [including, without limitation, all amounts owed to the Swap Counterparty, including all Swap Termination Payments]; and
(c) the Issuer has delivered to the Indenture Trustee [and the Swap Counterparty] an Officers Certificate, an Opinion of Counsel and (if required by the TIA or the Indenture Trustee [or the Swap Counterparty (unless the Interest Rate Swap Agreement has been terminated and all amounts owed to the Swap Counterparty have been paid)] and if such discharge is not related to a redemption of the Notes in accordance with Section 10.1) a certificate from a firm of certified public accountants, each meeting the applicable requirements of Section 11.1(a) and, subject to Section 11.2, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with (and, in the case of an Officers Certificate, stating that the Rating Agency Condition has been satisfied (provided, that such Officers Certificate need not state that the Rating Agency Condition has been satisfied if all amounts owing on each Class of Notes have been paid or will be paid in full on the date of delivery of such Officers Certificate)).
SECTION 4.2 Application of Trust Money. All monies deposited with the Indenture Trustee pursuant to Section 4.1 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture. Such monies need not be segregated from other funds except to the extent required herein or by law.
SECTION 4.3 Repayment of Monies Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to the Notes, all monies then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture with respect to such Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to Section 3.3 and thereupon such Paying Agent shall be released from all further liability with respect to such monies.
ARTICLE V
REMEDIES
SECTION 5.1 Events of Default. The occurrence and continuation of 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) shall constitute a default under this Indenture (each, an Event of Default):
(a) a default in the payment of any interest on any Note of the Controlling Class when the same becomes due and payable, and such default shall continue for a period of five (5) Business Days or more;
(b) a default in the payment of principal of any Note at the related Final Scheduled Payment Date or the Redemption Date;
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(c) any failure by the Issuer to duly observe or perform in any material respect any of its covenants or agreements made in this Indenture (other than (i) a covenant or agreement, a default in the observance or performance of which is elsewhere specifically addressed in this Section 5.1 or (ii) a covenant or agreement in Section 12.2), which failure materially and adversely affects the interests of the Noteholders, and such failure shall continue unremedied for a period of ninety (90) days after receipt by the Issuer of written notice, by registered or certified mail, by the Indenture Trustee or by Noteholders evidencing at least a majority of the Outstanding Note Balance of the Controlling Class, specifying such failure and requiring it to be remedied and stating that such notice is a Notice of Default hereunder;
(d) any representation or warranty of the Issuer made in this Indenture proves to have been incorrect in any material respect when made, which failure materially and adversely affects the interests of the Noteholders, and which failure continues unremedied for ninety (90) days after receipt by the Issuer of written notice, by registered or certified mail, by the Indenture Trustee or by Noteholders evidencing at least a majority of the Outstanding Note Balance of the Controlling Class, specifying such failure and requiring it to be remedied and stating that such notice is a Notice of Default hereunder; or
(e) a Bankruptcy Event with respect to the Issuer;
provided, however, that a delay in or failure of performance referred to under clauses (a), (b), (c) or (d) above for a period of one hundred twenty (120) days will not constitute an Event of Default if that delay or failure was caused by force majeure or other similar occurrence.
SECTION 5.2 Acceleration of Maturity; Waiver of Event of Default.
(a) Except as set forth in the following sentence, if an Event of Default should occur and be continuing, then and in every such case the Indenture Trustee may, or if directed by the Noteholders representing not less than a majority of the Outstanding Note Balance of the Controlling Class shall, declare all the Notes to be 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 unpaid Note Balance of such Notes, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable. If an Event of Default specified in Section 5.1(e) occurs, all unpaid principal, together with all accrued and unpaid interest thereon, of all Notes, and all other amounts payable hereunder, shall automatically become due and payable without any declaration or other act on the part of the Indenture Trustee or any Noteholder.
(b) 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 provided for in this Article V, the Noteholders representing a majority of the Outstanding Note Balance of the Controlling Class, by written notice to the Issuer and the Indenture Trustee, may rescind and annul such declaration and its consequences if:
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(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 all 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 or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel [and (C) any Net Swap Payments and any Swap Termination Payments then due and payable to the Swap Counterparty under the Interest Rate Swap Agreement]; 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.
If the Notes have been declared due and payable or have automatically become due and payable following an Event of Default, the Indenture Trustee may institute Proceedings to collect amounts due, exercise remedies as a secured party (including foreclosure or sale of the Collateral) or elect to maintain the Collateral and continue to apply the proceeds from the Collateral as if there had been no declaration of acceleration. Any sale of the Collateral by the Indenture Trustee will be subject to the terms and conditions of Section 5.4.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by the Indenture Trustee.
(a) The Issuer covenants that if (i) default is made in the payment of any interest on any Note of the Controlling Class when the same becomes due and payable, and such default continues for a period of five (5) Business Days or more, or (ii) default is made in the payment of the principal of any Note at the related Final Scheduled Payment Date or the Redemption Date, the Issuer will, upon demand of the Indenture Trustee in writing as directed by a majority of the Outstanding Note Balance of the Controlling Class, pay to the Indenture Trustee, for the benefit of the Holders of the Notes, the whole amount then due and payable on such Notes for principal and interest, with interest upon the overdue principal, and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of interest, at the applicable 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, disbursements and advances of the Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay the amounts described in clause (a) above upon such demand, the Indenture Trustee, in its own name and as trustee of an express trust, may 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 upon such Notes and collect in the manner provided by law out of the property of the Issuer or other obligor upon such Notes, wherever situated, the monies adjudged or decreed to be payable.
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(c) If an Event of Default shall have occurred and is continuing, the Indenture Trustee may, as more particularly provided in Section 5.4, proceed to protect and enforce its rights and the rights of the Noteholders, by such appropriate Proceedings as the Indenture Trustee shall 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 upon the Notes or any Person having or claiming an ownership interest in the Collateral, Proceedings under the Bankruptcy 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, 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 judicial Proceedings relative to the Issuer or other obligor upon 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, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole 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, indemnities and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence, bad faith or willful misconduct) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on behalf of the Holders of Notes in any election of a trustee, a standby trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any monies 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 Noteholders allowed in any judicial Proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each Noteholder 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
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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, indemnities and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence, bad faith or willful misconduct, and any other amounts due the Indenture Trustee under Section 6.7.
(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 trial or other Proceedings relative thereto, and any such action or 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 Swap Counterparty].
(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 Noteholders, and it shall not be necessary to make any Noteholder a party to any such Proceedings.
SECTION 5.4 Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing, the Indenture Trustee may do one or more of the following (subject to Sections 5.2 and 5.5):
(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 upon such Notes monies adjudged due;
(ii) institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Collateral;
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(iii) exercise any other 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 and the Noteholders; and
(iv) subject to Section 5.17, after an acceleration of the maturity of the Notes pursuant to Section 5.2, sell the Collateral 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 the Indenture Trustee may not sell or otherwise liquidate the Collateral following an Event of Default unless (A) the Holders of 100% of the Outstanding Note Balance have consented to such liquidation, (B) the proceeds of such sale or liquidation are sufficient to pay in full the principal of and the accrued interest on the Outstanding Notes [and all amounts due to the Swap Counterparty under the Transaction Documents] or (C) the Event of Default either (x) relates to the failure to pay interest or principal when due (a Payment Default) and the Indenture Trustee determines (but shall have no obligation to make such determination) that the Collections on the Receivables will not be sufficient on an ongoing basis to make all payments on the Notes as they would have become due if the Notes had not been declared due and payable or (y) relates to a Bankruptcy Event, and in the case of each of (x) and (y) above, the Indenture Trustee obtains the consent of the Holders of 66-2/3% of the Outstanding Note Balance of the Controlling Class [and the Swap Counterparty]. In determining such sufficiency or insufficiency with respect to clauses (B) and (C) of the preceding sentence, the Indenture Trustee may, but need not, obtain and fully 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. Notwithstanding anything herein to the contrary, if the Event of Default does not relate to a Payment Default or Bankruptcy Event with respect to the Issuer, the Indenture Trustee may not sell or otherwise liquidate the Trust Estate unless the Holders of all Outstanding Notes consent to such sale or the proceeds of such sale are sufficient to pay in full the principal of and accrued interest on the Outstanding Notes [and all amounts due to the Swap Counterparty under the Interest Rate Swap Agreement].
(b) Notwithstanding the provisions of Sections 8.2 or 8.5 of this Indenture, if the Notes have been accelerated, the Indenture Trustee shall, upon written direction from the Servicer, pay out such money or property (and other amounts, including all amounts held on deposit in the Reserve Account) held as Collateral for the benefit of the Noteholders (net of liquidation costs associated with the sale of the Trust Estate) in the following order of priority:
(i) first, to the Indenture Trustee, the Owner Trustee and the Asset Representations Reviewer, pro rata based on amounts due, any accrued and unpaid fees, indemnification amounts and reasonable expenses permitted under the Transaction Documents [and, to the Asset Representations Reviewer, any accrued and unpaid fees (including unpaid fees with respect to prior periods), reasonable expenses and indemnification amounts to the extent not previously paid by the Sponsor];
(ii) second, to the Servicer, the Servicing Fee and all unpaid Servicing Fees with respect to prior Collection Periods;
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(iii) [third, to the Swap Counterparty, the Net Swap Payment;]
(iv) fourth, [pro rata, (A) to the Swap Counterparty for any due and unpaid Senior Swap Termination Payments and (B)] based on interest amounts due to the Class A Noteholders for payment to each respective Class of Class A Noteholders, the Accrued Class A Note Interest; provided that if there are not sufficient funds available to pay the entire amount of the Accrued Class A Note Interest, the amount available shall be applied to the payment of such interest on each Class of Class A Notes on a pro rata basis based on the amount of interest payable to each Class of Class A Notes;
(v) fifth, if an Event of Default described in Section 5.1(a), (b), or (e) has occurred, in the following order of priority:
(a) to the Holders of the Class A-1 Notes in respect of principal thereon until the Class A-1 Notes have been paid in full;
(b) to the Holders of the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes, in respect of principal thereon, on a pro rata basis (based on the Note Balance of each Class on such Payment Date), until all Classes of the Class A Notes have been paid in full;
(c) to the Holders of the Class B Notes, the Accrued Class B Note Interest;
(d) to the Holders of the Class B Notes in respect of principal thereon until the Class B Notes have been paid in full;
(e) to the Holders of the Class C Notes, the Accrued Class C Note Interest;
(f) to the Holders of the Class C Notes in respect of principal thereon until the Class C Notes have been paid in full;
(g) [to the Holders of the Class D Notes, the Accrued Class D Note Interest; and
(h) to the Holders of the Class D Notes in respect of principal thereon until the Class D Notes have been paid in full;]
(vi) sixth, if an Event of Default described in Section 5.1(c) or (d) has occurred, in the following order of priority:
(a) to the Holders of the Class B Notes, the Accrued Class B Note Interest;
(b) to the Holders of the Class C Notes, the Accrued Class C Note Interest;
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(c) [to the Holders of the Class D Notes, the Accrued Class D Note Interest;]
(d) to the Holders of the Class A-1 Notes in respect of principal thereof until the Class A-1 Notes have been paid in full;
(e) to the Holders of the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes, in respect of principal thereon, on a pro rata basis (based on the Note Balance of each Class on such Payment Date), until all Classes of the Class A Notes have been paid in full;
(f) to the Holders of the Class B Notes in respect of principal thereon until the Class B Notes have been paid in full;
(g) to the Holders of the Class C Notes in respect of principal thereon until the Class C Notes have been paid in full; and
(h) [to the Holders of the Class D Notes in respect of principal thereon until the Class D Notes have been paid in full;] and
(vii) [seventh, to the Swap Counterparty, Subordinated Swap Termination Payments and any other amounts owing to the Swap Counterparty not previously paid; and]
(viii) eighth, any remaining funds shall be distributed to the Certificateholders, pro rata based on the Percentage Interest of each Certificateholder, or, to the extent Definitive Certificates have been issued, to the Certificate Distribution Account for distribution to the Certificateholders in accordance with Section 5.1 of the Trust Agreement.
The Indenture Trustee may fix a record date and payment date for any payment to Noteholders pursuant to this Section. At least fifteen (15) days before such record date, the Issuer shall mail to each Noteholder and the Indenture Trustee a notice that states the record date, the payment date and the amount to be paid.
Prior to an acceleration of the Notes after an Event of Default, if the Indenture Trustee collects any money or property pursuant to this Article V, such amounts shall be deposited into the Collection Account and distributed in accordance with Sections 8.2 or 8.5 hereof
(c) Notwithstanding the foregoing, in the event that the Bank were to become the subject of an insolvency proceeding and the FDIC as receiver or conservator for the Bank pays damages as contemplated by paragraph (d)(4)(ii) of the FDIC Rule, then the actions and distributions described in Section 12.5 shall be effected instead of Section 5.4(b).
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SECTION 5.5 Optional Preservation of the Collateral. If the Notes have been declared or are automatically due and payable under Section 5.2 following an Event of Default and such declaration or automatic occurrence and its consequences have not been rescinded and annulled, if permitted hereunder, the Indenture Trustee may, but need not, elect to maintain possession of the Collateral and, if the Indenture Trustee elects to maintain such possession, it shall continue to apply the proceeds thereof in accordance with Section 5.4(b). It is the intent 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 amounts due to the Swap Counterparty under the Interest Swap Agreement] under the Transaction Documents, and the Indenture Trustee shall take such intent into account when determining whether or not to maintain possession of the Collateral. In determining whether to maintain possession of the Collateral, the Indenture Trustee may, but need not, obtain and fully 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 Collateral for such purpose.
SECTION 5.6 Limitation of Suits.
(a) 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 a Responsible Officer of the Indenture Trustee (or to the Indenture Trustee at its address for notices in accordance with Section 11.4) of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Note Balance 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 the Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee indemnity reasonably satisfactory to it against the costs, expenses and liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for sixty (60) days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceedings; and
(v) no direction inconsistent with such written request has been given to the Indenture Trustee during such sixty (60) day period by the Holders of a majority of the Outstanding Note Balance.
No Noteholder or group of Noteholders 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 Noteholders or to obtain or to seek to obtain priority or preference over any other Noteholders or to enforce any right under this Indenture, except, in each case, to the extent and 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 Noteholders, each representing less than a majority of the Outstanding Note Balance of the Controlling Class, the Indenture Trustee will take the action, if any, directed by the largest percentage of Noteholders satisfying Section 5.6(a), notwithstanding any other provisions of this Indenture.
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(b) No Noteholder shall have any right to vote except as provided pursuant to this Indenture and the Notes, nor any right in any manner to otherwise control the operation and management of the Issuer. However, in connection with any action as to which Noteholders are entitled to vote or consent under this Indenture and the Notes, the Issuer may set a record date for purposes of determining the identity of Noteholders entitled to vote or consent in accordance with TIA Section 316(c).
SECTION 5.7 Rights of Noteholders to Receive Principal and Interest. Notwithstanding any other provisions in this Indenture, the Holder of any Note shall have the right, to receive payment of the principal of and interest, 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 Noteholder.
SECTION 5.8 Restoration of Rights and Remedies. If the Indenture Trustee 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 or to such Noteholder, then and in every such case the Issuer, the Indenture Trustee 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 and the Noteholders shall continue as though no such Proceeding had been instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Indenture Trustee[, the Swap Counterparty] 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 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 or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as the case may be.
SECTION 5.11 Control by Noteholders. Subject to the provisions of Sections 5.4, 5.6, 6.2(d), 6.2(e) and 6.2(f), Noteholders holding not less than a majority of the Outstanding Note Balance of the Controlling Class, 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 with respect to the exercise of any trust or power conferred on the Indenture Trustee; provided, that
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(a) such direction shall not be in conflict with any rule of law or with this Indenture;
(b) subject to the express terms of the proviso and the last sentence of Section 5.4(a), any direction to the Indenture Trustee to sell or liquidate the Trust Estate shall be by the Holders of Notes representing not less than 100% of the Outstanding Note Balance unless the proceeds of such sale are sufficient to pay in full the principal of and accrued interest on the Outstanding Notes;
(c) if the conditions set forth in Section 5.5 have been satisfied and the Indenture Trustee elects to retain the Trust Estate pursuant to such Section, then any direction to the Indenture Trustee by Holders of Notes representing less than 100% of the Outstanding Note Balance to sell or liquidate the Trust Estate shall be of no force and effect;
(d) the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction, applicable law and the terms of this Indenture; and
(e) such direction shall be in writing;
provided, further, that, subject to Section 6.1, the Indenture Trustee need not take any action that it determines might expose it to personal liability or might materially adversely affect or unduly prejudice 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 5.2, the Holders of Notes of not less than a majority of the Outstanding Note Balance of the Controlling Class 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, (b) in respect of a covenant or provision hereof which cannot be modified or amended without the consent of each Noteholder or (c) arising from a Bankruptcy Event with respect to the Issuer. In the case of any such waiver, the Issuer, the Indenture Trustee and the Noteholders shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.
Upon any such waiver, such Default or Event of 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 prior, 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 Noteholder by such Noteholders acceptance of a Note 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 the 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,
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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, (b) any suit instituted by any Noteholder, or group of Noteholders, in each case holding in the aggregate more than 10% of the Outstanding Note Balance 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, 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 Trustees 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 or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee 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 5.4(b), if the maturity of the Notes has been accelerated pursuant to Section 5.2 or Sections 8.2 and 8.5 of this Indenture, or Section 4.4 of the Servicing Agreement and Section 8.2 of this Indenture, if the maturity of the Notes has not been accelerated.
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SECTION 5.16 Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee to do so, the Issuer shall take all such lawful action as the Indenture Trustee may request to compel or secure the performance and observance (i) by the Seller of its obligations to the Issuer under or in connection with the Sale Agreement, (ii) by the Servicer of its obligations to the Issuer under or in connection with the Servicing Agreement or (iii) by the Seller or the Bank, as applicable, of each of their obligations under or in connection with the Purchase Agreement, in each case, in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement and the Purchase Agreement, as the case may be, to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of default on the part of the Seller, the Servicer or the Bank thereunder and the institution of legal or administrative actions or Proceedings to compel or secure performance by the Seller of its obligations under the Sale Agreement, by the Servicer of its obligations under the Servicing Agreement or by the Seller or the Bank of each of their obligations under or in connection with the Purchase Agreement.
(b) If an Event of Default has occurred and is continuing, the Indenture Trustee may, and, at the direction (which direction shall be in writing) of the Holders of a majority of the Outstanding Note Balance of the Controlling Class shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller under or in connection with the Sale Agreement, against the Servicer under or in connection with the Servicing Agreement or against the Seller or the Bank under or in connection with the Purchase Agreement, including the right or power to take any action to compel or secure performance or observance by the Seller, the Servicer or the Bank of each of their obligations to the Issuer thereunder.
SECTION 5.17 Sale of Collateral. If the Indenture Trustee acts to sell the Collateral or any part thereof, pursuant to Section 5.4(a), the Indenture Trustee shall publish a notice in an Authorized Newspaper stating that the Indenture Trustee intends to effect such a sale in a commercially reasonable manner and on commercially reasonable terms, which shall include the solicitation of competitive bids. Following such publication, the Indenture Trustee shall, unless otherwise prohibited by applicable law from any such action, sell the Collateral or any part thereof, in such manner and on such terms as provided above to the highest bidder, provided, however, that the Indenture Trustee may from time to time postpone any sale by public announcement made at the time and place of such sale. The Indenture Trustee shall give notice to the Seller and the Servicer of any proposed sale, and the Seller, the Servicer or any Affiliate thereof shall be permitted to bid for the Collateral at any such sale. The Indenture Trustee may obtain a prior determination from a conservator, receiver or trustee in bankruptcy of the Issuer that the terms and manner of any proposed sale are commercially reasonable. The power to effect any sale of any portion of the Collateral pursuant to Section 5.4 and this Section 5.17 shall not be exhausted by any one or more sales as to any portion of the Collateral remaining unsold, but shall continue unimpaired until the entire Collateral shall have been sold or all amounts payable on the Notes shall have been paid.
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ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of the Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the Indenture Trustee shall exercise the rights and powers vested in it by this Indenture and shall 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 Persons own affairs.
(b) Prior to the occurrence 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 the other Transaction Documents to which it is a party and no implied covenants or obligations shall be read into this Indenture or the other Transaction Documents against the Indenture Trustee; and
(ii) in the absence of bad faith 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 certificates, resolutions, certificates of auditors, opinions or other documents furnished to the Indenture Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Indenture Trustee, the Indenture Trustee shall examine the certificates, opinions or other documents to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).
(c) The Indenture Trustee shall 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 the Indenture Trustee 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 the exercise of any trust or power conferred upon it hereunder 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) and (c) of this Section.
(e) The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuer.
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(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.
(g) No provision of this Indenture or any other Transaction Document shall require the Indenture Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or thereunder 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 indemnity satisfactory to it against such risk or liability is not reasonably assured to it. [Insert language regarding the determination of the applicable benchmark for each Interest Period.]
(h) Every provision of this Indenture and each other Transaction Document 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.
SECTION 6.2 Rights of the Indenture Trustee.
(a) The Indenture Trustee may conclusively rely on 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 Officers Certificate or an Opinion of Counsel, as applicable. The Indenture Trustee shall not be liable for any action it takes, suffers or omits to take in good faith in reliance on such Officers Certificate or Opinion of Counsel.
(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.
(d) The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustees conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the 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) The Indenture Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture or to institute, conduct or defend any litigation under this Indenture or in relation to this Indenture or to honor the request or direction of any of the Noteholders pursuant to this Indenture (other than requests, demands or directions relating to an Asset Review as described in Section 7.6 hereof or to the Noteholders or Note Owners right to communication with each other as described in Section 3.12 of the Sale Agreement) unless such Noteholders shall have offered to the Indenture Trustee security or indemnity reasonably satisfactory to the Indenture Trustee against the reasonable costs, expenses, disbursements, advances and liabilities that might be incurred by it, its agents and its counsel in compliance with such request or direction.
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(g) The Indenture Trustee shall be deemed not to have knowledge of any event or information (including, but not limited to, an Event of Default) or be required to act upon any event or information (including the sending of any notice), unless a Responsible Officer of the Indenture Trustee has actual knowledge or shall have received written notice thereof and shall have no duty to take any action to determine whether any such event shall have occurred.
(h) The Indenture Trustee shall not be imputed with any knowledge of, or information possessed or obtained by any other Person, or any affiliate, line of business, or other division of Wilmington Trust, National Association (and vice versa) unless such person is a Responsible Officer of the Indenture Trustee or the Indenture Trustee also has such actual knowledge or information. Information contained in any reports delivered to the Indenture Trustee and any other publicly available information shall not constitute actual or constructive knowledge; provided, however, that notwithstanding any provision in the Transaction Documents to the contrary, any document delivered to the Indenture Trustee that contains information which the Indenture Trustee is required to be notified of to fulfill its obligations under the Transaction Documents or under applicable law, shall constitute actual notice to the Indenture Trustee of such information.
(i) Notwithstanding anything to the contrary herein or otherwise, under no circumstance will the Indenture Trustee be liable for special, punitive, indirect or consequential loss or damage of any kind whatsoever (including lost profits).
(j) The Indenture Trustee shall not be liable with respect to any action it takes or omits to take in accordance with a direction received by it from the Issuer or the required Noteholders, as the case may be, in accordance with the Transaction Documents.
(k) Notwithstanding anything to the contrary in this Indenture, the Indenture Trustee shall not be liable for any loss or damage, or any failure or reasonable delay in the performance of its obligations hereunder if it is prevented from so performing its obligations by any reason which is beyond the control of such party, including, but not limited to, applicable law or force majeure, and the Indenture Trustee shall not be required to take any action that is contrary to applicable law.
(l) The right of the Indenture Trustee to perform any permissive or discretionary act enumerated in this Indenture or any related document shall not be construed as a duty.
(m) Neither the Indenture Trustee nor any of its officers, directors, employees, attorneys or agents will be responsible or liable for the existence, genuineness, value or protection of any collateral, for the legality, enforceability, effectiveness or sufficiency of the Transaction Documents, for the creation, perfection, continuation, priority, sufficiency or protection of any liens with regard to the Collateral or the Transaction Documents, or for any defect or deficiency as to any such matters, to monitor the status of any lien or the performance of the Collateral, or for any failure to demand, collect, foreclose or realize upon or otherwise enforce any of such liens or the Transaction Documents or any delay in doing so, unless such responsibility or liability is otherwise imposed on the Indenture Trustee under this Indenture.
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(n) The Indenture Trustee shall not be liable solely for any action or inaction of the Issuer, the Noteholders, the Servicer, or any other party (or agent thereof) to this Indenture or any other Transaction Document and may assume compliance by such parties with their obligations under this Indenture or any other Transaction Documents, unless a Responsible Officer of the Indenture Trustee has actual knowledge or received written notice to the contrary.
SECTION 6.3 Individual Rights of the Indenture Trustee. Subject to Section 310 of the TIA, the Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Seller, the Owner Trustee, the Administrator and their respective Affiliates with the same rights it would have if it were not the Indenture Trustee, and the Seller, the Owner Trustee, the Administrator and their respective Affiliates may maintain normal commercial banking and investment banking relationships with the Indenture Trustee and its Affiliates. Any Paying Agent, Note Registrar, co-registrar, co-paying agent, co-trustee or separate trustee may do the same with like rights. However, the Indenture Trustee must comply with Section 6.11.
SECTION 6.4 The Indenture Trustees Disclaimer. The Indenture Trustee shall not be responsible for and makes no representation as to the validity, enforceability or adequacy of this Indenture or the Notes, shall not be accountable for the Issuers use of the proceeds from the Notes, and 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 (including any recitals), all of which shall be taken as the statements of the Issuer, other than the Indenture Trustees certificate of authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing and if it is either actually known by a Responsible Officer of the Indenture Trustee or written notice of the existence thereof has been delivered to a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail to each Noteholder and the Administrator notice of the Default within ninety (90) days after such knowledge or notice 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 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 6.6 Reports by the Paying Agent.
(a) The Paying Agent, at the expense of the Issuer, shall make available to each Noteholder, not later than the latest date permitted by law, such information as may be required by law to enable such Holder to prepare its federal and state income tax returns.
(b) The Paying Agent shall 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.
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SECTION 6.7 Compensation and Indemnity. The Issuer shall cause the Servicer to (i) pay to the Indenture Trustee from time to time such compensation as the Servicer and the Indenture Trustee shall from time to time agree in writing for services rendered by the Indenture Trustee hereunder in accordance with a fee letter between the Servicer and the Indenture Trustee, provided, however, that such fee letter may be amended from time to time after the date hereof to provide for the Indenture Trustees role as Computation Agent, if applicable, and as agreed to by the Servicer and the Indenture Trustee, (ii) reimburse the Indenture Trustee for all reasonable expenses, advances and disbursements reasonably incurred by it in connection with the performance of its duties as Indenture Trustee and (iii) indemnify the Indenture Trustee for, and hold it harmless against, any and all fees, costs, loss, liability, expense, tax, penalty or claim (including reasonable attorneys fees and expenses and court costs and any losses, including those incurred in connection with a successful defense, in whole or part, of any claim that the Indenture Trustee breached its standard of care and those incurred in actions involving the indemnifying party or other relevant transaction parties) incurred by it in connection with the administration of the Transaction Documents, the performance of its duties as Indenture Trustee or in connection with any claim, action, or suit brought to enforce the Indenture Trustees right to indemnification. The Indenture Trustees compensation shall not be limited by any law on compensation of a trustee of an express trust. The Indenture Trustee shall notify the Issuer and the Servicer promptly of any claim for which it may seek indemnity. Failure by the Indenture Trustee to so notify the Issuer and the Servicer shall not relieve the Issuer or the Servicer of its obligations hereunder. The Issuer shall, or shall cause the Servicer to, defend any such claim, and the Indenture Trustee may have separate counsel and the Issuer shall, or shall cause the Servicer to, pay the fees and expenses of such counsel within a reasonable time following receipt by the Servicer of an invoice therefor. The Indenture Trustee shall not be indemnified by the Administrator, the Issuer, the Seller, the Bank or the Servicer against any loss, liability or expense incurred by it or arising from (i) the Indenture Trustees own willful misconduct, negligence or bad faith, as determined by a court of competent jurisdiction or as otherwise agreed to by the parties, (ii) the inaccuracy of any representation or warranty expressly made in accordance with Section 6.13 hereof or (iii) taxes, fees or other charges on, based on or measured by, any fees, commissions or compensation received by the Indenture Trustee.
The compensation and indemnity obligations to the Indenture Trustee pursuant to this Section shall survive the termination, assignment and/or discharge of this Indenture and the resignation or removal of the Indenture Trustee. When the Indenture Trustee incurs expenses after the occurrence of an Event of Default set forth in Section 5.1(e) with respect to the Issuer, the expenses are intended to constitute expenses of administration under the Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency or similar law.
Any amounts payable to the Indenture Trustee, to the extent not paid by the Servicer, pursuant to this Section 6.7 shall be paid by the Issuer in accordance with Section 8.5(a) or Section 5.4(b) of this Indenture, as applicable.
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SECTION 6.8 Removal, Resignation and Replacement of the Indenture Trustee. The Indenture Trustee may resign at any time by so notifying the Issuer, the Administrator, [the Swap Counterparty,] the Servicer and each Rating Agency. The Holders of a majority of the Note Balance of the Controlling Class may remove the Indenture Trustee without cause by giving thirty (30) days prior written notice to the Indenture Trustee and the Issuer, and following that removal may appoint a successor to the Indenture Trustee. The Issuer shall remove the Indenture Trustee if:
(a) the Indenture Trustee fails to comply with Section 6.11;
(b) a Bankruptcy Event occurs with respect to the Indenture Trustee;
(c) a receiver or other public officer takes charge of the Indenture Trustee or its property; or
(d) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of the Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Issuer shall promptly appoint a successor Indenture Trustee which satisfies the requirements set forth in Section 6.11.
A successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring Indenture Trustee[, the Swap Counterparty] and to the Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee, without any further act, deed or conveyance, shall have all the rights, powers and duties of the Indenture Trustee under this Indenture. 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 the Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within sixty (60) days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Issuer or the Holders of a majority of the Note Balance of the Controlling Class may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee.
Any resignation or removal of the Indenture Trustee and appointment of a successor Indenture Trustee pursuant to any of the provisions of this Section shall not become effective until acceptance of appointment by the successor Indenture Trustee pursuant to this Section 6.8 and payment of all fees, expenses and indemnities owed to the outgoing Indenture Trustee.
Notwithstanding the resignation or removal of the Indenture Trustee pursuant to this Section, the Issuers and the Servicers obligations under Section 6.7 shall continue for the benefit of the retiring Indenture Trustee.
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The Indenture Trustee shall not be liable for the acts or omissions of any successor Indenture Trustee.
SECTION 6.9 Successor Indenture Trustee by Merger. Subject to Section 6.11, 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 otherwise qualified and eligible under Section 6.11. The Indenture Trustee shall provide the Administrator 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.
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time, after delivering written notice to the Administrator, 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 and the Administrator acting jointly 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 Estate, and to vest in such Person or Persons, in such capacity and for the benefit of the Noteholders, such title to the Trust Estate, or any part hereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Indenture Trustee and the Administrator 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 6.8.
(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 intended 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 Collateral 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;
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(ii) no separate trustee or co-trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, including acts or omissions of predecessor or successor trustees; and
(iii) the Indenture Trustee and the Administrator may at any time accept the resignation of or, acting jointly, 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 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 Indenture 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 and a copy thereof given to the Administrator.
(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 Indenture 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. Notwithstanding anything to the contrary in this Indenture, the appointment of any separate trustee or co-trustee shall not relieve the Indenture Trustee of its obligations and duties under this Indenture.
SECTION 6.11 Eligibility; Disqualification. The Indenture Trustee shall at all times satisfy the requirements of TIA Section 310(a) and, in addition, 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 shall have a long term debt rating of at least investment grade or better by each Rating Agency or shall otherwise be acceptable to each Rating Agency. The Indenture Trustee shall also satisfy the requirements of TIA Section 310(b). Neither the Issuer nor any Affiliate of the Issuer may serve as Indenture Trustee.
SECTION 6.12 Preferential Collection of Claims Against the Issuer. The Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). Any Indenture Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated.
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SECTION 6.13 Representations and Warranties. The Indenture Trustee hereby makes the following representations and warranties on which the Issuer and the Noteholders shall rely:
(i) the Indenture Trustee is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America;
(ii) the Indenture Trustee has full power, authority and legal right to execute, deliver, and perform this Indenture and shall have taken all necessary action to authorize the execution, delivery and performance by it of this Indenture;
(iii) this Indenture has been duly executed and delivered by the Indenture Trustee; and
(iv) this Indenture is a legal, valid and binding obligation of the Indenture Trustee enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors rights generally and to general principles of equity.
ARTICLE VII
NOTEHOLDERS LISTS AND REPORTS
SECTION 7.1 The Issuer to Furnish the Indenture Trustee Names and Addresses of Noteholders. The Issuer shall furnish or cause to be furnished to the Indenture Trustee (a) not more than five (5) days after each Record Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Noteholders as of such Record Date, and (b) at such other times as the Indenture Trustee may request in writing, within thirty (30) days after receipt by the Note Registrar of any such request, a list of similar form and content as of a date not more than ten (10) days prior to the time such list is furnished; provided, however, that so long as (i) the Indenture Trustee is the Note Registrar or (ii) the Notes are issued as Book-Entry Notes, no such list shall be required to be furnished to the Indenture Trustee.
SECTION 7.2 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 Noteholders contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.1 and the names and addresses of Noteholders received by the Indenture Trustee in its capacity as the Note Registrar. The Indenture Trustee may destroy any list furnished to it as provided in such Section 7.1 upon receipt of a new list so furnished.
(b) The Noteholders may communicate pursuant to TIA Section 312(b) with other Noteholders with respect to their rights under this Indenture or under the Notes. Upon receipt by the Indenture Trustee of any request by three or more Noteholders or by one or more Noteholders of Notes evidencing not less than 25% of the Outstanding Note Balance to receive a copy of the current list of Noteholders (whether or not made pursuant to TIA Section 312(b)), the Indenture Trustee shall (i) promptly notify the Administrator thereof by providing to the Administrator a copy of such request and a copy of the list of Noteholders produced in response thereto and (ii) within five (5) Business Days after receipt of such notice, forward a copy of the list of Noteholders produced to such Noteholders.
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SECTION 7.3 Reports by the Indenture Trustee. If required by TIA Section 313(a), within sixty (60) days after each March 31, beginning with March 31, 20[__], 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.
SECTION 7.4 Statements to Certificateholders and Noteholders. On each Payment Date, the Relevant Trustee shall make the Servicers Report provided by the Servicer pursuant to Section 3.9 of the Servicing Agreement available on its website as described below to the Issuer, the Servicer and each Noteholder and Certificateholder of record as of the most recent Record Date, which Servicers Report shall contain a statement setting forth for the Collection Period and Payment Date relating to such Determination Date the following information (to the extent applicable):
(a) the amount being paid on such Payment Date in respect of interest on and principal of each Class of Notes;
(b) the Class A-1 Note Balance, the Class A-2[-A] Note Balance, the Class A-2-B Note Balance, the Class A-3 Note Balance, the Class A-4 Note Balance, the Class B Note Balance, the Class C Note Balance [and the Class D Note Balance], in each case before and after giving effect to payments on such Payment Date;
(c) (i) the amount on deposit in the Reserve Account, both before and after giving effect to withdrawals therefrom and deposits thereto in respect of such Payment Date; (ii) the Specified Reserve Account Balance for such Payment Date; (iii) the amount deposited in the Reserve Account in respect of such Payment Date, if any; and (iv) the Reserve Account Draw Amount and the Reserve Account Excess Amount, if any, in respect of such Payment Date;
(d) the First Allocation of Principal, Second Allocation of Principal, Third Allocation of Principal, Fourth Allocation of Principal and Regular Principal Distribution Amount for such Payment Date;
(e) the Pool Factor and the Note Factor for such Payment Date;
(f) the amount of the Servicing Fee with respect to the related Collection Period , the amount of the Servicing Fee to be paid on such Payment Date and the amount of any unpaid Servicing Fees from the prior Payment Date;
(g) the amount of the Class A Noteholders Interest Carryover Shortfall, the Class B Noteholders Interest Carryover Shortfall, the Class C Noteholders Interest Carryover Shortfall [and the Class D Noteholders Interest Carryover Shortfall], if any, on such Payment Date;
(h) the amount of fees[, expenses and indemnities] to be paid by the Issuer to the Indenture Trustee, the Owner Trustee and the Asset Representations Reviewer, if any, with respect to the related Payment Date and the amount of any unpaid fees[, expenses or indemnities] to the Indenture Trustee, the Owner Trustee and the Asset Representations Reviewer;
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(i) the aggregate Repurchase Price with respect to Repurchased Receivables with respect to the related Collection Period;
(j) the aggregate amount being distributed on such Payment Date to the Certificates;
(k) the amount of Collections for the related Collection Period;
(l) the Cumulative Net Loss Ratio for such Payment Date;
(m) the number and aggregate Outstanding Principal Balance of 60-Day Delinquent Receivables as of the end of the related Collection Period;
(n) the Delinquency Percentage for the related Collection Period;
(o) the Delinquency Trigger for such Payment Date;
(p) the number of Receivables and the Net Pool Balance as of the beginning and end of the related Collection Period; and
(q) the number, dollar amount and percentage of Net Pool Balance of Receivables that are 30-59, 60-89, 90-119 and 120 or more days delinquent as of the end of the related Collection Period[; and]
(p) [the Net Swap Payment][; and]
(q) [the amount on deposit in the Pre-Funding Account as of the beginning and end of the related Collection Period (until the end of the Funding Period).]
No disbursements shall be made directly by the Servicer to a Noteholder, and the Servicer shall not be required to maintain any investor record relating to the posting of disbursements or otherwise.
The Relevant Trustee will make available via the Relevant Trustees internet website all reports or notices required to be provided by the Relevant Trustee under this Section 7.4. Any information that is disseminated in accordance with the provisions of this Section 7.4 shall not be required to be disseminated in any other form or manner. The Relevant Trustee will make no representations or warranties as to the accuracy or completeness of such documents and will assume no responsibility therefor.
The Indenture Trustees internet website shall be initially located at [___________] or at such other address as shall be specified by the Indenture Trustee from time to time in writing to the Noteholders, the Owner Trustee, the Servicer, the Issuer or any Paying Agent. In connection with providing access to the Indenture Trustees internet website, the Indenture Trustee may require registration and the acceptance of a disclaimer. The Indenture Trustee shall not be liable for the dissemination of information in accordance with this Indenture. The Indenture Trustee shall notify the Noteholders in writing of any changes in the address or means of access to the Internet website where the reports are accessible.
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SECTION 7.5 Noteholder Demand for Repurchase, Dispute Resolution.
(a) If a Noteholder (if the Notes are represented by Definitive Notes) or a Note Owner (if the Notes are represented by Book-Entry Notes) becomes aware of a breach of the Banks representations and warranties in Section 3.3 of the Purchase Agreement that would require the Bank to repurchase a Receivable pursuant to Section 3.4 of the Purchase Agreement such Noteholder or Note Owner (the Requesting Investor) may notify the Bank of such breach and request that the Bank repurchase the related Receivable. Any such written notice shall identify the Receivable and shall reference this Indenture, as well as the related breach of representation or warranty. If the Requesting Investor is a Note Owner, then each written notice from such Requesting Investor must be accompanied by Verification Documents.
(b) If a Requesting Investor requests the repurchase of a Receivable pursuant to clause (a) above, and the repurchase request has not been fulfilled or otherwise resolved to the reasonable satisfaction of such Requesting Investor within one hundred eighty (180) days of the receipt of notice of the request by the Bank, the Requesting Investor may, in its discretion, refer the matter to either mediation or arbitration pursuant to Section 3.11 of the Purchase Agreement.
(c) A Requesting Investor shall not be required to direct that an Asset Review be performed prior to submitting a repurchase request with respect to any Receivable or using the dispute resolution provisions pursuant to Section 3.11 of the Purchase Agreement with respect to such Receivable. The failure of a Requesting Investor to direct an Asset Review shall not affect whether any Requesting Investor can pursue dispute resolution. In addition, whether any Requesting Investor voted affirmatively, negatively or abstained in the vote to cause an Asset Review shall not affect whether such Requesting Investor may use the dispute resolution proceedings pursuant to Section 3.11 of the Purchase Agreement. A Requesting Investor may refer to either mediation or arbitration pursuant to Section 3.11 of the Purchase Agreement a dispute related to any Receivables, including any Receivables that the Asset Representations Reviewer did not review in connection with an Asset Review, any Receivables for which the Asset Representations Reviewer found a Test Fail in connection with an Asset Review and any Receivables that the Asset Representations Reviewer reviewed and determined that there were no Test Fails in connection with an Asset Review.
SECTION 7.6 Investor Action to Initiate an Asset Review.
(a) If the Delinquency Percentage on any Payment Date exceeds the Delinquency Trigger, then Noteholders (if the Notes are represented by Definitive Notes) or Note Owners (if the Notes are represented by Book-Entry Notes) holding at least 5% of the Outstanding Note Balance (the Instituting Noteholders) may elect to initiate a vote to determine whether the Asset Representations Reviewer should conduct an Asset Review by giving written notice to the Indenture Trustee of their desire to institute such a vote within [ninety (90)] days after the filing of the Form 10-D disclosing that the Delinquency Percentage exceeds the Delinquency Trigger; provided, however, that the failure of any Noteholder or Note
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Owner to institute such a vote shall not preclude such Noteholder or Note Owner, as applicable, from pursuing dispute resolution pursuant to Section 3.11 of the Purchase Agreement. If any Instituting Noteholder is not a Noteholder as reflected on the Note Register, the Indenture Trustee may require such Instituting Noteholder to provide Verification Documents to confirm that the Instituting Noteholder is, in fact, a Note Owner. If the Instituting Noteholders initiate a vote as described in this clause (a), the Indenture Trustee shall submit the matter to a vote of all Noteholders, which shall be through the Clearing Agency if the Notes are represented by Book-Entry Notes, and the Issuer will include or cause to be included in the related Form 10-D that such a vote has been called. The Indenture Trustee may set a Record Date for purposes of determining the identity of Noteholders or Note Owners, as applicable, entitled to vote in accordance with TIA Section 316(c). The vote will remain open until the [150th] day after the filing of the Form 10-D disclosing that the Delinquency Percentage exceeds the Delinquency Trigger. Abstaining from, voting in favor of, or voting against causing the Asset Representations Reviewer to conduct an Asset Review shall not preclude any Noteholder from pursuing dispute resolution pursuant to Section 3.11 of the Purchase Agreement. The Noteholder Direction shall be deemed to have occurred if Noteholders representing at least a majority of the voting Noteholders vote in favor of directing an Asset Review of the Subject Receivables by the Asset Representations Reviewer. Following the completion of the voting process, the next Form 10-D filed by the Depositor will disclose whether or not a Noteholder Direction has occurred.
(b) Within [five (5)] Business Days of the Review Satisfaction Date, the Indenture Trustee will send a written notice (a Review Notice) to the Bank, the Seller, the Servicer and the Asset Representations Reviewer specifying that the asset review conditions have been satisfied, providing the applicable Review Satisfaction Date and stating that the Asset Representations Reviewer shall conduct an Asset Review of the Subject Receivables.
(c) Notwithstanding clauses (a) and (b) of this Section 7.6, a Noteholder (if the Notes are represented by Definitive Notes) or Note Owner (if the Notes are represented by Book-Entry Notes) need not direct an Asset Review be performed prior to (i)(x) notifying the Bank of a breach of the Banks representations and warranties in Section 3.3 of the Purchase Agreement that would require the Bank to repurchase a Receivable pursuant to Section 3.4 of the Purchase Agreement and (y) requesting that the Bank repurchase the related Receivable pursuant to Section 7.5 hereof or (ii) referring the matter, at its discretion, to either mediation or arbitration pursuant to Section 3.11 of the Purchase Agreement.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 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 Collateral, 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.
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SECTION 8.2 Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the Servicer to establish:
(i) (x) Prior to the payment in full of the principal of and interest on the Notes, for the benefit of the Noteholders under the sole dominion and control of the Indenture Trustee and in the name of the Issuer, an Eligible Account, bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Noteholders, which Eligible Account shall be non-interest bearing and established by and maintained with the Indenture Trustee or its designee and (y) following payment in full of the principal of and interest on the Notes, for the benefit of the Certificateholders, in the name of the Issuer, an Eligible Account, bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Certificateholders, which Eligible Account shall be non-interest bearing and established by and maintained with the Owner Trustee, as Relevant Trustee, or its designee (the Collection Account). No checks shall be issued, printed or honored with respect to the Collection Account.
(ii) For the benefit of the Noteholders, under the sole dominion and control of the Indenture Trustee and in the name of the Issuer, an Eligible Account (the Principal Distribution Account) bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Noteholders, which Eligible Account shall be non-interest bearing and established by and maintained with the Indenture Trustee or its designee and which may be a sub account of the Collection Account. No checks shall be issued, printed or honored with respect to the Principal Distribution Account.
(iii) For the benefit of the Noteholders, under the sole dominion and control of the Indenture Trustee and in the name of the Issuer, an Eligible Account (the Reserve Account, and together with the Collection Account and the Principal Distribution Account, the Trust Accounts) bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Noteholders, which Eligible Account shall be non-interest bearing and established by and maintained with the Indenture Trustee or its designee. No checks shall be issued, printed or honored with respect to the Reserve Account.
(iv) [For the benefit of the Noteholders, in the name of the Indenture Trustee, an Eligible Account (the Pre-Funding Account and together with the Collection Account, the Principal Distribution Account and the Reserve Account, the Trust Accounts)), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Noteholders, which Eligible Account shall be established and maintained with the Indenture Trustee or its designee. No checks shall be issued, printed or honored with respect to the Pre-Funding Account.]
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(v) (x) with respect to distributions payable to the Depositor, as the holder of the Retained Certificate, an account specified in writing by the Servicer to the Certificate Paying Agent and (y) if any Definitive Certificates other than the Retained Certificate are issued, for the benefit of the Certificateholders, in the name of the Issuer, an Eligible Account (the Certificate Distribution Account) bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Certificateholders, which Eligible Account shall be established by and maintained with the Certificate Paying Agent or its designee. No checks shall be issued, printed or honored with respect to the Certificate Distribution Account. For the avoidance of doubt, the Certificate Distribution Account referenced in clause (x) above shall not be a Trust Account.
(b) On or before the Business Day prior to each Payment Date, the Issuer shall cause (i) the Servicer to deposit all Collections and (ii) the Servicer, the Seller or the Bank as applicable, to deposit all Repurchase Prices with respect to the Collection Period preceding such Payment Date in the Collection Account. On the Business Day prior to each Payment Date, all amounts required to be withdrawn from the Reserve Account and deposited in the Collection Account pursuant to Section 8.4 hereof shall be withdrawn by the Indenture Trustee from the Reserve Account and deposited to the Collection Account as instructed on the Servicers Report.
(c) Prior to the acceleration of the maturity of the Notes pursuant to Section 5.2 of this Indenture, on each Payment Date and the Redemption Date, the Indenture Trustee shall, upon written direction from the Servicer, distribute all amounts on deposit in the Principal Distribution Account to Noteholders in respect of principal of the Notes to the extent of the funds therein in the following order of priority:
(i) first, to the Holders of the Class A-1 Notes, until the Class A-1 Notes are paid in full;
(ii) second, to the Holders of the Class A-2 Notes, until the Class A-2 Notes are paid in full;
(iii) third, to the Holders of the Class A-3 Notes, until the Class A-3 Notes are paid in full;
(iv) fourth, to the Holders of the Class A-4 Notes, until the Class A-4 Notes are paid in full;
(v) fifth, to the Holders of the Class B Notes, until the Class B Notes are paid in full;
(vi) sixth, to the Holders of the Class C Notes, until the Class C Notes are paid in full; and
(vii) [seventh, to the Holders of the Class D Notes, until the Class D Notes are paid in full.]
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(d) On the Payment Date on which the Notes of all Classes have been paid in full, the Indenture Trustee shall take all necessary or appropriate actions, as directed by the Issuer and at no expense to the Indenture Trustee or the Owner Trustee, to transfer all of its right, title and interest in the contents of the Collection Account (including any investments and investment income) to the Owner Trustee for the benefit of the Certificateholders for deposit into such new non-interest bearing account to be established by the Owner Trustee in accordance with Section 8.2(a)(i). Following such transfer, the Collection Account will be maintained under the sole dominion and control of the Owner Trustee for the benefit of the Certificateholders and the Certificate Paying Agent will make distributions from the Collection Account pursuant to Section 8.5(a).
(e) [On the first Payment Date following the termination of the Funding Period, the Indenture Trustee shall, based on the information set forth in the related Servicers Certificate, withdraw any remaining funds on deposit in the Pre-Funding Account (excluding investment earnings or income) and pay to the Noteholders an amount equal to the amount of such funds as follows:
(i) if the aggregate amount of such funds is greater than $100,000, to the Noteholders, their pro rata portion of such funds (based on the Initial Note Balance of each Class of Notes as a fraction of the Initial Note Balance of all Classes of Notes); or
(ii) if the aggregate amount of such funds is less than or equal to $100,000, to the Noteholders, the portion of such funds in sequential order of priority beginning with the Class A-1 Notes.]
SECTION 8.3 General Provisions Regarding Accounts.
(a) Funds on deposit in the Collection Account shall be invested by the Relevant Trustee in Permitted Investments selected in writing by the Servicer and of which the Servicer provides notification (pursuant to standing instructions or otherwise); provided, that it is understood and agreed that if the Servicer does not provide such specific written investment direction or provides notification (pursuant to standing instructions or otherwise) that such funds on deposit in the Collection Account shall remain uninvested, those funds shall then remain uninvested unless and until the Servicer provides alternate notification with respect to the Collection Account; provided further, that it is further understood and agreed that neither the Servicer, the Relevant Trustee nor the Issuer shall be liable for any loss arising from such investment in Permitted Investments. All such Permitted Investments shall be held by or on behalf of the Relevant Trustee as secured party for the benefit of the Noteholders (or, if there are no Notes Outstanding, for the benefit of the Certificateholders); provided further, that on each Payment Date all interest and other investment income (net of investment losses and expenses) on funds on deposit in the Collection Account shall be, at the written direction of the Servicer, distributed to the Servicer as additional servicing compensation and shall not be available to pay the distributions provided for in Section 8.5. All investments of funds on deposit in the Collection Account shall mature or be liquidated on the Business Day immediately preceding the next Payment Date. No Permitted Investment shall be sold or otherwise disposed of prior to its scheduled maturity unless a default occurs with respect to such Permitted Investment and the Servicer directs the Relevant Trustee in writing to dispose of such Permitted Investment. Funds on deposit in the Principal Distribution Account, the Reserve Account and the Certificate Distribution Account shall remain uninvested.
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(b) The Relevant Trustee shall possess all right, title and interest in all funds on deposit from time to time in the Trust Accounts and in all proceeds thereof and all such funds, investments and proceeds shall be part of the Trust Estate. Except as otherwise provided herein, the Trust Accounts shall be under the sole dominion and control of the Relevant Trustee for the benefit of the Noteholders (or, if there are no Notes outstanding, for the benefit of the Certificateholders). If, at any time, any Trust Account ceases to be an Eligible Account, the Servicer shall promptly notify the Relevant Trustee (unless such Trust Account is an account with the Relevant Trustee) in writing and within ten (10) Business Days (or any longer period if the Rating Agency Condition is satisfied with respect to such longer period) after becoming aware of the fact, establish a new Trust Account as an Eligible Account and shall direct the Relevant Trustee to transfer any cash and/or any investments to such new Trust Account.
(c) With respect to the Trust Account Property, the parties hereto agree that:
(i) any Trust Account Property that consists of uninvested funds shall be held solely in Eligible Accounts and, except as otherwise provided herein, each such Eligible Account shall be subject to the exclusive custody and control of the Indenture Trustee, and, except as otherwise provided in the Transaction Documents, the Relevant Trustee or its designee shall have sole signature authority with respect thereto;
(ii) any Trust Account Property that is an uncertificated security under Article 8 of the UCC and that is not governed by clause (iii) below shall be delivered to the Indenture Trustee or its designee in accordance with paragraph (c) of the definition of Delivery and shall be maintained by the Relevant Trustee or such designee, pending maturity or disposition, through continued registration of the Indenture Trustees (or its designees) ownership of such security on the books of the issuer thereof; and
(iii) any Trust Account Property that is an uncertificated security that is a book-entry security (as such term is defined in Federal Reserve Bank Operating Circular No. 7) held in a securities account at a Federal Reserve Bank and eligible for transfer through the Fedwire® Securities Service operated by 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 Relevant Trustee or its designee or a securities intermediary (as such term is defined in Section 8-102(a)(14) of the UCC) acting solely for the Relevant Trustee or such designee, pending maturity or disposition, through continued book-entry registration of such Trust Account Property as described in such paragraph.
(d) All interest and investment income (net of investment losses and expenses) on funds on deposit in the Collection Account shall be distributed to the Servicer in accordance with the provisions of Section 3.7 of the Servicing Agreement. The Relevant Trustee shall not be directed to make any investment of any funds or to sell any investment held in any of the Trust Accounts unless the security interest Granted and perfected in such account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person.
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(e) Subject to Section 6.1(c), the Relevant Trustee shall not in any way be held liable by reason of any insufficiency in the Collection Account resulting from any loss on any Permitted Investment included therein, except for losses attributable to the Relevant Trustees failure to make payments on any such Permitted Investments issued by the Relevant Trustee in its commercial capacity as principal obligor and not as trustee, in accordance with their terms.
(f) If (i) investment directions shall not have been given in writing by the Servicer in accordance with Section 8.3(a) for any funds on deposit in the Collection Account to the Relevant Trustee by 11:00 a.m., New York City time (or such other time as may be agreed by the Servicer and the Indenture Trustee), on any Business Day or (ii) a Default or Event of Default shall have occurred and be continuing with respect to the Notes but the Notes shall not have been declared due and payable pursuant to Section 5.2 or (iii) if the Notes shall have been declared due and payable following an Event of Default and amounts collected or received from the Trust Estate are being applied in accordance with Section 5.4 as if there had not been such a declaration, then the Relevant Trustee shall, to the fullest extent practicable, invest and reinvest funds in the Collection Account in one or more Permitted Investments in accordance with the standing instructions most recently given by the Servicer; provided, however, that if no standing instructions shall have been given to the Relevant Trustee, the funds shall remain uninvested.
(g) In making or disposing of any investment permitted by this Indenture, the Relevant Trustee is authorized to deal with itself (in its individual capacity) or with any one or more of its Affiliates, in each case on an arms-length basis and on standard market terms, whether it or such Affiliate is acting as a subagent of the Relevant Trustee or for any third person or dealing as principal for its own account.
(h) With respect to the period prior to payment in full of the principal of and interest on the Notes and each Trust Account at [___________________] (the initial Indenture Trustee), the Issuer, the Indenture Trustee, in its capacity as the secured party hereunder (in such capacity the Indenture Trustee Secured Party) and the Indenture Trustee, in its capacity as deposit bank or securities intermediary, as the case may be, for such Trust Account (in such capacity the Account Bank), agree that:
(i) With respect to each deposit account that is or constitutes part of such Trust Account, in order to perfect the security interest of the Indenture Trustee Secured Party in accordance with Section 9-104 of the UCC, the Account Bank will comply with all instructions originated by the Indenture Trustee Secured Party directing disposition of the funds in such deposit account without further consent by the Issuer; and
(ii) With respect to each securities account that is or constitutes part of such Trust Account, in order to perfect the security interest of the Indenture Trustee Secured Party by control in accordance with Section 9-106 of the UCC, the Account Bank will comply with all entitlement orders (as defined in Section 8-102 of the UCC) originated by the Indenture Trustee Secured Party without further consent by the Issuer.
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(i) Pursuant to Section 4.1(b) of the Servicing Agreement, the Servicer acknowledges that upon its written request and at no additional cost, it has the right to receive notification after the completion of each purchase and sale of Permitted Investments or the Indenture Trustees receipt of a brokers confirmation. The Servicer agrees that such notifications shall not be provided by the Indenture Trustee hereunder, and the Indenture Trustee shall make available, upon request and in lieu of notifications, periodic account statements that reflect such investment activity.
SECTION 8.4 Additional Withdrawals and Deposits.
(a) The Paying Agent will, on the Business Day prior to each Payment Date, withdraw from the Reserve Account the Reserve Account Excess Amount, if any, for such Payment Date and deposit such amount in the Collection Account.
(b) The Paying Agent will, [(i)] on the Business Day prior to the Payment Date relating to each Collection Period, withdraw from the Reserve Account the Reserve Account Draw Amount and deposit such amount in the Collection Account[; and (ii) will cause the amount available in the Pre-Funding Account to equal the Initial Pre-Funding Account Deposit Amount].
(c) [On each Funding Date, the Indenture Trustee, on behalf of the Seller, shall deposit into the Reserve Account an amount equal to the Subsequent Reserve Account Deposit Amount for such Funding Date in accordance with Section 2.3(c) of the Sale Agreement.]
(d) The Paying Agent shall receive written instructions from the Servicer (which may be in the form of the Servicers Report or a written order or request of the Servicer signed by an Authorized Officer of the Servicer upon which the Paying Agent shall be fully protected in relying with no liability thereafter) directing the Paying Agent to make the foregoing withdrawals and deposits.
SECTION 8.5 Distributions.
(a) Prior to any acceleration of the Notes pursuant to Section 5.2 and subject to Section 8.5(b), on each Payment Date, the Paying Agent (based solely on information contained in, and as directed by, the Servicers Report delivered on or before the related Determination Date pursuant to Section 3.9 of the Servicing Agreement) shall make the following deposits and distributions, to the extent of Available Funds and the Reserve Account Draw Amount on deposit in the Collection Account for such Payment Date, in the following order of priority:
(i) first, to the Servicer, the Servicing Fee and all unpaid Servicing Fees with respect to prior Collection Periods;
(ii) [second, to the Swap Counterparty, the Net Swap Payment;]
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(iii) third, to the Noteholders of the Class A Notes, pro rata, the Accrued Class A Note Interest; provided, that if there are not sufficient funds available to pay the entire amount of the Accrued Class A Note Interest, the amount available will be applied to the payment of interest on the Class A Notes on a pro rata basis based on the amount of interest payable to each Class of Class A Notes;
(iv) fourth, to the Principal Distribution Account for distribution to the Noteholders pursuant to Section 8.2(c), the First Allocation of Principal, if any;
(v) fifth, to the Class B Noteholders, the Accrued Class B Note Interest for the related Interest Period;
(vi) sixth, to the Principal Distribution Account for distribution to the Noteholders pursuant to Section 8.2(c), the Second Allocation of Principal, if any;
(vii) seventh, to the Class C Noteholders, the Accrued Class C Note Interest for the related Interest Period;
(viii) eighth, to the Principal Distribution Account for distribution to the Noteholders pursuant to Section 8.2(c), the Third Allocation of Principal, if any;
(ix) ninth, to the Class D Noteholders, the Accrued Class D Note Interest for the related Interest Period;
(x) tenth, to the Principal Distribution Account for distribution to the Noteholders pursuant to Section 8.2(c), the Fourth Allocation of Principal, if any;
(xi) eleventh, to the Reserve Account, any additional amount required to cause the amount on deposit in the Reserve Account to equal the Specified Reserve Account Balance;
(xii) twelfth, to the Principal Distribution Account for distribution to the Noteholders in accordance with Section 8.2(c), the Regular Principal Distribution Amount;
(xiii) thirteenth, to the Indenture Trustee, the Owner Trustee and the Asset Representations Reviewer, pro rata, fees, expenses and indemnification amounts due and owing under the Asset Representations Review Agreement, the Servicing Agreement, the Sale Agreement, the Trust Agreement and the Indenture, as applicable, which have not been previously paid; and
(xiv) [fourteenth, to the Swap Counterparty, any Subordinated Swap Termination Payments for such Payment Date;] and
(xv) fifteenth, to the Certificateholders, pro rata based on the Percentage Interest of each Certificateholder, or, to the extent Definitive Certificates have been issued, to the Certificate Distribution Account for distribution to the Certificateholders in accordance with Section 5.1 of the Trust Agreement.
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Notwithstanding any other provision of this Section 8.5, following the occurrence and during the continuation of an Event of Default which has resulted in an acceleration of the Notes, the Paying Agent shall apply all amounts on deposit in the Collection Account pursuant to Section 5.4(b).
(b) Notwithstanding Section 8.5(a), in the event that the Bank were to become the subject of an insolvency proceeding and the FDIC as receiver or conservator for the Bank pays damages as contemplated by paragraph (d)(4)(ii) of the FDIC Rule, then the actions and distributions described in Section 12.4 of the Indenture shall be effected instead of Section 8.5(a).
SECTION 8.6 Release of Collateral.
(a) The Indenture Trustee may if permitted and in accordance with the terms hereof, 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 Trustees 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 Trustees authority, inquire into the satisfaction of any conditions precedent or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no Notes Outstanding and all sums due the Indenture Trustee pursuant to Section 6.7 [have been paid and all amounts due to the Swap Counterparty under the Interest Rate Swap Agreement] have been paid, release any remaining portion of the Collateral 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. Such release shall include release of the lien of this Indenture and transfer of dominion and control over the Trust Accounts to the Owner Trustee. The Indenture Trustee shall release property from the lien of this Indenture pursuant to this Section only upon receipt of an Issuer Request accompanied by an Officers Certificate, an Opinion of Counsel and (if required by the TIA) Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1.
Each Noteholder or Note Owner, by its acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, acknowledges that from time to time the Indenture Trustee shall release the lien of this Indenture (or shall be deemed to automatically release the lien of this Indenture without any further action) on any Receivable to be sold to (i) the Servicer in accordance with Section 3.6 of the Servicing Agreement and (ii) the Bank pursuant to Section 3.4 of the Purchase Agreement.
SECTION 8.7 Opinion of Counsel. The Indenture Trustee shall receive at least five (5) days notice (or such shorter notice acceptable to the Indenture Trustee) when requested by the Issuer to take any action pursuant to Section 8.6, accompanied by copies of any instruments involved, and the Indenture Trustee may also require as a condition to such action, an Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee, 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
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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 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, as to factual matters, 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. Such opinion shall be at other than the Indenture Trustees expense.
SECTION 8.8 [Interest Rate Swap Agreement.
(a) The Issuer shall enter into the Initial Interest Rate Swap Agreement with the Initial Swap Counterparty. Subject to the requirements of this Section 8.8, the Issuer may from time to time enter into one or more Replacement Interest Rate Swap Agreements in the event that the Initial Interest Rate Swap Agreement is terminated due to any Termination Event or Event of Default (each as defined in the Initial Interest Rate Swap Agreement) prior to its scheduled expiration and in accordance with the terms of such Interest Rate Swap Agreement. Other than any Replacement Interest Rate Swap Agreement entered into pursuant to this Section 8.8(a), the Issuer may not enter into any additional interest rate swap agreements.
(b) In the event of any early termination of any Interest Rate Swap Agreement, (i) the Indenture Trustee shall establish the Swap Termination Payment Account (the Swap Termination Payment Account) over which the Indenture Trustee shall have exclusive control and the sole right of withdrawal, and in which no Person other than the Indenture Trustee and the Noteholders shall have any legal or beneficial interest, (ii) any Swap Termination Payments received from the Swap Counterparty will be remitted to the Swap Termination Payment Account and (iii) any Swap Replacement Proceeds received from a Replacement Swap Counterparty will be remitted directly to the Swap Counterparty; provided, that any such remittance to the Swap Counterparty shall not exceed the amounts, if any, owed to the Swap Counterparty under the Interest Rate Swap Agreement; provided, further that the Swap Counterparty shall only receive Swap Replacement Proceeds if all Swap Termination Payments due from the Swap Counterparty to the Issuer have been paid in full and if such amounts have not been paid in full then the amount of Swap Replacement Proceeds necessary to make up any deficiency shall be remitted to the Swap Termination Payment Account.
(c) The Issuer shall promptly, following the early termination of any Initial Interest Rate Swap Agreement due to an Event of Default or Termination Event (each as defined in the Initial Interest Rate Swap Agreement) and in accordance with the terms of such Interest Rate Swap Agreement, enter into a Replacement Interest Rate Swap Agreement to the extent possible and practicable through application of funds available in the Swap Termination Payment Account unless entering into such Replacement Interest Rate Swap Agreement will cause the Rating Agency Condition not to be satisfied.
(d) To the extent that the funds available in the Swap Termination Payment Account exceed the costs of entering into a Replacement Interest Rate Swap Agreement and the Rating Agency Condition is met with respect to such determination, the amounts in the Swap Termination Payment Account (other than funds used to pay the costs of entering into a Replacement Interest Rate Swap Agreement, if applicable) shall be included in Available Funds
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and allocated in accordance with the order of priority specified in Section 8.5(a) on the following Payment Date. In any other situation, amounts on deposit in the Swap Termination Payment Account at any time shall be invested pursuant to Section 8.2(b) and on each Payment Date after the creation of a Swap Termination Payment Account, the funds therein shall be used to cover any shortfalls in the amounts payable under [clauses (1) through (15)] under Section 8.5(a), provided that in no event will the amount withdrawn from the Swap Termination Payment Account on such Payment Date exceed the amount of Net Swap Receipts that would have been required to be paid on such Payment Date under the terminated Interest Rate Swap Transaction had there been no termination of such transaction. Any amounts remaining in the Swap Termination Payment Account after payment in full of the Class [D] Notes shall be included in Available Funds and allocated in accordance with the order of priority specified in Section 8.5(a) on the following Payment Date.
(e) If the Swap Counterparty is required to post collateral under the terms of the Interest Rate Swap Agreement, the Indenture Trustee shall establish the Swap Collateral Account (the Swap Collateral Account) over which the Indenture Trustee shall have exclusive control and the sole right of withdrawal, and in which no Person other than the Indenture Trustee and the Noteholders shall have any legal or beneficial interest. The Indenture Trustee shall deposit all collateral received from the Swap Counterparty under the Interest Rate Swap Agreement into the Swap Collateral Account. Any and all funds at any time on deposit in, or otherwise to the credit of, the Swap Collateral Account shall be held in trust by the Indenture Trustee for the benefit of the Noteholders. The only permitted withdrawal from or application of funds on deposit in, or otherwise to the credit of, the Swap Collateral Account shall be (i) for application to obligations of the Swap Counterparty to the Issuer under the Interest Rate Swap Agreement in accordance with the terms of the Interest Rate Swap Agreement or (ii) to return collateral to the Swap Counterparty when and as required by the Interest Rate Swap Agreement.
(f) If at any time the Interest Rate Swap Agreement becomes subject to early termination due to the occurrence of an Event of Default or Termination Event (as defined in the Interest Rate Swap Agreement), the Issuer and the Indenture Trustee shall use reasonable efforts (following the expiration of any applicable grace period) to enforce the rights of the Issuer thereunder as may be permitted by the terms of the Interest Rate Swap Agreement and consistent with the terms hereof. To the extent not fully paid from Swap Replacement Proceeds, any Swap Termination Payment owed by the Issuer to the Swap Counterparty under the Interest Rate Swap Agreement shall be payable to the Swap Counterparty in installments made on each following Payment Date until paid in full in accordance with the order of priority specified in Section 5.4(b). To the extent that the Swap Replacement Proceeds exceed any such Swap Termination Payments (or if there are no Swap Termination Payments due to the Swap Counterparty), the Swap Replacement Proceeds in excess of such Swap Termination Payments, if any, shall be included in Available Funds and allocated and applied in accordance with the order of priority specified in Section 5.4(b) on the following Payment Date.]
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Noteholders or any other Person, but with prior notice from the Issuer to each Rating Agency, the Issuer and the Indenture Trustee (when so directed by an Issuer Request), at any time and from time to time, may enter into one or more 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 for the purposes of modifying in any manner the rights of the Noteholders under this Indenture subject to the satisfaction of the following conditions:
(i) the Issuer delivers an Opinion of Counsel or an Officers Certificate to the Indenture Trustee to the effect that such supplemental indenture will not materially and adversely affect the interests of the Noteholders; or
(ii) the Rating Agency Condition is satisfied with respect to such amendment and the Issuer notifies the Indenture Trustee in writing that the Rating Agency Condition is satisfied with respect to such amendment.
(b) Prior to the execution of any such supplemental indenture, the Issuer shall provide written notification of the substance of such supplemental indenture to each Rating Agency and the Owner Trustee; and promptly after the execution of any such supplemental indenture, the Issuer shall furnish a copy of such supplemental indenture to each Rating Agency, the Owner Trustee and the Indenture Trustee; provided, that no supplemental indenture pursuant to this Section 9.1 shall be effective which materially and adversely affects the rights, privileges, indemnities, protections, immunities, obligations or duties of the Indenture Trustee or the Owner Trustee without the prior written consent of such Person.
(c) Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture pursuant to this Section 9.1, the Indenture Trustee shall make available to the Noteholders a copy of such amendment or supplemental indenture via its website at [_______________]. Any failure of the Indenture Trustee to make available a copy of such amendment or supplemental indenture, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.
(d) Notwithstanding subsection (a) of this Section 9.1, other than in connection with an amendment pursuant to Section 12.1(b) or Section 12.4, this Indenture may only be amended by the Issuer and the Indenture Trustee if (i) the Majority Certificateholders [or, if 100% of the aggregate Percentage Interests is then beneficially owned by the Bank and/or its Affiliates, such Person (or Persons)], consent to such amendment or (ii) such amendment shall not, as evidenced by an Officers Certificate of the Seller or an Opinion of Counsel delivered to the Indenture Trustee and the Owner Trustee, materially and adversely affect the interests of the Certificateholders. It will not be necessary to obtain the consent of the Certificateholders to approve the particular form of any proposed amendment or consent, but it will be sufficient if such consent approves the substance thereof. In determining whether 100% of the aggregate Percentage Interests is then beneficially owned by the Bank and/or its Affiliates for purposes of clause (i), any party shall be entitled to rely on an Officers Certificate or similar certification of the Bank or any Affiliate thereof to such effect.
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(e) [Notwithstanding the foregoing, no amendment under this Section 9.1 shall materially and adversely affect the rights or obligations of the Swap Counterparty under this Indenture unless the Swap Counterparty shall have consented in writing to such action (and such consent shall be deemed to have been given if the Swap Counterparty does not object in writing within ten (10) Business Days after receipt of a written request for such consent).]
SECTION 9.2 Supplemental Indentures with Consent of Noteholders.
(a) Subject to subsection (b) of this Section 9.2, the Issuer and the Indenture Trustee, when authorized by an Issuer Request, also may, with prior notice from the Issuer to the Rating Agencies and with the consent of the Holders of not less than a majority of the Outstanding Note Balance of the Controlling Class, 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 Noteholders under this Indenture; provided, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Note affected thereby:
(i) change the coin or currency in which, any Note or the interest thereon is payable, reduce the interest rate or principal amount of any Note, or delay the Final Scheduled Payment Date or reduce the Redemption Price of any Note;
(ii) reduce the percentage of the Note Balance, 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 Note Balance, the consent of the Holders of which is required to direct the Indenture Trustee to direct the Issuer to sell or liquidate the Trust Estate pursuant to Section 5.4 if the proceeds of such sale would be insufficient to pay the Note Balance plus accrued but unpaid interest on the Notes;
(v) modify any provision of this Section 9.2 in any respect materially adverse to the interests of the Noteholders;
(vi) 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 or in the Transaction Documents, terminate the lien of this Indenture on any property at any time subject hereto or deprive any Noteholder of the security provided by the lien of this Indenture; or
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(vii) impair the right to institute suit for the enforcement of payment as provided in Section 5.7.
(b) Notwithstanding subsection (a) of this Section 9.2, other than in connection with an amendment pursuant to Section 12.1(b) or Section 12.4, this Indenture may only be amended by the Issuer and the Indenture Trustee if (i) the Majority Certificateholders consent to such amendment or (ii) such amendment shall not, as evidenced by an Officers Certificate of the Seller or an Opinion of Counsel delivered to the Indenture Trustee and the Owner Trustee, materially and adversely affect the interests of the Certificateholders. It will not be necessary to obtain the consent of the Certificateholders to approve the particular form of any proposed amendment or consent, but it will be sufficient if such consent approves the substance thereof.
(c) 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.
(d) Prior to the execution of any such supplemental indenture, the Issuer shall provide written notification of the substance of such supplemental indenture to each Rating Agency and the Owner Trustee; and promptly after the execution of any such supplemental indenture, the Issuer shall furnish a copy of such supplemental indenture to each Rating Agency, the Owner Trustee and the Indenture Trustee; provided that no supplemental indenture pursuant to this Section 9.2 shall be effective which affects the rights, privileges, indemnities, protections, immunities, obligations or duties of the Indenture Trustee or the Owner Trustee without the prior written consent of such Person.
(e) Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture pursuant to this Section, the Indenture Trustee shall make available to the Noteholders a copy of such amendment or supplemental indenture via its website at [______________]. Any failure of the Indenture Trustee to make available such amendment or supplemental indenture, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.
(f) Notwithstanding anything herein to the contrary and for purposes of classifying the Issuer as a grantor trust under the Code, no amendment or indenture supplemental to this Indenture shall be made that would (i) result in a variation of the investment of the beneficial owners of the Certificates for purposes of the United States Treasury Regulation section 301.7701-4(c) without the consent of Noteholders evidencing at least a majority of the Outstanding Note Balance of the Controlling Class and the Majority Certificateholders or (ii) cause the Issuer (or any part thereof) to be classified as other than a grantor trust under subtitle A, chapter 1, subchapter J, part I, subpart E of the Code without the consent of all of the Noteholders and all of the Certificateholders.
SECTION 9.3 Execution of Supplemental Indentures. In executing, or permitting the additional trusts created by, any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject to Sections 6.1 and 6.2, 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 Trustees own rights, duties, liabilities or immunities under this Indenture or otherwise.
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SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and 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 Noteholders 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 9.5 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.
SECTION 9.6 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 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.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 Redemption.
(a) Each of the Notes is subject to redemption in whole, but not in part, at the direction of the Bank, as Servicer, pursuant to Section 7.1 of the Servicing Agreement, on any Payment Date on which the Servicer (or its designee) exercises its option to purchase the Trust Estate (other than the Reserve Account) pursuant to such Section, for a purchase price equal to the Optional Purchase Price, which amount shall be deposited by the Servicer (or its designee) into the Collection Account on or prior to noon, New York City time, on the Redemption Date.
(b) Each of the Notes is subject to redemption in whole, but not in part, on any Payment Date [occurring after the end of the Funding Period] on which the sum of the amounts in the Reserve Account and the remaining Available Funds after the payments under clauses [first through eleventh and thirteenth] of Section 8.5(a) would be sufficient to pay in full the aggregate unpaid Note Balance of all of the Outstanding Notes as determined by the Servicer. On such Payment Date, (i) the Indenture Trustee upon written direction from the Servicer shall transfer all amounts on deposit in the Reserve Account to the Collection Account and (ii) the Outstanding Notes shall be redeemed in whole, but not in part.
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(c) If the Notes are to be redeemed pursuant to Sections 10.1(a) or 10.1(b), the Administrator or the Issuer shall provide at least twenty (20) days prior notice of the redemption of the Notes to the Indenture Trustee[, the Swap Counterparty] and the Owner Trustee and the Indenture Trustee shall provide prompt (but not later than ten (10) days prior to the applicable Redemption Date) notice thereof, at the expense of the Servicer, to the Noteholders.
SECTION 10.2 Form of Redemption Notice. Notice of redemption under Section 10.1 shall be given by the Indenture Trustee by first-class mail, postage prepaid, transmitted or mailed prior to the applicable Redemption Date to each Holder of Notes as of the close of business on the Record Date preceding the applicable Redemption Date, at such Holders address appearing in the Note Register.
All notices of redemption under this Section 10.2 shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such Redemption Date is not applicable and that payments shall be made only upon presentation and surrender of such Notes, and 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 3.2);
(iv) that interest on the Notes shall cease to accrue on the Redemption Date; and
(v) the CUSIP numbers (if applicable) for such Notes.
Notice of redemption of the Notes shall be given by the Indenture Trustee in the name and at the expense of the Issuer. In addition, the Issuer shall notify each Rating Agency upon redemption of the Notes. Failure to give notice of redemption, or any defect therein, to any Noteholder shall not impair or affect the validity of the redemption of any Note.
SECTION 10.3 Notes Payable on Redemption Date. The Notes to be redeemed shall, following notice of redemption as required by Section 10.2 (in the case of redemption pursuant to Section 10.1), 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.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1 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 (i) an Officers Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with that satisfies TIA Section 314(c)(1), (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with that satisfies TIA Section 314(c)(2) and (iii) if required by the TIA in the case of condition precedent compliance that is subject to verification by accountants, a certificate or opinion of an accountant that satisfies TIA Section 314(c)(3), 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 furnished in accordance with TIA Section 314(e) 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 11.1(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an Officers Certificate certifying or stating the opinion of each Person signing such certificate as to the fair value in accordance with TIA Section 314(d) (within ninety (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 an Officers 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 an Independent Certificate as to the same matters, if the fair value in accordance with TIA Section
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314(d) to the Issuer of the property or 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) and this clause (ii), is 10% or more of the Outstanding Note Balance, 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 Officers Certificate is less than $25,000 or less than one percent of the Outstanding Note Balance.
(iii) Other than as contemplated by Section 11.1(b)(v), whenever any property or securities are to be released from the lien of this Indenture, the Issuer shall also furnish to the Indenture Trustee an Officers Certificate certifying or stating the opinion of each Person signing such certificate as to the fair value (within ninety (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) Whenever the Issuer is required to furnish to the Indenture Trustee an Officers 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 an Independent Certificate as to the same matters if the fair value of the property or securities and of all other property other than Purchased Receivables, 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 Note Balance, 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 Officers Certificate is less than $25,000 or less than one percent of the then Outstanding Note Balance.
(v) Notwithstanding Section 2.9 or any other provision of this Section, the Issuer may (A) collect, liquidate, sell or otherwise dispose of Receivables and Financed Vehicles as and to the extent permitted or required by the Transaction Documents, including without limitation pursuant to Section 10.1 of this Indenture, and (B) make cash payments out of the Trust Accounts as and to the extent permitted or required by the Transaction Documents.
SECTION 11.2 Form of Documents Delivered to the 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 his or her 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
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Administrator or the Issuer, stating that the information with respect to such factual matters is in the possession of the Servicer, the Seller, the Administrator or the Issuer, 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 Issuers 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 Trustees right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI.
SECTION 11.3 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 6.1) 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 any Noteholder 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.
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SECTION 11.4 Notices. All demands, notices and communications hereunder shall be in writing and shall be delivered or mailed by registered or certified first-class United States mail, postage prepaid, hand delivery, prepaid courier service, or by e-mail (if an applicable e-mail address is provided on Schedule I to the Sale Agreement), and addressed in each case as specified on Schedule I to the Sale Agreement or at such other address as shall be designated by any of the specified addressees in a written notice to the other parties hereto. Delivery shall occur only upon receipt or reported tender of such communication by an officer of the recipient entitled to receive such notices located at the address of such recipient for notices hereunder.
SECTION 11.5 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 or via electronic transmission to each Noteholder affected by such event, at his 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 an Event of Default.
SECTION 11.6 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 Noteholder providing for a method of payment, or notice by the Indenture Trustee or any Paying Agent to such Noteholder, that is different from the methods provided for in this Indenture for such payments or notices, provided that such methods are reasonable and consented to by the Indenture Trustee (which consent shall not be unreasonably withheld). 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.
SECTION 11.7 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.
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The provisions of TIA Sections 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.
SECTION 11.8 Information Requests. The parties hereto shall provide any information reasonably requested by the Servicer, the Issuer, the Seller or any of their Affiliates, in order to comply with or obtain more favorable treatment under any current or future law, rule, regulation, accounting rule or principle.
SECTION 11.9 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 11.10 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.
SECTION 11.11 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 11.12 Benefits of Indenture. [The Swap Counterparty shall be a third-party beneficiary to the provisions of this Indenture.] Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, [the Swap Counterparty] 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 11.13 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 11.14 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 OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.15 Counterparts. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, regardless of whether delivered in physical or electronic form, but all such counterparts shall together constitute but one and the same instrument.
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SECTION 11.16 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 its expense accompanied by an Opinion of Counsel (which may be counsel to the Indenture Trustee or any other counsel reasonably acceptable to Indenture Trustee) 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 11.17 Trust Obligation. Each Noteholder or Note Owner, by acceptance of a Note, or, in the case of a Note Owner of a beneficial interest in a Note, by accepting the benefits of this Indenture, covenants and agrees that 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 their respective individual capacities, (ii) any Certificateholder or any other owner of a beneficial interest in the Issuer, (iii) the Servicer, the Administrator or the Seller or (iv) any partner, owner, beneficiary, agent, officer, director, employee, successor or assign of any Person described in clauses (i), (ii) and (iii) above, 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.
SECTION 11.18 No Petition. Each of the Indenture Trustee, by entering into this Indenture, and each Noteholder and Note Owner, by accepting a Note or, in the case of a Note Owner, a beneficial interest in a Note, hereby covenants and agrees that prior to the date which is one year and one day after payment in full of all obligations of each Bankruptcy Remote Party in respect of all securities issued by the Bankruptcy Remote Parties, (i) such party shall not authorize any Bankruptcy Remote Party to commence a voluntary winding-up or other voluntary case or other Proceeding seeking liquidation, reorganization or other relief with respect to such Bankruptcy Remote Party or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction or seeking the appointment of an administrator, a trustee, receiver, liquidator, custodian or other similar official with respect to such Bankruptcy Remote Party or any substantial part of its property or to consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other Proceeding commenced against such Bankruptcy Remote Party, or to make a general assignment for the benefit of, its creditors generally, any party hereto or any other creditor of such Bankruptcy Remote Party, and (ii) such party shall not commence, join or institute against, with any other Person, any Proceeding against such Bankruptcy Remote Party under any bankruptcy, reorganization, arrangement, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction.
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SECTION 11.19 Submission to Jurisdiction; Waiver of Jury Trial. Each of the parties hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any Proceeding relating to this Indenture or any documents executed and delivered in connection herewith, or for recognition and enforcement of any judgment in respect thereof, to the nonexclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof;
(b) consents that any such Proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of such action or Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such Proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address determined in accordance with Section 11.4 of this Indenture;
(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) to the extent permitted by applicable law, waives all right of trial by jury in any Proceeding or counterclaim based on, or arising out of, under or in connection with this Indenture, any other Transaction Document, or any matter arising hereunder or thereunder.
SECTION 11.20 Subordination of Claims. The Issuers obligations under this Indenture are obligations solely of the Issuer and will not constitute a claim against the Seller to the extent that the Issuer does not have funds sufficient to make payment of such obligations. In furtherance of and not in derogation of the foregoing, each of the Owner Trustee (in its individual capacity and as the Owner Trustee), by accepting the benefits of this Indenture, the Certificateholder, by accepting the Certificate, and the Indenture Trustee (in its individual capacity and as Indenture Trustee), by entering into this Indenture, and each Noteholder and each Note Owner [and the Swap Counterparty], by accepting the benefits of this Indenture, hereby acknowledges and agrees that such Person has no right, title or interest in or to the Other Assets of the Seller. To the extent that, notwithstanding the agreements and provisions contained in the preceding sentence, each of the Owner Trustee, the Indenture Trustee, each Noteholder or Note Owner and the Certificateholder either (i) asserts an interest or claim to, or benefit from, Other Assets, or (ii) is deemed to have any such interest, claim to, or benefit in or from Other Assets, whether by operation of law, legal process, pursuant to applicable provisions of insolvency laws or otherwise (including by virtue of Section 1111(b) of the Bankruptcy Code or any successor provision having similar effect under the Bankruptcy Code), then such Person further acknowledges and agrees that any such interest, claim or benefit in or from Other Assets is and will be expressly subordinated to the indefeasible payment in full, which, under the terms of the relevant documents relating to the securitization or conveyance of such Other Assets, are entitled to be paid from, entitled to the benefits of, or otherwise secured by such Other Assets (whether or not any such entitlement or security interest is legally perfected or otherwise entitled to a priority of distributions or application under applicable law, including insolvency laws, and whether or not asserted against the Seller), including the payment of post-petition interest on such other obligations and liabilities. The provisions of this Section 11.20 will be deemed a subordination agreement within the meaning of Section 510(a) of the Bankruptcy Code. Each of
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the Indenture Trustee (in its individual capacity and as the Indenture Trustee), by entering into or accepting this Indenture, the Certificateholder, by accepting the Certificate, and the Owner Trustee, and each Noteholder or Note Owner, by accepting the benefits of this Indenture, hereby further acknowledges and agrees that no adequate remedy at law exists for a breach of this Section and the terms of this Section may be enforced by an action for specific performance. The provisions of this Section will be for the third party benefit of those entitled to rely thereon and will survive the termination of this Indenture.
SECTION 11.21 U.S.A. Patriot Act. The parties hereto acknowledge that in accordance with Section 326 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Title III of Pub. L. 107 56 (signed into law October 26, 2001) and its implementing regulations (collectively, Patriot Act), the Indenture Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Indenture Trustee. The parties to this Indenture agree that they will provide the Indenture Trustee with such information about the Issuer as it may reasonably request in order for the Indenture Trustee to satisfy the requirements of the Patriot Act.
SECTION 11.22 Beneficial Ownership. Pursuant to the Patriot Act, the Financial Crimes Enforcement Networks (FinCEN) Customer Due Diligence Requirements and such other laws, rules, regulations and executive orders in effect from time to time applicable to banking institutions (Applicable Law), the Indenture Trustee is required to obtain from the Issuer on or before closing, and from time to time thereafter, documentation to verify and record information that identifies each person who opens an account. For a non-individual person such as a business entity, a charity, a trust or other legal entity, the Indenture Trustee will ask for documentation to verify the entitys formation and existence, its financial statements, licenses, tax identification documents, identification and authorization documents from individuals claiming authority to represent the entity and other relevant documentation and information (including beneficial owners of such entities). To the fullest extent permitted by Applicable Law, the Indenture Trustee may conclusively rely on, and shall be fully protected and indemnified in relying on, any such information received. Failure to provide such information may result in an inability of the Indenture Trustee to perform its obligations hereunder, which, at the sole option of the Indenture Trustee, may result in the Indenture Trustees resignation in accordance with the terms hereof.
SECTION 11.23 Limitation of Liability. It is expressly understood and agreed by the parties hereto that (a) this Indenture is executed and delivered by [___________], not individually or personally but solely as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it under the Trust Agreement, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by [___________], but is made and intended for the purpose for binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on [___________], individually or personally, to perform any covenant, either express or implied, contained herein, all such liability, if any, being expressly waived by the parties hereto and any Person claiming by, through or under the parties hereto, (d) [___________] has made no investigation as to the accuracy or completeness of any
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representations and warranties made by the Issuer in this Indenture and (e) under no circumstances shall [___________] be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Indenture or the other related documents.
SECTION 11.24 [Limitation of Rights. All of the rights of the Swap Counterparty in, to and under this Indenture (including, but not limited to, all of the Swap Counterpartys rights as a third-party beneficiary of this Agreement and as an Indenture Secured Party under this Indenture and all of the Swap Counterpartys rights to receive notice of any action hereunder and to give or withhold consent to any action hereunder) shall terminate upon the termination of the Interest Rate Swap Agreement in accordance with the terms thereof and the payment in full of all amounts owing to the Swap Counterparty.]
ARTICLE XII COMPLIANCE WITH THE FDIC RULE
SECTION 12.1 Purpose. (a) Each of the Noteholders, by its acceptance of the Notes, each of the Certificateholders, by its acceptance of the Certificates, the Capital One Parties and the Relevant Trustee acknowledges and agrees that the purpose of this Article XII is to facilitate compliance by the Capital One Parties with the provisions of the FDIC Rule. Each of the Noteholders, the Certificateholders, the Capital One Parties and the Relevant Trustee acknowledges that the interpretations of the requirements of the FDIC Rule may change over time, whether due to interpretive guidance provided by the FDIC or its staff, consensus among participants in the asset-backed securities markets, advice of counsel, or otherwise, and agrees that the provisions set forth in this Article XII shall have the effect and meanings that are appropriate under the FDIC Rule as such meanings change over time on the basis of evolving interpretations of the FDIC Rule.
(b) If any provision of the FDIC Rule is amended, or any interpretive guidance regarding the FDIC Rule is provided by the FDIC or its staff, as a result of which the Issuer determines that an amendment to this Article XII is necessary or desirable, then the Issuer and the Relevant Trustee shall be authorized and entitled to amend this Article XII in accordance with such FDIC Rule amendment or guidance notwithstanding the requirements set forth in Section 9.1 and 9.2, provided that the Issuer delivers to the Relevant Trustee an Opinion of Counsel to the effect that such amendment is required to remain in compliance with the FDIC Rule. Nothing in this Section 12.1(b) shall limit the rights of the Indenture Trustee pursuant to Section 9.3 or the Owner Trustee pursuant to Section 11.1(d) of the Trust Agreement.
(c) As used in this Article XII, but subject to the rules of interpretation specified in Section 12.1(a) and Section 12.1(b), references to (i) the sponsor shall mean the Bank, (ii) the issuing entity shall mean, collectively, the Seller and the Issuer (except in Section 12.2(e), where such term shall have the meaning in the FDIC Rule), (iii) the servicer shall mean the Servicer or Administrator, as applicable, (iv) obligations or securitization obligations shall mean the Notes and, to the extent permitted by the FDIC Rule, the Certificates, and (v) financial assets and securitized financial assets shall mean the Receivables (except in Section 12.2(e), where such term shall have the meaning in the FDIC Rule).
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(d) Each of the Capital One Parties believes that the transactions and actions contemplated by the Transaction Documents and the Prospectus comply with the requirements of Section 12.2.
SECTION 12.2 Requirements of the FDIC Rule. As required by the FDIC Rule:
(a) Payment of principal and interest on the securitization obligations must be primarily based on the performance of financial assets that are transferred to the issuer and, except for interest rate or currency mismatches between the financial assets and the obligations, shall not be contingent on market or credit events that are independent of such financial assets.
(b) The sponsor, issuing entity, and/or servicer, as appropriate, shall make available to investors, information describing the financial assets, obligations, capital structure, compensation of relevant parties, and relevant historical performance data set forth below:
(i) On or prior to issuance of obligations and at the time of delivery of any periodic distribution report and, in any event, at least once per calendar quarter, while obligations are outstanding, information about the obligations and the securitized financial assets shall be disclosed to all potential investors at the financial asset or pool level, as appropriate for the financial assets, and security-level to enable evaluation and analysis of the credit risk and performance of the obligations and financial assets. Such information and its disclosure, at a minimum, shall comply with the requirements of Regulation AB or any successor disclosure requirements for public issuances, even if the obligations are issued in a private placement or are not otherwise required to be registered; provided that information that is unknown or not available to the sponsor or the issuer after reasonable investigation may be omitted if the issuer includes a statement in the offering documents disclosing that the specific information is otherwise unavailable;
(ii) On or prior to issuance of obligations, the structure of the securitization and the credit and payment performance of the obligations shall be disclosed, including the capital or tranche structure, the priority of payments and specific subordination features; representations and warranties made with respect to the financial assets, the remedies for and the time permitted for cure of any breach of representations and warranties, including the repurchase of financial assets, if applicable; liquidity facilities and any credit enhancements permitted by the FDIC Rule, any waterfall triggers or priority of payment reversal features; and policies governing delinquencies, servicer advances, loss mitigation, and write-offs of financial assets;
(iii) While obligations are outstanding, the issuing entity shall provide to investors information with respect to the credit performance of the obligations and the financial assets, including periodic and cumulative financial asset performance data, delinquency and modification data for the financial assets, substitutions and removal of financial assets, servicer advances, as well as losses that were allocated to such tranche and remaining balance of financial assets supporting such tranche, if applicable, and the percentage of each tranche in relation to the securitization as a whole; and
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(iv) In connection with the issuance of the obligations, the nature and amount of compensation paid to the originator, sponsor, rating agency or third-party advisor, any mortgage or other broker, and the servicer(s), and the extent to which any risk of loss on the underlying assets is retained by any of them for such securitization shall be disclosed. The issuer shall provide to investors while any obligations are outstanding any changes to such information and the amount and nature of payments of any deferred compensation or similar arrangements to any of the parties.
(c) The sponsor or a majority-owned affiliate of the sponsor shall retain an economic interest in the credit risk of the financial assets in accordance with Regulation RR, 17 C.F.R. §246.1, et seq. (Regulation RR), including (1) the restrictions on sale, pledging and hedging set forth therein and (2) any disclosure requirements set forth therein.
(d) The obligations shall not be predominantly sold to an affiliate (other than (i) a wholly-owned subsidiary consolidated for accounting and capital purposes with the sponsor or (ii) an affiliated broker-dealer who purchases such obligations with a view to promptly reselling such obligations to persons or entities that are neither affiliates (other than wholly-owned subsidiaries of the sponsor consolidated for accounting and capital purposes with the sponsor) nor insiders of the sponsor in the ordinary course of such broker-dealers business pursuant to an underwriting or similar agreement entered into in the ordinary course of business) or an insider of the sponsor; provided that (i) at the time the obligations are sold to the affiliated broker-dealer, such broker-dealer sells not less than 51% of the principal amount of the obligations to persons and entities that are not affiliates (other than wholly-owned subsidiaries of the sponsor consolidated for accounting and capital purposes with the sponsor) or insiders of the sponsor; (ii) at all times after such obligations are sold to the affiliated broker-dealer, such broker-dealer holds the unsold portion of the obligations with the intent to sell such unsold portion to persons or entities that are not affiliates (other than wholly-owned subsidiaries of the sponsor consolidated for accounting and capital purposes with the sponsor) or insider of the sponsor and (iii) the other requirements of the FDIC Rule, including, without limitation, the requirements of Sections 360.6(c)(3) and (4) of the FDIC Rule, are satisfied.
(e) The sponsor shall separately identify in its financial asset data bases the financial assets transferred into any securitization and shall maintain an electronic or paper copy of the closing documents in a readily accessible form, and a current list of all of its outstanding securitizations and issuing entities, and the most recent Form 10-K, if applicable, or other periodic financial report for each securitization and issuer. The sponsor shall make these records readily available for review by the FDIC promptly upon written request.
(f) To the extent serving as servicer, custodian or paying agent for the securitization, the sponsor shall not commingle amounts received with respect to the financial assets with its own assets except for the time, not to exceed two (2) Business Days, necessary to clear any payments received.
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SECTION 12.3 Performance. The Issuer agrees to perform the obligations set forth in Section 12.2, except to the extent any such obligation is specifically imposed exclusively upon the servicer or the sponsor.
SECTION 12.4 Actions Upon Repudiation.
(a) In the event that the Sponsor becomes the subject of an insolvency proceeding and the FDIC as receiver or conservator for the Sponsor exercises its right of repudiation as contemplated by paragraph (d)(4)(ii) of the FDIC Rule, the Servicer (including any successor Servicer, if the Bank has been replaced as Servicer) shall ascertain whether the FDIC in such capacity will pay damages as provided in such paragraph (d)(4)(ii). Upon making such determination, the Servicer shall promptly, and in any event no more than one Business Day thereafter (or, if the Servicer fails to act, the Noteholders representing not less than a majority of the Outstanding Note Balance or the Majority Certificateholders may), so notify the Indenture Trustee and the Owner Trustee.
(b) Upon receipt of the notice specified in Section 12.4(a) indicating that a payment will be made, the Relevant Trustee shall determine the date (the applicable distribution date) for making a distribution to Noteholders and Certificateholders of such damages, which date shall be the earlier of (i) the next Payment Date on which such damages could be distributed and (ii) the earliest practicable date by which the Relevant Trustee could declare a special distribution date, in each case subject to all applicable provisions of this Indenture, applicable law and the procedures of any applicable Clearing Agency.
(c) When the applicable distribution date is determined, (i) the Computation Agent shall promptly compute the amount of interest to be paid on each Class of Notes on the applicable distribution date, which interest (unless such applicable distribution date is a Payment Date) shall be the amount accruing up to the applicable distribution date and which shall be computed by pro rating the amount that would otherwise be payable on the next succeeding Payment Date on the basis of (x) the number (in the case of Notes other than the Class A-1 Notes, not to exceed 30) of days elapsed from such preceding Payment Date divided by (y) 30 and (ii) the Owner Trustee, based on written instructions setting forth the damages calculation provided by the Majority Certificateholders, shall notify the Indenture Trustee and the FDIC of the damages due to the Certificateholders pursuant to Section 360.6(d)(4)(ii) of the FDIC Rule. The Computation Agent shall notify the Owner Trustee and the Indenture Trustee (if a separate Person) in writing of the applicable amounts of principal and interest to be paid on each Class of Notes not later than the Business Day following the day on which the applicable distribution date is determined.
(d) If the applicable distribution date is a special distribution date, the Relevant Trustee shall (i) declare such special distribution date (the record date for which shall be the close of business on the day immediately preceding such special distribution date), (ii) declare a special distribution to Noteholders consisting of unpaid interest on each Note and the Outstanding Principal Balance of each Note, (iii) deliver notice to the Noteholders of such special distribution date and special distribution; and (iv) deliver notice to the Owner Trustee (or, if the Owner Trustee is the Relevant Trustee, deliver notice to the Certificateholders) of such special distribution date and special distribution.
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(e) Following payment by the FDIC of such damages,
(i) such damages with respect to the Notes shall be deposited into the Principal Distribution Account and such damages with respect to the Certificates shall be deposited into the Certificate Distribution Account;
(ii) the Computation Agent shall promptly, and no later than one Business Day after such damages have been paid by the FDIC, (i) compute the amount, if any, required to be withdrawn from available funds in the Reserve Account and transferred to the Principal Distribution Account so that the amount on deposit in the Principal Distribution Account shall equal the aggregate amount to be distributed as specified in Section 12.4(c), and (ii) promptly inform the Servicer, the Owner Trustee and the Indenture Trustee (if a separate Person) in writing of such computations;
(iii) on the applicable distribution date, the Indenture Trustee shall, first, withdraw from monies on deposit in the Reserve Account and, if necessary, from monies on deposit in the Collection Account the amount necessary to pay the Indenture Trustee and the Owner Trustee any accrued and unpaid fees (including any prior unpaid Indenture Trustee or Owner Trustee fees) and reasonable expenses and any indemnification amounts not previously paid and distribute such amount to the Indenture Trustee and the Owner Trustee pro rata based on amounts due; provided, that the Owner Trustee shall provide the amount of any such fees, expenses and indemnification amounts owed to it to the Indenture Trustee, upon which the Indenture Trustee may conclusively rely without any liability therefor, second, based on the computations in Section 12.4(e), withdraw from monies on deposit in the Reserve Account and, if necessary, monies on deposit in the Collection Account the amount so computed and deposit such amount into the Principal Distribution Account and third, cause all amounts deposited in the Principal Distribution Account pursuant to this Section 12.4 to be applied in accordance with the following order of priority:
(a) first, to the Holders of the Notes, ratably, interest on the Notes in the amount computed by the Computation Agent pursuant to Section 12.4(c);
(b) second, to the Holders of the Class A-1 Notes, in respect of principal thereon, until the Class A-1 Notes have been paid in full;
(c) third, to the Holders of the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes, in respect of principal thereon, on a pro rata basis, until all classes of the Class A Notes have been paid in full;
(d) fourth, to the Holders of the Class B Notes, in respect of principal thereon, until the Class B Notes have been paid in full;
(e) fifth, to the Holders of the Class C Notes, in respect of principal thereon, until the Class C Notes have been paid in full; and
(f) [sixth, to the Holders of the Class D Notes, in respect of principal thereon, until the Class D Notes have been paid in full.]
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(iv) On the applicable distribution date, the Owner Trustee shall, based on the computations in Section 12.4(c), cause all amounts deposited in the Certificate Distribution Account pursuant to this Section 12.4 to be distributed to the Certificateholders, pro rata based on the Percentage Interest of each Certificateholder; and
(v) any funds remaining in the Collection Account and the Reserve Account shall be distributed on the following Payment Date (or on such applicable distribution date, if it is a Determination Date), such distributions to be made in accordance with Section 5.4 or 8.5, as applicable, with the Relevant Trustee at the written direction of the Servicer to adjust the amounts of such distributions in the Relevant Trustees Certificate to take into account the amounts distributed on the applicable distribution date.
SECTION 12.5 Notice.
(a) In the event that the Bank becomes the subject of an insolvency proceeding and the FDIC as receiver or conservator provides a written notice of repudiation as contemplated by paragraph (d)(4)(ii) of the FDIC Rule, the party receiving such notice shall promptly deliver such notice to each of the Capital One Parties and the Indenture Trustee and the Owner Trustee.
(b) If the FDIC (i) is appointed as a conservator or receiver of the Bank and (ii) is in default due to its failure to pay principal or interest when due following the expiration of any cure period hereunder or under the other Transaction Documents, the Indenture Trustee at the direction of the Noteholders representing not less than a majority of the Outstanding Note Balance, the Servicer or the Majority Certificateholders shall be entitled to deliver written notice to the FDIC requesting the exercise of contractual rights hereunder and under the other Transaction Documents. Upon delivery of such notice, the Relevant Trustee may exercise any contractual rights such Relevant Trustee may have in accordance with the Transaction Documents and the FDIC Rule. The Indenture Trustee shall, at the written direction of the Noteholders representing not less than a majority of the Outstanding Note Balance, and the Owner Trustee shall, at the written direction of the Majority Certificateholders, exercise such contractual rights.
SECTION 12.6 Reservation of Rights. Neither the inclusion of this Article XII in this Indenture nor the compliance by any Person with, or the acknowledgment by any Person of, this Articles provisions constitutes an agreement or acknowledgment by any Person that, in the case of an insolvency proceeding with respect to the Bank, a receiver or conservator will have any rights with respect to the Trust Estate.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Indenture to be duly executed by their respective officers, thereunto duly authorized, all as of the day and year first above written.
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_] | ||
By: | [_______________], not in its | |
individual capacity but solely as Owner Trustee | ||
By: | ||
Name: | ||
Title: | ||
[__________________], a [____________], not in its individual capacity but solely as the Indenture Trustee | ||
By: | ||
Name: | ||
Title: |
S-1 | 20[_]-[_] Indenture |
SCHEDULE I
PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS
In addition to the representations, warranties and covenants contained in the Indenture, the Issuer hereby represents, warrants, and covenants to the Indenture Trustee as follows on the Closing Date [and on each Funding Date]:
General
1. The Indenture creates a valid and continuing security interest (as defined in the applicable UCC) in the Receivables and the other Collateral in favor of the Indenture Trustee, which security interest is prior to all other Liens, and is enforceable as such against creditors of and purchasers from the Issuer.
2. The Receivables constitute chattel paper (including electronic chattel paper or tangible chattel paper), accounts, instruments, promissory notes, payment intangibles or general intangibles, within the meaning of the applicable UCC.
3. Immediately prior to the sale, transfer, contribution, assignment and/or conveyance of a Receivable, such Receivable is secured by a first priority validly perfected and enforceable security interest in the related Financed Vehicle in favor of the Originator (or its assignee), as secured party, or all necessary actions with respect to such Receivable have been taken or will be taken to perfect a first priority security interest in the related Financed Vehicle in favor of the Originator (or its assignee), as secured party, subject, as to enforcement, to applicable bankruptcy, insolvency, reorganization, liquidation or other similar laws and equitable principles relating to or affecting the enforcement of creditors rights generally.
Creation
4. Immediately prior to the sale, transfer, contribution, assignment and/or conveyance of a Receivable by the Seller to the Issuer, the Seller owned and had good and marketable title to such Receivable free and clear of any Lien created by the Seller (other than any Liens in favor of the Issuer) and immediately after the sale, transfer, assignment and conveyance of such Receivable to the Issuer, the Issuer will have good and marketable title to such Receivable free and clear of any Lien created by the Seller.
Perfection
5. The Issuer has submitted or will have caused to be submitted, on the effective date of the Indenture, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Receivables granted to the Indenture Trustee hereunder; and the Servicer, in its capacity as custodian, has in its possession the original copies of such instruments or tangible chattel paper that constitute or evidence the Receivables, and all financing statements referred to in this paragraph contain a statement that: A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Secured Party.
I-1 | 20[_]-[_] Indenture |
6. With respect to Receivables that constitute an instrument or tangible chattel paper, either:
(i) All original executed copies of each such instrument or tangible chattel paper have been delivered to the Indenture Trustee, as pledgee of the Issuer; or
(ii) Such instruments or tangible chattel paper are in the possession of the Servicer and the Indenture Trustee has received a written acknowledgment from the Servicer that the Servicer (in its capacity as custodian) is holding such instruments or tangible chattel paper solely on behalf and for the benefit of the Indenture Trustee, as pledgee of the Issuer; or
(iii) The Servicer received possession of such instruments or tangible chattel paper after the Indenture Trustee received a written acknowledgment from the Servicer that the Servicer is acting solely as agent of the Indenture Trustee, as pledgee of the Issuer.
Priority
7. The Issuer has not authorized the filing of, and is not aware of any financing statements against the Issuer that include a description of collateral covering the Receivables other than any financing statement (i) relating to the conveyance of the Receivables by the Bank to the Seller under the Purchase Agreement, (ii) relating to the conveyance of the Receivables by the Seller to the Issuer under the Sale Agreement, (iii) relating to the security interest granted to the Indenture Trustee under the Indenture or (iv) that has been terminated.
8. The Issuer is not aware of any material judgment, ERISA or tax lien filings against the Issuer.
9. Neither the Issuer nor a custodian or vaulting agent thereof holding any Receivable that is electronic chattel paper has communicated an authoritative copy (as such term is used in Section 9-105 of the UCC) of any loan agreement that constitutes or evidences such Receivable to any Person other than the Servicer.
10. None of the instruments, electronic chattel paper or tangible chattel paper that constitutes or evidences the Receivables has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Issuer or the Indenture Trustee.
Survival of Perfection Representations
11. Notwithstanding any other provision of the Indenture, the perfection representations, warranties and covenants contained in this Schedule I shall be continuing, and remain in full force and effect until such time as all obligations under the Indenture have been finally and fully paid and performed.
No Waiver
12. The Issuer shall provide the Rating Agencies with prompt written notice of any material breach of the perfection representations, warranties and covenants contained in this Schedule I, and shall not, without satisfying the Rating Agency Condition, waive a breach of any of such perfection representations, warranties or covenants.
II-2 | 20[_]-[_] Indenture |
Exhibit A
FORM OF CLASS [A-1] [A-2[-A]] [[A-2-B]] [A-3] [A-4] [B] [C] [D] NOTES
REGISTERED |
$___________________1 | |
No. R-________ |
CUSIP NO. ______________ | |
ISIN. ______________ |
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
[[FOR 144A NOTES:] THIS NOTE OR ANY INTEREST HEREIN HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND THE ISSUER HAS NOT BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE INVESTMENT COMPANY ACT). THIS NOTE OR ANY INTEREST HEREIN MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT (A) (1) TO A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (A QUALIFIED INSTITUTIONAL BUYER) WHO IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, IN A PRINCIPAL AMOUNT OF NOT LESS THAN [$[1,000] AND IN GREATER WHOLE NUMBER DENOMINATIONS OF $[1,000] IN EXCESS THEREOF (EXCEPT FOR TWO SUCH NOTES WHICH MAY BE ISSUED IN INTEGRAL MULTIPLES IN EXCESS THEREOF OF OTHER THAN $[1,000])] FOR THE PURCHASER AND FOR EACH SUCH ACCOUNT, IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS SPECIFIED IN THE INDENTURE, OR (2) TO THE SELLER OR ANY OF ITS U.S. CORPORATE AFFILIATES (OR DISREGARDED ENTITIES THEREOF) AND (B)
1 | Denominations of $[1,000] and integral multiples of $[1,000] in excess thereof (except for two Notes of each Class which may be issued in a denomination other than an integral multiple of $[1,000]). |
A-1-1 | Indenture (COPAR 20[__]-[_]) |
IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. EACH PURCHASER WILL BE DEEMED TO HAVE MADE CERTAIN REPRESENTATIONS AND AGREEMENTS SET FORTH IN THE INDENTURE. ANY TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE INDENTURE TRUSTEE, OR ANY INTERMEDIARY. IF AT ANY TIME, THE ISSUER DETERMINES OR IS NOTIFIED THAT THE HOLDER OF SUCH NOTE OR BENEFICIAL INTEREST IN SUCH NOTE WAS IN BREACH, AT THE TIME GIVEN, OF ANY OF THE REPRESENTATIONS SET FORTH IN THE INDENTURE, THE ISSUER AND THE INDENTURE TRUSTEE MAY CONSIDER THE ACQUISITION OF THIS NOTE OR SUCH INTEREST IN SUCH NOTE VOID AND REQUIRE THAT THIS NOTE OR SUCH INTEREST HEREIN BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER.]
BY ACQUIRING THIS NOTE (OR ANY INTEREST HEREIN), EACH PURCHASER OR TRANSFEREE (AND, IF THE PURCHASER OR TRANSFEREE IS A PLAN (AS DEFINED BELOW), ITS FIDUCIARY) (I) WILL BE DEEMED TO REPRESENT AND WARRANT THAT EITHER (A) SUCH PURCHASER OR TRANSFEREE IS NOT ACQUIRING AND WILL NOT HOLD THIS NOTE (OR ANY INTEREST HEREIN) ON BEHALF OF, OR WITH ANY ASSETS OF, A PLAN THAT IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (ERISA), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE CODE) (EACH, A BENEFIT PLAN), OR A PLAN THAT IS SUBJECT TO A LAW THAT IS SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (SIMILAR LAW) OR (B) THE ACQUISITION, HOLDING AND DISPOSITION OF THIS NOTE (OR ANY INTEREST HEREIN) WILL NOT GIVE RISE TO A NONEXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A VIOLATION OF ANY SIMILAR LAW AND (II) ACKNOWLEDGES AND AGREES IF IT IS A BENEFIT PLAN OR A PLAN THAT IS SUBJECT TO SIMILAR LAW, IT SHALL NOT ACQUIRE THIS NOTE (OR INTEREST HEREIN) AT ANY TIME THAT THE RATINGS ON THIS NOTE ARE BELOW INVESTMENT GRADE OR IF THIS NOTE HAS BEEN CHARACTERIZED AS OTHER THAN INDEBTEDNESS FOR APPLICABLE LOCAL LAW PURPOSES. FOR PURPOSES OF THE FOREGOING, PLAN MEANS AN EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3) OF ERISA WHETHER OR NOT SUBJECT TO TITLE I OF ERISA, A PLAN AS DEFINED IN SECTION 4975 OF THE CODE, OR AN ENTITY OR ACCOUNT DEEMED TO HOLD THE PLAN ASSETS OF ANY OF THE FOREGOING.
TRANSFERS OF THIS NOTE MUST GENERALLY BE ACCOMPANIED BY APPROPRIATE TAX TRANSFER DOCUMENTATION AND ARE SUBJECT TO RESTRICTIONS AS PROVIDED IN THE INDENTURE.
A-1-2 | Indenture (COPAR 20[__]-[_]) |
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_]
[CLASS A-1 [___]%] [CLASS A-2[-A] [___]%] [[CLASS A-2-B] [BENCHMARK] + [___]%]]
[CLASS A-3 [___]%] [CLASS A-4 [___]%] [CLASS B [___]%] [CLASS C [___]%]
[CLASS D [___]%]
AUTO LOAN ASSET BACKED NOTES
Capital One Prime Auto Receivables Trust 20[_]-[_], a statutory trust organized and existing under the laws of the State of Delaware (including any successor, the Issuer), for value received, hereby promises to pay to [______], or registered assigns, the principal sum of [___] DOLLARS ($[___]), in monthly installments on the [___] of each month, or if such day is not a Business Day, on the immediately succeeding Business Day, commencing on [________________], 20[__] (each, a Payment Date) until the principal of this Note is paid or made available for payment, and to pay interest on each Payment Date on the Class [A-1] [A-2[-A]] [[A-2-B]] [A-3] [A-4] [B] [C] [D] Note Balance as of the preceding Payment Date (after giving effect to all payments of principal made on the preceding Payment Date), or as of the Closing Date in the case of the first Payment Date, at the rate per annum shown above (the Interest Rate), in each case as and to the extent set forth in Sections 2.7, 3.1, 5.4(b), 8.2 and 8.5 of the Indenture; provided, however, that the entire unpaid Class [A-1] [A-2[-A]] [[A-2-B]] [A-3] [A-4] [B] [C] [D] Note Balance shall be due and payable on the earliest of (i) [___] (the Final Scheduled Payment Date), (ii) the Redemption Date, if any, pursuant to Section 10.1 of the Indenture and (iii) the date the Notes are accelerated after an Event of Default pursuant to Section 5.2 of the Indenture. Interest on this Note will accrue for each Payment Date from and including the [preceding Payment Date (or, in the case of the initial Payment Date, from and including the Closing Date) to but excluding such Payment Date]2 [[___] day of the prior calendar month (or, in the case of the initial Payment Date from and including the Closing Date) to but excluding the [___] day of the calendar month in which such Payment Date occurs]3. Interest will be computed on the basis of [Class A-1[, A-2-B]: actual days elapsed and a 360-day year][Class A-2[-A], A-3, A-4, B, A-4 C, D: a 360-day year of twelve 30-day months]. Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Note shall be applied first to interest on this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by the Indenture Trustee the name of which appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof or be valid or obligatory for any purpose.
2 | The Class A-1 Notes [and the Class A-2-B Notes]. |
3 | The Class A-2[-A], A-3, A-4, B, C and D Notes. |
A-1-3 | Indenture (COPAR 20[__]-[_]) |
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually, by its Authorized Officer.
Dated: [ ]
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_] | ||
By:[____________], not in its individual capacity but solely as Owner Trustee | ||
By: |
||
Name: |
||
Title: |
A-1-4 | Indenture (COPAR 20[__]-[_]) |
INDENTURE TRUSTEES CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-mentioned Indenture.
Dated: [ ]
[_________________________], | ||
a national banking association, not in its individual capacity but solely as Indenture Trustee | ||
By: | ||
Authorized Signatory |
A-1-5 | Indenture (COPAR 20[__]-[_]) |
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer, designated as its [Class A-1 [_____]%] [Class A-2[-A] [___]%] [[Class A-2-B [Benchmark] + [___]%]] [Class A-3 [___]%] [Class A-4 [___]%] [Class B [___]%] [Class C [___]%] [Class D [___]%] Auto Loan Asset-Backed Notes (herein called the Class [A-1] [A-2[-A]] [[A-2-B]] [A-3] [A-4] [B] [C] [D] Notes or the Notes), all issued under an Indenture, dated as of [________________], 20[__] (such Indenture, as supplemented or amended, is herein called the Indenture), between the Issuer and [_________________________], a national banking association, not in its individual capacity but solely as trustee (the Indenture Trustee), which term includes any successor Indenture Trustee under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Noteholders. The Notes are subject to all terms of the Indenture and the Servicing Agreement. All terms used in this Note that are not otherwise defined herein and that are defined in the Indenture or the Servicing Agreement shall have the meanings assigned to them in or pursuant to the Indenture or in Appendix A of the Servicing Agreement.
The Class A-1 Notes, the Class A-2[-A] Notes, [the Class A-2-B Notes,] the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes [and the Class D Notes] are and will be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture. The Class B Notes are subordinated to the Class A Notes and are secured by the collateral pledged as security therefor on a subordinated basis as provided in the Indenture. The Class C Notes are subordinated to the Class A Notes and Class B Notes and are secured by the collateral pledged as security therefor on a subordinated basis as provided in the Indenture. [The Class D Notes are subordinated to the Class A Notes, Class B Notes and Class C Notes and are secured by the collateral pledged as security therefor on a subordinated basis as provided in the Indenture.] All covenants and agreements made by the Issuer in the Indenture are for the benefit of the Holders of the Class A Notes, Class B Notes, Class C Notes [and the Class D Notes]. All covenants and agreements made by the Issuer in the Indenture are for the benefit of the Holders of the Class A Notes, Class B Notes, Class C Notes [and the Class D Notes].
Principal payable on the Notes will be paid on each Payment Date in the amount specified in the Indenture and in the Servicing Agreement. As described above, the entire Class [A-1] [A-2[-A]] [[A-2-B]] [A-3] [A-4] [B] [C] [D] Note Balance shall be due and payable on the earliest of (i) [___] (the Final Scheduled Payment Date), (ii) the Redemption Date, if any, pursuant to Section 10.1 of the Indenture and (iii) the date the Notes are accelerated after an Event of Default pursuant to Section 5.2 of the Indenture. All principal payments on the Class [A-1] [A-2[-A]] [[A-2-B]] [A-3] [A-4] [B] [C] [D] Notes shall be made pro rata to the Class [A-1] [A-2[-A]] [[A-2-B]] [A-3] [A-4] [B] [C] [D] Noteholders entitled thereto.
Payments of principal of and interest on this Note made on each Payment Date, Redemption Date or upon acceleration shall be made by wire transfer if an account has been designated by the related Noteholder three (3) Business Days prior to the related Payment Date and otherwise by check mailed first-class, postage prepaid, to the Person whose name appears as the registered Holder of this Note (or one or more Predecessor Notes) on the Note Register as of the close of business on the related Record Date, except that with respect to Notes registered on
A-1-6 | Indenture (COPAR 20[__]-[_]) |
the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Note be submitted for notation of payment. Any reduction in the principal amount of this Note (or any one or more Predecessor Notes) affected by any payments made on any Payment Date or Redemption Date shall be binding upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the remaining unpaid principal amount of this Note on a Payment Date or Redemption Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the registered Holder hereof as of the close of business on the Record Date preceding such Payment Date or Redemption Date by notice mailed prior to such Payment Date or Redemption Date which shall specify the amount then due and payable and such amount shall be payable only upon presentation and surrender of this Note at the Corporate Trust Office of the Indenture Trustee or at the place specified by the Indenture Trustee in such notice.
The Issuer shall pay interest on overdue installments of interest at the Class [A-1], [A-2[-A]], [[A-2-B]] [A-3], [A-4], [B], [C], [D] Interest Rate to the extent lawful.
Each Noteholder or Note Owner, by acceptance of this Note, or, in the case of a Note Owner of a beneficial interest in this Note, covenants and agrees that 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 the Indenture or any certificate or other writing delivered in connection herewith or therewith, against (i) the Indenture Trustee or the Owner Trustee in their respective individual capacities, (ii) any Certificateholder or any other owner of a beneficial interest in the Issuer, (iii) the Servicer, the Administrator or the Seller or (iv) any partner, owner, beneficiary, agent, officer, director, employee, successor or assign of any Person described in clauses (i), (ii) and (iii) above, 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.
It is the intent of the Issuer, the Noteholders and the Note Owners that, for purposes of federal, state and local income, franchise and value added tax, the Class A-1 Notes, the Class A-2[-A] Notes, [the Class A-2-B] Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes [and the Class D Notes] (other than any Notes that are owned during any period of time by either the Issuer or a Person that is considered the same Person as the Issuer for United States federal income tax purposes) shall constitute indebtedness. The Noteholders, by acceptance of this Note, agree to treat, and to take no action inconsistent with the treatment of, the Notes for such tax purposes as indebtedness.
A-1-7 | Indenture (COPAR 20[__]-[_]) |
Each Noteholder and Note Owner, by accepting this Note or, in the case of a Note Owner, a beneficial interest in this Note, hereby covenants and agrees that prior to the date which is one year and one day after payment in full of all obligations of each Bankruptcy Remote Party in respect of all securities issued by the Bankruptcy Remote Parties, (i) such party shall not authorize any Bankruptcy Remote Party to commence a voluntary winding-up or other voluntary case or other Proceeding seeking liquidation, reorganization or other relief with respect to such Bankruptcy Remote Party or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction or seeking the appointment of an administrator, a trustee, receiver, liquidator, custodian or other similar official with respect to such Bankruptcy Remote Party or any substantial part of its property or to consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other Proceeding commenced against such Bankruptcy Remote Party, or to make a general assignment for the benefit of, its creditors generally, any party to the Indenture or any other creditor of such Bankruptcy Remote Party and (ii) such party shall not commence, join with any other Person in commencing or institute, with any other Person, any Proceeding against such Bankruptcy Remote Party under any bankruptcy, reorganization, arrangement, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction.
THIS NOTE AND THE INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-1-8 | Indenture (COPAR 20[__]-[_]) |
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto |
(name and address of assignee) |
the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ______________________, attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.
Dated: _____________ _______________________________ */
Signature Guaranteed: |
|
Signatures must be guaranteed by an eligible guarantor institution meeting the requirements of the Note Registrar, which requirements include membership or participation in 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 Securities Exchange Act of 1934, as amended. |
*/ | NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular without alteration, enlargement or any change whatsoever. |
A-1-9 | Indenture (COPAR 20[__]-[_]) |
Exhibit 5.1
Mayer Brown LLP 71 South Wacker Drive Chicago, Illinois 60606-4637 | ||
November 3, 2021 | Main Tel +1 312 782 0600 www.mayerbrown.com |
Capital One Auto Receivables, LLC
1600 Capital One Drive
Room 27907B
McLean, Virginia 22102
Re: | Capital One Auto Receivables, LLC |
Registration Statement on Form SF-3 (No. 333-_______)
Ladies and Gentlemen:
We have acted as special counsel to Capital One Auto Receivables, LLC, a Delaware limited liability company (the Company), in connection with the above-captioned registration statement (such registration statement, together with the exhibits and any amendments thereto, the Registration Statement) filed by the Company with the Securities and Exchange Commission (the Commission) in connection with the registration by the Company of asset-backed notes (the Notes). As described in the Registration Statement, the Notes will be issued from time to time in series, with each series being issued by a statutory trust (each, a Trust) to be formed by the Company pursuant to a trust agreement (each, as amended, restated or otherwise modified, a Trust Agreement) between the Company and a trustee. For each series, the Notes will be issued pursuant to an indenture (the Indenture) between the related Trust, as issuer, and a financial institution acting as indenture trustee (the Indenture Trustee).
In that connection, we generally are familiar with the proceedings required to be taken in connection with the proposed authorization, issuance and sale of any series of Notes and have examined copies of such documents, corporate records and other instruments as we have deemed necessary or appropriate for the purpose of this opinion, including the Registration Statement and, in each case as filed as an exhibit to the Registration Statement, the form of Underwriting Agreement, the form of Indenture (including the form of Notes included as an exhibit thereto), the form of Amended and Restated Trust Agreement, the form of Sale Agreement, the form of Purchase Agreement, the form of Servicing Agreement, the form of Administration Agreement and the form of Asset Representations Review Agreement (collectively, the Operative Documents). Terms used herein without definition have the meanings given to such terms in the Registration Statement.
Mayer Brown is a global services provider comprising an association of legal practices that are separate entities including
Mayer Brown LLP (Illinois, USA), Mayer Brown International LLP (England), Mayer Brown (a Hong Kong partnership)
and Tauil & Chequer Advogados (a Brazilian partnership).
MAYER BROWN LLP
Capital One Auto Receivables, LLC
Page 2
Based on and subject to the foregoing, we are of the opinion that, with respect to the Notes, when (a) the related Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended, (b) such Notes have been duly executed and issued by the related Trust and authenticated by the related Indenture Trustee, and sold by (or at the direction of) the Company and (c) payment of the agreed consideration for such Notes shall have been received by the Trust, all in accordance with the terms and conditions of the related Operative Documents and a definitive purchase, underwriting or similar agreement with respect to such Notes and in the manner described in the Registration Statement, such Notes will have been duly authorized by all necessary action of the Trust and will be legally issued and binding obligations of the Trust and entitled to the benefits afforded by the related Indenture, except as may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other laws relating to or affecting creditors rights generally (including, without limitation, fraudulent conveyance laws), and by general principles of equity, regardless of whether such matters are considered in a proceeding in equity or at law.
MAYER BROWN LLP
Capital One Auto Receivables, LLC
Page 3
Our opinions expressed herein are limited to the federal laws of the United States and the laws of the State of New York and the Delaware Statutory Trust Act. We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement and to the use of our name therein without admitting we are experts within the meaning of the Securities Act of 1933, as amended, or the rules and regulations of the Commission issued thereunder, with respect to any part of the Registration Statement or this exhibit.
Very truly yours, |
/s/ Mayer Brown LLP
MAYER BROWN LLP |
Exhibit 8.1
Mayer Brown LLP 71 South Wacker Drive Chicago, Illinois 60606-4637 | ||
November 3, 2021 | Main Tel +1 312 782 0600 www.mayerbrown.com |
Capital One Auto Receivables, LLC
1600 Capital One Drive
Room 27907B
McLean, Virginia 22102
Re: | Capital One Auto Receivables, LLC |
Registration Statement on Form SF-3 (No. 333-________)
Ladies and Gentlemen:
We have acted as special federal tax counsel to Capital One Auto Receivables, LLC, a Delaware limited liability company (the Company), in connection with the above-captioned registration statement (such registration statement, together with the exhibits and any amendments thereto, the Registration Statement) filed by the Company with the Securities and Exchange Commission in connection with the registration by the Company of asset-backed notes (the Notes). As described in the Registration Statement, the Notes will be issued from time to time in series, with each series being issued by a statutory trust (each, a Trust) to be formed by the Company pursuant to a trust agreement (as amended, restated or otherwise modified, the Trust Agreement) between the Company and a trustee. The Notes will be issued pursuant to an indenture (each, an Indenture) between the related Trust and a financial institution acting as indenture trustee (the Indenture Trustee).
In that connection, we generally are familiar with the proceedings required to be taken in connection with the proposed authorization, issuance and sale of any series of Notes and have examined copies of such documents, corporate records and other instruments as we have deemed necessary or appropriate for the purpose of this opinion, including the Registration Statement and, in each case as filed as an exhibit to the Registration Statement, the form of Underwriting Agreement, the form of Indenture (including the form of Notes included as an exhibit thereto), the form of Amended and Restated Trust Agreement, the form of Sale Agreement, the form of Purchase Agreement, the form of Servicing Agreement, the form of Administration Agreement and the form of Asset Representations Review Agreement (collectively, the Operative Documents). Terms used herein without definition have the meanings given to such terms in the Registration Statement.
The opinion set forth herein is based upon the applicable provisions of the Internal Revenue Code of 1986, as amended (the Code), Treasury regulations promulgated and proposed thereunder, current positions of the Internal Revenue Service (the IRS) contained in published Revenue Rulings and Revenue Procedures, current administrative positions of the IRS
Mayer Brown is a global services provider comprising an association of legal practices that are separate entities including
Mayer Brown LLP (Illinois, USA), Mayer Brown International LLP (England), Mayer Brown (a Hong Kong partnership)
and Tauil & Chequer Advogados (a Brazilian partnership).
Mayer Brown LLP
Capital One Auto Receivables, LLC
Page 2
and existing judicial decisions. No tax rulings will be sought from the IRS with respect to any of the matters discussed herein. The statutory provisions, regulations and interpretations on which our opinions are based are subject to change, which changes could apply retroactively. In addition, there can be no assurance that positions contrary to those stated in our opinions may not be taken by the IRS.
Based on the foregoing and assuming that the Operative Documents with respect to each series are executed and delivered in substantially the form we have examined and that the transactions contemplated to occur under the Operative Documents in fact occur in accordance with the terms thereof, to the extent that the statements set forth in the Prospectus forming part of the Registration Statement under the captions Summary of TermsTax Status and Material United States Federal Income Tax Consequences constitute matters of U.S. federal income tax law or legal conclusions with respect thereto relating to U.S. federal tax matters, and to the extent such statements expressly state our opinions or state that our opinion has been or will be provided as to the Notes, we hereby confirm and adopt the opinions set forth therein (subject to the qualifications, assumptions, limitations and exceptions set forth therein).
Mayer Brown LLP
Capital One Auto Receivables, LLC
Page 3
We know that we are referred to under the captions referred to above included in the Prospectus, and we hereby consent to the use of our name therein and to use of this opinion for filing with the Registration Statement as Exhibit 8.1 thereto, without admitting that we are experts within the meaning of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission issued thereunder, with respect to any part of the Registration Statement, including this exhibit.
Respectfully submitted, |
/s/ Mayer Brown LLP |
MAYER BROWN LLP |
Exhibit 10.1
FORM OF
SALE AGREEMENT
dated as of [___________], 20[__]
between
CAPITAL ONE AUTO RECEIVABLES, LLC
and
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_],
as Purchaser
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND USAGE |
1 | |||||
SECTION 1.1 |
Definitions | 1 | ||||
SECTION 1.2 |
Other Interpretive Provisions | 1 | ||||
ARTICLE II PURCHASE |
2 | |||||
SECTION 2.1 |
Conveyance of Transferred Assets | 2 | ||||
SECTION 2.2 |
[Conveyance of Subsequent Transferred Assets | 2 | ||||
SECTION 2.3 |
[Funding Events | 2 | ||||
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS |
3 | |||||
SECTION 3.1 |
Representations and Warranties of the Seller | 3 | ||||
SECTION 3.2 |
Representations and Warranties of the Seller Regarding the Transferred Assets | 4 | ||||
SECTION 3.3 |
Liability of the Seller | 5 | ||||
SECTION 3.4 |
Merger or Consolidation of, or Assumption of the Obligations of, Seller | 6 | ||||
SECTION 3.5 |
Seller May Own Notes and Certificates | 6 | ||||
SECTION 3.6 |
Compliance with Organizational Documents | 6 | ||||
SECTION 3.7 |
Protection of Title | 7 | ||||
SECTION 3.8 |
Other Liens or Interests | 7 | ||||
SECTION 3.9 |
Exchange Act Filings | 7 | ||||
SECTION 3.10 |
Sarbanes-Oxley Act Requirements | 8 | ||||
SECTION 3.11 |
Compliance with the FDIC Rule | 8 | ||||
SECTION 3.12 |
Noteholder Communication | 8 | ||||
ARTICLE IV MISCELLANEOUS |
9 | |||||
SECTION 4.1 |
Transfers Intended as Sale; Security Interest | 9 | ||||
SECTION 4.2 |
Notices, Etc | 9 | ||||
SECTION 4.3 |
Choice of Law | 10 | ||||
SECTION 4.4 |
Headings | 10 | ||||
SECTION 4.5 |
Counterparts | 10 | ||||
SECTION 4.6 |
Amendment | 10 | ||||
SECTION 4.7 |
Waivers | 11 | ||||
SECTION 4.8 |
Entire Agreement | 11 | ||||
SECTION 4.9 |
Severability of Provisions | 12 | ||||
SECTION 4.10 |
Binding Effect | 12 |
i | Form of Sale Agreement |
TABLE OF CONTENTS
SECTION 4.11 |
Acknowledgment and Agreement | 12 | ||||
SECTION 4.12 |
Cumulative Remedies | 12 | ||||
SECTION 4.13 |
Nonpetition Covenant | 12 | ||||
SECTION 4.14 |
Submission to Jurisdiction; Waiver of Jury Trial | 13 | ||||
SECTION 4.15 |
Limitation of Liability of Owner Trustee | 13 | ||||
SECTION 4.16 |
Third-Party Beneficiaries | 13 | ||||
SECTION 4.17 |
[Limitation of Rights | 14 |
EXHIBITS
Exhibit A | Form of Assignment Pursuant to Sale Agreement | |
[Exhibit B | Form of Notice of Funding Date] | |
Schedule I | Notice Addresses | |
Schedule II | Perfection Representations, Warranties and Covenants | |
Appendix A | Definitions |
ii | Form of Sale Agreement |
THIS SALE AGREEMENT is made and entered into as of [___________], 20[__] (as amended, restated, supplemented or otherwise modified and in effect from time to time, this Agreement) by CAPITAL ONE AUTO RECEIVABLES, LLC, a Delaware limited liability company (the Seller), and CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_], a Delaware statutory trust (the Issuer).
WITNESSETH:
WHEREAS, the Issuer desires to purchase from the Seller a portfolio of motor vehicle receivables, including motor vehicle retail installment sale contracts and/or installment loans that are secured by new and used automobiles, light-duty trucks, SUVs and vans; and
WHEREAS, the Seller is willing to sell such portfolio of motor vehicle receivables and related property to the Issuer on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
SECTION 1.1 Definitions. Except as otherwise defined herein or as the context may otherwise require, capitalized terms used but not otherwise defined herein are defined in Appendix A hereto, which also contains rules as to usage that are applicable herein.
SECTION 1.2 Other Interpretive Provisions. For purposes of this Agreement, unless the context otherwise requires: (a) accounting terms not otherwise defined in this Agreement, and accounting terms partly defined in this Agreement to the extent not defined, shall have the respective meanings given to them under GAAP (provided, that, to the extent that the definitions in this Agreement and GAAP conflict, the definitions in this Agreement shall control); (b) terms defined in Article 9 of the UCC as in effect in the relevant jurisdiction and not otherwise defined in this Agreement are used as defined in that Article; (c) the words hereof, herein and hereunder and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) references to any Article, Section, Schedule, Appendix or Exhibit are references to Articles, Sections, Schedules, Appendices and Exhibits in or to this Agreement and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (e) the term including and all variations thereof means including without limitation; (f) except as otherwise expressly provided herein, references to any law or regulation refer to that law or regulation as amended from time to time and include any successor law or regulation; (g) references to any Person include that Persons successors and assigns; and (h) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof.
Form of Sale Agreement |
ARTICLE II
PURCHASE
SECTION 2.1 Conveyance of Transferred Assets. In consideration of the Issuers sale and delivery to, or upon the order of, the Seller of (i) all of the Notes and (ii) the Certificates on the Closing Date, the Seller does hereby sell, transfer, assign, set over, sell and otherwise convey to the Issuer without recourse (subject to the obligations herein) on the Closing Date all of its right, title, interest, claims and demands, whether now owned or hereafter acquired, in, to and under the [Initial] Transferred Assets, as evidenced by an assignment substantially in the form of Exhibit A (the Assignment) delivered on the Closing Date. The sale, transfer, assignment and conveyance made hereunder does not constitute and is not intended to result in an assumption by the Issuer of any obligation of the Seller or the Originator to the Obligors, the Dealers, insurers or any other Person in connection with the Receivables or the other assets and properties conveyed hereunder or any agreement, document or instrument related thereto.
SECTION 2.2 [Conveyance of Subsequent Transferred Assets. In consideration of the payment of the Receivables Purchase Price from the Pre-Funding Account, on each Funding Date, the Seller does hereby irrevocably sell, transfer, assign, and otherwise convey to the Issuer without recourse (subject to the obligations herein) all right, title and interest of the Seller, whether now owned or hereafter acquired, in, to and under the Subsequent Transferred Assets, as evidenced by an assignment substantially in the form of Exhibit A delivered on such Funding Date. The purchase of Subsequent Transferred Assets on a Funding Date shall be made in accordance with the Purchase Agreement and this Agreement. The sale, transfer, assignment and conveyance made hereunder does not constitute and is not intended to result in an assumption by the Issuer of any obligation of the Seller or the Originator to the Obligors, the Dealers, insurers or any other Person in connection with the Receivables or the other assets and properties conveyed hereunder or any agreement, document or instrument related thereto.]
SECTION 2.3 [Funding Events.
(a) A funding event (each, a Funding Event) shall occur upon a Funding Date and in accordance with the requirements of this Section.
(b) During the Funding Period, on each Funding Date, the Issuer shall (i) acquire Subsequent Transferred Assets from the Seller pursuant to Section 2.2 (and the Seller shall have acquired the related Subsequent Purchased Assets from the Bank pursuant to the Purchase Agreement) and (ii) Grant all of the Issuers right, title and interest in, to and under such Subsequent Transferred Assets to the Indenture Trustee for the benefit of the Holders of the Notes. Such Subsequent Transferred Assets shall be acquired at the option of the Issuer upon instruction from the Servicer; provided that such Subsequent Transferred Assets may not be acquired through the Pre-Funding Account if the effect of such acquisition would be to (i) reduce the weighted average Contract Rate of all Subsequent Receivables to less than [___]%, (ii) increase the weighted average remaining term to maturity of all Subsequent Receivables to greater than [___] months or (iii) increase the portion of all Receivables due from Obligors having a billing address in any given state to a level greater than [___]% of the Net Pool Balance.
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(c) The following procedures shall be followed to effect a Funding Event:
(i) The Bank shall package and forward or cause to be packaged and forwarded to the Servicer (in the event that the Bank is not the Servicer) the Receivable Files with respect to each Subsequent Receivable.
(ii) At least three (3) Business Days prior to the related Funding Date, the Issuer shall deliver, or cause to be delivered, to the Indenture Trustee, the Servicer and the Rating Agencies a Notice of Funding Date (substantially in the form of Exhibit B hereto).
(iii) The Seller shall have delivered to the Issuer the executed Assignment relating to such Funding Event in the form of Exhibit A hereto and the executed Assignment relating to such Funding Event in the form of Exhibit A to the Purchase Agreement.
(iv) Upon receipt of the deliverables set forth in clause (iii) above, the Indenture Trustee shall, on the applicable Funding Date, withdraw from the Pre-Funding Account an amount equal to the Receivables Purchase Price for the Subsequent Receivables acquired on such Funding Date and shall forward such funds (less amounts required to be deposited into the Reserve Account as described in the next sentence) to the Seller or its designee (which may include the Bank), in cash by federal wire transfer in accordance with the Notice of Funding Date. On the applicable Funding Date, the Indenture Trustee, on behalf of the Seller, shall deposit into the Reserve Account from the Receivables Purchase Price which would otherwise be released to the Seller from the Pre-Funding Account, an amount equal to the Subsequent Reserve Account Deposit Amount for such Funding Date.]
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.1 Representations and Warranties of the Seller. The Seller makes the following representations and warranties as of the Closing Date on which the Issuer will be deemed to have relied in acquiring the Transferred Assets:
(a) Existence and Power. The Seller is a limited liability company validly existing and in good standing under the laws of the State of Delaware and has, in all material respects, all power and authority to carry on its business as it is now conducted. The Seller has obtained all necessary licenses and approvals in each jurisdiction where the failure to do so would materially and adversely affect the ability of the Seller to perform its obligations under this Agreement or affect the enforceability or collectability of the Receivables or any other part of the Transferred Assets.
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(b) Authorization and No Contravention. The execution, delivery and performance by the Seller of this Agreement (i) have been duly authorized by all necessary limited liability company action on the part of the Seller and (ii) do not contravene or constitute a default under (A) any applicable order, law, rule or regulation, (B) its organizational documents or (C) any material agreement, contract, order or other instrument to which it is a party or its property is subject (other than violations which do not affect the legality, validity or enforceability of such agreements or which, individually or in the aggregate, would not materially and adversely affect the transactions contemplated by, or the Sellers ability to perform its obligations under, this Agreement).
(c) No Consent Required. No approval or authorization by, or filing with, any Governmental Authority is required in connection with the execution, delivery and performance by the Seller of this Agreement other than (i) UCC filings, (ii) approvals and authorizations that have previously been obtained and filings that have previously been made and (iii) approvals, authorizations or filings which, if not obtained or made, would not have a material adverse effect on the enforceability or collectability of the Receivables or any other part of the Transferred Assets or would not materially and adversely affect the ability of the Seller to perform its obligations under this Agreement.
(d) Binding Effect. This Agreement constitutes the legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws affecting the enforcement of creditors rights generally and, if applicable, the rights of creditors of limited liability companies from time to time in effect or by general principles of equity.
(e) No Proceedings. There are no Proceedings pending or, to the knowledge of the Seller, threatened against the Seller before or by any Governmental Authority that (i) assert the invalidity or unenforceability of this Agreement or (ii) seek any determination or ruling that would materially and adversely affect the performance by the Seller of its obligations under this Agreement.
(f) Lien Filings. The Seller is not aware of any material judgment, ERISA or tax lien filings against the Seller.
SECTION 3.2 Representations and Warranties of the Seller Regarding the Transferred Assets. On the date hereof, the Seller hereby makes the following representations and warranties to the Issuer, on which the Issuer will be deemed to have relied in acquiring the Transferred Assets:
(a) The Receivables and the other Transferred Assets have been validly assigned by the Seller to the Issuer.
(b) The Seller has not authorized the filing of and is not aware of any financing statements against the Seller that includes a description of collateral covering any Receivable other than any financing statement relating to security interests granted under the Transaction Documents or that have been or, prior to the assignment of such Receivables hereunder, will be terminated, amended or released. This Agreement creates a valid and continuing security interest in the Receivables (other than the Related Security with respect thereto, to the extent that an ownership interest therein cannot be perfected by the filing of a financing statement) in favor of the Issuer which security interest is prior to all other Liens created by the Seller (other than Permitted Liens) and is enforceable as such against all other creditors of and purchasers and assignees from the Seller.
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(c) The representations and warranties regarding creation, perfection and priority of security interests in the Transferred Assets, which are attached to this Agreement as Schedule II, are true and correct.
SECTION 3.3 Liability of the Seller.
(a) The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement.
(b) The Seller shall indemnify, defend, and hold harmless the Issuer, the Owner Trustee and the Indenture Trustee from and against any loss, liability or expense (including reasonable attorneys fees and expenses and court costs and any losses incurred in connection with a successful defense, in whole or part, of any claim that the Indenture Trustee breached its standard of care and legal fees and expenses incurred in actions against the indemnifying party) incurred by reason of the Sellers violation of federal or State securities laws in connection with the registration or the sale of the Notes.
(c) Indemnification under this Section 3.3 will survive the resignation or removal of the Owner Trustee or the Indenture Trustee and the termination or assignment of this Agreement and will include, without limitation, reasonable fees and expenses of counsel and expenses of litigation including those incurred in connection with the enforcement of the Indenture Trustees rights (including indemnification rights) under the Transaction Documents. If the Seller has made any indemnity payments pursuant to this Section 3.3 and the Person to or on behalf of whom such payments are made thereafter collects any of such amounts from others, such Person will promptly repay such amounts to the Seller, without interest.
(d) The Sellers obligations under this Agreement and the other Transaction Documents are obligations solely of the Seller and will not constitute a claim against the Seller to the extent that the Seller does not have funds sufficient to make payment of such obligations. In furtherance of and not in derogation of the foregoing, the Issuer, the Servicer, the Indenture Trustee and the Owner Trustee, by entering into or accepting this Agreement, acknowledge and agree that they have no right, title or interest in or to the Other Assets of the Seller. To the extent that, notwithstanding the agreements and provisions contained in the preceding sentence, the Issuer, the Servicer, the Indenture Trustee or the Owner Trustee either (i) asserts an interest in, claim to or benefit in or from Other Assets or (ii) is deemed to have any such interest in, claim to or benefit in or from Other Assets, whether by operation of law, legal process, pursuant to applicable provisions of insolvency laws or otherwise (including by virtue of Section 1111(b) of the Bankruptcy Code or any successor provision having similar effect under the Bankruptcy Code), then the Issuer, the Servicer, the Indenture Trustee or the Owner Trustee further acknowledges and agrees that any such interest in, claim to or benefit in or from Other Assets is and will be expressly subordinated to the indefeasible payment in full of the other obligations and liabilities which, under the terms of the relevant documents relating to the securitization or conveyance of such Other Assets, are entitled to be paid from, entitled to the benefits of, or
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otherwise secured by such Other Assets (whether or not any such entitlement or security interest is legally perfected or otherwise entitled to a priority of distributions or application under applicable law, including insolvency laws, and whether or not asserted against the Seller), including the payment of post-petition interest on such other obligations and liabilities. This subordination agreement will be deemed a subordination agreement within the meaning of Section 510(a) of the Bankruptcy Code. The Issuer, the Servicer, the Indenture Trustee and the Owner Trustee each further acknowledges and agrees that no adequate remedy at law exists for a breach of this Section 3.3(d) and the terms of this Section 3.3(d) may be enforced by an action for specific performance. The provisions of this Section 3.3(d) will be for the third-party benefit of those entitled to rely thereon and will survive the termination of or the assignment of this Agreement, and the resignation or removal of any indemnified party. Any amounts payable to the Indenture Trustee pursuant to this Section 3.3(d), to the extent not paid by the Seller, shall be paid by the Issuer in accordance with Section 8.5(a) of the Indenture.
SECTION 3.4 Merger or Consolidation of, or Assumption of the Obligations of, Seller. Any Person (i) into which the Seller may be merged or converted or with which it may be consolidated, to which it may sell or transfer its business and assets as a whole or substantially as a whole, (ii) resulting from any merger, sale, transfer, conversion, or consolidation to which the Seller shall be a party, (iii) succeeding to the business of the Seller, or (iv) more than 50% of the voting stock or voting power and 50% or more of the economic equity of which is owned directly or indirectly by Capital One Financial Corporation, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Seller under this Agreement, will be the successor to the Seller under this Agreement without the execution or filing of any document or any further act on the part of any of the parties to this Agreement anything herein to the contrary notwithstanding. The Seller shall provide notice of any merger, conversion, consolidation or succession pursuant to this Section 3.5 to the Administrator. Notwithstanding the foregoing, if the Seller enters into any of the foregoing transactions and is not the surviving entity, the Seller will deliver to the Indenture Trustee and the Owner Trustee an Opinion of Counsel either (A) stating that, in the opinion of such counsel, 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 Issuer and, if the Notes are Outstanding, the Indenture Trustee for the benefit of the Noteholders, respectively, in the Receivables, or (B) stating that, in the opinion of such counsel, no such action is necessary to preserve and protect such interest.
SECTION 3.5 Seller May Own Notes and Certificates. The Seller, and any Affiliate of the Seller, may in its individual or any other capacity become the owner or pledgee of Notes and Certificates with the same rights as it would have if it were not the Seller or an Affiliate thereof, except as otherwise expressly provided herein or in the other Transaction Documents. Except as set forth herein or in the other Transaction Documents, Notes and Certificates so owned by the Seller or any such Affiliate will have an equal and proportionate benefit under the provisions of this Agreement and the other Transaction Documents, without preference, priority, or distinction as among all of the Notes and Certificates.
SECTION 3.6 Compliance with Organizational Documents. The Seller shall comply with its limited liability company agreement and other organizational documents.
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SECTION 3.7 Protection of Title.
(a) The Seller shall authorize and file such financing statements and cause to be authorized and filed such continuation and other financing statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of the Issuer under this Agreement in the Purchased Assets (to the extent that the interest of the Issuer therein can be perfected by the filing of a financing statement). The Seller shall deliver (or cause to be delivered) to the Issuer file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing.
(b) The Seller shall notify the Issuer in writing within ten (10) days following the occurrence of (i) any change in the Sellers organizational structure as a limited liability company, (ii) any change in the Sellers location (within the meaning of Section 9-307 of the UCC) and (iii) any change in the Sellers name, and shall take all action prior to making such change (or shall have made arrangements to take such action substantially simultaneously with such change, if it is not practicable to take such action in advance) reasonably necessary or advisable in the opinion of the Issuer to amend all previously filed financing statements or continuation statements described in paragraph (a) above. The Seller will at all times maintain its location within the United States.
(c) The Seller shall maintain (or shall cause the Servicer to maintain) its computer systems so that, from time to time after the conveyance under this Agreement of the Receivables, the master computer records (including any backup archives) that refer to a Receivable shall indicate clearly the interest of the Issuer (or any subsequent assignee of the Issuer) in such Receivable and that such Receivable is owned by such Person. Indication of such Persons interest in a Receivable shall not be deleted from or modified on such computer systems until, and only until, the related Receivable shall have been paid in full or repurchased.
(d) If at any time the Seller 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 Seller 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 (or any subsequent assignee of the Issuer).
SECTION 3.8 Other Liens or Interests. Except for the conveyances and grants of security interests pursuant to this Agreement and the other Transaction Documents, the Seller shall not sell, pledge, assign or transfer the Receivables or other property transferred to the Issuer to any other Person, or grant, create, incur, assume or suffer to exist any Lien (other than Permitted Liens) on any interest therein, and the Seller shall defend the right, title and interest of the Issuer in, to and under such Receivables or other property transferred to the Issuer against all claims of third parties claiming through or under the Seller.
SECTION 3.9 Exchange Act Filings. The Issuer hereby authorizes the Seller to prepare, sign, certify and file any and all reports, statements and information respecting the Issuer and/or the Notes required to be filed pursuant to the Exchange Act, and the rules thereunder.
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SECTION 3.10 Sarbanes-Oxley Act Requirements. To the extent any documents are required to be filed or any certification is required to be made with respect to the Issuer or the Notes pursuant to the Sarbanes-Oxley Act, the Issuer hereby authorizes the Seller to prepare, sign, certify and file any such documents or certifications on behalf of the Issuer.
SECTION 3.11 Compliance with the FDIC Rule. The Seller (i) shall perform the covenants set forth in Article XII of the Indenture applicable to it and (ii) shall facilitate compliance with Article XII of the Indenture by the Capital One Parties.
SECTION 3.12 Noteholder Communication. A Noteholder (if the Notes are represented by Definitive Notes) or a Note Owner (if the Notes are represented by Book-Entry Notes) may send a request to the Seller at any time notifying the Seller that such Noteholder or Note Owner, as applicable, would like to communicate with other Noteholders or Note Owners, as applicable, with respect to an exercise of their rights under the terms of the Transaction Documents. If the requesting party is not a Noteholder as reflected on the Note Register, the Seller may require that the requesting party provide Verification Documents. Each request must include (i) the name of the requesting Noteholder or Note Owner, as applicable and (ii) a description of the method by which other Noteholders or Note Owners, as applicable, may contact the requesting Noteholder or Note Owner. A Noteholder or Note Owner, as applicable, that delivers a request under this Section 3.12 will be deemed to have certified to the Issuer, the Seller and the Bank that its request to communicate with other Noteholders or Note Owners, as applicable, relates solely to a possible exercise of rights under the Indenture or the other Transaction Documents, and will not be used for other purposes. In each monthly distribution report on Form 10-D under the Exchange Act with respect to the Issuer, the Seller shall include disclosure regarding any request that complies with the requirements of this Section 3.12 received during the related Collection Period from a Noteholder or Note Owner to communicate with other Noteholders or Note Owners, as applicable, related to the Noteholders or Note Owners exercising their rights under the terms of the Transaction Documents. The disclosure in such Form 10-D regarding the request to communicate shall include (w) the name of the investor making the request, (x) the date the request was received, (y) a statement to the effect that the Seller has received a request from such Noteholder or Note Owner, as applicable, stating that such Noteholder or Note Owner, as applicable, is interested in communicating with other Noteholders or Note Owners, as applicable, with regard to the possible exercise of rights under the Transaction Documents, and (z) a description of the method other Noteholders or Note Owners, as applicable, may use to contact the requesting Noteholder or Note Owner. The Seller and the Servicer will be responsible for any expenses incurred in connection with the filing of such disclosure and the reimbursement of any costs incurred by the Indenture Trustee in connection with the preparation thereof.
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ARTICLE IV
MISCELLANEOUS
SECTION 4.1 Transfers Intended as Sale; Security Interest.
(a) Each of the parties hereto expressly intends and agrees that the transfers contemplated and effected under this Agreement are complete and absolute sales, transfers and assignments rather than pledges or assignments of only a security interest and shall be given effect as such for all purposes. It is further the intention of the parties hereto that the Receivables and the related Transferred Assets shall not be part of the Sellers estate in the event of a bankruptcy or insolvency of the Seller. The sales and transfers by the Seller of the Receivables and related Transferred Assets hereunder are and shall be without recourse to, or representation or warranty (express or implied) by, the Seller, except as otherwise specifically provided herein. The limited rights of recourse specified herein against the Seller are intended to provide a remedy for breach of representations and warranties relating to the condition of the property sold, rather than to the collectibility of the Receivables.
(b) Notwithstanding the foregoing, in the event that the Receivables and other Transferred Assets are held to be property of the Seller, or if for any reason this Agreement is held or deemed to create indebtedness or a security interest in the Receivables and other Transferred Assets, then it is intended that:
(i) This Agreement shall be deemed to be a security agreement within the meaning of Articles 8 and 9 of the New York UCC and the UCC of any other applicable jurisdiction;
(ii) The conveyance provided for in Section 2.1 shall be deemed to be a grant by the Seller of, and the Seller hereby grants to the Issuer, a security interest in all of its right (including the power to convey title thereto), title and interest, whether now owned or hereafter acquired, in and to the Receivables and other Transferred Assets, to secure such indebtedness and the performance of the obligations of the Seller hereunder;
(iii) The possession by the Issuer or its agent of the Receivable Files and any other property that constitute instruments, money, negotiable documents or chattel paper shall be deemed to be possession by the secured party or possession by the purchaser or a Person designated by such purchaser, for purposes of perfecting such security interest pursuant to the New York UCC and the UCC of any other applicable jurisdiction; and
(iv) Notifications to Persons holding such property, and acknowledgments, receipts or confirmations from Persons holding such property, shall be deemed to be notifications to, or acknowledgments, receipts or confirmations from, bailees or agents (as applicable) of the Issuer for the purpose of perfecting such security interest under applicable law.
SECTION 4.2 Notices, Etc. All demands, notices and communications hereunder shall be in writing and shall be delivered or mailed by registered or certified first-class United States mail, postage prepaid, hand delivery, prepaid courier service, or by e-mail (if an applicable e-mail address is provided on Schedule I hereto), and addressed in each case as specified on Schedule I, or at such other address as shall be designated by any of the specified addressees in a written notice to the other parties hereto. Any notice required or permitted to be mailed to a Noteholder or Certificateholder shall be given by first class mail, postage prepaid, at the address of such Noteholder or Certificateholder as shown in the Note Register. Delivery shall occur only upon receipt or reported tender of such communication by an officer of the recipient entitled to receive such notices located at the address of such recipient for notices hereunder; provided, however, that any notice to a Noteholder or Certificateholder mailed within the time and manner prescribed in this Agreement shall be conclusively presumed to have been duly given, whether or not the Noteholder or Certificateholder shall receive such notice.
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SECTION 4.3 Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL, SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 4.4 Headings. The section headings hereof have been inserted for convenience only and shall not be construed to affect the meaning, construction or effect of this Agreement.
SECTION 4.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, regardless of whether delivered in physical or electronic form, but all of such counterparts shall together constitute but one and the same instrument.
SECTION 4.6 Amendment.
(a) Any term or provision of this Agreement (including Appendix A hereto) may be amended by the Seller without the consent of the Indenture Trustee, any Noteholder, the Owner Trustee or any other Person subject to the satisfaction of one of the following conditions:
(i) | The Seller delivers an Opinion of Counsel or an Officers Certificate to the Indenture Trustee to the effect that such amendment will not materially and adversely affect the interests of the Noteholders; or |
(ii) | The Rating Agency Condition is satisfied with respect to such amendment and the Seller notifies the Indenture Trustee in writing that the Rating Agency Condition is satisfied with respect to such amendment. |
(b) This Agreement (including Appendix A) may also be amended from time to time by the Issuer and the Seller, with the consent of the Holders of Notes evidencing not less than a majority of the Outstanding Note Balance of the Controlling Class, 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. It will not be necessary for the consent of Noteholders or Certificateholders to approve the particular form of any proposed amendment or consent, but it will be sufficient if such consent approves the substance thereof. The manner of obtaining such consents (and any other consents of Noteholders and Certificateholders provided for in this Agreement) and of evidencing the authorization of the execution thereof by Noteholders and Certificateholders will be subject to such reasonable requirements as the Indenture Trustee and Owner Trustee may prescribe, including the establishment of record dates pursuant to the Depository Agreement.
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(c) Prior to the execution of any amendment pursuant to this Section 4.6, the Seller shall provide written notification of the substance of such amendment to each Rating Agency; and promptly after the execution of any such amendment, the Seller shall furnish a copy of such amendment to each Rating Agency, the Issuer, the Owner Trustee and the Indenture Trustee; provided, that no amendment pursuant to this Section 4.6 shall be effective which materially and adversely affects the rights, protections or duties of the Indenture Trustee or the Owner Trustee without the prior written consent of such Person.
(d) Prior to the execution of any amendment to this Agreement, the Owner Trustee and the Indenture Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and an Officers Certificate of the Seller or the Administrator that all conditions precedent to the execution and delivery of such amendment have been satisfied.
(e) Notwithstanding subsections (a) and (b) of this Section 4.6, this Agreement may only be amended by the Seller if (i) the Majority Certificateholders [or, if 100% of the aggregate Percentage Interests is then beneficially owned by the Bank and/or its Affiliates, such Person (or Persons)], consent to such amendment or (ii) such amendment shall not, as evidenced by an Officers Certificate of the Seller or an Opinion of Counsel delivered to the Indenture Trustee and the Owner Trustee, materially and adversely affect the interests of the Certificateholders. In determining whether 100% of the aggregate Percentage Interests is then beneficially owned by the Bank and/or its Affiliates for purposes of clause (i), any party shall be entitled to rely on an Officers Certificate or similar certification of the Bank or any Affiliate thereof to such effect.
(f) Notwithstanding anything herein to the contrary, for purposes of classifying the Issuer as a grantor trust under the Code, no amendment shall be made to this Agreement that would (i) result in a variation of the investment of the beneficial owners of the Certificates for purposes of the United States Treasury Regulation section 301.7701-4(c) without the consent of Noteholders evidencing at least a majority of the Outstanding Note Balance of the Controlling Class and the Majority Certificateholders or (ii) cause the Issuer (or any part thereof) to be classified as other than a grantor trust under subtitle A, chapter 1, subchapter J, part I, subpart E of the Code without the consent of all of the Noteholders and all of the Certificateholders.
SECTION 4.7 Waivers. No failure or delay on the part of the Seller, the Issuer or the Indenture Trustee in exercising any power or right hereunder (to the extent such Person has any power or right hereunder) shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Issuer or the Seller in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by either party under this Agreement shall, except as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval under this Agreement shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 4.8 Entire Agreement. The Transaction Documents contain a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter thereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter thereof, superseding all prior oral or written understandings. There are no unwritten agreements among the parties.
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SECTION 4.9 Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.
SECTION 4.10 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect until such time as the parties hereto shall agree.
SECTION 4.11 Acknowledgment and Agreement. By execution below, the Seller expressly acknowledges and consents to the Grant of a security interest in the Receivables and the other Transferred Assets by the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the Noteholders. In addition, the Seller hereby acknowledges and agrees that for so long as the Notes are outstanding, the Indenture Trustee will have, pursuant to the Transaction Documents, the right to exercise all powers, privileges and claims of the Issuer under this Agreement in the event that the Issuer shall fail to exercise the same.
SECTION 4.12 Cumulative Remedies. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.
SECTION 4.13 Nonpetition Covenant. Each party hereto agrees that, prior to the date which is one year and one day after payment in full of all obligations of each Bankruptcy Remote Party in respect of all securities issued by any Bankruptcy Remote Party (i) such party shall not authorize any Bankruptcy Remote Party to commence a voluntary winding-up or other voluntary case or other Proceeding seeking liquidation, reorganization or other relief with respect to such Bankruptcy Remote Party or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction or seeking the appointment of an administrator, a trustee, receiver, liquidator, custodian or other similar official with respect to such Bankruptcy Remote Party or any substantial part of its property or to consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other Proceeding commenced against such Bankruptcy Remote Party, or to make a general assignment for the benefit of its creditors generally, any party hereto or any other creditor of such Bankruptcy Remote Party, and (ii) such party shall not commence or join with any other Person in commencing any Proceeding against such Bankruptcy Remote Party under any bankruptcy, reorganization, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction. This Section shall survive the termination of this Agreement.
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SECTION 4.14 Submission to Jurisdiction; Waiver of Jury Trial. Each of the parties hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any Proceeding relating to this Agreement or any documents executed and delivered in connection herewith, or for recognition and enforcement of any judgment in respect thereof, to the nonexclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof;
(b) consents that any such Proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such Proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address determined in accordance with Section 4.2 of this Agreement;
(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) to the extent permitted by applicable law, each party hereto irrevocably waives all right of trial by jury in any Proceeding or counterclaim based on, or arising out of, under or in connection with this Agreement, any other Transaction Document, or any matter arising hereunder or thereunder.
SECTION 4.15 Limitation of Liability of Owner Trustee. It is expressly understood and agreed by the parties hereto that (a) this Agreement is executed and delivered by [_____________], not individually or personally but solely as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it under the Trust Agreement, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by [_____________], but is made and intended for the purpose for binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on [_____________], individually or personally, to perform any covenant either express or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and any Person claiming by, through or under the parties hereto, (d) [_____________] has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Agreement, and (e) under no circumstances shall [_____________] be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Agreement or the other related documents.
SECTION 4.16 Third-Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns, and [each of the Swap Counterparty,] the Indenture Trustee and the Owner Trustee shall be express third-party beneficiaries hereof and may enforce the provisions hereof as if it were a party hereto. Except as otherwise provided in this Section, no other Person will have any right hereunder.
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SECTION 4.17 [Limitation of Rights. All of the rights of the Swap Counterparty in, to and under this Agreement (including, but not limited to, all of the Swap Counterpartys rights as a third party beneficiary of this Agreement and all of the Swap Counterpartys rights to receive notice of any action hereunder and to give or withhold consent to any action hereunder) shall terminate upon the termination of the Interest Rate Swap Agreement in accordance with the terms thereof and the payment in full of all amounts owing to the Swap Counterparty.]
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
CAPITAL ONE AUTO RECEIVABLES, LLC |
By: |
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Name: |
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Title: |
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_] | ||||
By: [___________], | ||||
not in its individual capacity but solely as Owner Trustee |
By: |
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Name: |
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Title: |
S-1 | Form of Sale Agreement |
EXHIBIT A
FORM OF
ASSIGNMENT PURSUANT TO SALE AGREEMENT
[_______], 20[__]
For value received, in accordance with the Sale Agreement, dated as of [___________], 20[__] (the Agreement), between Capital One Auto Receivables, LLC, a Delaware limited liability company (the Seller), and Capital One Prime Auto Receivables Trust 20[__]-[_], a Delaware statutory trust (the Issuer), on the terms and subject to the conditions set forth in the Agreement, the Seller does hereby sell, transfer, assign, set over, and otherwise convey to the Issuer without recourse (subject to the obligations in the Agreement), all right, title, interest, claims and demands, whether now owned or hereafter acquired, in, to and under the [Initial][Subsequent] Transferred Assets.
The foregoing sale does not constitute and is not intended to result in any assumption by the Issuer of any obligation of the undersigned or the Originator to the Obligors, the Dealers, insurers or any other Person in connection with the Receivables, or the other assets and properties conveyed hereunder or any agreement, document or instrument related thereto.
This assignment is made pursuant to and upon the representations, warranties and agreements on the part of the undersigned contained in the Agreement and is governed by the Agreement.
Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Agreement.
[Remainder of page intentionally left blank]
A-1 | Form of Sale Agreement |
IN WITNESS WHEREOF, the undersigned has caused this assignment to be duly executed as of the date first above written.
CAPITAL ONE AUTO RECEIVABLES, LLC |
By: |
Name: | ||
Title: |
A-2 | Form of Sale Agreement |
EXHIBIT B
[NOTICE OF FUNDING DATE
In accordance with the Indenture, dated as of [________], 20[__] (as amended, supplemented or otherwise modified and in effect from time to time, the Indenture), by and between CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_] (the Issuer) and [____________], as indenture trustee (the Indenture Trustee), the undersigned hereby gives notice of the Funding Date to occur on or before [________], 20[__] for each of the Receivables listed on the Schedule of Receivables for such Funding Date. Unless otherwise defined herein, capitalized terms have the meanings set forth in Appendix A to the Sale Agreement dated as of [________], 20[__] by and among the Issuer, the Indenture Trustee, CAPITAL ONE, NATIONAL ASSOCIATION and CAPITAL ONE AUTO RECEIVABLES, LLC, as seller (the Seller).
SUBSEQUENT RECEIVABLES: |
Aggregate Principal Balance of Subsequent Receivables |
as of the Subsequent Cut-Off Date: $__________________ |
PRE-FUNDING ACCOUNT ACTIVITY |
Amount to be wired to or at the direction of the Seller in |
payment for such Subsequent Receivables: $__________________ |
Subsequent Reserve Account Deposit Amount: $__________________ |
Subsequent Cut-Off Date: _________________, 20[__]
The undersigned hereby certifies that, in connection with the Funding Date specified above, the undersigned has complied with all terms and provisions specified in Section 2.3 of the Sale Agreement, including, but not limited to, delivery of the Officers Certificate, as specified therein.
Date: ________________________, 20[__]
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_] | ||
By: CAPITAL ONE, NATIONAL ASSOCIATION, as Administrator |
By: |
Name: | ||
Title: ] |
B-1 | Form of Sale Agreement |
SCHEDULE I
NOTICE ADDRESSES
If to the Issuer:
Capital One Prime Auto Receivables Trust 20[_]-[_]
[Address]
with copies to the Administrator and the Indenture Trustee
If to the Bank, the Servicer or the Administrator:
Capital One, National Association
1680 Capital One Drive
McLean, Virginia 22102
Attention: [____________]
with copies to:
Capital One, National Association
1680 Capital One Drive
McLean, Virginia 22102
Attention: [____________]
If to the Seller:
Capital One Auto Receivables, LLC
1600 Capital One Drive
Room 27907B
McLean, Virginia 22102
Telephone: [____________]
Attention: [____________]
with a copy to:
Capital One, National Association
1680 Capital One Drive
McLean, Virginia 22102
Attention: [____________]
If to the Indenture Trustee:
[_______________]
[Address]
Schedule I-1 | Form of Sale Agreement |
If to the Owner Trustee:
[_______________]
[Address]
If to [Rating Agency]:
[_______________]
[Address]
Schedule I-2 | Form of Sale Agreement |
SCHEDULE II
PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS
In addition to the representations, warranties and covenants contained in the Agreement, the Seller hereby represents, warrants, and covenants to the Issuer as follows on the Closing Date [and on each Funding Date]:
General
1. This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Receivables and the other Transferred Assets in favor of the Issuer, which security interest is prior to all other Liens, and is enforceable as such against creditors of and purchasers from the Seller.
2. The Receivables constitute chattel paper (including electronic chattel paper or tangible chattel paper), accounts, instruments, promissory notes, payment intangibles or general intangibles, within the meaning of the applicable UCC.
3. Immediately prior to the sale, transfer, contribution, assignment and/or conveyance of a Receivable, such Receivable is secured by a first priority validly perfected and enforceable security interest in the related Financed Vehicle in favor of the Originator (or its assignee), as secured party, or all necessary actions with respect to such Receivable have been taken or will be taken to perfect a first priority security interest in the related Financed Vehicle in favor of the Originator (or its assignee), as secured party, subject, as to enforcement, to applicable bankruptcy, insolvency, reorganization, liquidation or other similar laws and equitable principles relating to or affecting the enforcement of creditors rights generally.
Creation
4. Immediately prior to the sale, transfer, contribution, assignment and/or conveyance of a Receivable by the Seller to the Issuer, the Seller owned and had good and marketable title to such Receivable free and clear of any Lien created by the Seller (other than any Liens in favor of the Purchaser) and immediately after the sale, transfer, assignment and conveyance of such Receivable to the Issuer, the Issuer will have good and marketable title to such Receivable free and clear of any Lien created by the Seller.
5. The Seller has received all consents and approvals to the sale of the Receivables hereunder to the Issuer required by the terms of the Receivables that constitute instruments.
Perfection
6. The Seller has submitted or will have caused to be submitted, on the effective date of this Agreement, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the sale of the Receivables from the Seller to the Issuer and the security interest in the Receivables granted to the Issuer hereunder; and the Servicer, in its capacity as custodian, has in its possession the original copies
Schedule II-1 | Form of Sale Agreement |
of such instruments or tangible chattel paper that constitute or evidence the Receivables, and all financing statements referred to in this paragraph contain a statement that: A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Secured Party/Purchaser.
7. With respect to Receivables that constitute an instrument or tangible chattel paper, either:
(i) Such instruments or tangible chattel paper are in the possession of the Servicer and the Indenture Trustee has received a written acknowledgment from the Servicer that the Servicer (in its capacity as custodian) is holding such instruments or tangible chattel paper solely on behalf and for the benefit of the Indenture Trustee, as pledgee of the Issuer; or
(ii) The Servicer received possession of such instruments or tangible chattel paper after the Indenture Trustee received a written acknowledgment from the Servicer that the Servicer is acting solely as agent of the Indenture Trustee, as pledgee of the Issuer.
Priority
8. The Seller has not authorized the filing of, and is not aware of any financing statements against the Seller that include a description of collateral covering the Receivables other than any financing statement (i) relating to the conveyance of the Receivables by the Bank to the Seller under the Purchase Agreement, (ii) relating to the conveyance of the Receivables by the Seller to the Issuer under the Sale Agreement, (iii) relating to the security interest granted to the Indenture Trustee under the Indenture or (iv) that has been terminated.
9. The Seller is not aware of any material judgment, ERISA or tax lien filings against the Seller.
10. Neither the Seller nor a custodian or vaulting agent thereof holding any Receivable that is electronic chattel paper has communicated an authoritative copy (as such term is used in Section 9-105 of the UCC) of any loan agreement that constitutes or evidences such Receivable to any Person other than the Servicer.
11. None of the instruments, electronic chattel paper or tangible chattel paper that constitutes or evidences the Receivables has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Seller, the Issuer or the Indenture Trustee.
Survival of Perfection Representations
12. Notwithstanding any other provision of the Agreement, the perfection representations, warranties and covenants contained in this Schedule II shall be continuing, and remain in full force and effect until such time as all obligations under the Notes have been finally and fully paid and performed.
Schedule II-2 | Form of Sale Agreement |
APPENDIX A
DEFINITIONS
(see attached)
Schedule II-3 | Form of Sale Agreement |
APPENDIX A
DEFINITIONS
The following terms have the meanings set forth, or referred to, below1:
144A Notes means any Note retained by the Depositor or an Affiliate thereof on the Closing Date.
60-Day Delinquent Receivables means, as of any date of determination, all Receivables (other than Repurchased Receivables and Defaulted Receivables) that are sixty (60) or more days delinquent as of such date (or, if such date is not the last day of a Collection Period, as of the last day of the Collection Period immediately preceding such date), as determined in accordance with the Servicers Customary Servicing Practices.
Accrued Class A Note Interest means, with respect to any Payment Date, the sum of the Class A Noteholders Monthly Accrued Interest for such Payment Date and the Class A Noteholders Interest Carryover Shortfall for such Payment Date.
Accrued Class B Note Interest means, with respect to any Payment Date, the sum of the Class B Noteholders Monthly Accrued Interest for such Payment Date and the Class B Noteholders Interest Carryover Shortfall for such Payment Date.
Accrued Class C Note Interest means, with respect to any Payment Date, the sum of the Class C Noteholders Monthly Accrued Interest for such Payment Date and the Class C Noteholders Interest Carryover Shortfall for such Payment Date.
Accrued Class D Note Interest means, with respect to any Payment Date, the sum of the Class D Noteholders Monthly Accrued Interest for such Payment Date and the Class D Noteholders Interest Carryover Shortfall for such Payment Date.
Act has the meaning set forth in Section 11.3(a) of the Indenture.
Administration Agreement means the Administration Agreement, dated as of the Closing Date, between the Administrator, the Issuer and the Indenture Trustee, as the same may be amended and supplemented from time to time.
Administrator means the Bank, or any successor Administrator under the Administration Agreement.
Affiliate means, for any specified Person, any other Person which, directly or indirectly, controls, is controlled by or is under common control with such specified Person and affiliated has a meaning correlative to the foregoing. For purposes of this definition, control means the power, directly or indirectly, to cause the direction of the management and policies of a Person.
1 | Note: the Sale Agreement with respect to any Series which includes floating rate notes will include additional defined terms, as applicable, with respect to the related benchmark and any benchmark replacement. |
Appendix A COPAR 20[__]-[_] |
Applicable Tax State means, as of any date, each State as to which any of the following is then applicable: (a) a State in which the Owner Trustee maintains its Corporate Trust Office, (b) a State in which the Owner Trustee maintains its principal executive offices, and (c) the States of [Virginia and Texas].
Asset Representations Review Agreement means the Asset Representations Review Agreement, dated as of the Closing Date, between the Issuer, the Servicer and the Asset Representations Reviewer.
Asset Representations Reviewer means [___________], a [___________], or any successor Asset Representations Reviewer under the Asset Representations Review Agreement.
Asset Review has the meaning assigned to such term in the Asset Representations Review Agreement.
Authenticating Agent means any Person appointed by the Indenture Trustee at the direction of the Issuer to act on behalf of the Indenture Trustee to authenticate and deliver the Notes.
Authorized Newspaper means a newspaper of general circulation in the City of New York, printed in the English language and customarily published on each Business Day, whether or not published on Saturdays, Sundays and holidays.
Authorized Officer means: (a) with respect to the Issuer, (i) 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 on the Closing Date (as such list may be modified or supplemented from time to time thereafter) or (ii) so long as the Administration Agreement is in effect, any officer of the Administrator who is authorized to act for the Administrator in matters relating to the Issuer pursuant to the Administration Agreement and who is identified on the list of Authorized Officers delivered by the Administrator to the Owner Trustee and the Indenture Trustee on the Closing Date (as such list may be modified or supplemented from time to time thereafter); and (b) with respect to the Owner Trustee, the Indenture Trustee, the Note Registrar and the Servicer, any officer of the Owner Trustee, the Indenture Trustee, the Note Registrar or the Servicer, as applicable, who is authorized to act for the Owner Trustee, the Indenture Trustee, the Note Registrar or the Servicer, as applicable, in matters relating to the Owner Trustee, the Indenture Trustee, the Note Registrar or the Servicer and who is identified on the list of Authorized Officers delivered by each of the Owner Trustee, the Indenture Trustee and the Servicer to the Indenture Trustee on the Closing Date or by the Note Registrar on the date of its appointment as such (as such list may be modified or supplemented from time to time thereafter).
Available Funds means, for any Payment Date and the related Collection Period, an amount equal to the sum of the following amounts: (i) all Collections on deposit in the Collection Account received by the Servicer during such Collection Period; (ii) the sum of the Repurchase Prices deposited into the Collection Account with respect to each Receivable that is
A-2 | Appendix A COPAR 20[__]-[_] |
to become a Repurchased Receivable [during the related Collection Period][on such Payment Date]; (iii) [the investment income accrued during such Collection Period from the investment of funds in the Trust Accounts, (iv)] the Optional Purchase Price deposited into the Collection Account in connection with the exercise of the Optional Purchase; [and] (v) the Reserve Account Excess Amount for such Payment Date[,(vi) the Net Swap Receipts (excluding Swap Termination Payments received from the Swap Counterparty and deposited into the Swap Termination Payment Account), (vii) amounts on deposit in the Swap Termination Payment Account to the extent such amounts are required to be included in Available Funds pursuant to Section 8.8(d) of the Servicing Agreement and (viii) Swap Replacement Proceeds, to the extent required to be included in Available Funds pursuant to Section 8.8(f) of the Servicing Agreement].
Available Funds Shortfall Amount means, as of any Payment Date, the amount by which the sum of the amounts required to be paid pursuant to clauses first through [ninth] of Section 8.5(a) of the Indenture exceeds the Available Funds for such Payment Date.
Bank means Capital One, National Association, a national banking association, and its successors and assigns.
Bankruptcy Code means the United States Bankruptcy Code, 11 U.S.C. 101 et seq., as amended.
Bankruptcy Event means, with respect to any Person, (i) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person 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 of such Person, or ordering the winding-up or liquidation of such Persons affairs, and such decree or order shall remain unstayed and in effect for a period of ninety 90 consecutive days or (ii) the commencement by such Person of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of such Person, 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.
Bankruptcy Remote Party means each of the Depositor, the Issuer, any other trust created by the Depositor or any limited liability company or corporation wholly-owned by the Depositor.
[Benchmark means, initially, [insert floating rate benchmark applicable to any floating rate notes.]2
2 | [Note: the Transaction Documents with respect to any Series which includes floating rate notes will include additional defined terms, as applicable, with respect to the related benchmark and any benchmark replacement.] |
A-3 | Appendix A COPAR 20[__]-[_] |
Benefit Plan means (i) any employee benefit plan as defined in Section 3(3) of ERISA, that is subject to Title I of ERISA, (ii) a plan as described by Section 4975(e)(1) of the Code, that is subject to Section 4975 of the Code or (iii) any entity deemed to hold the plan assets of any of the foregoing by reason of such employee benefit plans or other plans investment in the entity.
Book-Entry Certificates means the Certificates held by a Clearing Agency or its nominee and with respect to which beneficial ownership and transfers thereof shall be made through book entries by a Clearing Agency as described in Section 3.3 of the Trust Agreement.
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 of the Indenture.
Business Day means any day other than a Saturday, a Sunday or a day on which banking institutions in the states of Delaware, Virginia, Texas or New York, or in the state in which the Corporate Trust Office of the Indenture Trustee is located, are authorized or obligated by law, executive order or government decree to be closed.
Capital One Parties means collectively, the Bank, the Depositor and the Issuer.
Certificate means a certificate substantially in the form of Exhibit A to the Trust Agreement evidencing a beneficial interest in the Issuer. For the avoidance of doubt, the references in the Transaction Documents to a Certificate or a Certificateholder, unless the context otherwise requires, shall be deemed to be references to Certificates or Certificateholders if more than one Certificate has been issued.
Certificate Distribution Account means the account designated as such, established and maintained pursuant to Section 8.2(a)[(iv)][(v)] of the Indenture.
Certificate Investor Representation Letter means a certificate investor representation letter, substantially in the form of Exhibit B to the Trust Agreement.
Certificate of Title means, with respect to any Financed Vehicle, the certificate of title or other documentary evidence of ownership of such Financed Vehicle as issued by the department, agency or official of the jurisdiction (whether in paper or electronic form) in which such Financed Vehicle is titled and which is responsible for accepting applications for, and maintaining records regarding, certificates of title and liens thereon.
Certificate of Trust means the certificate of trust for the Issuer filed on [_______], 20[__] by the Owner Trustee pursuant to the Statutory Trust Statute.
Certificate Owner means, with respect to a Book-Entry Certificate, the Person who is the beneficial owner of such Book-Entry Certificate, as reflected on the books of the Clearing Agency or 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).
A-4 | Appendix A COPAR 20[__]-[_] |
Certificate Paying Agent means [___________] or any other Person appointed as the successor Certificate Paying Agent pursuant to Section 3.9 of the Trust Agreement.
Certificate Register has the meaning set forth in Section 3.6 of the Trust Agreement.
Certificate Registrar has the meaning set forth in Section 3.6 of the Trust Agreement.
Certificateholder means, as of any date, the Person in whose name a Certificate is registered on the Certificate Register on such date.
Class means a group of Notes whose form is identical except for variation in denomination, principal amount or owner, and references to each Class thus mean each of the Class A-1 Notes, the Class A-2[-A] Notes, [the Class A-2-B Notes,] the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D Notes.
Class A Noteholders means, collectively, the Class A-1 Noteholders, the Class A-2[-A] Noteholders, [the Class A-2-B Noteholders,] the Class A-3 Noteholders and the Class A-4 Noteholders.
Class A Noteholders Interest Carryover Shortfall means, with respect to any Payment Date, the excess of (A) the sum of (i) the Class A Noteholders Monthly Accrued Interest for the preceding Payment Date and (ii) any Class A Noteholders Interest Carryover Shortfall for the preceding Payment Date, over (B) the amount in respect of interest that was actually paid to Noteholders of Class A Notes on such preceding Payment Date, plus interest on the amount of interest due but not paid to Noteholders of Class A Notes on the preceding Payment Date, to the extent permitted by law, at the respective Interest Rates borne by such Class A Notes for the related Interest Period.
Class A Noteholders Monthly Accrued Interest means, with respect to any Payment Date, the aggregate interest accrued for the related Interest Period on the Class A-1 Notes, the Class A-2[-A] Notes, [the Class A-2-B Notes,] the Class A-3 Notes and the Class A-4 Notes at the respective Interest Rate for such Class on the Note Balance of the Notes of each such Class as of the immediately preceding Payment Date or the Closing Date, as the case may be, after giving effect to all payments of principal to the Noteholders of the Notes of such Class on or prior to such preceding Payment Date.
Class A Notes means, collectively, the Class A-1 Notes, the Class A-2[-A] Notes, [the Class A-2-B Notes,] the Class A-3 Notes and the Class A-4 Notes.
Class A-1 Final Scheduled Payment Date means the Payment Date occurring in [_________].
Class A-1 Interest Rate means [______]% per annum (computed on the basis of the actual number of days elapsed during the applicable Interest Period, but assuming a 360-day year).
Class A-1 Note Balance means, at any time, the Initial Class A-1 Note Balance reduced by all payments of principal made prior to such time on the Class A-1 Notes.
A-5 | Appendix A COPAR 20[__]-[_] |
Class A-1 Noteholder means the Person in whose name a Class A-1 Note is registered on the Note Register.
Class A-1 Notes means the Class of Auto Loan Asset Backed Notes designated as Class A-1 Notes, issued in accordance with the Indenture.
Class A-2[-A] Final Scheduled Payment Date means the Payment Date occurring in [_________].
Class A-2[-A] Interest Rate means [___]% per annum (computed on the basis of a 360-day year of twelve 30-day months).
Class A-2[-A] Note Balance means, at any time, the Initial Class A-2[-A] Note Balance reduced by all payments of principal made prior to such time on the Class A-2[-A] Notes.
Class A-2[-A] Noteholder means the Person in whose name a Class A-2[-A] Note is registered on the Note Register.
Class A-2[-A] Notes means the Class of Auto Loan Asset Backed Notes designated as Class A-2[-A] Notes, issued in accordance with the Indenture.
[Class A-2-B Final Scheduled Payment Date means the Payment Date occurring in [_________].]
[Class A-2-B Interest Rate means Benchmark + [___]% per annum (computed on the basis of the actual number of days elapsed, but assuming a 360-day year).]
[Class A-2-B Note Balance means, at any time, the Initial Class A-2-B Note Balance reduced by all payments of principal made prior to such time on the Class A-2-B Notes.]
[Class A-2-B Noteholder means the Person in whose name a Class A-2-B Note is registered on the Note Register.]
[Class A-2-B Notes means the Class of Auto Loan Asset Backed Notes designated as Class A-2-B Notes, issued in accordance with the Indenture.]
Class A-3 Final Scheduled Payment Date means the Payment Date occurring in [_________].
Class A-3 Interest Rate means [___]% per annum (computed on the basis of a 360-day year of twelve 30-day months).
Class A-3 Note Balance means, at any time, the Initial Class A-3 Note Balance reduced by all payments of principal made prior to such time on the Class A-3 Notes.
Class A-3 Noteholder means the Person in whose name a Class A-3 Note is registered on the Note Register.
A-6 | Appendix A COPAR 20[__]-[_] |
Class A-3 Notes means the Class of Auto Loan Asset Backed Notes designated as Class A-3 Notes, issued in accordance with the Indenture.
Class A-4 Final Scheduled Payment Date means the Payment Date occurring in [_________].
Class A-4 Interest Rate means [___]% per annum (computed on the basis of a 360-day year of twelve 30 day months).
Class A-4 Note Balance means, at any time, the Initial Class A-4 Note Balance reduced by all payments of principal made prior to such time on the Class A-4 Notes.
Class A-4 Noteholder means the Person in whose name a Class A-4 Note is registered on the Note Register.
Class A-4 Notes means the Class of Auto Loan Asset Backed Notes designated as Class A-4 Notes, issued in accordance with the Indenture.
Class B Final Scheduled Payment Date means the Payment Date occurring in [_________].
Class B Interest Rate means [___]% per annum (computed on the basis of a 360-day year of twelve 30-day months).
Class B Note Balance means, at any time, the Initial Class B Note Balance reduced by all payments of principal made prior to such time on the Class B Notes.
Class B Noteholder means the Person in whose name a Class B Note is registered on the Note Register.
Class B Noteholders Interest Carryover Shortfall means, with respect to any Payment Date, the excess of (A) the sum of (i) the Class B Noteholders Monthly Accrued Interest for the preceding Payment Date and (ii) any Class B Noteholders Interest Carryover Shortfall for the preceding Payment Date, over (B) the amount in respect of interest that was actually paid to Noteholders of Class B Notes on such preceding Payment Date, plus interest on the amount of interest due but not paid to Noteholders of Class B Notes on the preceding Payment Date, to the extent permitted by law, at the Interest Rate borne by such Class B Notes for the related Interest Period.
Class B Noteholders Monthly Accrued Interest means, with respect to any Payment Date, the aggregate interest accrued for the related Interest Period on the Class B Notes at the Class B Interest Rate on the Class B Note Balance on the immediately preceding Payment Date or the Closing Date, as the case may be, after giving effect to all payments of principal to the Class B Noteholders on or prior to such preceding Payment Date.
Class B Notes means the Class of Auto Loan Asset Backed Notes designated as Class B Notes, issued in accordance with the Indenture.
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Class C Final Scheduled Payment Date means the Payment Date occurring in [_________].
Class C Interest Rate means [___]% per annum (computed on the basis of a 360-day year of twelve 30-day months).
Class C Note Balance means, at any time, the Initial Class C Note Balance reduced by all payments of principal made prior to such time on the Class C Notes.
Class C Noteholder means the Person in whose name a Class C Note is registered on the Note Register.
Class C Noteholders Interest Carryover Shortfall means, with respect to any Payment Date, the excess of (A) the sum of (i) the Class C Noteholders Monthly Accrued Interest for the preceding Payment Date and (ii) any Class C Noteholders Interest Carryover Shortfall for the preceding Payment Date, over (B) the amount in respect of interest that was actually paid to Noteholders of Class C Notes on such preceding Payment Date, plus interest on the amount of interest due but not paid to Noteholders of Class C Notes on the preceding Payment Date, to the extent permitted by law, at the Interest Rate borne by such Class C Notes for the related Interest Period.
Class C Noteholders Monthly Accrued Interest means, with respect to any Payment Date, the aggregate interest accrued for the related Interest Period on the Class C Notes at the Class C Interest Rate on the Class C Note Balance on the immediately preceding Payment Date or the Closing Date, as the case may be, after giving effect to all payments of principal to the Class C Noteholders on or prior to such preceding Payment Date.
Class C Notes means the Class of Auto Loan Asset Backed Notes designated as Class C Notes, issued in accordance with the Indenture.
Class D Final Scheduled Payment Date means the Payment Date occurring in [_________].
Class D Interest Rate means [___]% per annum (computed on the basis of a 360-day year of twelve 30-day months).
Class D Note Balance means, at any time, the Initial Class D Note Balance reduced by all payments of principal made prior to such time on the Class D Notes.
Class D Noteholder means the Person in whose name a Class D Note is registered on the Note Register.
A-8 | Appendix A COPAR 20[__]-[_] |
Class D Noteholders Interest Carryover Shortfall means, with respect to any Payment Date, the excess of (A) the sum of (i) the Class D Noteholders Monthly Accrued Interest for the preceding Payment Date and (ii) any Class D Noteholders Interest Carryover Shortfall for the preceding Payment Date, over (B) the amount in respect of interest that was actually paid to Noteholders of Class D Notes on such preceding Payment Date, plus interest on the amount of interest due but not paid to Noteholders of Class D Notes on the preceding Payment Date, to the extent permitted by law, at the Interest Rate borne by such Class D Notes for the related Interest Period.
Class D Noteholders Monthly Accrued Interest means, with respect to any Payment Date, the aggregate interest accrued for the related Interest Period on the Class D Notes at the Class D Interest Rate on the Class D Note Balance on the immediately preceding Payment Date or the Closing Date, as the case may be, after giving effect to all payments of principal to the Class D Noteholders on or prior to such preceding Payment Date.
Class D Notes means the Class of Auto Loan Asset Backed Notes designated as Class D Notes, issued in accordance with the Indenture.
Clearing Agency means an organization registered as a clearing agency pursuant to Section 17A of the Exchange Act and shall initially be DTC.
Clearing Agency Participant means a broker, dealer, bank or other financial institution or other Person for which from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.
Closing Date means [___________], 20[__].
Code means the Internal Revenue Code of 1986, as amended, modified or supplemented from time to time, and any successor law thereto, and the regulations promulgated and the rulings issued thereunder.
Collateral has the meaning set forth in the Granting Clause of the Indenture.
Collection Account means the trust account established and maintained pursuant to Section 8.2(a)(i) of the Indenture.
Collection Period means the period commencing on the first day of each calendar month and ending on the last day of such calendar month (or, in the case of the initial Collection Period, the period commencing on the close of business on the [Initial] Cut-Off Date and ending on [___________], 20[__]). As used herein, the related Collection Period with respect to [any date of determination or] a Payment Date shall be deemed to be the Collection Period which precedes [that date of determination or] such Payment Date.
Collections means, with respect to the Receivables and to the extent received by the Servicer after the [applicable] Cut-Off Date, the sum of (i) any monthly payment by or on behalf of the Obligors thereunder or any other amounts received by the Servicer which, in accordance with the Customary Servicing Practices, would customarily be applied to the payment of accrued interest or to reduce the Outstanding Principal Balance of a Receivable, (ii) any full or partial
A-9 | Appendix A COPAR 20[__]-[_] |
prepayment of such Receivables and (iii) all Liquidation Proceeds; provided, however, that the term Collections in no event will include (1) for any Payment Date, any amounts in respect of any Receivable the Repurchase Price of which has been included in the Available Funds on a prior Payment Date, (2) any Supplemental Servicing Fees and Reimbursements or (3) premiums with respect to any Insurance Policy, rebates of premiums with respect to the cancellation or termination of any Insurance Policy, extended warranty or service contract that was not financed by, or is not included in the Outstanding Principal Balance of, any Receivable.
Commission means the U.S. Securities and Exchange Commission.
Computation Agent means the Person appointed by a majority of the Noteholders evidencing at least a majority of the Outstanding Note Balance (or, if no Notes are Outstanding, by the Majority Certificateholders) to fulfill the role of Computation Agent pursuant to Section 12.4 of the Indenture. For the avoidance of doubt, the Indenture Trustee or Owner Trustee may (but are not required to) serve in this role, and the Indenture Trustee acting as Computation Agent will be entitled to a fee for such service pursuant to Section 6.7 of the Indenture, and the Owner Trustee acting as Computation Agent will be entitled to a fee for such service pursuant to Section 8.1 of the Trust Agreement.
Contract means, with respect to any Receivable, the motor vehicle retail installment sale contract and/or the installment loan, any amendments thereto and any related documentary draft, if applicable, evidencing such Receivable.
Contract Rate means, with respect to a Receivable, the rate per annum at which interest accrues under the Contract evidencing such Receivable. Such rate may be less than the Annual Percentage Rate disclosed in the Receivable.
Controlling Class means, with respect to any Notes Outstanding, the Class A Notes (voting together as a single Class) as long as any Class A Notes are Outstanding, and thereafter the Class B Notes as long as any Class B Notes are Outstanding, and thereafter the Class C Notes as long as any Class C Notes are Outstanding and thereafter the Class D Notes as long as any Class D Notes are Outstanding, excluding, in each case, Notes held by the Servicer, the Administrator, the Issuer, any Certificateholder or any of their respective Affiliates.
Corporate Trust Office means:
(a) as used with respect to the Indenture Trustee, the principal office of the Indenture Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of the execution of the Indenture is located at [_____________], Attention: [_____________], or at such other address as the Indenture Trustee may designate from time to time by notice to the Noteholders, [the Swap Counterparty,] the Administrator, the Servicer and the Issuer, or the principal corporate trust office of any successor Indenture Trustee (the address of which the successor Indenture Trustee will notify the Noteholders, the Administrator, the Servicer and the Owner Trustee); and
A-10 | Appendix A COPAR 20[__]-[_] |
(b) as used with respect to Owner Trustee, the corporate trust office of the Owner Trustee located at [_____________], Attention: [_____________], or at such other address as the Owner Trustee may designate by notice to the Certificateholder and the Depositor, or the principal corporate trust office of any successor Owner Trustee (the address of which the successor Owner Trustee will notify the Certificateholder and the Depositor).
Cumulative Net Loss Ratio means, as of any Payment Date, the ratio (expressed as a percentage) of (a) the aggregate Outstanding Principal Balance of Receivables that became Defaulted Receivables which occurred during the period from the [Initial] Cut-Off Date through the end of the related Collection Period reduced by the amount of Liquidation Proceeds with respect to Defaulted Receivables received since the Cut-Off Date to (b) the aggregate Outstanding Principal Balance of the [Initial] Receivables [plus (ii) the initial aggregate Outstanding Principal Balance of the Subsequent Receivables as of their respective Subsequent Cut-Off Dates].
Customary Servicing Practices means the customary servicing practices of the Servicer or any Sub-Servicer with respect to all comparable motor vehicle receivables that the Servicer or such Sub-Servicer, as applicable, services for itself or others (which includes, or is modified with respect to the Receivables to include, that no modification to any Receivable is permitted other than a Permitted Modification), as such practices may be changed from time to time (except to the extent any such change could result in the Issuer being treated as other than a fixed investment trust described in Treasury Regulation section 301.7701-4(c) that is treated as a grantor trust under subtitle A, chapter 1, subchapter J, part I, subpart E of the Code), it being understood that the Servicer and the Sub-Servicers may not have the same Customary Servicing Practices.
Cut-Off Date means, [(i) with respect to any Receivable transferred on the Closing Date, the Initial Cut-Off Date and (ii) with respect to Receivables transferred on any Funding Date, the applicable Subsequent Cut-Off Date].
Dealer means a motor vehicle dealership.
Default means any occurrence that is, or with notice or lapse of time or both would become, an Event of Default.
Defaulted Receivable means, a Receivable (other than a Repurchased Receivable) that the Servicer has charged-off (in whole or in part) in accordance with its Customary Servicing Practices.
Definitive Certificates has the meaning set forth in Section 3.3 of the Trust Agreement.
Definitive Note has the meaning set forth in Section 2.10 of the Indenture.
Delinquency Percentage means, for any Payment Date and the related Collection Period, an amount equal to the ratio (expressed as a percentage) of (i) the aggregate Outstanding Principal Balance of all 60-Day Delinquent Receivables as of the last day of such Collection Period to (ii) the Net Pool Balance as of the last day of such Collection Period.
Delinquency Trigger means, for any Payment Date and the related Collection Period, [___]%.
A-11 | Appendix A COPAR 20[__]-[_] |
Delivery when used with respect to Trust Account Property means:
(a) with respect to (I) bankers acceptances, commercial paper, negotiable certificates of deposit and other obligations that constitute instruments as defined in Section 9-102(a)(47) of the UCC and are susceptible of physical delivery, transfer of actual possession thereof to the Indenture Trustee or its nominee or custodian by physical delivery to the Indenture Trustee or its nominee or custodian endorsed to the Indenture Trustee or its nominee or custodian or endorsed in blank; (II) with respect to a certificated security (as defined in Section 8-102(a)(4) of the UCC) transfer of actual possession thereof (i) by physical delivery of such certificated security to the Indenture Trustee or its nominee or custodian endorsed to, or registered in the name of, the Indenture Trustee or its nominee or custodian or endorsed in blank, or to another person, other than a securities intermediary (as defined in Section 8-102(a)(14) of the UCC), who acquires possession of the certificated security on behalf of the Indenture Trustee or its nominee or custodian or, having previously acquired possession of the certificate, acknowledges that it holds for the Indenture Trustee or its nominee or custodian or (ii) if such certificated security is in registered form, by delivery thereof to a securities intermediary, endorsed to or registered in the name of the Indenture Trustee or its nominee or custodian, and the making by such securities intermediary of entries on its books and records identifying such certificated securities as belonging to the Indenture Trustee or its nominee or custodian and the sending by such securities intermediary of a confirmation of the purchase of such certificated security by the Indenture Trustee or its nominee or custodian (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 or its nominee or custodian; 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 securities issued by the U.S. Treasury, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association or the other government agencies, instrumentalities and establishments of the United States identified in Appendix A to Federal Reserve Bank Operating Circular No. 7 as in effect from time to time that is a book-entry security (as such term is defined in Federal Reserve Bank Operating Circular No. 7) held in a securities account and eligible for transfer through the Fedwire® Securities Service operated by 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 securities account maintained with a Federal Reserve Bank by a participant (as such term is defined in Federal Reserve Bank Operating Circular No. 7) that is a depository institution (as defined in Section 19(b)(1)(A) of the Federal Reserve Act) pursuant to applicable Federal regulations, and issuance by such depository institution of a deposit notice or other written confirmation of such book-entry registration to the Indenture Trustee or its nominee or custodian of the purchase by the Indenture Trustee or its nominee or custodian of such book-entry securities; the making by such depository institution of entries in its books and records identifying such book entry security held
A-12 | Appendix A COPAR 20[__]-[_] |
through the Federal Reserve System pursuant to Federal book-entry regulations or a security entitlement thereto as belonging to the Indenture Trustee or its nominee or custodian and indicating that such depository institution holds such Trust Account Property solely as agent for the Indenture Trustee or its nominee or custodian; 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 or its nominee or custodian, 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 (as defined in Section 8-102(a)(18) of the UCC) and that is not governed by clause (b) above, (i) registration on the books and records of the issuer thereof in the name of the Indenture Trustee or its nominee or custodian, or (ii) registration on the books and records of the issuer thereof in the name of another person, other than a securities intermediary, who acknowledges that it holds such uncertificated security for the benefit of the Indenture Trustee or its nominee or custodian.
Depositor means Capital One Auto Receivables, LLC, a Delaware limited liability company.
Depository Agreement means the agreement, dated as of the Closing Date, executed by the Issuer in favor of DTC, as initial Clearing Agency, relating to the Notes [and the Book-Entry Certificates], as the same may be amended or supplemented from time to time.
Determination Date means, for any Collection Period, the third Business Day preceding the related Payment Date, beginning [___________], 20[__].
Disqualified Transferee has the meaning set forth in Section 3.7 of the Trust Agreement.
Dollar and $ mean lawful currency of the United States of America.
Domestic Corporation means an entity that is treated as a corporation for United States federal income tax purposes and is a U.S. Tax Person.
DTC means The Depository Trust Company, and its successors.
Eligible 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 acting in its fiduciary capacity organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any domestic branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as (i) the long-term unsecured debt of such depository institution shall have a credit rating from [_____] of at least [___] and from [_____] of at least [___] and (ii) the long-term unsecured debt of such depository institution shall have a credit rating from [_____] of at least [___] or the commercial paper, short-term debt obligations or other short-term deposits of such depository institution shall have a credit rating of at least [___] from [_____]. Any such trust account may be maintained with the Owner Trustee, the Indenture Trustee or any of their respective Affiliates, if such accounts meet the requirements described in clause (b) of the preceding sentence.
A-13 | Appendix A COPAR 20[__]-[_] |
Eligible Institution means (a) the corporate trust department of the Indenture Trustee or (b) a depository institution or trust company (other than any Affiliate of Capital One Financial Corporation) (which may be the Owner Trustee or any of its Affiliates) organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any domestic branch of a foreign bank) (i) which at all times has either (A) a long-term senior unsecured debt rating of [___] or better by [___], [___] or better by [___] or [___] or better by [___], if rated by [___] or such other rating that is acceptable to each Rating Agency, as evidenced by a letter from such Rating Agency to the Issuer or the Indenture Trustee or (B) a certificate of deposit rating of [___] by [___], [___] by [___] or [___] by [___], if rated by [___]or (C) such other rating that is acceptable to each Rating Agency, as evidenced by a letter from such Rating Agency to the Issuer or the Indenture Trustee and (ii) whose deposits are insured by the Federal Deposit Insurance Corporation.
Eligible Receivable means a Receivable meeting all of the criteria set forth on Schedule II of the Purchase Agreement as of the Closing Date [or the applicable Funding Date, as the case may be].
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
[EU Securitization Regulation means Regulation (EU) 2017/2402 of the European Parliament and of the Council of December 12, 2017.]
EU SR Rules means the EU Securitization Regulation, together with all relevant implementing regulations in relation thereto, all regulatory and/or implementing technical standards in relation thereto or applicable in relation thereto pursuant to any transitional arrangements made pursuant to the EU Securitization Regulation and, in each case, any relevant guidance published in relation thereto by the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority (or in each case, any predecessor or any other applicable regulatory authority) or by the European Commission.
Event of Default has the meaning set forth in Section 5.1 of the Indenture.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Exchange Act Reports means any reports on Form 10-D, Form 8-K and Form 10-K filed or to be filed by the Seller with respect to the Issuer under the Exchange Act.
FATCA means Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereunder or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code, any published intergovernmental agreement entered into in connection with the implementation of the foregoing and any fiscal or regulatory legislation, rules or official practices adopted pursuant to such published intergovernmental agreement.
A-14 | Appendix A COPAR 20[__]-[_] |
FATCA Withholding Tax means any withholding or deduction required pursuant to FATCA.
FDIC means the Federal Deposit Insurance Corporation.
FDIC Rule means the FDICs rule regarding the treatment by the FDIC, as receiver or conservator of an insured depository institution, of financial assets transferred by the institution in connection with a securitization or participation (12 C.F.R. § 360.6).
Final Scheduled Payment Date means, with respect to (i) the Class A-1 Notes, the Class A-1 Final Scheduled Payment Date, (ii) the Class A-2[-A] Notes, the Class A-2[-A] Final Scheduled Payment Date, [(iii) the Class A-2-B Notes, the Class A-2-B Final Scheduled Payment Date,] (iv) the Class A-3 Notes, the Class A-3 Final Scheduled Payment Date, (v) the Class A-4 Notes, the Class A-4 Final Scheduled Payment Date, (vi) the Class B Notes, the Class B Final Scheduled Payment Date, (vii) the Class C Notes, the Class C Final Scheduled Payment Date, and (viii) the Class D Notes, the Class D Final Scheduled Payment Date.
Financed Vehicle means a new or used automobile, light-duty truck, SUV or van, together with all accessions thereto, securing an Obligors indebtedness under the applicable Receivable.
First Allocation of Principal means, for any Payment Date, an amount not less than zero equal to the excess, if any, of (a) the Note Balance of the Class A Notes as of such Payment Date (before giving effect to any principal payments made on the Class A Notes on such Payment Date) over (b) [the sum of (i)] the Net Pool Balance as of the last day of the related Collection Period [plus (ii) amounts, if any, on deposit in the Pre-Funding Account as of the end of the related Collection Period minus (iii) the YSOC Amount]; provided, however, that the First Allocation of Principal shall not exceed the Note Balance of the Class A Notes; provided, further, that the First Allocation of Principal for any Payment Date on and after the Final Scheduled Payment Date for any Class of Class A Notes shall not be less than the amount that is necessary to reduce the Note Balance of that Class of Class A Notes to zero.
Form 10-D Disclosure Item means, with respect to any Person, (a) any legal proceedings pending against such Person or of which any property of such Person is then subject, or (b) any proceedings known to be contemplated by governmental authorities against such Person or of which any property of such Person would be subject, in each case that would be material to the Noteholders.
Fourth Allocation of Principal means, for any Payment Date, an amount not less than zero equal to the excess, if any, of (a) the sum of the Note Balance of the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes minus the sum of the First Allocation of Principal, the Second Allocation of Principal and the Third Allocation of Principal for that Payment Date as of such Payment Date (before giving effect to any principal payments made on the Notes on such Payment Date) over [(b) the sum of (i)] the Net Pool Balance as of the last day of the related Collection Period [plus (ii) amounts, if any, on deposit in the Pre-Funding Account as of the end of the related Collection Period minus (iii) the YSOC Amount]; provided, however, that the; provided, however, that the Fourth Allocation of Principal on and after the Final Scheduled Payment Date for the Class D Notes shall not be less than the amount that is necessary to reduce the Note Balance of the Class D Notes to zero (after the application of the First Allocation of Principal, Second Allocation of Principal and Third Allocation of Principal).
A-15 | Appendix A COPAR 20[__]-[_] |
[Funding Date means a date occurring not more than once per calendar week during the Funding Period and on which some or all of the Subsequent Receivables are transferred to the Issuer.]
[Funding Period means the period beginning on the Closing Date and ending upon the earliest to occur of (i) [___________], 20[__], (ii) the date upon which an Event of Default occurs and (iii) the date on which the amount on deposit in the Pre-Funding Account has been reduced to $[___] or less.]
GAAP means generally accepted accounting principles in the USA, applied on a materially consistent basis.
Governmental Authority means any (a) Federal, state, municipal, foreign or other governmental entity, board, bureau, agency or instrumentality, (b) administrative or regulatory authority (including any central bank or similar authority) or (c) court or judicial authority.
Grant means mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, create, grant a Lien upon and a security interest in and right of set-off against, deposit, set over and confirm pursuant to the 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. Other forms of the verb to Grant shall have correlative meanings.
Holder means, as the context may require, a Certificateholder or a Noteholder or both.
Indenture means the Indenture, dated as of the Closing Date, between the Issuer and Indenture Trustee, as the same may be amended and supplemented from time to time.
[Indenture Secured Parties shall mean the Noteholders and the Swap Counterparty.]
Indenture Trustee means [___________], a [___________] organized under the laws of the state of [___________], not in its individual capacity but as indenture trustee under the Indenture, or any successor trustee under the Indenture.
Independent means, when used with respect to any specified Person, that such Person (i) is in fact independent of the Issuer, any other obligor upon the Notes, the Administrator and any Affiliate of any of the foregoing Persons, (ii) does not have any direct financial interest or any material indirect financial interest in the Issuer, any such other obligor upon the Notes, the Administrator or any Affiliate of any of the foregoing Persons and (iii) is not connected with the Issuer, any such other obligor upon the Notes, the Administrator or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions.
A-16 | Appendix A COPAR 20[__]-[_] |
Independent Certificate means a certificate or opinion to be delivered to the Indenture Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.1 of the Indenture, made by an independent appraiser or other expert appointed by an Issuer Order, and such opinion or certificate shall state that the signer has read the definition of Independent in this Appendix A and that the signer is Independent within the meaning thereof.
Initial Certificate Transfer Opinion means an Opinion of Counsel rendered by nationally recognized tax counsel (i) upon the initial transfer by the Depositor of a Certificate that results in the Issuer not being wholly owned by the Depositor and (ii) while any Note retained by the Issuer or a Person that is considered the same Person as the Issuer for United States federal income tax purposes is outstanding that (x) such Note will be debt for United States federal income tax purposes or (y) the transfer by the Depositor of such Certificate will not cause the Issuer to be treated as an association or publicly traded partnership taxable as a corporation, or to be treated as other than a grantor trust for United States federal income tax purposes.
Initial Class A-1 Note Balance means $[_________].
Initial Class A-2[-A] Note Balance means $[_________].
[Initial Class A-2-B Note Balance means $[_________].]
Initial Class A-3 Note Balance means $[_________].
Initial Class A-4 Note Balance means $[_________].
Initial Class B Note Balance means $[_________].
[Initial Cut-Off Date means [___________], 20[__].]
[Initial Interest Rate Swap Agreement means the ISDA Master Agreement, dated as of the Closing Date, between the Initial Swap Counterparty and the Issuer, the Schedule thereto, dated as of the Closing Date, the Credit Support Annex, and the Confirmations thereto, dated as of the Closing Date and entered into pursuant to such ISDA Master Agreement, as the same may be amended from time to time in accordance with the terms thereof.]
Initial Note Balance means, for any Class, the Initial Class A-1 Note Balance, the Initial Class A-2[-A] Note Balance, [the Initial Class A-2-B Note Balance,] the Initial Class A-3 Note Balance, the Initial Class A-4 Note Balance, the Initial Class B Note Balance, the Initial Class C Note Balance and the Initial Class D Note Balance, as applicable, or with respect to the Notes generally, the sum of the foregoing.
[Initial Pre-Funding Account Deposit Amount means an amount equal to $0.]
A-17 | Appendix A COPAR 20[__]-[_] |
[Initial Purchased Assets has the meaning set forth in Section 2.1 of the Purchase Agreement.]
[Initial Receivables means the Receivables transferred by the Depositor to the Issuer on the Closing Date.]
Initial Reserve Account Deposit Amount means an amount equal to $[_________], which amount includes the Negative Carry Amount.
[Initial Swap Counterparty means [_____________], as the swap counterparty under the Initial Interest Rate Swap Agreement.]
[Initial Transferred Assets means (a) the Initial Purchased Assets, (b) all of the Depositors rights under the Purchase Agreement and (c) all proceeds of the foregoing.]
Instituting Noteholders has the meaning set forth in Section 7.6(a) of the Indenture.
Insurance Policy means (i) any theft and physical damage insurance policy maintained by or on behalf of the Obligor under a Receivable, providing coverage against loss or damage to or theft of the related Financed Vehicle, (ii) any credit life or credit disability insurance maintained by or on behalf of an Obligor in connection with any Receivable and (iii) any vendors single interest policy provided by an Affiliate of the Bank in connection with any Receivable.
Interest Period means with respect to any Payment Date, (a) with respect to the Class A-1 Notes [and the Class A-2-B Notes], from and including the Closing Date (in the case of the first Payment Date) or from and including the most recent Payment Date to but excluding that Payment Date (for example, for a Payment Date in June, the Interest Period is from and including the Payment Date in May to but excluding the Payment Date in June) and (b) for the Class A-2[-A] Notes, the Class A-3 Notes, the Class B Notes, the Class C Notes and the Class D Notes, from and including the [__] day of the calendar month preceding such Payment Date (or from and including the Closing Date in the case of the first Payment Date) to but excluding the [__] day of the month in which such Payment Date occurs.
Interest Rate means (a) with respect to the Class A-1 Notes, the Class A-1 Interest Rate, (b) with respect to the Class A-2[-A] Notes, the Class A-2[-A] Interest Rate, [(c) with respect to the Class A-2-B Notes, the Class A-2-B Interest Rate,] (d) with respect to the Class A-3 Notes, the Class A-3 Interest Rate, (e) with respect to the Class A-4 Notes, the Class A-4 Interest Rate, (f) with respect to the Class B Notes, the Class B Interest Rate (g) with respect to the Class C Notes, the Class C Interest Rate or (h) with respect to the Class D Notes, the Class D Interest Rate.
[Interest Rate Swap Agreement means the Initial Interest Rate Swap Agreement and any Replacement Interest Rate Swap Agreement.]
Investment Company Act means the Investment Company Act of 1940, as amended.
A-18 | Appendix A COPAR 20[__]-[_] |
Issuer means Capital One Prime Auto Receivables Trust 20[__]-[_], a Delaware statutory trust established pursuant to the Trust Agreement and the filing of the Certificate of Trust, until a successor replaces it and, thereafter, means such successor.
Issuer Order and Issuer Request means a written order or request of the Issuer signed in the name of the Issuer by any one of its Authorized Officers and delivered to the Indenture Trustee.
Item 1119 Party means the Depositor, the Bank, the Servicer, the Indenture Trustee, the Owner Trustee, the Asset Representations Reviewer, [the Swap Counterparty,] any underwriter of the Notes and any other material transaction party identified by the Depositor, the Bank or to the Indenture Trustee and the Owner Trustee in writing.
Lien means, for any asset or property of a Person, a lien, security interest, mortgage, pledge or encumbrance in, of or on such asset or property in favor of any other Person, except any Permitted Lien.
Liquidation Expenses means auction, painting, repair or refurbishment expenses in respect of the disposition of a Financed Vehicle and any payments required by law to be remitted to the Obligor.
Liquidation Proceeds means, with respect to any Defaulted Receivable, (a) insurance proceeds received by the Servicer with respect to the Insurance Policies, (b) amounts received by the Servicer in connection with such Receivable pursuant to the exercise of rights under that Receivable and (c) the monies collected by the Servicer (from whatever source, including proceeds of a sale of a Financed Vehicle, a deficiency balance recovered from the Obligor after the charge-off of such Receivable or as a result of any recourse against the related Dealer, if any) on such Receivable, in the case of each of the foregoing clauses (a) through (c), net of any outstanding related Liquidation Expenses and any payments required by law to be remitted to the Obligor; provided, however, that the Repurchase Price for any Receivable shall not constitute Liquidation Proceeds.
Majority Certificateholders means Certificateholders holding in the aggregate more than 50% of the Percentage Interests.
[Negative Carry Amount means $[ ].]
Net Pool Balance means, as of any date, the aggregate Outstanding Principal Balance of all Receivables (other than Defaulted Receivables) of the Issuer on such date.
[Net Swap Payment means for the Interest Rate Swap Agreement, the net amounts owed by the Issuer to the Swap Counterparty, if any, on any Swap Payment Date, excluding Swap Termination Payments.]
[Net Swap Receipts means for the Interest Rate Swap Agreement, the net amounts owed by the Swap Counterparty to the Issuer, if any, on any Swap Payment Date, including, without limitation, any Swap Termination Payments.]
A-19 | Appendix A COPAR 20[__]-[_] |
Note means a Class A-1 Note, Class A-2[-A] Note, [Class A-2-B Note,] Class A-3 Note, Class A-4 Note, Class B Note, Class C Note or Class D Note, in each case substantially in the forms of Exhibit A to the Indenture.
Note Balance means, with respect to any date of determination, for any Class, the Class A-1 Note Balance, the Class A-2[-A] Note Balance, [the Class A-2-B Note Balance,] the Class A-3 Note Balance, the Class A-4 Note Balance, the Class B Note Balance, the Class C Note Balance or the Class D Note Balance, as applicable, or with respect to the Notes generally, the sum of all of the foregoing.
Note Factor means, with respect to the Notes or any Class of Notes on any Payment Date, a six-digit decimal figure equal to the Note Balance of the Notes or such Class of Notes, as applicable, as of the end of the preceding Collection Period divided by the Note Balance of the Notes or such Class of Notes, as applicable, as of the Closing Date. The Note Factor will be 1.000000 as of the Closing Date; thereafter, the Note Factor will decline to reflect reductions in the Note Balance of the Notes or such Class of Notes, as applicable.
Noteholder means, as of any date, the Person in whose name a Note is registered on the Note Register on such date.
Noteholder Direction has the meaning set forth in Section 7.6(a) of the Indenture.
Note Owner means, with respect to a Book-Entry Note, the Person who is the beneficial owner of such Book-Entry Note, as reflected on the books of the Clearing Agency or 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 set forth in Section 2.4 of the Indenture.
[Notice of Funding Date means a notice in the form of Exhibit B to the Sale Agreement.]
Obligor means, for any Receivable, each Person obligated to pay such Receivable.
Officers Certificate means (i) with respect to the Issuer, a certificate signed by any Authorized Officer of the Issuer and (ii) with respect to the Depositor or the Servicer, a certificate signed by any Responsible Officer thereof.
Opinion of Counsel means one or more written opinions of counsel who may, except as otherwise expressly provided in the Indenture or any other applicable Transaction Document, be employees of or counsel to the Issuer, the Servicer, the Depositor or the Administrator, and which opinion or opinions comply with any applicable requirements of the Transaction Documents and are in form and substance reasonably satisfactory to the recipient(s). Opinions of Counsel need address matters of law only and may be based upon stated assumptions as to relevant matters of fact.
A-20 | Appendix A COPAR 20[__]-[_] |
Optional Purchase has the meaning set forth in Section 7.1 of the Servicing Agreement.
Optional Purchase Price has the meaning set forth in Section 7.1 of the Servicing Agreement.
Originator means Capital One, National Association.
Other Assets means any assets (or interests therein) (other than the Trust Estate) conveyed or purported to be conveyed by the Depositor to another Person or Persons other than the Issuer, whether by way of a sale, capital contribution or by virtue of the granting of a lien.
Outstanding means, as of any date, all Notes (or all Notes of an applicable Class) theretofore authenticated and delivered under the Indenture except:
(i) Notes (or Notes of an applicable Class) theretofore cancelled by the Note Registrar or delivered to the Note Registrar for cancellation;
(ii) Notes (or Notes of an applicable Class) 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 related Noteholders (provided, however, that if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to the Indenture or provision therefor, satisfactory to the Indenture Trustee, has been made); and
(iii) Notes (or Notes of an applicable Class) in exchange for or in lieu of other Notes (or Notes of such Class) that have been authenticated and delivered pursuant to the Indenture unless proof satisfactory to the Indenture Trustee is presented that any such Notes are held by a bona fide purchaser;
provided, that in determining whether Noteholders holding the requisite Note Balance have given any request, demand, authorization, direction, notice, consent, vote or waiver hereunder or under any Transaction Document, Notes owned by the Issuer, the Depositor, any Certificateholder, the Servicer, the Administrator, the Asset Representations Reviewer or any of their respective Affiliates shall be disregarded and deemed not to be Outstanding unless all of the Notes are then owned by the Issuer, the Depositor, any Certificateholder, the Servicer, the Administrator, the Asset Representations Reviewer or any of their respective Affiliates, except that, in determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, vote or waiver, only Notes that a Responsible Officer of 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 thereof establishes to the satisfaction of the Indenture Trustee such pledgees right so to act with respect to such Notes and that such pledgee is not the Issuer, the Depositor, any Certificateholder, the Seller, the Servicer, the Administrator, the Asset Representations Reviewer or any of their respective Affiliates.
Outstanding Principal Balance means, with respect to any Receivable as of any date, the outstanding principal balance of such Receivable calculated in accordance with the Customary Servicing Practices.
A-21 | Appendix A COPAR 20[__]-[_] |
Owner Trustee means [____________], a [____________], not in its individual capacity but solely as owner trustee under the Trust Agreement, and any successor Owner Trustee thereunder.
Paying Agent means (i) prior to the payment in full of principal and interest on the Notes, the Indenture Trustee or any other Person that meets the eligibility standards for the Indenture Trustee set forth in Section 6.11 of the Indenture and is authorized by the Issuer to make the payments to and distributions from the Collection Account and the Principal Distribution Account, including the payment of principal of or interest on the Notes on behalf of the Issuer and (ii) following the payment in full of principal and interest on the Notes, the Certificate Paying Agent or any other Person appointed as the successor Certificate Paying Agent pursuant to Section 3.9 of the Trust Agreement.
Payment Date means the [__] day of each calendar month beginning [___________], 20[__]; provided, however, whenever a Payment Date would otherwise be a day that is not a Business Day, the Payment Date shall be the immediately succeeding Business Day. As used herein, the related Payment Date with respect to a Collection Period shall be deemed to be the Payment Date which immediately follows such Collection Period.
Payment Default has the meaning set forth in Section 5.4(a) of the Indenture.
Percentage Interest means, with respect to a Certificate, the individual percentage interest of such Certificate, which shall be specified on the face thereof and which shall represent the percentage of certain distributions of the Issuer beneficially owned by such Certificateholder. The sum of the Percentage Interests for all of the Certificates shall be 100%.
Permitted Investments means any one or more of the following types of investments:
(a) direct obligations of, and obligations fully guaranteed as to timely payment by, the United States of America;
(b) demand deposits, money market deposit accounts, time deposits or certificates of deposit of any depository institution (including, the Servicer, the Indenture Trustee or the Owner Trustee or any of their respective Affiliates) or trust company incorporated under the laws of the United States of America or any state thereof or the District of Columbia (or any domestic branch of a foreign bank) and subject to supervision and examination by Federal or state banking or depository institution authorities (including depository receipts issued by any such institution or trust company as custodian with respect to any obligation referred to in clause (a) above or a portion of such obligation for the benefit of the holders of such depository receipts); provided that at the time of the investment or contractual commitment to invest therein (which shall be deemed to be made again each time funds are reinvested following each Payment Date), the commercial paper or other short-term senior 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) of such depository institution or trust company shall have a credit rating from [__________] of at least [_________] and from [_________]of [________];
A-22 | Appendix A COPAR 20[__]-[_] |
(c) commercial paper (including commercial paper of any Affiliate of the Seller, the Servicer, the Bank, the Indenture Trustee or the Owner Trustee or any of their respective Affiliates) having, at the time of the investment or contractual commitment to invest therein, a rating from [__________] of at least [_________] and from [_________]of [________];
(d) investments in money market funds (including funds for which the Seller, the Servicer, the Bank, the Indenture Trustee or Owner Trustee or any of their respective Affiliates is investment manager or advisor) having a rating from [__________] of at least [_________] and from [_________]of [________]; and
(e) bankers acceptances issued by any depository institution or trust company referred to in clause (b) above;
provided that, in each case, no withholding tax would be imposed if acquired directly by a person not described in Section 7701(a)(30) of the Code assuming such person delivered a properly completed and executed IRS Form W-8BEN or W-8BEN-E (as applicable).
Each of the Permitted Investments may be purchased from the Indenture Trustee or through an Affiliate of the Indenture Trustee. Each Permitted Investment must mature or be liquidated on the Business Day immediately preceding the next Payment Date.
Permitted Liens means: (a) any liens created by the Transaction Documents; (b) any liens for taxes not yet due and payable or the amount of which is being contested in good faith by appropriate Proceedings; and (c) any liens of mechanics, suppliers, vendors, materialmen, laborers, employees, repairmen and other like liens securing obligations which are not due and payable or the amount or validity of which is being contested in good faith by appropriate Proceedings.
Permitted Modification has the meaning set forth in Section 3.2 of the Servicing Agreement.
Person means any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.
Physical Property has the meaning specified in the definition of Delivery above.
Plan means: (i) any employee benefit plan as defined in Section 3(3) of ERISA, whether or not subject to ERISA; (ii) a plan as described by Section 4975(e)(1) of the Code, whether or not subject to Section 4975 of the Code; or (iii) any entity deemed to hold the plan assets of any of the foregoing by reason of such employee benefit plans or other plans investment in the entity.
Pool Factor on a Payment Date means a six-digit decimal figure equal to the Net Pool Balance as of the end of the preceding Collection Period divided by the aggregate Outstanding Principal Balance of the Receivables as of the Cut-Off Date. The Pool Factor will be 1.000000 as of the Cut-Off Date; thereafter, the Pool Factor will decline to reflect reductions in the Net Pool Balance.
A-23 | Appendix A COPAR 20[__]-[_] |
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; provided, however, for the purpose of this definition, any Note authenticated and delivered under Section 2.5 of the Indenture in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note.
[Pre-Funding Account means the segregated trust account by that name established and maintained pursuant to Section 8.2(a)(iv) of the Indenture.]
Principal Distribution Account means the account by that name established and maintained pursuant to Section 8.2(a)(ii) of the Indenture.
Proceeding means any suit in equity, action at law or other judicial or administrative proceeding.
Purchase Agreement means the Purchase Agreement, dated as of the Closing Date, between the Bank and the Depositor, as amended, modified or supplemented from time to time.
Purchased Assets has the meaning set forth in Section 2.1 of the Purchase Agreement.
Qualified Dispute Resolution Professional means an attorney or retired judge that is independent, impartial, knowledgeable about and experienced with the laws of the State of New York, specializing in commercial litigation with at least fifteen (15) years of experience and whose name is on a list of neutral parties maintained by the AAA.
Qualified Institutional Buyer means a qualified institutional buyer as defined in Rule 144A.
Rating Agency means either or each of [___], [___] or [___], as indicated by the context.
Rating Agency Condition means, with respect to any event or circumstance and each Rating Agency, either (a) written confirmation (which may be in the form of a letter, press release or other publication, or a change in such Rating Agencys published ratings criteria to this effect) by such Rating Agency that the occurrence of such event or circumstance will not cause it to downgrade, qualify or withdraw its rating assigned to any of the Notes or (b) that such Rating Agency shall have been given notice of such event or circumstance at least ten (10) days prior to the occurrence of such event or circumstance (or, if ten (10) days advance notice is impracticable, as much advance notice as is practicable) and such Rating Agency shall not have issued any written notice that the occurrence of such event or circumstance will cause it to downgrade, qualify or withdraw its rating assigned to the Notes.
Receivable means any Contract with respect to a new or used automobile, light-duty truck, SUV or van, which shall appear on the Schedule of Receivables and all Related Security in connection therewith which has not been released from the lien of the Indenture.
Receivable Files has the meaning set forth in Section 2.1(a) of the Servicing Agreement.
A-24 | Appendix A COPAR 20[__]-[_] |
[Receivables Purchase Price means, with respect to any Subsequent Receivables, [___]% of the aggregate Outstanding Principal Balance of such Subsequent Receivables as of the related Subsequent Cut-Off Date (provided, however, that the Receivables Purchase Price on the final Funding Date may be adjusted as agreed to by the Depositor and the Issuer to be less than [___]% for the purpose of using all funds remaining on deposit in the Pre-Funding Account to purchase Subsequent Receivables).]
Record Date means, unless otherwise specified in any Transaction Document, with respect to any Payment Date or Redemption Date, (i) for any Definitive Notes and for any Definitive Certificates, the close of business on the last Business Day of the calendar month immediately preceding the calendar month in which such Payment Date or Redemption Date occurs and (ii) for any Book-Entry Notes and for any Book-Entry Certificates, the close of business on the Business Day immediately preceding such Payment Date or Redemption Date.
Records means, for any Receivable, all contracts, books, records and other documents or information (including computer programs, tapes, disks, software and related property and rights, to the extent legally transferable) relating to such Receivable or the related Obligor.
Redemption Date means in the case of a redemption of the Notes pursuant to Section 10.1 of the Indenture, the Payment Date specified by the Administrator or the Issuer pursuant to Section 10.1 of the Indenture.
Redemption Price means an amount equal to the sum of (a) the unpaid Note Balance of all Notes redeemed plus (b) accrued and unpaid interest thereon at the applicable Interest Rate for the Notes being so redeemed, through the Redemption Date.
Regular Principal Distribution Amount means, for any Payment Date, an amount not less than zero equal to the excess of (a) the excess of (A) the sum of the aggregate Note Balance of the Notes as of such Payment Date (before giving effect to any principal payments made on the Notes on such Payment Date) over (B) the Net Pool Balance as of the last day of the related Collection Period [plus amounts, if any, on deposit in the Pre-Funding Account as of the end of the related Collection Period], minus the Target Overcollateralization Amount over (b) the sum of the First Allocation of Principal, the Second Allocation of Principal, the Third Allocation of Principal and the Fourth Allocation of Principal for that Payment Date; provided, however, that the Regular Principal Distribution Amount on and after the Final Scheduled Payment Date for any Class of Notes will not be less than the amount that is necessary to reduce the Note Balance of that Class to zero (after the application of the First Allocation of Principal, the Second Allocation of Principal, the Third Allocation of Principal and the Fourth Allocation of Principal).
Regulation AB means Subpart 229.1100 Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1125, as such regulation may be amended from time to time and subject to such clarification and interpretation as have been provided by the Commission in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518. 70 Fed. Reg. 1,506, 1,531 (January 7, 2005)) or by the staff of the Commission, or as may be provided in writing by the Commission or its staff from time to time.
A-25 | Appendix A COPAR 20[__]-[_] |
Related Security means, for any Receivable: (i) the security interest in the related Financed Vehicle; (ii) all rights of the Originator to proceeds from claims on any Insurance Policy; (iii) any other property securing the Receivables; (iv) all rights of the Originator to refunds in connection with extended service agreements relating to Receivables which became Defaulted Receivables; and (v) all proceeds of the foregoing.
Relevant Trustee means (i) prior to the payment in full of principal of and interest on the Notes, the Indenture Trustee and (ii) following the payment in full of principal of and interest on the Notes, the Owner Trustee; provided, however, that with respect to any property that is under the joint or separate control of a co-trustee or separate trustee under the Trust Agreement or the Indenture, respectively, Relevant Trustee shall refer to either or both of the Owner Trustee and such co-trustee or separate trustee or to either or both of the Indenture Trustee and such co-trustee or separate trustee, as the case may be.
[Replacement Interest Rate Swap Agreement means, with respect to any Swap Counterparty, any replacement Interest Rate Swap Agreement entered into pursuant to the conditions set forth in the Interest Rate Swap Agreement.]
[Replacement Swap Counterparty means, with respect to any Swap Counterparty, any replacement Swap Counterparty under a Replacement Interest Rate Swap Agreement that satisfies the conditions set forth in the Interest Rate Swap Agreement.]
Reportable Event means any event required to be reported on Form 8-K, and in any event, the following:
(a) entry into a material definitive agreement related to the Issuer, the Notes, the Receivables or an amendment to a Transaction Document, even if the Seller is not a party to such agreement (e.g., a servicing agreement with a servicer contemplated by Item 1108(a)(2) of Regulation AB);
(b) termination of a Transaction Document (other than by expiration of the agreement on its stated termination date or as a result of all parties completing their obligations under such agreement), even if the Seller is not a party to such agreement (e.g., a servicing agreement with a servicer contemplated by Item 1108(a)(3) of Regulation AB);
(c) with respect to the Servicer only, the occurrence of a Servicer Replacement Event;
(d) an Event of Default;
(e) the resignation, removal, replacement or substitution of the Indenture Trustee or the Owner Trustee; and
(f) with respect to the Indenture Trustee only, a required distribution to Holders of the Notes is not made as of the required Payment Date under the Indenture.
A-26 | Appendix A COPAR 20[__]-[_] |
Repurchase Price means, with respect to any Repurchased Receivable, a price equal to the Outstanding Principal Balance of such Receivable plus any unpaid accrued interest related to such Receivable accrued to and including the earlier of (a) the end of the Collection Period preceding the date that such Repurchased Receivable was purchased by the Bank or the Servicer, as applicable or (b) the end of the Collection Period preceding the date that such Repurchased Receivable was charged-off (in whole or in part) by the Servicer in accordance with its Customary Servicing Practices.
Repurchased Receivable means a Receivable purchased by the Bank pursuant to Section 3.4 of the Purchase Agreement or by the Servicer pursuant to Section 3.6 of the Servicing Agreement.
Requesting Investor has the meaning set forth in Section 7.5(a) of the Indenture.
Requesting Party has the meaning set forth in Section 3.11(a) of the Purchase Agreement.
Reserve Account means the account designated as such, established and maintained pursuant to Section 8.2(a)(iii) of the Indenture.
Reserve Account Draw Amount means, for any Payment Date, the amount withdrawn from the Reserve Account, equal to the lesser of (a) the Available Funds Shortfall Amount, if any, for such Payment Date and (b) the amount on deposit in the Reserve Account on the Business Day prior to such Payment Date. In addition, if the sum of the amounts in the Reserve Account and the remaining Available Funds after the payments under clauses first through [ninth] and [eleventh] of Section 8.5(a) of the Indenture would be sufficient to pay in full the aggregate unpaid Note Balance of all of the outstanding Classes of Notes, then the Reserve Account Draw Amount will, if so specified in the Servicers Report, include such additional amount as may be necessary to pay all Outstanding Notes in full.
Reserve Account Excess Amount means, with respect to any Payment Date, an amount equal to the excess, if any, of (a) the amount of cash or other immediately available funds in the Reserve Account on the Business Day prior to that Payment Date, after giving effect to all deposits to and withdrawals from the Reserve Account relating to that Payment Date, over (b) the Specified Reserve Account Balance with respect to that Payment Date; provided, however, that if such Payment Date is the Redemption Date, the Reserve Account Excess Amount shall mean an amount equal to the amount of cash or other immediately available funds in the Reserve Account on that Payment Date after giving effect to all deposits to and withdrawals from the Reserve Account relating to that Payment Date.
Responsible Officer means: (a) with respect to the Indenture Trustee, any officer within the corporate trust department of the Indenture Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Indenture Trustee who customarily performs functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such persons knowledge of and familiarity with the particular subject and who, in each case, shall have direct responsibility for the administration of
A-27 | Appendix A COPAR 20[__]-[_] |
the Indenture; (b) with respect to the Owner Trustee, any officer within the Corporate Trust Office of the Owner Trustee and having direct responsibility for the administration of the Issuer, including any vice president, assistant vice president, assistant treasurer, assistant secretary, associate, trust officer or financial services officer, or any other officer 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 officers knowledge of and familiarity with the particular subject; (c) with respect to the Servicer, the Bank, the Seller or the Administrator, any officer of such Person having direct responsibility for the transactions contemplated by the Transaction Documents, including the president, treasurer, secretary or assistant secretary, controller, vice president of capital markets funding, or any other officer customarily performing functions similar to those performed by any of the above designated officers for any such entities and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officers knowledge of and familiarity with the particular subject; and (d) with respect to the Depositor, any officer of such Person having direct responsibility for the transactions contemplated by the Transaction Documents, including the president, treasurer, secretary or assistant secretary, deputy controller, assistant vice president, or any other officer customarily performing functions similar to those performed by any of the above designated officers for the Depositor and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officers knowledge of and familiarity with the particular subject.
Retained Certificate means any Certificate beneficially owned by the Depositor or an Affiliate thereof.
Review Notice is defined in Section 7.6 (b) of the Indenture.
Review Report has the meaning assigned to such term in Section 1.01 of the Asset Representations Review Agreement.
Review Satisfaction Date means, with respect to any Asset Review, the first date on which (a) the Delinquency Percentage for any Payment Date exceeds the Delinquency Trigger and (b) a Noteholder Direction with respect to such Asset Review has occurred.
Rule 144A means Rule 144A under the Securities Act and any successor rule thereto.
Rule 144A Information means the information specified pursuant to Rule 144A(d)(4) of the Securities Act (or any successor provision thereto).
Rules has the meaning set forth in Section 3.11(b) of the Purchase Agreement.
Sale Agreement means the Sale Agreement, dated as of the Closing Date, between the Seller and the Issuer, as amended, modified or supplemented from time to time.
Sarbanes Certification has the meaning set forth in Section 8.19(b)(iii) of the Servicing Agreement.
Sarbanes-Oxley Act means the Sarbanes-Oxley Act of 2002, as amended, modified or supplemented from time to time, and any successor law thereto.
A-28 | Appendix A COPAR 20[__]-[_] |
Schedule of Receivables means, [as the context may require, the electronic data file of (i) the schedule of Initial Receivables or Subsequent Receivables, as the case may be, transferred to the Issuer on the Closing Date or a Funding Date, respectively, or (ii) collectively, the schedule of all Receivables assigned to the Issuer by the Seller as of the date of determination, with such additions and deletions as properly made pursuant to the Transaction Documents][ the schedule of Receivables transferred to the Issuer on the Closing Date].
Second Allocation of Principal means, for any Payment Date, an amount not less than zero equal to the excess, if any, of (a) the sum of the Note Balance of the Class A Notes and the Class B Notes as of such Payment Date (before giving effect to any principal payments made on such Payment Date) minus the First Allocation of Principal for that Payment Date over (b) [the sum of (i)] the Net Pool Balance as of the last day of the related Collection Period [plus (ii) amounts, if any, on deposit in the Pre-Funding Account as of the end of the related Collection Period minus (iii) the YSOC Amount]; provided, however, that the Second Allocation of Principal on and after the Final Scheduled Payment Date for the Class B Notes shall not be less than the amount that is necessary to reduce the Note Balance of the Class B Notes to zero (after the application of the First Allocation of Principal).
Section 385 Certificateholder means a holder of a Certificate (or interest therein) that is (1) a Domestic Corporation, (2) an entity (foreign or domestic) that (i) is treated as a partnership for United States federal income tax purposes and 80 percent or more of its ownership interests are controlled, directly or indirectly, by an expanded group, within the meaning of Treasury Regulation Section 1.385-1(c)(4) and (ii) has an expanded group partner (as defined in Treasury Regulation Section 1.385-3(g)(12)) that is a Domestic Corporation or (3) a disregarded entity or grantor trust of an entity described in clause (1) or (2).
Section 385 Controlled Partnership has the meaning set forth in Treasury Regulation Section 1.385-1(c)(1) for a controlled partnership.
Section 385 Expanded Group has the meaning set forth in Treasury Regulation Section 1.385-1(c)(4) for an expanded group.
Section 941 Effective Date has the meaning set forth in Section 12.4 of the Indenture.
Section 941 Rules has the meaning set forth in Section 12.4 of the Indenture.
Securities Act means the Securities Act of 1933, as amended.
[Senior Swap Termination Payment means any payment which is pro rata with payments of interest on the Notes and is higher in priority than payments of principal on the Notes that may be owed by the Issuer to the Swap Counterparty under the Interest Rate Swap Agreement that is not a Subordinated Swap Termination Payment.]
[Securitization Regulations means the EU Securitization Regulation together with the UK Securitization Regulation.]
Seller means Capital One Auto Receivables, LLC, a Delaware limited liability company.
A-29 | Appendix A COPAR 20[__]-[_] |
Servicer means the Bank, initially, and any replacement Servicer appointed pursuant to the Servicing Agreement.
Servicer Replacement Event means any one or more of the following that shall have occurred and be continuing:
(a) any failure by the Servicer to deliver or cause to be delivered any required payment to the Indenture Trustee or the Owner Trustee for deposit into the Collection Account, which failure continues unremedied for five (5) Business Days after discovery thereof by a Responsible Officer of the Servicer or receipt by a Responsible Officer of the Servicer of written notice thereof from the Indenture Trustee or Noteholders evidencing at least a majority of the Note Balance (or, if no Notes are Outstanding, from the Majority Certificateholders);
(b) any failure by the Servicer to duly observe or perform in any material respect any other of its covenants or agreements in the Servicing Agreement (other than Section 3.15 of the Servicing Agreement), which failure materially and adversely affects the rights of the Issuer, the Noteholders or the Certificateholders, and which continues unremedied for ninety (90) days after discovery thereof by a Responsible Officer of the Servicer or receipt by the Servicer of written notice thereof from the Indenture Trustee or Noteholders evidencing at least a majority of the Note Balance (or, if no Notes are Outstanding, from the Majority Certificateholders) (it being understood that no Servicer Replacement Event will result from a breach by the Servicer of any covenant for which the repurchase of the affected Receivable is specified as the sole remedy pursuant to Section 3.6 of the Servicing Agreement); or
(c) the Servicer suffers a Bankruptcy Event;
provided, that (A) any delay or failure of performance referred to in clause (a) above shall have been caused by force majeure or other similar occurrence, the five (5) Business Day grace period referred to in such clause (a) shall be extended for an additional sixty (60) days and (B) if any delay or failure of performance referred to in clause (b) above shall have been caused by force majeure or other similar occurrence, the ninety (90) day grace period referred to in clause (b) shall be extended for an additional sixty (60) days. The existence or occurrence of any material instance of noncompliance (within the meaning of Item 1122 of Regulation AB) shall not create any presumption that any event in clauses (a), or (b) above has occurred.
Servicing Agreement means the Servicing Agreement, dated as of the Closing Date, among the Issuer, the Servicer and the Indenture Trustee, as the same may be amended, modified or supplemented from time to time.
Servicing Criteria means the servicing criteria set forth in Item 1122(d) of Regulation AB.
Servicing Fee means, for any Payment Date, the product of (A) one-twelfth [(or, in the case of the first Payment Date, a fraction, the numerator of which is the number of days from but not including the Initial Cut-Off Date to and including the last day of the first Collection Period and the denominator of which is 360)], (B) the Servicing Fee Rate and (C) the Net Pool Balance as of the first day of the related Collection Period (or, in the case of the first Payment Date, as of the Initial Cut-Off Date).
A-30 | Appendix A COPAR 20[__]-[_] |
Servicing Fee Rate means [___]% per annum.
Servicers Report means the Servicers Report delivered pursuant to Section 3.9(a) of the Servicing Agreement.
Severely Distressed Receivable means, as of any date of determination, a Receivable (other than a Repurchased Receivable) (i) that is sixty (60) or more days delinquent, (ii) that is a Defaulted Receivable, (iii) for which the Obligor is the subject of a bankruptcy or other insolvency proceeding, (iv) for which the related Financed Vehicle has been repossessed (or for which the Servicer has initiated repossession proceedings) or (v) for which the related Financed Vehicle has been subject to theft or suffered destruction or damage that would be determined to be beyond repair in accordance with Customary Servicing Practices.
Similar Law means any federal, state, local or other law that is substantially similar to Title I of ERISA or Section 4975 of the Code.
Simple Interest Method means the method of calculating interest due on a motor vehicle receivable on a daily basis based on the actual outstanding principal balance of the receivable on that date.
Simple Interest Receivable means any motor vehicle receivable pursuant to which the payments due from the Obligors during any month are allocated between interest, principal and other charges based on the actual date on which a payment is received and for which interest is calculated using the Simple Interest Method.
Specified Reserve Account Balance means, for any Payment Date while the Notes are Outstanding, 0.25% of the Net Pool Balance as of the Cut-Off Date; provided, that on any Payment Date after the Notes are no longer Outstanding following payment in full of the principal and interest on the Notes, the Specified Reserve Account Balance shall be $0.
[SR Rules means the EU SR Rules together with the UK SR Rules.]
Statutory Trust Statute means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code § 3801 et seq.
[Subordinated Swap Termination Payment means any payment which is subordinate to payments of principal and interest on the Notes that may be owed by the Issuer to the Swap Counterparty under the Interest Rate Swap Agreement where the Swap Counterparty is the Defaulting Party or Sole Affected Party (other than with respect to illegality or a tax event) as each such term is defined in the Interest Rate Swap Agreement.]
[Subsequent Cut-Off Date means, with respect to any Subsequent Receivable, the date specified in the Notice of Funding Date related to such Subsequent Receivable.]
[Subsequent Purchased Assets has the meaning set forth in Section 2.2 of the Purchase Agreement.]
A-31 | Appendix A COPAR 20[__]-[_] |
[Subsequent Receivable means a Receivable transferred to the Issuer by the Depositor on a Funding Date.]
[Subsequent Reserve Account Deposit Amount means, with respect to a Funding Date, an amount equal to [___]% of the aggregate Outstanding Principal Balance of the Subsequent Receivables transferred on such Funding Date as of the related Subsequent Cut-Off Date.]
[Subsequent Transferred Assets means (a) the Subsequent Purchased Assets, (b) all of the Depositors rights under the Purchase Agreement and (c) all proceeds of the foregoing.]
Sub-Servicer means any Affiliate of the Servicer or any sub-contractor to whom any or all duties of the Servicer (including, without limitation, its duties as custodian) under the Transaction Documents have been delegated in accordance with Section 6.1 of the Servicing Agreement.
Supplemental Servicing Fees and Reimbursements means any and all (i) late fees, (ii) extension fees, (iii) non-sufficient funds charges, (iv) prepayment fees, (v) any and all other administrative fees or similar charges allowed by applicable law with respect to any Receivable and (vi) repossession fees and expenses, legal fees and expenses and similar out-of-pocket fees and expenses incurred by the Servicer and reimbursed to the Servicer with respect to any Receivable.
[Swap Collateral Account means a single, segregated trust account in the name of the Indenture Trustee, which shall be designated as the Swap Collateral Account which shall be held in trust for the benefit of the Noteholders established pursuant to Section 8.8(e) of the Indenture.]
[Swap Counterparty means the Initial Swap Counterparty and any Replacement Swap Counterparty.]
[Swap Payment Date means the date on which Net Swap Receipts or Net Swap Payments, as applicable, are made pursuant to the Interest Rate Swap Agreement.]
[Swap Replacement Proceeds means any amounts received from a Replacement Swap Counterparty in consideration for entering into a Replacement Interest Rate Swap Agreement for a terminated Interest Rate Swap Agreement.]
[Swap Termination Payment means payment due to the Swap Counterparty by the Issuer or to the Issuer by the Swap Counterparty, including interest that may accrue thereon, under the Interest Rate Swap Agreement due to a termination of the Interest Rate Swap Agreement due to an event of default or termination event under the Interest Rate Swap Agreement.]
[Swap Termination Payment Account means a single segregated trust account held in the United States in the name of the Indenture Trustee which shall be held in trust for the benefit of the Noteholders pursuant to Section 8.8(b) of the Indenture.]
A-32 | Appendix A COPAR 20[__]-[_] |
Target Overcollateralization Amount means, for any Payment Date, 0.25% of the Net Pool Balance as of the Cut-Off Date.
Tax Information means information and/or properly completed and signed tax certifications (e.g., Form W-9 or W-8) sufficient to eliminate the imposition of or determine the amount of any withholding of tax, including backup withholding and FATCA Withholding Tax.
Third Allocation of Principal means, for any Payment Date, an amount not less than zero equal to the excess, if any, of (a) the sum of the Note Balance of the Class A Notes, the Class B Notes and the Class C Notes minus the sum of the First Allocation of Principal and Second Allocation of Principal for that Payment Date as of such Payment Date (before giving effect to any principal payments made on the Notes on such Payment Date) over [(b) the sum of (i)] the Net Pool Balance as of the last day of the related Collection Period [plus (ii) amounts, if any, on deposit in the Pre-Funding Account as of the end of the related Collection Period minus (iii) the YSOC Amount]; provided, however, that the Third Allocation of Principal for any Payment Date on and after the Final Scheduled Payment Date for the Class C Notes shall not be less than the amount that is necessary to reduce the Note Balance of the Class C Notes to zero (after the application of the First Allocation of Principal and the Second Allocation of Principal).
TIA or Trust Indenture Act means the Trust Indenture Act of 1939, as amended and as in force on the date hereof, unless otherwise specifically provided.
Transaction Documents means the Indenture, the Notes, the Depository Agreement, the Sale Agreement, the Servicing Agreement, the Purchase Agreement, the Asset Representations Review Agreement, the Administration Agreement[, the Swap Agreement] and the Trust Agreement, as the same may be amended or modified from time to time.
Transferred Assets means (a) the Purchased Assets, (b) all of the Depositors rights under the Purchase Agreement and (c) all proceeds of the foregoing.
Trust Account Property means the Trust Accounts, all amounts and investments held from time to time in any Trust Account (whether in the form of deposit accounts, book-entry securities, uncertificated securities or otherwise), and all proceeds of the foregoing.
Trust Accounts has the meaning set forth in Section 8.2(a)[(iii)][(iv)] of the Indenture.
Trust Agreement means the Amended and Restated Trust Agreement, dated as of the Closing Date, between the Depositor and the Owner Trustee, as the same may be amended and supplemented from time to time.
Trust Estate means all money, accounts, chattel paper, general intangibles, goods, instruments, investment property and other property of the Issuer, including without limitation (i) the Receivables acquired by the Issuer under the Sale Agreement, the Related Security relating thereto and Collections thereon after the Cut-Off Date, (ii) the Receivable Files, (iii) the rights of the Issuer to the funds on deposit from time to time in the Trust Accounts and any other account or accounts (other than the Certificate Distribution Account) established pursuant to the Indenture or Servicing Agreement and all cash, investment property and other property from time to time credited thereto and all proceeds thereof, (iv) the rights of the Seller, as buyer, under
A-33 | Appendix A COPAR 20[__]-[_] |
the Purchase Agreement (including the representations and warranties of the Bank therein) and the assignment executed by the Bank pursuant to the Purchase Agreement, (v) the rights of the Issuer under the Sale Agreement, the assignment executed by the Depositor pursuant to the Sale Agreement and the Servicing Agreement, (vi) the rights of the Issuer under the Administration Agreement and (vii) all proceeds of the foregoing.
UCC means, unless the context otherwise requires, the Uniform Commercial Code as in effect in the relevant jurisdiction, as amended from time to time.
[UK Securitization Regulation means Regulation (EU) 2017/2402 as it forms part of UK domestic law as retained EU law by operation of the EUWA, and as amended by the Securitisation (Amendment) (EU Exit) Regulations 2019.]
UK SR Rules means the UK Securitization Regulation, together with (i) all applicable binding technical standards made under the UK Securitization Regulation, (ii) any EU regulatory technical standards or implementing technical standards relating to the EU Securitization Regulation (including such regulatory technical standards or implementing technical standards which are applicable pursuant to any transitional provisions of the EU Securitization Regulation) forming part of UK domestic law by operation of the EUWA, (iii) all relevant guidance, policy statements or directions relating to the application of the UK Securitization Regulation (or any binding technical standards) published by the Financial Conduit Authority and/or the Prudential Regulation Authority (or their successors), (iv) any guidelines relating to the application of the EU Securitization Regulation which are applicable in the UK, (v) any other transitional, saving or other provision relevant to the UK Securitization Regulation by virtue of the operation of the EUWA, and (vi) any other applicable laws, acts, statutory instruments, rules, guidance or policy statements published or enacted relating to the UK Securitization Regulation.
Underwriter or Underwriters means, collectively, [__________],[__________],[__________],[__________] and [__________].
Underwriting Agreement means the Underwriting Agreement, dated as of [___________], 20[__], among [__________], on its own behalf and as representative of the several underwriters named therein, the Bank and the Depositor.
United States or USA means the United States of America (including all states, the District of Columbia and political subdivisions thereof).
Unrelated Amounts means (a) amounts deposited by the Servicer into the Collection Account but later determined by the Servicer to be mistaken or returned deposits or postings and (b) amounts deposited by the Servicer into the Collection Account as Collections but which were later determined by the Servicer to not constitute Collections with respect to the Receivables.
U.S. Tax Person means a Person that is a United States person as defined in Section 7701(a)(30) of the Code, generally including:
(a) a citizen or resident of the United States;
A-34 | Appendix A COPAR 20[__]-[_] |
(b) a corporation or partnership organized in or under the laws of the United States, any State or the District of Columbia;
(c) an estate, the income of which is includible in gross income for United States tax purposes, regardless of its source; or
(d) a trust if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. Tax Persons have the authority to control all substantial decisions of the trust or a trust that has elected to be treated as a U.S. Tax Person.
Verification Documents means, with respect to any Note Owner, a certification from such Note Owner certifying that such Person is in fact, a Note Owner, as well as one additional piece of documentation reasonably satisfactory to the recipient, such as a trade confirmation, account statement, letter from a broker or dealer or other similar document.
[YSOC Amount means, with respect to each Payment Date, an amount equal to the sum of the amount for each Receivable equal to the excess, if any, of (x) the scheduled payments due on the Receivable for each future Collection Period discounted to present value as of the end of the preceding Collection Period at the APR of that Receivable over (y) the scheduled payments due on the Receivable for each future Collection Period discounted to present value as of the end of the preceding Collection Period at a discount rate equal to the greater of the APR of that Receivable and [ ]%.]
The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. Unless otherwise inconsistent with the terms of this Agreement, all accounting terms used herein shall be interpreted, and all accounting determinations hereunder shall be made, in accordance with GAAP. Amounts to be calculated hereunder shall be continuously recalculated at the time any information relevant to such calculation changes.
A-35 | Appendix A COPAR 20[__]-[_] |
Exhibit 10.2
FORM OF
PURCHASE AGREEMENT
dated as of [___________], 20[__]
between
CAPITAL ONE, NATIONAL ASSOCIATION
and
CAPITAL ONE AUTO RECEIVABLES, LLC,
as Purchaser
Form of Purchase Agreement
TABLE OF CONTENTS
Page | ||||||
ARTICLE I |
DEFINITIONS AND USAGE |
|||||
SECTION 1.1 |
Definitions |
1 | ||||
SECTION 1.2 |
Other Interpretive Provisions |
1 | ||||
ARTICLE II |
PURCHASE |
|||||
SECTION 2.1 |
Agreement to Sell and Contribute on the Closing Date |
2 | ||||
SECTION 2.2 |
[Agreement to Sell and Contribute on the Funding Dates |
2 | ||||
SECTION 2.3 |
Consideration and Payment [for the Initial Purchased Assets] |
2 | ||||
SECTION 2.4 |
[Consideration and Payment for the Subsequent Purchased Assets |
3 | ||||
ARTICLE III |
REPRESENTATIONS, WARRANTIES AND COVENANTS |
|||||
SECTION 3.1 |
Representations and Warranties of the Bank |
3 | ||||
SECTION 3.2 |
Representations and Warranties of the Bank Regarding the Purchased Assets |
4 | ||||
SECTION 3.3 |
Representations and Warranties of the Bank as to each Receivable |
5 | ||||
SECTION 3.4 |
Repurchase upon Breach |
5 | ||||
SECTION 3.5 |
Protection of Title |
6 | ||||
SECTION 3.6 |
Other Liens or Interests |
7 | ||||
SECTION 3.7 |
Official Record |
7 | ||||
SECTION 3.8 |
Merger or Consolidation of, or Assumption of the Obligations of, the Bank |
7 | ||||
SECTION 3.9 |
Bank May Own Notes and Certificates |
7 | ||||
SECTION 3.10 |
Compliance with the FDIC Rule |
7 | ||||
SECTION 3.11 |
Dispute Resolution |
7 | ||||
SECTION 3.12 |
Cooperation with Voting |
11 | ||||
ARTICLE IV |
MISCELLANEOUS |
|||||
SECTION 4.1 |
Transfers Intended as Sale; Security Interest |
12 | ||||
SECTION 4.2 |
Notices, Etc |
12 | ||||
SECTION 4.3 |
Choice of Law |
13 | ||||
SECTION 4.4 |
Headings |
13 | ||||
SECTION 4.5 |
Counterparts |
13 | ||||
SECTION 4.6 |
Amendment |
13 |
-i- | Form of Purchase Agreement |
TABLE OF CONTENTS
(continued)
Page | ||||||
SECTION 4.7 |
Waivers |
15 | ||||
SECTION 4.8 |
Entire Agreement |
15 | ||||
SECTION 4.9 |
Severability of Provisions |
15 | ||||
SECTION 4.10 |
Binding Effect |
15 | ||||
SECTION 4.11 |
Acknowledgment and Agreement |
15 | ||||
SECTION 4.12 |
Cumulative Remedies |
15 | ||||
SECTION 4.13 |
Nonpetition Covenant |
15 | ||||
SECTION 4.14 |
Submission to Jurisdiction; Waiver of Jury Trial |
16 | ||||
SECTION 4.15 |
Not Applicable to the Bank in Other Capacities |
16 | ||||
SECTION 4.16 |
Third-Party Beneficiaries |
16 | ||||
SECTION 4.17 |
[Limitation of Rights |
17 |
EXHIBITS |
||||||
Exhibit A |
Form of Assignment Pursuant to Purchase Agreement |
|||||
Schedule I |
Perfection Representations, Warranties and Covenants |
|||||
Schedule II |
Representations and Warranties with Respect to the Receivables |
-ii- | Form of Purchase Agreement |
THIS PURCHASE AGREEMENT is made and entered into as of [___________], 20[__] (as amended, restated, supplemented or otherwise modified and in effect from time to time, this Agreement) by CAPITAL ONE, NATIONAL ASSOCIATION, a national banking association (the Bank), and CAPITAL ONE AUTO RECEIVABLES, LLC, a Delaware limited liability company (COAR).
WITNESSETH:
WHEREAS, COAR desires to purchase from the Bank a portfolio of motor vehicle receivables, including motor vehicle retail installment sale contracts and/or installment loans that are secured by new and used automobiles, light-duty trucks, SUVs and vans; and
WHEREAS, the Bank is willing to sell such portfolio of motor vehicle receivables and related property to COAR on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
SECTION 1.1 Definitions. Except as otherwise defined herein or as the context may otherwise require, capitalized terms used but not otherwise defined herein are defined in Appendix A to the Sale Agreement, dated as of the date hereof (as amended, supplemented, or otherwise modified and in effect from time to time, the Sale Agreement), between the Issuer and COAR, which also contains rules as to usage that are applicable herein. As used herein, the following terms shall have the following meanings:
[Initial Purchased Assets has the meaning specified in Section 2.1.
Purchased Assets has the meaning specified in Section 2.2.
Subsequent Purchased Assets has the meaning specified in Section 2.2.]
SECTION 1.2 Other Interpretive Provisions. For purposes of this Agreement, unless the context otherwise requires: (a) accounting terms not otherwise defined in this Agreement, and accounting terms partly defined in this Agreement to the extent not defined, shall have the respective meanings given to them under GAAP (provided, that, to the extent that the definitions in this Agreement and GAAP conflict, the definitions in this Agreement shall control); (b) terms defined in Article 9 of the UCC as in effect in the relevant jurisdiction and not otherwise defined in this Agreement are used as defined in that Article; (c) the words hereof, herein and hereunder and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) references to any Article, Section, Schedule, Appendix or Exhibit are references to Articles, Sections, Schedules, Appendices and Exhibits in or to this Agreement and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (e) the term including and all variations thereof means including without limitation; (f) except as otherwise expressly provided herein, references to any law or
Form of Purchase Agreement
regulation refer to that law or regulation as amended from time to time and include any successor law or regulation; (g) references to any Person include that Persons successors and assigns; and (h) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof.
ARTICLE II
PURCHASE
SECTION 2.1 Agreement to Sell and Contribute on the Closing Date. On the terms and subject to the conditions set forth in this Agreement, the Bank does hereby sell, transfer, assign, set over, contribute and otherwise convey to COAR without recourse (subject to the obligations herein) on the Closing Date all of its right, title, interest, claims and demands in, to and under the Receivables, the Collections after the [Initial] Cut-Off Date, the Receivable Files and the Related Security relating thereto, whether now owned or hereafter acquired, as evidenced by an assignment substantially in the form of Exhibit A (the Assignment) delivered on the Closing Date (collectively, the [Initial] Purchased Assets)[, which sale shall be effective as of the Initial Cut-Off Date]. The sale, transfer, assignment, contribution and conveyance made hereunder does not constitute and is not intended to result in an assumption by COAR of any obligation of the Bank to the Obligors, the Dealers, insurers or any other Person in connection with the Receivables or the other assets and properties conveyed hereunder or any agreement, document or instrument related thereto.
SECTION 2.2 [Agreement to Sell and Contribute on the Funding Dates. On the terms and subject to the conditions set forth in this Agreement, the Bank does hereby sell, transfer, assign, set over, contribute and otherwise convey to COAR on each Funding Date all of its right, title and interest in, to and under the Receivables, and the Collections after the related Subsequent Cut-Off Date, the Receivable Files and the Related Security relating thereto, whether now owned or hereafter acquired, identified in an Assignment substantially in the form of Exhibit A delivered on such Funding Date (collectively, the Subsequent Purchased Assets and, together with the Initial Purchased Assets, and all proceeds of the foregoing, the Purchased Assets). The sale, transfer, assignment, contribution and conveyance made hereunder does not constitute and is not intended to result in an assumption by COAR of any obligation of the Bank to the Obligors, the Dealers, insurers or any other Person in connection with the Receivables or the other assets and properties conveyed hereunder or any agreement, document or instrument related thereto.]
SECTION 2.3 Consideration and Payment [for the Initial Purchased Assets]. The purchase price for the sale of the [Initial] Purchased Assets sold to COAR on the Closing Date shall equal the estimated fair market value of the [Initial] Purchased Assets on the Closing Date. Such purchase price shall be paid (a) in cash to the Bank in an amount agreed to between the Bank and COAR, [(b) by delivery to or upon the order of CONA, the 144A Notes and,] (c) to the extent not paid in cash by COAR, shall be paid by a capital contribution by the Bank of an undivided interest in such [Initial] Purchased Assets that increases its equity interest in COAR in an amount equal to the excess of the estimated fair market value of the [Initial] Purchased Assets over the amount of cash paid by COAR to the Bank [and the value of the 144A Notes].
-2- | Form of Purchase Agreement |
SECTION 2.4 [Consideration and Payment for the Subsequent Purchased Assets. The purchase price for the sale of the Subsequent Purchased Assets sold to COAR on each Funding Date shall equal the estimated fair market value of the related Subsequent Purchased Assets on such Funding Date. Such purchase price shall be paid in cash to the Bank in an amount agreed to between the Bank and COAR, and, to the extent not paid in cash by COAR, shall be paid by a capital contribution by the Bank of an undivided interest in such Subsequent Transferred Assets that increases its equity interest in COAR in an amount equal to the excess of the estimated fair market value of the Subsequent Transferred Assets over the amount of cash paid by COAR to the Bank.]
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.1 Representations and Warranties of the Bank. The Bank makes the following representations and warranties as of the Closing Date [with respect to the Initial Purchased Assets and as of each Funding Date with respect to the related Subsequent Purchased Assets, in each case], on which COAR will be deemed to have relied in acquiring the Purchased Assets. The representations and warranties will survive the conveyance of the Purchased Assets to COAR pursuant to this Agreement, the conveyance of the Purchased Assets by COAR to the Issuer pursuant to the Sale Agreement and the Grant thereof by the Issuer to the Indenture Trustee for the benefit of the Noteholders pursuant to the Indenture.
(a) Existence and Power. The Bank is a national banking association validly subsisting under the laws of the United States of America and has, in all material respects, all power and authority to carry on its business as it is now conducted. The Bank has obtained all necessary licenses and approvals in each jurisdiction where the failure to do so would materially and adversely affect the ability of the Bank to perform its obligations under this Agreement or affect the enforceability or collectability of the Receivables or any other part of the Purchased Assets.
(b) Authorization and No Contravention. The execution, delivery and performance by the Bank of this Agreement (i) have been duly authorized by all necessary action on the part of the Bank and (ii) do not contravene or constitute a default under (A) any applicable order, law, rule or regulation, (B) its organizational documents or (C) any material agreement, contract, order or other instrument to which it is a party or its property is subject (other than violations which do not affect the legality, validity or enforceability of such agreements or which, individually or in the aggregate, would not materially and adversely affect the transactions contemplated by, or the Banks ability to perform its obligations under, this Agreement).
(c) No Consent Required. No approval or authorization by, or filing with, any Governmental Authority is required in connection with the execution, delivery and performance by the Bank of this Agreement other than (i) UCC filings, (ii) approvals and authorizations that have previously been obtained and filings that have previously been made and (iii) approvals, authorizations or filings which, if not obtained or made, would not have a material adverse effect on the enforceability or collectability of the Receivables or any other part of the Purchased Assets or would not materially and adversely affect the ability of the Bank to perform its obligations under this Agreement.
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(d) Binding Effect. This Agreement constitutes the legal, valid and binding obligation of the Bank enforceable against the Bank in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws affecting the enforcement of creditors rights generally and, if applicable, the rights of creditors of banking corporations from time to time in effect or by general principles of equity.
(e) No Proceedings. There are no Proceedings pending or, to the knowledge of the Bank, threatened against the Bank before or by any Governmental Authority that (i) assert the invalidity or unenforceability of this Agreement or (ii) seek any determination or ruling that would materially and adversely affect the performance by the Bank of its obligations under this Agreement.
(f) Lien Filings. The Bank is not aware of any material judgment, ERISA or tax lien filings against the Bank.
SECTION 3.2 Representations and Warranties of the Bank Regarding the Purchased Assets. On the date hereof[, with respect to the Initial Receivables, or on each Funding Date, with respect to the Subsequent Receivables,] the Bank hereby makes the following representations and warranties to COAR as to the [Initial Receivables and the Subsequent] Receivables, as applicable, sold, transferred, assigned, contributed and otherwise conveyed to COAR under this Agreement on which such representations and warranties COAR will be deemed to have relied in acquiring the Receivables and which will survive the conveyance of the Purchased Assets to COAR pursuant to this Agreement, the conveyance of the Purchased Assets by COAR to the Issuer pursuant to the Sale Agreement and the Grant thereof by the Issuer to the Indenture Trustee for the benefit of the Noteholders pursuant to the Indenture:
(a) The Receivables were selected using selection procedures that were not known or intended by the Bank to be adverse to the Issuer.
(b) The Receivables and the other Purchased Assets have been validly assigned by the Bank to COAR.
(c) The information with respect to the Receivables transferred on the Closing Date as set forth in the Schedule of [Initial] Receivables was true and correct in all material respects as of the [Initial] Cut-Off Date. [The information with respect to the Subsequent Receivables transferred on each Funding Date as set forth in the related Schedule of Subsequent Receivables was true and correct in all material respects as of such Funding Date.]
(d) No Receivables are pledged, assigned, sold, subject to a security interest or otherwise conveyed by the Bank other than pursuant to the Transaction Documents. The Bank has not authorized the filing of and is not aware of any financing statements against the Bank that includes a description of collateral covering any Receivable other than any financing statement relating to security interests granted under the Transaction Documents or that have
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been or, prior to the assignment of such Receivables hereunder, will be terminated, amended or released. This Agreement creates a valid and continuing security interest in the Receivables (other than the Related Security with respect thereto, to the extent that an ownership interest therein cannot be perfected by the filing of a financing statement) in favor of COAR which security interest is prior to all other Liens created by the Bank (other than Permitted Liens) with respect to the Receivables and is enforceable as such against all other creditors of and purchasers and assignees from the Bank.
(e) The representations and warranties regarding creation, perfection and priority of security interests in the Purchased Assets, which are attached to this Agreement as Schedule I, are true and correct.
SECTION 3.3 Representations and Warranties of the Bank as to each Receivable. The Bank hereby makes the representations and warranties set forth on Schedule II as to the Receivables sold, transferred, assigned, set over and otherwise conveyed to COAR under this Agreement on which such representations and warranties COAR relies in acquiring the Receivables. Such representations and warranties shall survive the sale of the Purchased Assets by COAR to the Issuer under the Sale Agreement and the Grant of the Purchased Assets by the Issuer to the Indenture Trustee for the benefit of the Noteholders pursuant to the Indenture. Notwithstanding any statement to the contrary contained herein or in any other Transaction Document, the Bank shall not be required to notify any insurer with respect to any Insurance Policy obtained by an Obligor or to notify any Dealer about any aspect of the transaction contemplated by this Agreement. The Bank hereby agrees that the Issuer shall have the right to enforce any and all rights under this Agreement assigned to the Issuer under the Sale Agreement, including the right to cause the Bank to repurchase any Receivable with respect to which it is in breach of any of its representations and warranties set forth in Schedule II, directly against the Bank as though the Issuer were a party to this Agreement, and the Issuer shall not be obligated to exercise any such rights indirectly through COAR.
SECTION 3.4 Repurchase upon Breach. Upon discovery by or notice to a Responsible Officer of COAR or the Bank of a breach of any of the representations and warranties set forth in Section 3.3 with respect to any Receivable at the time such representations and warranties were made which materially and adversely affects the interests of the Issuer, the Noteholders or the Certificateholders, the party discovering such breach or receiving such notice shall give prompt written notice thereof to the other party; provided, that delivery of a Servicers Report which identifies that Receivables are being or have been repurchased shall be deemed to constitute prompt notice of such breach; provided, further, that the failure to give such notice shall not affect any obligation of the Bank hereunder. If the breach materially and adversely affects the interests of the Issuer, the Noteholders or the Certificateholders, then the Bank shall either (a) correct or cure such breach or (b) repurchase such Receivable from COAR (or its assignee), in either case on or before the Payment Date following the end of the Collection Period which includes the sixtieth (60th) day (or, if the Bank elects, an earlier date) after the date that the Bank became aware or was notified of such breach. Any such breach or failure will be deemed not to have a material and adverse effect if such breach or failure has not affected the ability of COAR (or its assignee) to receive and retain timely payment in full on such Receivable. Any such purchase by the Bank shall be at a price equal to the related Repurchase Price. In consideration for such repurchase, the Bank shall make (or shall cause to be made) a
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payment to COAR (or its assignee) equal to the Repurchase Price by depositing such amount into the Collection Account prior to noon, New York City time, on the date of such repurchase, if such repurchase date is not a Payment Date or, if such repurchase date is a Payment Date, then prior to the close of business on the Business Day prior to such repurchase date. Upon payment of such Repurchase Price by the Bank, COAR (or its assignee) shall release and shall execute and deliver such instruments of release, transfer or assignment, in each case without recourse or representation, as may be reasonably requested by the Bank to evidence such release, transfer or assignment or more effectively vest in the Bank or its designee any Receivable and the related Purchased Assets repurchased pursuant hereto. It is understood and agreed that the obligation of the Bank to purchase any Receivable as described above shall constitute the sole remedy respecting such breach available to COAR (or its assignee).
SECTION 3.5 Protection of Title.
(a) The Bank shall authorize and file such financing statements and cause to be authorized and filed such continuation and other financing statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of COAR under this Agreement in the Purchased Assets (to the extent that the interest of COAR therein can be perfected by the filing of a financing statement). The Bank shall deliver (or cause to be delivered) to COAR file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing.
(b) The Bank shall notify COAR in writing within ten (10) days following the occurrence of (i) any change in the Banks organizational structure as a banking corporation, (ii) any change in the Banks location (within the meaning of Section 9-307 of the UCC) and (iii) any change in the Banks name, and shall take all action prior to making such change (or shall have made arrangements to take such action substantially simultaneously with such change, if it is not practicable to take such action in advance) reasonably necessary or advisable in the opinion of COAR to amend all previously filed financing statements or continuation statements described in paragraph (a) above. The Bank will at all times maintain its location within the United States.
(c) The Bank shall maintain (or shall cause the Servicer to maintain) its computer systems so that, from time to time after the conveyance under this Agreement of the Receivables, the master computer records (including any backup archives) that refer to a Receivable shall indicate clearly the interest of COAR (or any subsequent assignee of COAR) in such Receivable and that such Receivable is owned by such Person. Indication of such Persons interest in a Receivable shall not be deleted from or modified on such computer systems until, and only until, the related Receivable shall have been paid in full or repurchased.
(d) If at any time the Bank 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 Bank 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 COAR (or any subsequent assignee of COAR).
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SECTION 3.6 Other Liens or Interests. Except for the conveyances and grants of security interests pursuant to this Agreement and the other Transaction Documents, the Bank shall not sell, pledge, assign or transfer the Receivables or other property transferred to COAR to any other Person, or grant, create, incur, assume or suffer to exist any Lien (other than Permitted Liens) on any interest therein, and the Bank shall defend the right, title and interest of COAR in, to and under such Receivables or other property transferred to COAR against all claims of third parties claiming through or under the Bank.
SECTION 3.7 Official Record. So long as the Notes and the Certificates remain outstanding, this Agreement shall be treated as an official record of the Bank within the meaning of Section 13(e) of the Federal Deposit Insurance Act (12 U.S.C. Section 1823(e)).
SECTION 3.8 Merger or Consolidation of, or Assumption of the Obligations of, the Bank. Any Person (i) into which the Bank may be merged or converted or with which it may be consolidated, to which it may sell or transfer its business and assets as a whole or substantially as a whole, (ii) resulting from any merger, sale, transfer, conversion, or consolidation to which the Bank shall be a party, (iii) succeeding to the business of the Bank, or (iv) more than 50% of the voting stock or voting power and 50% or more of the economic equity of which is owned directly or indirectly by Capital One Financial Corporation, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Bank under this Agreement, will be the successor to the Bank 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 anything herein to the contrary notwithstanding. Notwithstanding the foregoing, if the Bank enters into any of the foregoing transactions and is not the surviving entity, the Bank will deliver to the Indenture Trustee and the Owner Trustee an Opinion of Counsel either (A) stating that, in the opinion of such counsel, 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 Issuer and, if the Notes are Outstanding, the Indenture Trustee for the benefit of the Noteholders, respectively, in the Receivables, or (B) stating that, in the opinion of such counsel, no such action is necessary to preserve and protect such interest.
SECTION 3.9 Bank May Own Notes and Certificates. The Bank, and any Affiliate of the Bank, may in its individual or any other capacity become the owner or pledgee of Notes and Certificates with the same rights as it would have if it were not the Bank or an Affiliate thereof, except as otherwise expressly provided herein or in the other Transaction Documents. Except as set forth herein or in the other Transaction Documents, Notes and Certificates so owned by the Bank or any such Affiliate will have an equal and proportionate benefit under the provisions of this Agreement and the other Transaction Documents, without preference, priority, or distinction as among all of the Notes and Certificates.
SECTION 3.10 Compliance with the FDIC Rule. The Bank (i) shall perform the covenants set forth in Article XII of the Indenture applicable to it and (ii) shall facilitate compliance with Article XII of the Indenture by the Capital One Parties.
SECTION 3.11 Dispute Resolution.
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(a) If any Receivable is subject to repurchase pursuant to Section 3.4 of this Agreement, which repurchase is not resolved in accordance with the terms of this Agreement within one hundred eighty (180) days after notice is delivered to the Bank by a Requesting Investor, the Requesting Investor providing such notice (the Requesting Party) will have the right to refer the matter, at its discretion, to either third-party mediation (including nonbinding arbitration) or binding arbitration pursuant to this Section 3.11 and the Bank is hereby deemed to consent to the selected resolution method. At the end of the 180-day period described above, the Bank may provide notice informing the Requesting Party of the status of its request or, in the absence of any such notice, the Requesting Party may presume that its request remains unresolved. The Requesting Party must provide written notice of its intention to refer the matter to mediation (including nonbinding arbitration) or arbitration to the Bank within [thirty (30)] days following such 180th day. The Bank agrees to participate in the resolution method selected by the Requesting Party.
(b) If the Requesting Party selects mediation (including nonbinding arbitration) as the resolution method, the following provisions will apply:
(i) the mediation will be administered by the American Arbitration Association (the AAA) pursuant to its Commercial Arbitration Rules and Mediation Procedures in effect at the time the mediation is initiated (the Rules); provided, that if any of the provisions in the Rules are inconsistent with the procedures for the mediation or arbitration stated in this Agreement, the procedures in this Agreement will control;
(ii) the mediator must be a Qualified Dispute Resolution Professional. Upon being supplied a list, by the AAA, of at least ten (10) potential mediators that are each Qualified Dispute Resolution Professionals, each of the Requesting Party and the Bank will have the right to exercise two (2) peremptory challenges within [fourteen (14)] days and to rank the remaining potential mediators in order of preference. The AAA will select the mediator from the remaining potential mediators on the list, respecting the preference choices of the parties to the extent possible;
(iii) each of the Requesting Party and the Bank will use commercially reasonable efforts to begin the mediation within [ten (10)] Business Days of the selection of the mediator and to conclude the mediation within [thirty (30)] days of the start of the mediation;
(iv) the fees and expenses of the mediation will be allocated as mutually agreed by the Requesting Party and the Bank as part of the mediation; and
(v) a failure by the Requesting Party and the Bank to resolve a disputed matter through mediation shall not preclude either party from seeking a resolution of such matter through the initiation of a judicial proceeding in a court of competent jurisdiction, subject to Section 3.11(d) below.
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(c) If the Requesting Party selects arbitration as the resolution method, the following provisions will apply:
(i) the arbitration will be held in accordance with the United States Arbitration Act, notwithstanding any choice of law provision in this Agreement, and under the auspices of the AAA and in accordance with the Rules;
(ii) if the repurchase request specified in Section 3.11(a) involves the repurchase of an aggregate amount of Receivables with an aggregate Outstanding Principal Balance of less than five percent (5%) of the total Outstanding Principal Balance of the Receivables as of the date of such repurchase request, a single arbitrator will be used. That arbitrator must be a Qualified Dispute Resolution Professional. Upon being supplied a list of at least ten (10) potential arbitrators that are each Qualified Dispute Resolutions Professionals by the AAA, each of the Requesting Party and the Bank will have the right to exercise two (2) peremptory challenges within [fourteen (14)] days and to rank the remaining potential arbitrators in order of preference. The AAA will select the arbitrator from the remaining potential arbitrators on the list respecting the preference choices of the parties to the extent possible;
(iii) if the repurchase request specified in Section 3.11(a) involves the repurchase of an aggregate amount of Receivables with an aggregate Outstanding Principal Balance equal to or in excess of five percent (5%) of the total Outstanding Principal Balance of the Receivables as of the date of such repurchase request, a three-arbitrator panel will be used. The arbitral panel will consist of three Qualified Dispute Resolution Professionals, (A) one to be appointed by the Requesting Party within [five (5)] Business Days of providing notice to the Bank of its selection of arbitration, (B) one to be appointed by the Bank within [five (5)] Business Days of the Requesting Partys appointment of an arbitrator, and (C) the third, who will preside over the arbitral panel, to be chosen by the two party-appointed arbitrators within [five (5)] Business Days of the Banks appointment. If any party fails to appoint an arbitrator or the two party-appointed arbitrators fail to appoint the third within the relevant time periods, then the appointments will be made by the AAA pursuant to the Rules;
(iv) each arbitrator selected for any arbitration will abide by the Code of Ethics for Arbitrators in Commercial Disputes in effect at the time the arbitration is initiated. Prior to accepting an appointment, each arbitrator must promptly disclose any circumstances likely to create a reasonable inference of bias or conflict of interest or likely to preclude completion of the hearings within the prescribed time schedule. Any arbitrator selected may be removed by the AAA for cause consisting of actual bias, conflict of interest or other serious potential for conflict;
(v) the Requesting Party and the Bank each agree that it is their intention that after consulting with the parties, the arbitrator or arbitral panel, as applicable, will devise procedures and deadlines for the arbitration, to the extent not already agreed to by the parties, with the goal of expediting the proceeding and completing the arbitration within [thirty (30)] days after appointment of the arbitrator or arbitral panel, as applicable. The arbitrator or the arbitral panel, as applicable, will have the authority to schedule, hear, and determine any and all motions, including dispositive and discovery motions, in accordance with New York law then in effect (including prehearing and post hearing motions), and will do so on the motion of any party to the
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arbitration. Notwithstanding any other discovery that may be available under the Rules, unless otherwise agreed by the parties, each party to the arbitration will be limited to the following discovery in the arbitration:
(A) consistent with the expedited nature of arbitration, the Requesting Party and the Bank will, upon the written request of the other party, promptly provide the other with copies of documents relevant to the issues raised by any claim or counterclaim on which the producing party may rely in support of or in opposition to the claim or defense;
(B) at the request of a party, the arbitrator or arbitral panel, as applicable, shall have the discretion to order examination by deposition of witnesses to the extent the arbitrator or arbitral panel deems such additional discovery relevant and appropriate. Depositions shall be limited to a maximum of three (3) per party and shall be held within [thirty (30)] days of the making of a request. Additional depositions may be scheduled only with the permission of the arbitrator or arbitral panel, and for good cause shown. Each deposition shall be limited to a maximum of three (3) hours duration. All objections are reserved for the arbitration hearing except for objections based on privilege and proprietary or confidential information;
(C) any dispute regarding discovery, or the relevance or scope thereof, shall be determined by the arbitrator or arbitral panel, which determination shall be conclusive; and
(D) all discovery shall be completed within [sixty (60)] days following the appointment of the arbitrator or the arbitral panel, as applicable; provided, that the arbitrator or the arbitral panel, as applicable, will have the ability to grant the parties, or either of them, additional discovery to the extent that the arbitrator or the arbitral panel, as applicable, determines good cause is shown that such additional discovery is reasonable and necessary;
(vi) the Requesting Party and the Bank each agree that it is their intention that the arbitrator or the arbitral panel, as applicable, will resolve the dispute in accordance with the terms of this Agreement, and may not modify or change this Agreement in any way. The arbitrator or the arbitral panel, as applicable, will not have the power to award punitive damages or consequential damages in any arbitration conducted by it, and the Bank shall not be required to pay more than the applicable Repurchase Price with respect to any Receivable which the Bank is required to repurchase under the terms of this Agreement. The Requesting Party and the Bank each agree that it is their intention that in its final determination, the arbitrator or the arbitral panel, as applicable, will determine and award the costs of the arbitration (including the fees of the arbitrator or the arbitral panel, as applicable, cost of any record or transcript of the arbitration, and administrative fees) and reasonable attorneys fees to the parties as determined by the arbitrator or the arbitral panel, as applicable, in its reasonable discretion. The determination of the arbitrator or the arbitral panel, as applicable, must be consistent with the provisions of this Agreement, and will be in writing and counterpart
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copies will be promptly delivered to the parties. The determination of the arbitrator or the arbitral panel, as applicable, may be reconsidered once by the arbitrator or the arbitral panel, as applicable, upon the motion and at the expense of either party. Following that single reconsideration, the determination of the arbitrator or the arbitral panel, as applicable, will be final and non-appealable and may be entered in and may be enforced in, any court of competent jurisdiction;
(vii) by selecting binding arbitration, the Requesting Party is giving up the right to sue in court, including the right to a trial by jury; and
(viii) no Person may bring a putative or certified class action to arbitration.
(d) The following provisions will apply to both mediations (including nonbinding arbitrations) and arbitrations:
(i) any mediation or arbitration will be held in New York, New York;
(ii) notwithstanding this dispute resolution provision, the parties will have the right to seek provisional or ancillary relief from a competent court of law, including a temporary restraining order, preliminary injunction or attachment order, provided such relief would otherwise be available by law; and
(iii) the details and/or existence of any unfulfilled repurchase request specified in Section 3.11(a) above, any informal meetings, mediations or arbitration proceedings, including all offers, promises, conduct and statements, whether oral or written, made in the course of the parties attempt to informally resolve an unfulfilled repurchase request, and any discovery taken in connection with any arbitration, will be confidential, privileged and inadmissible for any purpose, including impeachment, in any mediation, arbitration or litigation, or other proceeding; provided, however, that any discovery taken in any arbitration will be admissible in that particular arbitration. Such information will be kept strictly confidential and will not be disclosed or discussed with any third party (excluding a partys attorneys, experts, accountants and other agents and representatives, as reasonably required in connection with the related resolution procedure), except as otherwise required by law, regulatory requirement or court order. If any party to a resolution procedure receives a subpoena or other request for information from a third party (other than a governmental regulatory body) for such confidential information, the recipient will promptly notify the other party to the resolution procedure and will provide the other party with the opportunity to object to the production of its confidential information. Notwithstanding anything in this Section 3.11 to the contrary, any discovery taken in connection with any arbitration pursuant to Section 3.11(c) above will be admissible in such arbitration.
SECTION 3.12 Cooperation with Voting. Each of the Bank and COAR hereby acknowledges and agrees that it shall cooperate with the Indenture Trustee to facilitate any vote by the Instituting Noteholders pursuant to the terms of Section 7.6 of the Indenture.
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ARTICLE IV
MISCELLANEOUS
SECTION 4.1 Transfers Intended as Sale; Security Interest.
(a) Each of the parties hereto expressly intends and agrees that the transfers contemplated and effected under this Agreement are complete and absolute sales, transfers and assignments rather than pledges or assignments of only a security interest and shall be given effect as such for all purposes. It is further the intention of the parties hereto that the Receivables and the related Purchased Assets shall not be part of the Banks estate in the event of a bankruptcy or insolvency of the Bank. The sales and transfers by the Bank of the Receivables and the related Purchased Assets hereunder are and shall be without recourse to, or representation or warranty (express or implied) by, the Bank, except as otherwise specifically provided herein. The limited rights of recourse specified herein against the Bank are intended to provide a remedy for breach of representations and warranties relating to the condition of the property sold, rather than to the collectibility of the Receivables.
(b) Notwithstanding the foregoing, in the event that the Receivables and other Purchased Assets are held to be property of the Bank, or if for any reason this Agreement is held or deemed to create indebtedness or a security interest in the Receivables and other Purchased Assets, then it is intended that:
(i) this Agreement shall be deemed to be a security agreement within the meaning of Articles 8 and 9 of the New York UCC and the UCC of any other applicable jurisdiction;
(ii) the conveyance[s] provided for in Section 2.1 [and Section 2.2] shall be deemed to be a grant by the Bank of, and the Bank hereby grants to COAR a security interest in all of its right (including the power to convey title thereto), title and interest, whether now owned or hereafter acquired, in and to the Receivables and other Purchased Assets, to secure such indebtedness and the performance of the obligations of the Bank hereunder;
(iii) the possession by COAR or its agent of the Receivable Files and any other property that constitute instruments, money, negotiable documents or chattel paper shall be deemed to be possession by the secured party or possession by COAR or a Person designated by COAR for purposes of perfecting the security interest pursuant to the New York UCC and the UCC of any other applicable jurisdiction; and
(iv) notifications to Persons holding such property, and acknowledgments, receipts or confirmations from Persons holding such property, shall be deemed to be notifications to, or acknowledgments, receipts or confirmations from, bailees or agents (as applicable) of COAR for the purpose of perfecting such security interest under applicable law.
SECTION 4.2 Notices, Etc. All demands, notices and communications hereunder shall be in writing and shall be delivered or mailed by registered or certified first-class United States mail, postage prepaid, hand delivery, prepaid courier service, or by e-mail (if an
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applicable e-mail address is provided on Schedule I to the Sale Agreement), and addressed in each case as specified on Schedule I to the Sale Agreement, or at such other address as shall be designated by any of the specified addressees in a written notice to the other parties hereto. Any notice required or permitted to be mailed to a Noteholder or Certificateholder shall be given by first class mail, postage prepaid, at the address of such Noteholder or Certificateholder as shown in the Note Register. Delivery shall occur only upon receipt or reported tender of such communication by an officer of the recipient entitled to receive such notices located at the address of such recipient for notices hereunder; provided, however, that any notice to a Noteholder or Certificateholder mailed within the time and manner prescribed in this Agreement shall be conclusively presumed to have been duly given, whether or not the Noteholder or Certificateholder shall receive such notice.
SECTION 4.3 Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL, SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 4.4 Headings. The section headings hereof have been inserted for convenience only and shall not be construed to affect the meaning, construction or effect of this Agreement.
SECTION 4.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, regardless of whether delivered in physical or electronic form, but all of such counterparts shall together constitute but one and the same instrument.
SECTION 4.6 Amendment.
(a) Any term or provision of this Agreement may be amended by the Bank and COAR without the consent of the Indenture Trustee, the Issuer, any Noteholder, the Owner Trustee or any other Person subject to the satisfaction of one of the following conditions:
(i) the Bank or COAR delivers an Opinion of Counsel or an Officers Certificate to the Indenture Trustee to the effect that such amendment will not materially and adversely affect the interests of the Noteholders; or
(ii) the Rating Agency Condition is satisfied with respect to such amendment and the Bank or COAR notifies the Indenture Trustee in writing that the Rating Agency Condition is satisfied with respect to such amendment.
(b) This Agreement may also be amended from time to time by the Bank and COAR with the consent of the Holders of Notes evidencing not less than a majority of the Outstanding Note Balance of the Controlling Class, 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. It will not be
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necessary for the consent of Noteholders or Certificateholders to approve the particular form of any proposed amendment or consent, but it will be sufficient if such consent approves the substance thereof. The manner of obtaining such consents (and any other consents of Noteholders and Certificateholders provided for in this Agreement) and of evidencing the authorization of the execution thereof by Noteholders and Certificateholders will be subject to such reasonable requirements as the Indenture Trustee and Owner Trustee may prescribe, including the establishment of record dates pursuant to the Depository Agreement.
(c) Prior to the execution of any amendment pursuant to this Section 4.6, the Bank or COAR shall provide written notification of the substance of such amendment to each Rating Agency; and promptly after the execution of any such amendment, the Bank or COAR shall furnish a copy of such amendment to each Rating Agency, the Issuer and the Indenture Trustee; provided, that no amendment pursuant to this Section 4.6 shall be effective which materially and adversely affects the rights, protections or duties of the Indenture Trustee or the Owner Trustee without the prior written consent of such Person.
(d) Prior to the execution of any amendment to this Agreement, the Owner Trustee and the Indenture Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and an Officers Certificate from COAR or the Administrator that all conditions precedent to the execution and delivery of such amendment have been satisfied. The Owner Trustee and the Indenture Trustee may, but shall not be obligated to, enter into any such amendment which materially and adversely affects the Owner Trustees or the Indenture Trustees, as applicable, own rights, privileges, indemnities, duties or obligations under this Agreement, the Transaction Documents or otherwise.
(e) Notwithstanding subsections (a) and (b) of this Section 4.6, this Agreement may only be amended by the Bank and COAR if (i) the Majority Certificateholders [or, if 100% of the aggregate Percentage Interests is then beneficially owned by the Bank and/or its Affiliates, such Person (or Persons)], consent to such amendment or (ii) such amendment shall not, as evidenced by an Officers Certificate of the Bank or COAR or an Opinion of Counsel delivered to the Indenture Trustee and the Owner Trustee, materially and adversely affect the interests of the Certificateholders. In determining whether 100% of the aggregate Percentage Interests is then beneficially owned by the Bank and/or its Affiliates for purposes of clause (i), any party shall be entitled to rely on an Officers Certificate or similar certification of the Bank or any Affiliate thereof to such effect.
(f) Notwithstanding anything herein to the contrary, for purposes of classifying the Issuer as a grantor trust under the Code, no amendment shall be made to this Agreement that would (i) result in a variation of the investment of the beneficial owners of the Certificates for purposes of the United States Treasury Regulation section 301.7701-4(c) without the consent of Noteholders evidencing at least a majority of the Outstanding Note Balance of the Controlling Class and the Majority Certificateholders or (ii) cause the Issuer (or any part thereof) to be classified as other than a grantor trust under subtitle A, chapter 1, subchapter J, part I, subpart E of the Code without the consent of all of the Noteholders and all of the Certificateholders.
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SECTION 4.7 Waivers. No failure or delay on the part of COAR the Servicer, the Bank, the Issuer or the Indenture Trustee in exercising any power or right hereunder (to the extent such Person has any power or right hereunder) shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on COAR or the Bank in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by either party under this Agreement shall, except as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval under this Agreement shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 4.8 Entire Agreement. The Transaction Documents contain a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter thereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter thereof, superseding all prior oral or written understandings. There are no unwritten agreements among the parties.
SECTION 4.9 Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.
SECTION 4.10 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect until such time as the parties hereto shall agree.
SECTION 4.11 Acknowledgment and Agreement. By execution below, the Bank expressly acknowledges and consents to the sale of the Purchased Assets and the assignment of all rights and obligations of the Bank related thereto by COAR to the Issuer pursuant to the Sale Agreement and the Grant of a security interest in the Receivables and the other Purchased Assets by the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the Noteholders. In addition, the Bank hereby acknowledges and agrees that for so long as the Notes are outstanding, the Indenture Trustee will have, pursuant to the Transaction Documents, the right to exercise all powers, privileges and claims of COAR under this Agreement in the event that COAR shall fail to exercise the same.
SECTION 4.12 Cumulative Remedies. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.
SECTION 4.13 Nonpetition Covenant. Each party hereto agrees that, prior to the date which is one year and one day after payment in full of all obligations of each Bankruptcy Remote Party in respect of all securities issued by any Bankruptcy Remote Party (i) such party shall not authorize any Bankruptcy Remote Party to commence a voluntary winding-up or other voluntary case or other Proceeding seeking liquidation, reorganization or other relief with respect
-15- | Form of Purchase Agreement |
to such Bankruptcy Remote Party or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction or seeking the appointment of an administrator, a trustee, receiver, liquidator, custodian or other similar official with respect to such Bankruptcy Remote Party or any substantial part of its property or to consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other Proceeding commenced against such Bankruptcy Remote Party, or to make a general assignment for the benefit of its creditors generally, any party hereto or any other creditor of such Bankruptcy Remote Party, and (ii) such party shall not commence or join with any other Person in commencing any Proceeding against such Bankruptcy Remote Party under any bankruptcy, reorganization, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction. This Section shall survive the termination of this Agreement.
SECTION 4.14 Submission to Jurisdiction; Waiver of Jury Trial. Each of the parties hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any Proceeding relating to this Agreement or any documents executed and delivered in connection herewith, or for recognition and enforcement of any judgment in respect thereof, to the nonexclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof;
(b) consents that any such Proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such Proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address determined in accordance with Section 4.2 of this Agreement;
(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) to the extent permitted by applicable law, each party hereto irrevocably waives all right of trial by jury in any Proceeding or counterclaim based on, or arising out of, under or in connection with this Agreement, any other Transaction Document, or any matter arising hereunder or thereunder.
SECTION 4.15 Not Applicable to the Bank in Other Capacities. Nothing in this Agreement shall affect any obligation the Bank may have in any other capacity.
SECTION 4.16 Third-Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns and each of the Issuer[, the Swap Counterparty] and the Indenture Trustee shall be an express third-party beneficiary hereof and may enforce the provisions hereof as if it were a party hereto. Except as otherwise provided in this Section, no other Person will have any right hereunder.
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SECTION 4.17 [Limitation of Rights. All of the rights of the Swap Counterparty in, to and under this Agreement (including, but not limited to, all of the Swap Counterpartys rights as a third party beneficiary of this Agreement and all of the Swap Counterpartys rights to receive notice of any action hereunder and to give or withhold consent to any action hereunder) shall terminate upon the termination of the Interest Rate Swap Agreement in accordance with the terms thereof and the payment in full of all amounts owing to the Swap Counterparty.]
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
CAPITAL ONE, NATIONAL ASSOCIATION | ||
By: |
| |
Name: | ||
Title: |
S-1 | Form of Purchase Agreement |
CAPITAL ONE AUTO RECEIVABLES, LLC | ||
By: |
| |
Name: | ||
Title: |
S-2 | Form of Purchase Agreement |
EXHIBIT A
FORM OF
ASSIGNMENT PURSUANT TO PURCHASE AGREEMENT
[DATE]
For value received, in accordance with the Purchase Agreement, dated as of [___________], 20[__] (the Agreement), between Capital One, National Association, a national banking association (the Bank), and Capital One Auto Receivables, LLC, a Delaware limited liability company (COAR), on the terms and subject to the conditions set forth in the Agreement, the Bank does hereby transfer, assign, set over, sell and otherwise convey to COAR on the date hereof without recourse (subject to the obligations in the Agreement), all of its right, title, interest, claims and demands[, whether now owned or hereafter acquired,] in, to and under the Receivables set forth on the Schedule of Receivables delivered by the Bank to COAR on the date hereof, the Collections after the [related] Cut-Off Date, the Receivable Files and the Related Security relating thereto and all the proceeds of the foregoing, which sale shall be effective as of such Cut-Off Date.
The foregoing sale does not constitute and is not intended to result in an assumption by COAR of any obligation of the Bank to the Obligors, the Dealers, insurers or any other Person in connection with the Receivables, or the other assets and properties conveyed hereunder or any agreement, document or instrument related thereto.
This assignment is made pursuant to and upon the representations, warranties and agreements on the part of the undersigned contained in the Agreement and is governed by the Agreement.
Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in the Agreement or, if not defined in the Agreement, in Appendix A to the Sale Agreement, dated as of [___________], 20[__], between Capital One Prime Auto Receivables Trust 20[__]-[_], and COAR.
[Remainder of page intentionally left blank]
Ex A-1
IN WITNESS HEREOF, the undersigned has caused this assignment to be duly executed as of the date first written above.
CAPITAL ONE, NATIONAL ASSOCIATION | ||
By: |
| |
Name: | ||
Title: |
Ex A-2 | Exhibit A to the Purchase Agreement |
SCHEDULE I
SCHEDULE I
PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS
In addition to the representations, warranties and covenants contained in the Agreement, the Bank hereby represents, warrants, and covenants to COAR as follows on the Closing Date [and on each Funding Date]:
General
1. This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Receivables and the other Purchased Assets in favor of COAR which security interest is prior to all other Liens, and is enforceable as such against creditors of and purchasers from the Bank.
2. The Receivables constitute chattel paper (including electronic chattel paper or tangible chattel paper), accounts, instruments, promissory notes, payment intangibles or general intangibles, within the meaning of the applicable UCC.
3. Immediately prior to the sale, transfer, contribution, assignment and/or conveyance of a Receivable, such Receivable is secured by a first priority validly perfected and enforceable security interest in the related Financed Vehicle in favor of the Originator (or its assignee), as secured party, or all necessary actions with respect to such Receivable have been taken or will be taken to perfect a first priority security interest in the related Financed Vehicle in favor of the Originator (or its assignee), as secured party, subject, as to enforcement, to applicable bankruptcy, insolvency, reorganization, liquidation or other similar laws and equitable principles relating to or affecting the enforcement of creditors rights generally.
Creation
4. Immediately prior to the sale, transfer, contribution, assignment and/or conveyance of a Receivable by the Bank to COAR, the Bank owned and had good and marketable title to such Receivable free and clear of any Lien created by the Bank (other than any Liens in favor of COAR) and immediately after the sale, transfer, assignment and conveyance of such Receivable to COAR, COAR will have good and marketable title to such Receivable free and clear of any Lien.
5. The Bank has received all consents and approvals to the sale of the Receivables hereunder to COAR required by the terms of the Receivables that constitute instruments.
Perfection
6. The Bank has submitted or will have caused to be submitted, on the effective date of this Agreement, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the sale of the Receivables from the Bank to COAR and the security interest in the Receivables granted to COAR hereunder; and the Servicer, in its capacity as custodian, has in its possession the original copies of such instruments or tangible chattel paper that constitute or evidence the Receivables, and all
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financing statements referred to in this paragraph contain a statement that: A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Secured Party/Purchaser.
7. With respect to Receivables that constitute an instrument or tangible chattel paper, either:
(i) All original executed copies of each such instrument or tangible chattel paper have been delivered to the Indenture Trustee, as pledgee of the Issuer; or
(ii) Such instruments or tangible chattel paper are in the possession of the Servicer and the Indenture Trustee has received a written acknowledgment from the Servicer that the Servicer (in its capacity as custodian) is holding such instruments or tangible chattel paper solely on behalf and for the benefit of the Indenture Trustee, as pledgee of the Issuer; or
(iii) The Servicer received possession of such instruments or tangible chattel paper after the Indenture Trustee received a written acknowledgment from the Servicer that the Servicer is acting solely as agent of the Indenture Trustee, as pledgee of the Issuer.
Priority
8. The Bank has not authorized the filing of, and is not aware of any financing statements against the Bank that include a description of collateral covering the Receivables other than any financing statement (i) relating to the conveyance of the Receivables by the Bank to COAR under the Purchase Agreement, (ii) relating to the conveyance of the Receivables by COAR to the Issuer under the Sale Agreement, (iii) relating to the security interest granted to the Indenture Trustee under the Indenture or (iv) that has been terminated.
9. The Bank is not aware of any material judgment, ERISA or tax lien filings against the Bank.
10. Neither the Bank nor a custodian or vaulting agent thereof holding any Receivable that is electronic chattel paper has communicated an authoritative copy (as such term is used in Section 9-105 of the UCC) of any loan agreement that constitutes or evidences such Receivable to any Person other than the Servicer.
11. None of the instruments, electronic chattel paper or tangible chattel paper that constitutes or evidences the Receivables has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than COAR, the Issuer or the Indenture Trustee.
Survival of Perfection Representations
12. Notwithstanding any other provision of this Agreement, the perfection representations, warranties and covenants contained in this Schedule I shall be continuing, and remain in full force and effect until such time as all obligations under Notes have been finally and fully paid and performed.
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No Waiver
13. The Bank shall provide the Rating Agencies with prompt written notice of any material breach of the perfection representations, warranties and covenants contained in this Schedule I, and shall not, without satisfying the Rating Agency Condition, waive a breach of any of such perfection representations, warranties or covenants.
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SCHEDULE II
SCHEDULE II
REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO THE RECEIVABLES
(a) Characteristics of Receivables. As of the Cut-Off Date (or such other date as may be specifically set forth below), each Receivable:
(i) has been fully and properly executed or electronically authenticated by the Obligor thereto;
(ii) has been originated by a Dealer to finance the retail sale by that Dealer of the related Financed Vehicle and has been purchased by the Bank from that Dealer;
(iii) as of the Closing Date, is secured by a first priority validly perfected security interest in the Financed Vehicle in favor of the Originator, as secured party, or all necessary actions have been commenced that would result in a first priority security interest in the Financed Vehicle in favor of the Originator, as secured party;
(iv) contains customary and enforceable provisions such that the rights and remedies of the holder thereof are adequate for realization against the collateral of the benefits of the security;
(v) provided, at origination, for level monthly payments which fully amortize the initial Outstanding Principal Balance over the original term; provided, that the amount of the first or last scheduled payment may be different from the level payment but in no event more than three times the level monthly payment;
(vi) provides for interest at the Contract Rate specified in the Schedule of Receivables;
(vii) was originated in the United States;
(viii) is secured by a new or used automobile, light duty truck, SUV or van;
(ix) has a Contract Rate of at least [___]%;
(x) had an original term to maturity of not more than [___] months and each Receivable has a remaining term to maturity, as of the Cut-Off Date, of not more than [___] months and not less than [___] month[s];
(xi) has an Outstanding Principal Balance of at least $[___];
(xii) has a final scheduled payment due on or before [___];
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(xiii) was not more than [twenty-nine (29)] days past due as of the Cut-Off Date;
(xiv) was not noted in the records of the Servicer as being the subject of any verified bankruptcy or insolvency Proceeding;
(xv) is a Simple Interest Receivable; and
(xvi) provides that a prepayment by the related Obligor will fully pay the Outstanding Principal Balance and accrued interest through the date of prepayment based on the Receivables Contract Rate.
(b) Compliance with Law. The Receivable complied at the time it was originated or made in all material respects with all requirements of applicable federal, state and local laws, and regulations thereunder, except where the failure to comply (i) was remediated or cured in all material respects prior to the Cut-Off Date, or (ii) would not render such Receivable unenforceable or create liability for COAR or the Issuer, as an assignee of such Receivable.
(c) Binding Obligation. The Receivable constitutes the legal, valid and binding payment obligation in writing of the Obligor, enforceable by the holder thereof in accordance with its terms, except (i) as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, liquidation or other similar laws and equitable principles relating to or affecting the enforcement of creditors rights generally and (ii) as such Receivable may be modified by the application after the Cut-Off Date of the Servicemembers Civil Relief Act, as amended, to the extent applicable to the related Obligor.
(d) Receivable in Force. The Receivable has not been satisfied, subordinated or rescinded nor do the records of the Servicer indicate that the related Financed Vehicle has been released from the lien of such Receivable in whole or in part.
(e) No Default; No Waivers. Except for payment delinquencies continuing for a period of not more than [twenty-nine (29)] days as of the Cut-Off Date or the failure of the Obligor to maintain physical damage insurance covering the related Financed Vehicle in accordance with the requirements of the Receivable, the records of the Servicer did not disclose that any default, breach, violation or event permitting acceleration under the terms of the Receivable existed as of the Cut-Off Date.
(f) Insurance. The Receivable requires that the Obligor thereunder obtain physical damage insurance covering the related Financed Vehicle.
(g) No Government Obligor. The Obligor on the Receivable is not the United States of America or any state thereof or any local government, or any agency, department, political subdivision or instrumentality of the United States of America or any state thereof or any local government.
(h) Assignment. No Receivable has been originated in, or is subject to the laws of, any jurisdiction under which the sale, transfer, assignment, contribution, conveyance or pledge of such Receivable would be unlawful, void, or voidable.
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(i) Good Title. As of the Closing Date and immediately prior to the sale and transfer contemplated in the Purchase Agreement, the Bank had good and marketable title to and was the sole owner of each Receivable free and clear of all Liens created by the Bank (except any Lien which will be released prior to assignment of such Receivable thereunder), and, immediately upon the sale and transfer by the Bank to COAR, COAR will have good and marketable title to each Receivable, free and clear of all Liens created by COAR (other than Permitted Liens). Immediately upon the sale and transfer by COAR to the Issuer pursuant to the Sale Agreement, the Issuer will have good and marketable title to each Receivable, free and clear of all Liens created by the Issuer (other than Permitted Liens).
(j) Characterization of Receivables. Each Receivable constitutes either tangible chattel paper, electronic chattel paper, an account, an instrument, or a general intangible, each as defined in the UCC.
(k) One Original. There is only one executed original, electronically authenticated original or authoritative copy of the Contract (in each case within the meaning of the UCC) related to each Receivable.
(l) No Defenses. The records of the Servicer do not reflect any material facts which have not been remediated or cured which would constitute the basis for any right of rescission, offset, claim, counterclaim or defense with respect to such Receivable or the same being asserted or threatened with respect to such Receivable.
II-3
Exhibit 10.3
FORM OF
SERVICING AGREEMENT
by and between
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ],
as Issuer
CAPITAL ONE, NATIONAL ASSOCIATION,
as Servicer
and
[ ],
as Indenture Trustee
Dated as of [ ], 20[ ]
TABLE OF CONTENTS
ARTICLE I |
DEFINITIONS AND USAGE |
1 | ||||
SECTION 1.1 |
Definitions |
1 | ||||
SECTION 1.2 |
Other Interpretive Provisions |
1 | ||||
ARTICLE II |
SERVICER AS CUSTODIAN |
2 | ||||
SECTION 2.1 |
Custody of Receivable Files |
2 | ||||
ARTICLE III |
ADMINISTRATION AND SERVICING OF RECEIVABLES AND TRUST PROPERTY |
4 | ||||
SECTION 3.1 |
Duties of Servicer |
4 | ||||
SECTION 3.2 |
Collection of Receivable Payments |
6 | ||||
SECTION 3.3 |
Realization Upon Receivables |
8 | ||||
SECTION 3.4 |
Maintenance of Security Interests in Financed Vehicles |
8 | ||||
SECTION 3.5 |
Covenants of Servicer |
9 | ||||
SECTION 3.6 |
Purchase of Receivables Upon Breach |
9 | ||||
SECTION 3.7 |
Servicing Fee |
10 | ||||
SECTION 3.8 |
Administrators Fee |
10 | ||||
SECTION 3.9 |
Servicers Report |
10 | ||||
SECTION 3.10 |
Annual Officers Certificate; Notice of Servicer Replacement Event |
10 | ||||
SECTION 3.11 |
Servicer Expenses |
11 | ||||
SECTION 3.12 |
Annual Registered Public Accounting Firm Attestation Report |
11 | ||||
SECTION 3.13 |
Exchange Act Filings |
12 | ||||
SECTION 3.14 |
Sarbanes-Oxley Act Requirements |
12 | ||||
SECTION 3.15 |
Compliance with the FDIC Rule |
12 | ||||
ARTICLE IV |
DISTRIBUTIONS; ACCOUNTS |
12 | ||||
SECTION 4.1 |
Establishment of Accounts |
12 | ||||
SECTION 4.2 |
Remittances |
12 | ||||
SECTION 4.3 |
Additional Deposits and Payments |
12 | ||||
ARTICLE V |
THE SERVICER |
13 | ||||
SECTION 5.1 |
Representations and Warranties of the Servicer |
13 | ||||
SECTION 5.2 |
Indemnities of Servicer |
14 | ||||
SECTION 5.3 |
Merger or Consolidation of, or Assumption of the Obligations of, Servicer |
15 | ||||
SECTION 5.4 |
Limitation on Liability of Servicer and Others |
15 |
i
TABLE OF CONTENTS
(continued)
SECTION 5.5 |
Delegation of Duties |
16 | ||||
SECTION 5.6 |
The Bank Not to Resign as Servicer |
16 | ||||
SECTION 5.7 |
Servicer May Own Notes and Certificates |
16 | ||||
ARTICLE VI |
REPLACEMENT OF SERVICER |
17 | ||||
SECTION 6.1 |
Replacement of Servicer |
17 | ||||
SECTION 6.2 |
Notification to Noteholders and Certificateholders |
18 | ||||
ARTICLE VII |
OPTIONAL PURCHASE |
18 | ||||
SECTION 7.1 |
Optional Purchase of Trust Estate |
18 | ||||
ARTICLE VIII |
MISCELLANEOUS PROVISIONS |
19 | ||||
SECTION 8.1 |
Amendment |
19 | ||||
SECTION 8.2 |
Protection of Title |
20 | ||||
SECTION 8.3 |
Notices, Etc |
21 | ||||
SECTION 8.4 |
Choice of Law |
21 | ||||
SECTION 8.5 |
Headings |
21 | ||||
SECTION 8.6 |
Counterparts |
21 | ||||
SECTION 8.7 |
Waivers |
22 | ||||
SECTION 8.8 |
Entire Agreement |
22 | ||||
SECTION 8.9 |
Severability of Provisions |
22 | ||||
SECTION 8.10 |
Binding Effect |
22 | ||||
SECTION 8.11 |
Not Applicable to the Bank in Other Capacities |
22 | ||||
SECTION 8.12 |
Cumulative Remedies |
22 | ||||
SECTION 8.13 |
Nonpetition Covenant |
22 | ||||
SECTION 8.14 |
Submission to Jurisdiction; Waiver of Jury Trial |
23 | ||||
SECTION 8.15 |
Limitation of Liability |
23 | ||||
SECTION 8.16 |
Third-Party Beneficiaries |
24 | ||||
SECTION 8.17 |
Information Requests |
24 | ||||
SECTION 8.18 |
Compliance with Regulation AB |
24 | ||||
SECTION 8.19 |
Information to Be Provided by the Indenture Trustee |
24 | ||||
SECTION 8.20 |
Form 8-K Filings |
26 | ||||
SECTION 8.21 |
Cooperation with Voting |
26 | ||||
SECTION 8.22 |
EU Risk Retention |
26 | ||||
SECTION 8.23 |
[Limitation of Rights |
27 |
ii
TABLE OF CONTENTS
(continued)
Exhibit A | SERVICING CRITERIA TO BE ADDRESSED IN INDENTURE TRUSTEES ASSESSMENT OF COMPLIANCE | |
Exhibit B | FORM OF INDENTURE TRUSTEES ANNUAL CERTIFICATION | |
Exhibit C | FORM OF INDENTURE TRUSTEES [MONTHLY][ANNUAL CERTIFICATION]REGARDING ITEM 1117 AND ITEM 1119 OF REGULATION AB |
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This SERVICING AGREEMENT, dated as of [ ], 20[ ] (together with all exhibits, schedules and appendices hereto and as amended, supplemented or otherwise modified and in effect from time to time, this Agreement), by and among CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ], a Delaware statutory trust (the Issuer), CAPITAL ONE, NATIONAL ASSOCIATION, a national banking association (the Bank), as servicer (in such capacity, the Servicer), and [ ], a [ ], as indenture trustee (the Indenture Trustee).
WHEREAS, the Issuer has acquired a portfolio of motor vehicle receivables, including motor vehicle retail installment sales contracts and/or installment loans that are secured by new and used automobiles, light-duty trucks, SUVs and vans; and
WHEREAS, the Bank is willing to service such motor vehicle receivables and related property on behalf of the Issuer;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
SECTION 1.1 Definitions. Except as otherwise specified herein or as the context may otherwise require, capitalized terms used but not otherwise defined herein are defined in Appendix A to the Sale Agreement, dated as of the date hereof (as amended, supplemented, or otherwise modified and in effect from time to time, the Sale Agreement), between the Issuer and Capital One Auto Receivables, LLC, which also contains rules as to usage that are applicable herein.
SECTION 1.2 Other Interpretive Provisions. For purposes of this Agreement, unless the context otherwise requires: (a) accounting terms not otherwise defined in this Agreement, and accounting terms partly defined in this Agreement to the extent not defined, shall have the respective meanings given to them under GAAP (provided, that, to the extent that the definitions in this Agreement and GAAP conflict, the definitions in this Agreement shall control); (b) terms defined in Article 9 of the UCC as in effect in the relevant jurisdiction and not otherwise defined in this Agreement are used as defined in that Article; (c) the words hereof, herein and hereunder and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) references to any Article, Section, Schedule, Appendix or Exhibit are references to Articles, Sections, Schedules, Appendices and Exhibits in or to this Agreement and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (e) the term including and all variations thereof means including without limitation; (f) except as otherwise expressly provided herein, references to any law or regulation refer to that law or regulation as amended from time to time and include any successor law or regulation; (g) references to any Person include that Persons successors and assigns; and (h) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision herein.
Servicing Agreement |
ARTICLE II
SERVICER AS CUSTODIAN
SECTION 2.1 Custody of Receivable Files.
(a) Custody. The Issuer and the Indenture Trustee, upon the execution and delivery of this Agreement, hereby appoint the Servicer, for which appointment the Indenture Trustee has no liability, and the Servicer hereby accepts such appointment, to act solely on behalf of and for the benefit of the Issuer and the Indenture Trustee as custodian of the following documents or instruments with respect to each Receivable (but only to the extent applicable to such Receivable and only to the extent held in tangible paper or electronic form) (the Receivable Files):
(i) | the fully executed original[, electronically authenticated original or authoritative copy] of the Contract ([in each case,] within the meaning of the UCC) related to such Receivable, including any written amendments or extensions thereto; |
(ii) | the original credit application or a photocopy thereof to the extent held in paper form; |
(iii) | the original Certificate of Title or, if not yet received, evidence that an application therefor has been submitted with the appropriate authority, a guaranty of title from a Dealer or such other document (electronic or otherwise, as used in the applicable jurisdiction) that the Servicer keeps on file, in accordance with its Customary Servicing Practices, evidencing the security interest of the Originator in the Financed Vehicle; provided, however, that in lieu of being held in the Receivable File, the Certificate of Title may be held by a third party service provider engaged by the Servicer to obtain or hold Certificates of Title; and |
(iv) | any and all other documents that the Servicer keeps on file, in accordance with its Customary Servicing Practices, relating to a Receivable, an Obligor or a Financed Vehicle (but only to the extent applicable to such Receivable and only to the extent held in tangible paper form or electronic form). |
(b) Safekeeping. The Servicer, in its capacity as custodian, shall hold the Receivable Files for the benefit of the Issuer and the Indenture Trustee, as pledgee of the Issuer. In performing its duties as custodian, the Servicer shall act in accordance with its Customary Servicing Practices. Nothing herein will be deemed to require an initial review or any periodic review by the Issuer or the Indenture Trustee of the Receivable Files. The Servicer may, in accordance with its Customary Servicing Practices: (i) maintain all or a portion of the Receivable Files in electronic form and (ii) maintain custody of all or any portion of the Receivable Files with one or more of its agents or designees.
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(c) Maintenance of and Access to Records. The Servicer will maintain all tangible documents or instruments included in each Receivable File in the United States (it being understood that the Receivable Files, or any part thereof, may be maintained at the offices of any Person to whom the Servicer has delegated responsibilities in accordance with Section 5.5). The Servicer will make available to the Issuer and the Indenture Trustee or their duly authorized representatives, attorneys or auditors a list of locations of the Receivable Files held in tangible form upon request. The Servicer will provide access to the Receivable Files, and the related accounts, records and computer systems maintained by the Servicer at such times as the Issuer or the Indenture Trustee direct, but only upon reasonable notice and during the normal business hours, which do not unreasonably interfere with the Servicers normal operations, at the respective offices of the Servicer; provided, however, that in the case of this clause (c), an officer of the Bank must be present during any such visit or discussion.
(d) Release of Documents. Upon written instructions from the Indenture Trustee, the Servicer will release or cause to be released any document in the Receivable Files to the Indenture Trustee, the Indenture Trustees agent or the Indenture Trustees designee, as the case may be, at such place or places as the Indenture Trustee may designate, as soon thereafter as is practicable, to the extent it does not unreasonably interfere with the Servicers normal operations. Any document so released will be handled by the Indenture Trustee with reasonable care and returned to the Servicer for safekeeping as soon as the Indenture Trustee or its agent or designee, as the case may be, has no further need therefor. The Servicer shall not be responsible for any loss occasioned by the failure of the Indenture Trustee or its agent or designee to return any document or any delay in doing so.
(e) Instructions; Authority to Act. All instructions from the Indenture Trustee will be in writing and signed by an Authorized Officer of the Indenture Trustee, and the Servicer will be deemed to have received proper instructions with respect to the Receivable Files upon its receipt of such written instructions.
(f) Custodians Indemnification. Subject to Section 5.2, the Servicer as custodian will indemnify the Issuer and the Indenture Trustee for any and all liabilities, obligations, losses, compensatory damages, payments, costs or expenses (including reasonable legal fees and expenses) of any kind whatsoever that may be imposed on, incurred by or asserted against the Issuer or the Indenture Trustee as the result of any improper act or omission in any way relating to the maintenance and custody by the Servicer as custodian of the Receivable Files including those incurred in connection with any action, claim or suit brought to enforce the Indenture Trustees right to indemnification; provided, however, that the Servicer as custodian will not be liable (i) to the Indenture Trustee or to the Issuer for any portion of any such amount resulting from the willful misconduct, bad faith or negligence of the Indenture Trustee or the Issuer, respectively, or (ii) to the Indenture Trustee for any portion of any such amount resulting from the failure of the Indenture Trustee, the Indenture Trustees agent or the Indenture Trustees designee to handle with reasonable care any Certificate of Title or other document released to the Indenture Trustee, the Indenture Trustees agent or the Indenture Trustees designee pursuant to Section 2.1(d). The provisions of this Section 2.1(f) shall survive the
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termination or assignment of this Agreement and the resignation or removal of the Indenture Trustee or Servicer, in its capacity as custodian. Any amount payable to the Indenture Trustee pursuant to this Section 2.1(f), to the extent not paid by the Servicer, shall be paid by the Issuer in accordance with Section 8.5(a) of the Indenture.
(g) Effective Period and Termination. The Servicers appointment as custodian will become effective as of the Cut-Off Date and will continue in full force and effect until terminated pursuant to this Section. If the Bank resigns as Servicer in accordance with the provisions of this Agreement or if all of the rights and obligations of the Servicer have been terminated under Section 6.1, the appointment of the Servicer as custodian hereunder may be terminated by the Indenture Trustee pursuant to the Transaction Documents, or by the Noteholders evidencing not less than a majority of the Outstanding Note Balance of the Controlling Class (or, if the Notes are no longer Outstanding, by the Majority Certificateholders), in the same manner as the Relevant Trustee or such Noteholders (or Certificateholders) may terminate the rights and obligations of the Servicer under Section 6.1. As soon as practicable after any termination of such appointment, the Servicer will deliver to the successor custodian the Receivable Files and the related accounts and records maintained by the Servicer at such place or places as the successor custodian may reasonably designate[; provided, however, that with respect to authoritative copies of the Receivables constituting electronic chattel paper, the Servicer, in its sole discretion, shall either (i) continue to hold any such authoritative copies on behalf of the Issuer and the Indenture Trustee or the Indenture Trustees agent (provided that the Servicer has not been terminated in accordance with the provisions of this Section 2.1(g)) or (ii) deliver copies of such authoritative copies and destroy the authoritative copies maintained by the Servicer prior to its termination such that the copy delivered to the Indenture Trustee or the Indenture Trustees agent becomes the authoritative copy of the Receivable constituting electronic chattel paper.] No such termination or resignation shall be given effect until a successor custodian has assumed the duties as custodian hereunder and in the Transaction Documents.
(h) Liability of Indenture Trustee. The Indenture Trustee shall not be liable for the acts or omissions of the Servicer, in its capacity as custodian of the Receivable Files.
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY
SECTION 3.1 Duties of Servicer.
(a) The Servicer is hereby appointed and authorized by the Issuer to act as agent for the Issuer and in such capacity shall manage, service, administer and make collections on the Receivables in accordance with its Customary Servicing Practices, subject to the provisions herein, using the degree of skill and care that the Servicer exercises with respect to all comparable motor vehicle receivables that it services for itself or others. The Servicers duties will include collection and posting of all payments, responding to inquiries of Obligors on such Receivables, pursuing delinquencies, providing invoices or other payment information (which may be in electronic form) to Obligors, reporting any required tax information to Obligors and
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accounting for Collections. The Servicer is not required under the Transaction Documents to make any disbursements via wire transfer or otherwise on behalf of an Obligor. There are no requirements under the Receivables or the Transaction Documents for funds to be, and funds shall not be, held in trust for an Obligor. There are no requirements under the Receivables or the Transaction Documents for payments or disbursements to be made by the Servicer on behalf of the Obligor. The Servicer hereby accepts such appointment and authorization and agrees to perform the duties of Servicer with respect to the Receivables set forth herein.
(b) Subject to the provisions of Section 3.2 and any other provision in this Agreement restricting the Servicer or specifying obligations different from the Customary Servicing Practices, the Servicer will follow its Customary Servicing Practices and will have full power and authority to do any and all things in connection with such managing, servicing, administration and collection that it may deem necessary or desirable as long as such activities will not result or cause the Issuer to be treated, for United States federal income tax purposes, as an association (or a publicly traded partnership) taxable as a corporation or as other than a fixed investment trust described in Treasury Regulation section 301.7701-4(c) that is treated as a grantor trust for United States federal income tax purposes. The Servicer is hereby authorized and empowered to execute and deliver, on behalf of itself, the Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders, the Certificateholders, or any of them, any and all instruments of satisfaction or cancellation, or partial or full release or discharge, and all other comparable instruments, with respect to such Receivables or to the Financed Vehicles securing such Receivables. The Servicer is hereby authorized to commence, in its own name or in the name of the Issuer, a Proceeding to enforce a Receivable or an Insurance Policy or to commence or participate in any other Proceeding (including a bankruptcy Proceeding) relating to or involving a Receivable, an Obligor, a Financed Vehicle or an Insurance Policy. If the Servicer commences a Proceeding to enforce a Receivable, the Issuer will thereupon be deemed to have automatically assigned such Receivable or its rights under such Insurance Policy to the Servicer solely for purposes of commencing or participating in any such Proceeding as a party or claimant, and the Servicer is authorized and empowered by the Issuer to execute and deliver in the Servicers name any notices, demands, claims, complaints, responses, affidavits or other documents or instruments in connection with any such Proceeding. If in any Proceeding it is held that the Servicer may not enforce a Receivable or Insurance Policy on the ground that it is not a real party in interest or a holder entitled to enforce the Receivable or Insurance Policy, the Issuer will, at the Servicers expense and direction, take steps to enforce the Receivable or Insurance Policy, including bringing suit in its name or the name of the Indenture Trustee. The Issuer will 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. The Servicer, at its expense, will obtain on behalf of the Issuer all licenses, if any, reasonably requested by the Seller to be held by the Issuer in connection with ownership of the Receivables, and will make all filings and pay all fees as may be required in connection therewith during the term hereof.
(c) The Servicer hereby agrees that upon its resignation and the appointment of a successor Servicer hereunder, the Servicer will terminate its activities as Servicer hereunder in accordance with Section 6.1, and, in any case, in a manner which the successor Servicer reasonably determines will facilitate the transition of the performance of such activities to such successor Servicer, and the Servicer shall cooperate with and assist such successor Servicer.
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(d) The Servicer shall not be required to maintain a fidelity bond or error and omissions policy or to monitor whether Obligors maintain an Insurance Policy on the Financed Vehicles.
SECTION 3.2 Collection of Receivable Payments. (a) The Servicer will make reasonable efforts to collect all payments called for under the terms and provisions of the Receivables as and when the same become due in accordance with its Customary Servicing Practices. The Servicer may grant Permitted Modifications, but not any other extension, deferral, amendment, modification, alteration, temporary reduction in payments or adjustment, with respect to any Receivable in accordance with its Customary Servicing Practices; provided, however, that if the Servicer (i) extends the date for final payment by the Obligor of any Receivable beyond the last day of the Collection Period preceding the latest Final Scheduled Payment Date of any Notes issued under the Indenture or (ii) reduces the Contract Rate or Outstanding Principal Balance with respect to any Receivable, in either case other than (A) as required by law or court order, at the direction of a regulatory authority, in accordance with regulatory guidance or in accordance with the Servicers compliance procedures for complying with the Servicemembers Civil Relief Act and any similar applicable state law or (B) in connection with a modification, adjustment or settlement in the event the Receivable becomes a Severely Distressed Receivable, it will promptly purchase such Receivable in the manner provided in Section 3.6; provided, further, that the Servicer shall not make a modification described in the preceding clause (i) or (ii) that would trigger a purchase pursuant to Section 3.6 for the sole purpose of enabling the Servicer to purchase a Receivable from the Issuer. The Servicer may in its discretion waive any late payment charge or any other fees that constitute Supplemental Servicing Fees and Reimbursements that may be collected in the ordinary course of servicing a Receivable. The Servicer is not required to make any advances of funds or guarantees regarding collections, cash flows or distributions. Without limiting the foregoing, the Servicer and its Affiliates (each in its individual capacity and not on behalf of the Issuer) may engage in any marketing practice or promotion or any sale of any products, goods or services, including Insurance Policy, to Obligors with respect to the Receivables so long as such practices, promotions or sales are offered to obligors of comparable motor vehicle receivables serviced by the Servicer for itself and others, whether or not such practices, promotions or sales might result in a decrease in the aggregate amount of payments on the Receivables, prepayments or faster or slower timing of the payment of the Receivables.
Permitted Modification means an extension, deferral, alteration, amendment, modification, temporary reduction in payment or adjustment to the terms of, or with respect to, any Receivable with respect to which at least one of the following conditions has been satisfied:
(i) | any amendment, modification, alteration or adjustment, individually and collectively with any other amendment, modification, alteration or adjustment proposed to be made with respect to the Receivable, is ministerial in nature (including, without limitation, any change to the due date for monthly payments that is not classified by the Servicer as an extension); |
(ii) | any amendment, modification, alteration or adjustment, individually and collectively with any other amendment, modification, alteration or |
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adjustment that (A) is required by law, or (B) (i) is in accordance with the Servicers Customary Servicing Practices and (ii) is intended by the Servicer to comply with or respond to a law, government regulation or government enforcement activity pertaining to the Receivables or classes of loans similar to the Receivables; |
(iii) | in the case of any extension or deferral, (A) the Obligors address is within a geographic area determined by the President of the United States or the Governor of the applicable state to warrant individual, or individual and public, assistance from the federal government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act or similar state law, as the case may be, or (B) the Obligor is a United States federal or state government employee that is furloughed on account of a shutdown of such government occurring as a result of a lapse in annual appropriations; |
(iv) | any amendment, modification, alteration or adjustment where (A) the Obligor is in payment default, the Receivable is a Severely Distressed Receivable or in the judgment of the Servicer, in accordance with the Servicers Customary Servicing Practices, it is reasonably foreseeable that the Obligor will default (it being understood that the Servicer may proactively contact any Obligor whom the Servicer believes may be at higher risk of a payment default under the related Receivable, and it being further understood that if the Obligor has notified the Servicer that the obligor has been materially and adversely impacted by a natural disaster or public terror attack, then the Servicer may reasonably conclude that it is reasonably foreseeable that such Obligor will default) and (B) the Servicer believes that such amendment, modification, alteration or adjustment is appropriate or necessary to preserve the value of the Receivable and to prevent the Receivable from going into default (or, where the Receivable is already in default, to prevent the Receivable from becoming further impaired); or |
(v) | any other extension, deferral, amendment, modification, alteration, temporary reduction in payment, or adjustment is (A) in accordance with the Servicers Customary Servicing Practices and (B) the Servicer has delivered an opinion to the Issuer and the Administrator to the effect that such extension, deferral, amendment, modification, alteration, temporary reduction in payment or adjustment will not cause the Issuer to be treated, for United States federal income tax purposes, as an association (or a publicly traded partnership) taxable as a corporation or as other than a grantor trust for United States federal income tax purposes. |
(b) Notwithstanding anything in this Agreement to the contrary, the Servicer may refinance any Receivable at the request of the Obligor by making a new loan to the related Obligor and depositing the full Outstanding Principal Balance of such Receivable into the Collection Account. The receivable created by such refinancing shall not be the property of the Issuer. The Outstanding Principal Balance shall be treated for all purposes, including for United States federal income tax purposes, as a payoff of all amounts owed by the related Obligor with respect to such Receivable.
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(c) Nothing in any section of this Agreement shall be construed to prevent the Servicer from implementing new programs, whether on an intermediate, pilot or permanent basis, or on a regional or nationwide basis, or from modifying its standards, policies and procedures as long as, in each case, such programs or modifications (i) would be consistent with its Customary Servicing Practices and (ii) would not cause the Issuer to be treated, for United States federal income tax purposes, as an association (or a publicly traded partnership) taxable as a corporation or as other than a grantor trust for United States federal income tax purposes.
SECTION 3.3 Realization Upon Receivables. On behalf of the Issuer, the Servicer will use commercially reasonable efforts, consistent with its Customary Servicing Practices, to repossess or otherwise convert the ownership of the Financed Vehicle securing any Receivable as to which the Servicer has determined eventual payment in full is unlikely, unless it determines in its sole discretion that repossession will not increase the Liquidation Proceeds by an amount greater than the expense of such repossession, that the proceeds ultimately recoverable with respect to such Receivable would be increased by forbearance or that repossessing such Financed Vehicle would otherwise not be consistent with the Servicers Customary Servicing Practices. The Servicer will follow such Customary Servicing Practices as it deems necessary or advisable, which may include reasonable efforts to realize upon any recourse to any Dealer and selling the Financed Vehicle at public or private sale. The foregoing will be subject to the provision that, in any case in which the Financed Vehicle has suffered damage, the Servicer shall not be required to expend funds in connection with the repair or the repossession of such Financed Vehicle. In addition, the Servicer may from time to time (but is not required to) sell any deficiency balance in accordance with its Customary Servicing Practices; provided, however, that (i) each sale must be made at a price equal to the fair market value of such deficiency balance in cash in immediately available funds and (ii) such sale must be without recourse, representation or warranty by the Issuer (other than any representation or warranty regarding the absence of Liens, that the Issuer has good title to the deficiency balance, or similar representation or warranty). To facilitate any such sale the Servicer may, in accordance with its Customary Servicing Practices, purchase from the Issuer such Receivables deficiency balance for a purchase price equal to the proceeds received by the Servicer from a third party for the sale of such Receivables deficiency balance. Net proceeds of any such sale allocable to the Receivable will constitute Liquidation Proceeds, and the sole right of the Issuer and the Indenture Trustee with respect to any such sold Receivables will be to receive such Liquidation Proceeds. Upon such sale, the Servicer will mark its computer records indicating that any such receivable sold is no longer a Receivable. The Servicer is authorized to take any and all actions necessary or appropriate on behalf of the Issuer to evidence the sale of the Financed Vehicle at a public or private sale or the sale of the Receivable to the Servicer to facilitate a deficiency balance sale pursuant to the provisions of this paragraph, in each case, free from any Lien or other interest of the Issuer or the Indenture Trustee.
SECTION 3.4 Maintenance of Security Interests in Financed Vehicles. The Servicer will, in accordance with its Customary Servicing Practices, take such steps as are necessary to maintain perfection of the security interest created by each Receivable in the related Financed Vehicle. The provisions set forth in this Section are the sole requirements under the Transaction
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Documents with respect to the maintenance of collateral or security for the Receivables. It is understood that the Financed Vehicles are the collateral and security for the Receivables, but that the Certificate of Title with respect to a Financed Vehicle does not constitute collateral for that Receivable and merely evidences such security interest. The Issuer hereby authorizes the Servicer to take such steps as are necessary to re-perfect such security interest created by the Receivable in the event of the relocation of a Financed Vehicle or for any other reason.
SECTION 3.5 Covenants of Servicer. Unless required by law or court order, at the direction of a regulatory authority or in accordance with regulatory guidance, the Servicer will not release the Financed Vehicle securing each such Receivable from the security interest granted by such Receivable in whole or in part except (a) in the event of payment in full by or on behalf of the Obligor thereunder or payment in full less a deficiency which the Servicer would not attempt to collect in accordance with its Customary Servicing Practices, (b) in connection with repossession or (c) as may be required by an insurer in order to receive proceeds from any Insurance Policy covering such Financed Vehicle.
SECTION 3.6 Purchase of Receivables Upon Breach. Upon discovery by any party hereto of a breach of any of the covenants set forth in Section 3.2, 3.3, 3.4 or 3.5 with respect to any Receivable which materially and adversely affects the interests of the Issuer, the Certificateholders or the Noteholders, the party discovering or receiving written notice of such breach shall give prompt written notice thereof to the other parties hereto; provided, that (i) delivery of a Servicers Report which identifies that Receivables are being or have been purchased pursuant to this Section 3.6 shall be deemed to constitute prompt notice by the Servicer and the Issuer of such breach and (ii) the Servicer or the Indenture Trustee shall be deemed to have knowledge of such breach only if a Responsible Officer has actual knowledge thereof, including without limitation upon receipt of written notice; provided, further, that the failure to give such notice shall not affect any obligation of the Servicer hereunder. If the breach materially and adversely affects the interests of the Issuer, the Certificateholders or the Noteholders or if the Servicer is required to purchase a Receivable pursuant to Section 3.2, then the Servicer shall either (a) correct or cure such breach, if applicable, or (b) purchase such Receivable from the Issuer, in either case on or before the Payment Date following the end of the Collection Period which includes the sixtieth (60th) day (or, if the Servicer elects, an earlier date) after the date that the Servicer became aware or was notified of such breach or obligation to repurchase, as applicable. Any such breach or failure will be deemed not to have a material and adverse effect if such breach or failure has not affected the ability of the Issuer to receive and retain timely payment in full on such Receivable. Any such purchase by the Servicer shall be at a price equal to the Repurchase Price. In consideration for such purchase, the Servicer shall make (or shall cause to be made) a payment to the Issuer equal to the Repurchase Price by depositing such amount into the Collection Account prior to 11:00 a.m., New York City time on the date of such purchase, if such date is not a Payment Date or, if such date is a Payment Date, then prior to the close of business on the Business Day prior to such date. Upon payment of such Repurchase Price by the Servicer, the Issuer and the Indenture Trustee, on behalf of the Noteholders, shall release and shall execute and deliver such instruments of release, transfer or assignment, in each case without recourse or representation and as prepared by and at the expense of the Servicer, as shall be reasonably necessary to vest in the Servicer or its designee any Receivable and the related Transferred Assets purchased pursuant hereto. It is understood and agreed that the obligation of the Servicer to purchase any Receivable as described above shall constitute the sole remedy respecting such breach available to the Issuer and the Indenture Trustee.
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SECTION 3.7 Servicing Fee. On each Payment Date, the Issuer shall pay to the Servicer the Servicing Fee in accordance with Section 8.5 of the Indenture for the immediately preceding Collection Period as compensation for its services. In addition, the Servicer will be entitled to retain all Supplemental Servicing Fees and Reimbursements. The Servicer also will be entitled to receive investment earnings (net of investment losses and expenses) on funds deposited in the Collection Account during each Collection Period.
SECTION 3.8 Administrators Fee. The Servicer shall pay the fees and expenses of the Administrator described in Section 3 of the Administration Agreement.
SECTION 3.9 Servicers Report.
(a) On or before the Determination Date preceding each Payment Date, the Servicer shall deliver to the Owner Trustee, the Indenture Trustee and each Paying Agent, with a copy to each of the Rating Agencies [and the Swap Counterparty], a Servicers Report containing all information necessary to make the payments, transfers and distributions pursuant to Section 4.3 hereof and Sections 8.2, 8.4 and 8.5 of the Indenture, together with the information to be made available by the Indenture Trustee pursuant to Section 7.4 of the Indenture, in each case, on such Payment Date, and any information reasonably requested by the Owner Trustee for it to prepare the reports pursuant to Section 5.3 of the Trust Agreement. At the sole option of the Servicer, each Servicers Report may be delivered in electronic or hard copy format.
(b) No disbursements shall be made directly by the Servicer to a Noteholder or a Certificateholder, and the Servicer shall not be required to maintain any investor record relating to the posting of disbursements or otherwise.
SECTION 3.10 Annual Officers Certificate; Notice of Servicer Replacement Event.
(a) The Servicer will deliver to the Issuer, with a copy to the Indenture Trustee[, the Swap Counterparty] and the Owner Trustee, on or before March 30th of each year, beginning on March 30, 20[ ], an Officers Certificate (with appropriate insertions) providing such information as is required under Item 1123 of Regulation AB.
(b) The Servicer will deliver to the Issuer, with a copy to the Indenture Trustee[, the Swap Counterparty] and the Owner Trustee promptly after having obtained knowledge thereof written notice in an Officers Certificate of any event which has occurred and is continuing, with the giving of notice or lapse of time or both, would become a Servicer Replacement Event. Except to the extent set forth in this Section 3.10(b), Section 6.2 and Section 8.20 of this Agreement and Section 3.12 and Section 6.5 of the Indenture, the Transaction Documents do not require any policies or procedures to monitor any performance or other triggers and events of default.
(c) The Servicer will deliver to the Issuer on or before March 30 of each year, beginning on March 30, 20[__], a report regarding the Servicers assessment of compliance with the Servicing Criteria during the immediately preceding calendar year, including disclosure of any material instance of non-compliance identified by the Servicer, as required under paragraph (b) of Rule 13a-18 and Rule 15d-18 of the Exchange Act and Item 1122 of Regulation AB.
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(d) If a Servicer Replacement Event occurs and is continuing and if it is either actually known by a Responsible Officer of the Indenture Trustee or written notice of the existence thereof has been delivered to a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall provide the Owner Trustee and the Administrator written notice of such Servicer Replacement Event.
SECTION 3.11 Servicer Expenses. The Servicer shall pay all expenses (other than Liquidation Expenses) incurred by it in connection with its activities hereunder, including fees and disbursements of independent accountants, taxes imposed on the Servicer and expenses incurred in connection with distributions and reports to the Noteholders and the Certificateholders. The Servicer shall also pay all fees, expenses, and indemnities of the Indenture Trustee (as described in, and pursuant to the limitations set forth in, Section 6.7 of the Indenture) and the Owner Trustee (as described in, and pursuant to the limitations set forth in, Sections 8.1 and 8.2 of the Trust Agreement). [The Servicer will not be entitled to reimbursement of such expenses except for Liquidation Expenses and fees and expenses included in Supplemental Servicing Fees and Reimbursements paid to the Servicer as reimbursements.]
SECTION 3.12 Annual Registered Public Accounting Firm Attestation Report.
(a) On or before the ninetieth (90th) day following the end of each fiscal year, beginning with the fiscal year ending December 31, 20[ ], the Servicer shall cause a firm of independent registered public accountants (who may also render other services to the Servicer, the Seller or their respective Affiliates) to furnish to the Issuer, with a copy to the Indenture Trustee, the Bank, the Servicer[, the Swap Counterparty] and the Seller each attestation report on assessments of compliance with the Servicing Criteria with respect to the Servicer or any Affiliate thereof during the related fiscal year delivered by such accountants pursuant to paragraph (c) of Rule 13a-18 or Rule 15d-18 of the Exchange Act and Item 1122 of Regulation AB. The certification required by this paragraph may be replaced by any similar certification using other procedures or attestation standards which are now or in the future in use by servicers of comparable assets, or which otherwise comply with any rule, regulation, no action letter or similar guidance promulgated by the Commission.
(b) Notwithstanding Section 3.10(a), the Servicer, however, shall not be obligated to add as an addressee or reliance party with respect to any report described above any Person who does not comply with or agree to the required procedures of such firm of independent certified public accountants, including but not limited to execution of engagement letters or access letters regarding such reports.
(c) The Indenture Trustee shall not be liable for any claims, liabilities or expenses relating to such accountants engagement or any report issued in connection with such engagement.
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SECTION 3.13 Exchange Act Filings. The Issuer hereby authorizes the Servicer to prepare, sign, certify and file or furnish any and all reports, statements and information respecting the Issuer and/or the Notes required to be filed pursuant to the Exchange Act, and the rules thereunder.
SECTION 3.14 Sarbanes-Oxley Act Requirements. To the extent any documents are required to be filed or any certification is required to be made with respect to the Issuer or the Notes pursuant to the Sarbanes-Oxley Act, the Issuer hereby authorizes the Servicer to prepare, sign, certify and file any such documents or certifications on behalf of the Issuer.
SECTION 3.15 Compliance with the FDIC Rule. The Servicer (i) shall perform the covenants set forth in Article XII of the Indenture applicable to it and (ii) shall facilitate compliance with Article XII of the Indenture by the Capital One Parties.
ARTICLE IV
DISTRIBUTIONS; ACCOUNTS
SECTION 4.1 Establishment of Accounts. (a) The Servicer shall cause to be established the Trust Accounts and the Certificate Distribution Account in the manner set forth in Section 8.2(a) of the Indenture. If the Certificate Distribution Account ceases to be an Eligible Account, the Servicer, on behalf of the Owner Trustee, shall comply with Section 5.4 of the Trust Agreement if the Certificate Distribution Account is not then held by the Owner Trustee or an Affiliate thereof. If any Trust Account ceases to be an Eligible Account, the Servicer shall comply with Section 8.3(b) of the Indenture.
(b) The Servicer may, but shall not be obligated to, select Permitted Investments with respect to funds on deposit in the Collection Account in accordance with Section 8.3 of the Indenture. The Servicer acknowledges that upon its written request and at no additional cost, it has the right to receive notification after the completion of each purchase and sale of Permitted Investments or the Indenture Trustees receipt of a brokers confirmation. The Servicer agrees that such notifications shall not be provided by the Indenture Trustee hereunder, and the Indenture Trustee shall make available, upon request and in lieu of notifications, periodic account statements that reflect such investment activity.
SECTION 4.2 Remittances. The Servicer shall deposit an amount equal to all Collections into the Collection Account within the time, not to exceed two (2) Business Days after its receipt thereof, necessary for the Servicer to clear any payments of Collections received; provided, however, that the Servicer may deduct from such Collections all Unrelated Amounts to the extent such Unrelated Amounts have not been previously reimbursed to the Servicer. Pending deposit in the Collection Account, Collections may be used by the Servicer at its own risk and are not required to be segregated from its own funds.
SECTION 4.3 Additional Deposits and Payments. On the date specified in Section 3.6 of this Agreement, the Servicer will deposit into the Collection Account the aggregate Repurchase Price with respect to Repurchased Receivables purchased by the Servicer pursuant to Section 3.6 on such date and the Servicer will deposit into the Collection Account all amounts, if
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any, to be paid under Section 7.1 in connection with the Optional Purchase. All such deposits with respect to any such date which is a Payment Date will be made, in immediately available funds by the close of business on the Business Day prior to such Payment Date related to such Collection Period.
ARTICLE V
THE SERVICER
SECTION 5.1 Representations and Warranties of the Servicer. The Servicer makes the following representations and warranties as of the Closing Date on which the Issuer will be deemed to have relied in acquiring the Transferred Assets and which will survive the conveyance of the Transferred Assets to the Issuer and the pledge thereof by the Issuer to the Indenture Trustee pursuant to the Indenture:
(a) Existence and Power. The Servicer is a national banking association validly existing under the laws of the United States of America and has, in all material respects, all power and authority to carry on its business as it is now conducted. The Servicer has obtained all necessary licenses and approvals in each jurisdiction where the failure to do so would materially and adversely affect the ability of the Servicer to perform its obligations under this Agreement or affect the enforceability or collectability of the Receivables or any other part of the Transferred Assets.
(b) Authorization and No Contravention. The execution, delivery and performance by the Servicer of this Agreement (i) have been duly authorized by all necessary action on the part of the Servicer and (ii) do not contravene or constitute a default under (A) any applicable order, law, rule or regulation, (B) its organizational documents or (C) any material agreement, contract, order or other instrument to which it is a party or its property is subject (other than violations of such laws, rules, regulations, indentures or agreements which do not affect the legality, validity or enforceability of any of such agreements or which, individually or in the aggregate, would not materially and adversely affect the transactions contemplated by, or the Servicers ability to perform its obligations under, this Agreement).
(c) No Consent Required. No approval or authorization by, or filing with, any Governmental Authority is required in connection with the execution, delivery and performance by the Servicer of this Agreement other than (i) UCC filings, (ii) approvals and authorizations that have previously been obtained and filings that have previously been made and (iii) approvals, authorizations or filings which, if not obtained or made, would not have a material adverse effect on the enforceability or collectability of the Receivables or would not materially and adversely affect the ability of the Servicer to perform its obligations under this Agreement.
(d) Binding Effect. This Agreement constitutes the legal, valid and binding obligation of the Servicer enforceable against the Servicer in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws affecting the enforcement of creditors rights generally and, if applicable, the rights of creditors of corporations from time to time in effect or by general principles of equity.
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(e) No Proceedings. There are no Proceedings pending or, to the knowledge of the Servicer, threatened against the Servicer before or by any Governmental Authority that (i) assert the invalidity or unenforceability of this Agreement or (ii) seek any determination or ruling that would materially and adversely affect the performance by the Servicer of its obligations under this Agreement.
SECTION 5.2 Indemnities of Servicer. The Servicer will be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Servicer under this Agreement, and hereby agrees to the following:
(a) The Servicer will defend, indemnify and hold harmless the Issuer, the Owner Trustee, the Indenture Trustee and the Seller 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. The Servicer will compensate and indemnify the Administrator to the extent and subject to the conditions set forth in Section 3 of the Administration Agreement.
(b) The Servicer will indemnify, defend and hold harmless the Issuer, the Owner Trustee and the Indenture Trustee from and against any taxes that may at any time be asserted against any such Person with respect to the transactions contemplated herein or in the other Transaction Documents, if any, including, without limitation, any sales, gross receipts, general corporation, tangible personal property, privilege, or license taxes (but, in the case of the Issuer, not including any taxes asserted with respect to, and as of the date of, the conveyance of the Receivables to the Issuer or the issuance and original sales of the Notes, or asserted with respect to ownership of the Receivables, or United States federal or other Applicable Tax State income taxes arising out of the transactions contemplated by this Agreement and the other Transaction Documents) and costs and expenses in defending against the same. For the avoidance of doubt, the Servicer will not indemnify for any costs, expenses, losses, claims, damages or liabilities due to the credit risk of the Obligors and for which reimbursement would constitute recourse for uncollectible Receivables. Any amounts payable to the Indenture Trustee pursuant to this Section 5.2(b), to the extent not paid by the Servicer, shall be paid by the Issuer in accordance with Section 8.5(a) of the Indenture.
(c) The Servicer will indemnify, defend and hold harmless the Issuer, the Owner Trustee, the Indenture Trustee and the Seller 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, willful misfeasance, or bad faith (other than errors in judgment) of the Servicer in the performance of its duties under this Agreement or any other Transaction Document to which it is a party, or by reason of its failure to perform its obligations or of reckless disregard of its obligations and duties under this Agreement or any other Transaction Document to which it is a party; provided, however, that the Servicer will not indemnify for any costs, expenses, losses, claims, damages or liabilities arising from its breach of any covenant for which the repurchase of the affected Receivables is specified as the sole remedy pursuant to Section 3.6.
(d) The Servicer will compensate and indemnify the Owner Trustee to the extent and subject to the conditions set forth in Sections 8.1 and 8.2 of the Trust Agreement. The Servicer
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will compensate and indemnify the Indenture Trustee to the extent and subject to the conditions set forth in Section 6.7 of the Indenture, except to the extent that any cost, expense, loss, claim, damage or liability arises out of or is incurred in connection with the performance by the Indenture Trustee of the duties of a successor Servicer hereunder.
(e) Indemnification under this Section 5.2 by the Bank (or any successor thereto pursuant to Section 6.1), as Servicer, with respect to the period such Person was the Servicer, will survive the termination of such Person as Servicer or a resignation by such Person as Servicer as well as the termination or assignment of this Agreement and the Trust Agreement or the resignation or removal of the Owner Trustee or the Indenture Trustee and will include reasonable fees and expenses of counsel and expenses of litigation and those amounts incurred in connection with any action, claim or suit brought by the Indenture Trustee or the Owner Trustee to enforce its right to indemnification. If the Servicer has made any indemnity payments pursuant to this Section 5.2 and the Person to or on behalf of whom such payments are made thereafter collects any of such amounts from others, such Person will promptly repay such amounts to the Servicer, without interest.
SECTION 5.3 Merger or Consolidation of, or Assumption of the Obligations of, Servicer. Any Person (i) into which the Servicer may be merged or converted or with which it may be consolidated, to which it may sell or transfer its business and assets as a whole or substantially as a whole, (ii) resulting from any merger, sale, transfer conversion or consolidation to which the Servicer shall be a party, (iii) succeeding to the business of the Servicer or (iv) more than 50% of the voting stock or voting power and 50% or more of the economic equity of which is owned directly or indirectly by Capital One Financial Corporation, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Servicer under this Agreement, will be the successor to the Servicer 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 anything herein to the contrary notwithstanding. The Servicer shall provide prior notice of the effective date of any merger, conversion, consolidation or succession pursuant to this Section 5.3 to the Issuer, the Indenture Trustee, the Owner Trustee and the Seller. The Servicer shall provide the Seller in writing such information as reasonably requested by the Seller to comply with its Exchange Act reporting obligations with respect to a successor Servicer.
SECTION 5.4 Limitation on Liability of Servicer and Others. (a) Neither the Servicer nor any of the directors or officers or employees or agents of the Servicer will be under any liability to the Issuer, the Indenture Trustee, the Owner Trustee, [the Swap Counterparty,] the Noteholders or the Certificateholders, except as provided in Section 5.2 of this Agreement and as otherwise provided under this Agreement, for any action taken or for refraining from the taking of any action pursuant to this Agreement or for errors in judgment; provided, however, that this provision will not protect the Servicer or any such Person against any liability that would otherwise be imposed by reason of willful misfeasance or bad faith in the performance of duties or by reason of its failure to perform its obligations or of reckless disregard of obligations and duties under this Agreement, or by reason of negligence in the performance of its duties under this Agreement (except for errors in judgment). The Servicer and any director, officer or employee or agent of the Servicer may rely in good faith on any Opinion of Counsel or on any Officers Certificate of the Seller or certificate of auditors believed to be genuine and to have been signed by the proper party in respect of any matters arising under this Agreement.
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(b) Except as provided in this Agreement, the Servicer will not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its duties to service the Receivables in accordance with this Agreement, and that in its opinion may involve it in any expense or liability; provided, however, that the Servicer may undertake any reasonable action that it may deem necessary or desirable in respect of this Agreement and the rights and duties of the parties to this Agreement and the interests of the Noteholders and the Certificateholders under this Agreement. In such event, the legal expenses and costs of such action and any liability resulting therefrom will be expenses, costs and liabilities of the Servicer.
SECTION 5.5 Delegation of Duties. The Servicer may, at any time without notice or consent, delegate (a) any or all of its duties (including, without limitation, its duties as custodian) under the Transaction Documents to any of its Affiliates or (b) specific duties (including, without limitation, its duties as custodian) to sub-contractors who are in the business of performing such duties; provided, that no such delegation shall relieve the Servicer of its responsibility with respect to such duties and the Servicer shall remain obligated and liable to the Issuer and the Indenture Trustee for its duties hereunder as if the Servicer alone were performing such duties.
SECTION 5.6 The Bank Not to Resign as Servicer. Subject to the provisions of Sections 5.3 and 5.5, the Bank will not resign from the obligations and duties hereby imposed on it as Servicer under this Agreement except upon determination that the performance of its duties under this Agreement is no longer permissible under applicable law. Notice of any such determination permitting the resignation of the Bank will be communicated to the Issuer, the Indenture Trustee and Owner Trustee at the earliest practicable time (and, if such communication is not in writing, will be confirmed in writing at the earliest practicable time) and any such determination will be evidenced by an Opinion of Counsel to such effect delivered to the Issuer, the Indenture Trustee and Owner Trustee concurrently with or promptly after such notice. No such resignation will become effective until a successor Servicer has (i) assumed the responsibilities and obligations of the Bank as Servicer and (ii) provided in writing the information reasonably requested by the Seller to comply with its reporting obligations under the Exchange Act with respect to a replacement Servicer.
SECTION 5.7 Servicer May Own Notes and Certificates. The Servicer, and any Affiliate of the Servicer, may, in its individual or any other capacity, become the owner or pledgee of Notes and Certificates with the same rights as it would have if it were not the Servicer or an Affiliate thereof, except as otherwise expressly provided herein or in the other Transaction Documents. Except as set forth herein or in the other Transaction Documents, Notes and Certificates so owned by or pledged to the Servicer or such Affiliate will have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority or distinction as among all of the Noteholders and Certificateholders.
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ARTICLE VI
REPLACEMENT OF SERVICER
SECTION 6.1 Replacement of Servicer.
(a) If a Servicer Replacement Event shall have occurred and be continuing, the Relevant Trustee shall, at the direction of 662⁄3% of the Outstanding Note Balance of the Controlling Class (or, if no Notes are Outstanding, the Majority Certificateholders), by notice given to the Servicer, the Owner Trustee, the Issuer, the Administrator, [the Swap Counterparty,] the Certificateholders and the Noteholders, terminate the rights and obligations of the Servicer under this Agreement with respect to the Receivables. In the event the Servicer is removed or resigns as Servicer with respect to servicing the Receivables, the Indenture Trustee, acting at the direction of 662⁄3% of the Outstanding Note Balance of the Controlling Class (or, if no Notes are Outstanding, the Majority Certificateholders), shall appoint a successor Servicer. Upon the Servicers receipt of notice of termination the predecessor Servicer will continue to perform its functions as Servicer under this Agreement only until the date specified in such termination notice or, if no such date is specified in such termination notice, until receipt of such notice. If a successor Servicer has not been appointed at the time when the predecessor Servicer ceases to act as Servicer in accordance with this Section, the Indenture Trustee without further action will automatically be appointed the successor Servicer. Notwithstanding the above, the Indenture Trustee, if it is legally unable or is unwilling to so act in its sole discretion, will appoint, or petition a court of competent jurisdiction to appoint, a successor Servicer. Any successor Servicer shall be an established institution having a net worth of not less than $100,000,000 and whose regular business includes the servicing of comparable motor vehicle receivables having an aggregate outstanding principal amount of not less than $50,000,000.
(b) Noteholders holding not less than a majority of the Outstanding Note Balance of the Controlling Class (or, if no Notes are Outstanding, the Majority Certificateholders) may waive any Servicer Replacement Event. Upon any such waiver, such Servicer Replacement Event shall cease to exist and be deemed to have been cured and not to have occurred and any Servicer Replacement Event arising therefrom shall be deemed not to have occurred for every purpose of this Agreement, but no such waiver shall extend to any prior, subsequent or other Servicer Replacement Event or impair any right consequent thereto.
(c) If replaced, the Servicer agrees that it will use commercially reasonable efforts to effect the orderly and efficient transfer of the servicing of the Receivables to a successor Servicer. All reasonable costs and expenses incurred in connection with transferring the Receivable Files to the successor Servicer and all other reasonable costs and expenses incurred in connection with the transfer to the successor Servicer related to the performance by the Servicer hereunder will be paid by the predecessor Servicer upon presentation of reasonable documentation of such costs and expenses.
(d) Upon the effectiveness of the assumption by the successor Servicer of its duties pursuant to this Section 6.1, the successor Servicer shall be the successor in all respects to the Servicer in its capacity as Servicer under this Agreement with respect to the Receivables, and shall be subject to all the responsibilities, duties and liabilities relating thereto, except with
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respect to the obligations of the predecessor Servicer that survive its termination as Servicer, including indemnification obligations as set forth in Section 5.2(e). In such event, the Indenture Trustee and the Owner Trustee are hereby authorized and empowered (but not obligated) to execute and deliver, on behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such termination and replacement of the Servicer, whether to complete the transfer and endorsement of the Receivables and related documents, or otherwise. No Servicer shall resign or be relieved of its duties under this Agreement, as Servicer of the Receivables, until a newly appointed Servicer for the Receivables shall have assumed the responsibilities and obligations of the resigning or terminated Servicer under this Agreement.
(e) In connection with such appointment, the Issuer may make such arrangements for the compensation of the successor Servicer out of Available Funds as it and such successor Servicer will agree; provided, however, that no such compensation will be in excess of the amount paid to the predecessor Servicer under this Agreement.
SECTION 6.2 Notification to Noteholders and Certificateholders. Upon any termination of, or appointment of a successor to, the Servicer pursuant to this Article VI, the Indenture Trustee will give prompt (but in no case later than five (5) Business Days after such occurrence) written notice thereof to the Owner Trustee, the Issuer and the Administrator, the Asset Representations Reviewer and to the Noteholders and Certificateholders at their respective addresses of record.
ARTICLE VII
OPTIONAL PURCHASE
SECTION 7.1 Optional Purchase of Trust Estate. The Servicer shall have the right at its option (the Optional Purchase) to purchase (and/or to designate one or more other Persons to purchase) the Trust Estate (other than the Reserve Account) from the Issuer on any Payment Date if both of the following conditions are satisfied: (a) as of the last day of the related Collection Period, the Net Pool Balance has declined to [10%] or less of the Net Pool Balance as of the Cut-Off Date; and (b) the sum of the Optional Purchase Price and Available Funds for such Payment Date would be sufficient to pay (x) the amounts required to be paid under clauses [first through ninth and eleventh of Section 8.5(a)] of the Indenture (assuming that such Payment Date is not a Redemption Date) and (y) the Outstanding Note Balance (after giving effect to the payments described in the preceding clause (x)). The purchase price for the Trust Estate (other than the Reserve Account) (the Optional Purchase Price) shall equal the Net Pool Balance plus accrued and unpaid interest on the Receivables as of the last day of the Collection Period immediately preceding the Redemption Date, which amount (net of any Collections deposited into the Collection Account after the last day of the Collection Period immediately preceding the Redemption Date) shall be deposited by the Servicer (or its designee) into the Collection Account on or prior to noon, New York City time, on the Redemption Date. If the Servicer (or its designee), exercises the Optional Purchase, the Notes shall be redeemed and in each case in whole but not in part on the related Payment Date for the Redemption Price.
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.1 Amendment.
(a) Any term or provision of this Agreement may be amended by the Servicer without the consent of the Indenture Trustee, the Issuer, any Noteholder, the Owner Trustee[, the Swap Counterparty] or any other Person subject to the satisfaction of one of the following conditions:
(i) | The Servicer delivers an Opinion of Counsel or an Officers Certificate to the Indenture Trustee to the effect that such amendment will not materially and adversely affect the interests of the Noteholders; or |
(ii) | The Rating Agency Condition is satisfied with respect to such amendment and the Servicer notifies the Indenture Trustee in writing that the Rating Agency Condition is satisfied with respect to such amendment. |
(b) This Agreement may also be amended from time to time by the Servicer, with the consent of the Holders of Notes evidencing not less than a majority of the Outstanding Note Balance of the Controlling Class, 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. It will not be necessary for the consent of Noteholders or Certificateholders to approve the particular form of any proposed amendment or consent, but it will be sufficient if such consent approves the substance thereof. The manner of obtaining such consents (and any other consents of Noteholders and Certificateholders provided for in this Agreement) and of evidencing the authorization of the execution thereof by Noteholders and Certificateholders will be subject to such reasonable requirements as the Indenture Trustee and Owner Trustee may prescribe, including the establishment of record dates pursuant to the Note Depository Agreement.
(c) Prior to the execution of any amendment pursuant to this Section 8.1, the Issuer shall provide written notification of the substance of such amendment to each Rating Agency; and promptly after the execution of any such amendment, the Servicer shall furnish a copy of such amendment to each Rating Agency, the Issuer, the Owner Trustee and the Indenture Trustee; provided, that no amendment pursuant to this Section 8.1 shall be effective which materially and adversely affects the rights, protections or duties of the Indenture Trustee or the Owner Trustee without the prior written consent of such Person.
(d) Prior to the execution of any amendment to this Agreement, the Owner Trustee and the Indenture Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and an Officers Certificate of the Seller or the Administrator that all conditions precedent to the execution and delivery of such amendment have been satisfied. The Owner Trustee and the Indenture Trustee may, but shall not be obligated to, enter into any such amendment which materially and adversely affects the Owner Trustees or the Indenture Trustees, as applicable, own rights, privileges, indemnities, duties or obligations under this Agreement, the Transaction Documents or otherwise.
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(e) Notwithstanding subsections (a) and (b) of this Section 8.1, this Agreement may only be amended by the Servicer if (i) the Majority Certificateholders [or, if 100% of the aggregate Percentage Interests is then beneficially owned by the Bank and/or its Affiliates, such Person (or Persons)], consent to such amendment or (ii) such amendment shall not, as evidenced by an Officers Certificate of the Servicer or an Opinion of Counsel delivered to the Indenture Trustee and the Owner Trustee, materially and adversely affect the interests of the Certificateholders. [In determining whether 100% of the aggregate Percentage Interests is then beneficially owned by the Bank and/or its Affiliates for purposes of clause (i), any party shall be entitled to rely on an Officers Certificate or similar certification of the Bank or any Affiliate thereof to such effect.]
(f) Notwithstanding anything herein to the contrary, for purposes of classifying the Issuer as a grantor trust under the Code, no amendment shall be made to this Agreement that would (i) result in a variation of the investment of the beneficial owners of the Certificates for purposes of the United States Treasury Regulation section 301.7701-4(c) without the consent of Noteholders evidencing at least a majority of the Outstanding Note Balance of the Controlling Class and the Majority Certificateholders or (ii) cause the Issuer (or any part thereof) to be classified as other than a grantor trust for United States. federal income tax purposes.
SECTION 8.2 Protection of Title.
(a) The Servicer shall maintain (or shall cause its Sub-Servicer to maintain) in accordance with its Customary Servicing Practices accounts and records as to each Receivable accurately and in sufficient detail to permit (i) the reader thereof to know at any time the status of such Receivable, including payments and recoveries made and payments owing (and the nature of each) and (ii) reconciliation between payments or recoveries on (or with respect to) each Receivable and the amounts from time to time deposited in the Collection Account in respect of such Receivable.
(b) The Servicer shall maintain (or shall cause its Sub-Servicer to maintain) its computer systems so that, from time to time after the conveyance under this Agreement of the Receivables, the 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 on behalf of the Noteholders pursuant to the Indenture. Indication of the Issuers interest in a Receivable shall not be deleted from or modified on such computer systems until, and only until, the related Receivable shall have been paid in full, repurchased by the Bank pursuant to Section 3.3 of the Receivables Sale Agreement or purchased by the Servicer pursuant to either Section 3.6 or 7.1 of this Agreement.
(c) If at any time 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)
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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 on behalf of the Noteholders.
(d) The Servicer, upon receipt of reasonable prior notice, shall permit the Indenture Trustee, the Owner Trustee and their respective agents at any time during normal business hours, to the extent it does not unreasonably interfere with the Servicers normal operations, to inspect, audit and, to the extent permitted by applicable law, make copies of and abstracts from Servicers (or any Sub-Servicers) records regarding any Receivable.
(e) Upon request, the Servicer shall furnish to the Issuer or to the Indenture Trustee, within thirty (30) Business Days, a list of all Receivables then owned by the Issuer, together with a reconciliation of such list to each of the Servicers Reports furnished before such request indicating removal of Receivables from the Issuer.
SECTION 8.3 Notices, Etc. All demands, notices and communications hereunder shall be in writing and shall be delivered or mailed by registered or certified first-class United States mail, postage prepaid, hand delivery, prepaid courier service, or by e-mail (if an applicable e-mail address is provided on Schedule I to the Sale Agreement), and addressed in each case as specified on Schedule I to the Sale Agreement, or at such other address as shall be designated by any of the specified addressees in a written notice to the other parties hereto. Any notice required or permitted to be mailed to a Noteholder or Certificateholder shall be given by first class mail, postage prepaid, at the address of such Noteholder or Certificateholder as shown in the Note Register. Delivery shall occur only upon receipt or reported tender of such communication by an officer of the recipient entitled to receive such notices located at the address of such recipient for notices hereunder; provided, however, that any notice to a Noteholder or Certificateholder mailed within the time and manner prescribed in this Agreement shall be conclusively presumed to have been duly given, whether or not the Noteholder or Certificateholder shall receive such notice.
SECTION 8.4 Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL, SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 8.5 Headings. The section headings hereof have been inserted for convenience of reference only and shall not be construed to affect the meaning, construction or effect of this Agreement.
SECTION 8.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, regardless of whether delivered in physical or electronic form, but all of such counterparts shall together constitute but one and the same instrument.
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SECTION 8.7 Waivers. No failure or delay on the part of the Servicer, the Issuer or the Indenture Trustee in exercising any power or right hereunder (to the extent such Person has any power or right hereunder) shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on any party hereto in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by any party hereto under this Agreement shall, except as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval under this Agreement shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 8.8 Entire Agreement. The Transaction Documents contain a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter thereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter thereof, superseding all prior oral or written understandings. There are no unwritten agreements among the parties.
SECTION 8.9 Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.
SECTION 8.10 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect until such time as the parties hereto shall agree.
SECTION 8.11 Not Applicable to the Bank in Other Capacities. Nothing in this Agreement shall affect any obligation the Bank may have in any other capacity.
SECTION 8.12 Cumulative Remedies. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.
SECTION 8.13 Nonpetition Covenant. Each party hereto agrees that, prior to the date which is one year and one day after payment in full of all obligations of each Bankruptcy Remote Party in respect of all securities issued by any Bankruptcy Remote Party (i) such party shall not authorize any Bankruptcy Remote Party to commence a voluntary winding-up or other voluntary case or other Proceeding seeking liquidation, reorganization or other relief with respect to such Bankruptcy Remote Party or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction or seeking the appointment of an administrator, a trustee, receiver, liquidator, custodian or other similar official with respect to such Bankruptcy Remote Party or any substantial part of its property or to consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other Proceeding commenced against such Bankruptcy Remote Party, or to make a general assignment for the benefit of, its creditors generally, any party hereto or any other creditor of such Bankruptcy Remote Party, and (ii) such party shall not commence or join with any other Person
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in commencing any Proceeding against such Bankruptcy Remote Party under any bankruptcy, reorganization, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction. This Section shall survive the termination of this Agreement.
SECTION 8.14 Submission to Jurisdiction; Waiver of Jury Trial. Each of the parties hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any Proceeding relating to this Agreement or any documents executed and delivered in connection herewith, or for recognition and enforcement of any judgment in respect thereof, to the nonexclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof;
(b) consents that any such Proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of such action or Proceeding in any such court or that such action or Proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such Proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address determined in accordance with Section 8.3;
(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) to the extent permitted by applicable law, each party hereto irrevocably waives all right of trial by jury in any action, Proceeding or counterclaim based on, or arising out of, under or in connection with this Agreement, any other Transaction Document, or any matter arising hereunder or thereunder.
SECTION 8.15 Limitation of Liability.
(a) [It is expressly understood and agreed by the parties hereto that (a) this Agreement is executed and delivered by [ ], not individually or personally but solely as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it under the Trust Agreement, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by [ ], but is made and intended for the purpose for binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on [ ], individually or personally, to perform any covenant, either express or implied, contained herein, all such liability, if any, being expressly waived by the parties hereto and any Person claiming by, through or under the parties hereto, (d) [ ] has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Agreement, and (e) under no circumstances shall [ ] be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Agreement or the other related documents.
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(b) Notwithstanding anything contained herein to the contrary, this Agreement has been executed and delivered by [ ], not in its individual capacity but solely as Indenture Trustee, and in no event shall it have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer under the Notes or any of the other Transaction Documents or in any of the certificates, notices or agreements delivered pursuant thereto, as to all of which recourse shall be had solely to the assets of the Issuer; provided that the Indenture Trustee shall be responsible for its actions as Indenture Trustee hereunder and under the Indenture. Under no circumstances shall the Indenture Trustee be personally liable for the payment of any indebtedness or expense of the Issuer or be liable for the breach or failure of any obligations, representation, warranty or covenant made or undertaken by the Issuer under the Transaction Documents. For the purposes of this Agreement, in the performance of its duties or obligations hereunder, the Indenture Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Article VI of the Indenture.]
SECTION 8.16 Third-Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns and (i) the Owner Trustee[, and the Swap Counterparty] shall be an express third party beneficiary hereof and may enforce the provisions hereof as if it were a party hereto (ii) and the Seller shall be an express third party beneficiary of Sections 8.18, 8.19, 8.20 and 8.21 and may enforce such provisions as if it were a party hereto. Except as otherwise provided in this Section, no other Person will have any right hereunder.
SECTION 8.17 Information Requests.
(a) The parties hereto shall provide any information reasonably requested by the Servicer, the Issuer, the Seller or any of their Affiliates, in order to comply with or obtain more favorable treatment under any current or future law, rule, regulation, accounting rule or principle.
(b) The Servicer shall furnish to the Indenture Trustee from time to time information (which is in the possession of the Servicer and is freely deliverable) related to the transactions contemplated by the Transaction Documents as the Indenture Trustee shall reasonably request.
SECTION 8.18 Compliance with Regulation AB. The Servicer shall cooperate fully with the Seller to deliver to the Seller (including any of its assignees or designees) any and all statements, reports, certifications, records and any other information necessary in the good faith determination of the Seller to permit the Seller to comply with the provisions of Regulation AB and its reporting obligations under the Exchange Act, together with such disclosures relating to the Servicer and the Receivables, or the servicing of the Receivables, reasonably believed by the Seller to be necessary in order to effect such compliance.
SECTION 8.19 Information to Be Provided by the Indenture Trustee.
(a) The Indenture Trustee shall (i) on or before the fifth (5th) Business Day of each month, notify the Seller, in writing, of any Form 10-D Disclosure Item with respect to the Indenture Trustee, together with a description of any such Form 10-D Disclosure Item in form and substance reasonably satisfactory to the Seller; provided, however, that, the Indenture Trustee shall not be required to provide such information in the event that there has been no
24 | Form of Servicing Agreement |
change to the information previously provided by the Indenture Trustee to Seller, and (ii) as promptly as practicable following notice to or actual knowledge by a Responsible Officer of the Indenture Trustee of any changes to such information, provide to the Seller, in writing, such updated information.
(b) As soon as available but no later than March 1st of each calendar year for so long as the Seller is filing reports with respect to the Issuer under the Exchange Act, commencing on March 1, 20[__], the Indenture Trustee shall:
i. | deliver to the Seller a report regarding the Indenture Trustees assessment of compliance with the Servicing Criteria during the immediately preceding calendar year, as required under paragraph (b) of Rule 13a-18, Rule 15d-18 of the Exchange Act and Item 1122 of Regulation AB. Such report shall be signed by an authorized officer of the Indenture Trustee, and shall address each of the Servicing Criteria specified in Exhibit A as applicable to the Indenture Trustee or such other criteria as mutually agreed upon by the Seller and the Indenture Trustee; |
ii. | cause a firm of registered public accountants that is qualified and independent within the meaning of Rule 2-01 of Regulation S-X under the Securities Act to deliver to the Seller a report for inclusion in the Sellers filing of Exchange Act Form 10-K with respect to the Issuer that attests to, and reports on, the assessment of compliance made by the Indenture Trustee and delivered to the Seller pursuant to the preceding paragraph. Such attestation shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act; |
iii. | deliver to the Seller and any other Person that will be responsible for signing the certification (a Sarbanes Certification) required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to Section 302 of the Sarbanes-Oxley Act) on behalf of the Issuer or the Seller, a back-up certification substantially in the form attached hereto as Exhibit B or such form as mutually agreed upon by the Seller and the Indenture Trustee; and |
iv. | deliver to the Seller the certification substantially in the form attached hereto as Exhibit C or such other form as is mutually agreed upon by the Seller and the Indenture Trustee regarding any affiliations or relationships (as described in Item 1119 of Regulation AB) between the Indenture Trustee and any Item 1119 Party and any Form 10-D Disclosure Item. |
The Indenture Trustee acknowledges that the parties identified in clause (iii) above may rely on the certification provided by the Indenture Trustee pursuant to such clause in signing a Sarbanes Certification and filing such with the Commission. The Indenture Trustee further acknowledges
25 | Form of Servicing Agreement |
that interpretations of the requirements of Regulation AB may change over time, whether due to interpretive guidance provided by the Commission or its staff, consensus among participants in the asset-backed securities markets, advice of counsel, or otherwise, and agrees to cooperate with the Seller to deliver to the Seller and the Servicer such information necessary in the good faith determination of the Seller or the Servicer to permit the Seller or the Servicer, as applicable, to comply with the provisions of Regulation AB.
(c) The Indenture Trustee shall provide the Seller and the Servicer (each, a Transaction Party and, collectively, the Transaction Parties) with (i) notification, as soon as practicable and in any event within ten (10) Business Days of all demands communicated to the Indenture Trustee for the repurchase or replacement of any Receivable pursuant to the Transaction Documents and (ii) promptly upon request by a Transaction Party, any other information reasonably requested by a Transaction Party to facilitate compliance by the Transaction Parties with Rule 15Ga-1 under the Exchange Act and Items 1104(e) and 1121(c) of Regulation AB. In no event shall the Indenture Trustee be deemed to be a securitizer as defined in Section 15G(a) of the Exchange Act nor shall it have any responsibility for making any filing to be made by a securitizer under the Exchange Act or Regulation AB. The Transaction Parties hereby acknowledge and agreed that the Indenture Trustees reporting is limited to information that it has received or acquired solely in its capacity as indenture trustee under this Agreement and the Indenture and not in any other capacity. The Transaction Parties further hereby acknowledge and agree that, other than any express duties or responsibilities as trustee under the Transaction Documents, the Indenture Trustee has no duty or obligation to undertake any investigation or inquiry related to repurchase demand activity in connection with any Transaction Documents, and no obligations or duties are otherwise implied by this section.
SECTION 8.20 Form 8-K Filings. The Indenture Trustee shall promptly notify the Seller, but in no event later than one (1) Business Day after its occurrence, of any Reportable Event of which a Responsible Officer of the Indenture Trustee has actual knowledge (other than a Reportable Event described in clause (a) or (b) of the definition thereof as to which the Servicer has actual knowledge). The Indenture Trustee shall be deemed to have actual knowledge of any such event to the extent that it relates to the Indenture Trustee or any action or failure to act by the Indenture Trustee.
SECTION 8.21 Cooperation with Voting. Each of the Servicer and the Issuer hereby acknowledges and agrees that it shall cooperate with the Indenture Trustee to facilitate any vote by the Instituting Noteholders pursuant to the terms of Section 7.6 of the Indenture.
SECTION 8.22 [EU Risk Retention. The Bank hereby covenants and agrees, in connection with the EU Securitization Regulation and the UK Securitization Regulation, in each case as in effect and applicable on the Closing Date, on an ongoing basis, so long as any Notes remain Outstanding:
(a) The Bank, as originator (as such term is defined for the purposes of each of the Securitization Regulations), will retain, upon issuance of the Notes and on an ongoing basis a material net economic interest (the Retained Interest) of not less than 5% in the securitization transaction described in the Prospectus, in the form of retention of at least 5% of the nominal value of each of the tranches sold or transferred to investors in accordance with the text of option (a) of Article 6(3) of the EU Securitization Regulation and option (a) of Article 6(3) of
26 | Form of Servicing Agreement |
the UK Securitization Regulation, by holding (i) at least 5% of the nominal value of each Class of Notes and (ii) all the membership interest in the Seller (or one or more other wholly-owned special purpose subsidiaries of the Bank), which in turn will hold at least 5% of the nominal value of the Certificates;
(b) The Bank will not (and will not permit the Seller or any of its other affiliates to) hedge or otherwise mitigate its credit risk under or associated with the Retained Interest, or sell, transfer or otherwise surrender all or part of the rights, benefits or obligations arising from the Retained Interest, except, in each case, to the extent permitted by the SR Rules;
(c) The Bank will not change the manner or form in which it retains the Retained Interest while any of the Notes are outstanding, except as permitted by the SR Rules; and
(d) The Bank will provide ongoing confirmation of its continued compliance with its obligations described in the foregoing clauses (a), (b) and (c), in or concurrently with the delivery of each Servicers Report.]
SECTION 8.23 [Limitation of Rights. All of the rights of the Swap Counterparty in, to and under this Agreement (including, but not limited to, all of the Swap Counterpartys rights as a third party beneficiary of this Agreement and all of the Swap Counterpartys rights to receive notice of any action hereunder and to give or withhold consent to any action hereunder) shall terminate upon the termination of the Interest Rate Swap Agreement in accordance with the terms thereof and the payment in full of all amounts owing to the Swap Counterparty.]
[Signatures Follow]
27 | Form of Servicing Agreement |
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.
CAPITAL ONE, NATIONAL ASSOCIATION, as Servicer | ||
By: |
| |
Name: | ||
Title: |
S-1 | Servicing Agreement |
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ] | ||
By: | [ ], | |
not in its individual capacity | ||
but solely as Owner Trustee | ||
By: |
| |
Name: | ||
Title: |
S-2 | Servicing Agreement |
[ ], not in its individual capacity but solely as Indenture Trustee | ||
By: |
| |
Name: | ||
Title: |
S-3 | Servicing Agreement |
EXHIBIT A
SERVICING CRITERIA TO BE ADDRESSED IN
INDENTURE TRUSTEES ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by the Indenture Trustee shall address, at a minimum, the criteria identified below as Applicable Servicing Criteria:
Servicing Criteria |
Applicable | |||
Reference |
Criteria |
|||
General Servicing Considerations | ||||
1122(d)(1)(i) | Policies and procedures are instituted to monitor any performance or other triggers and events of default in accordance with the transaction agreements. | |||
1122(d)(1)(ii) | If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third partys performance and compliance with such servicing activities. | |||
1122(d)(1)(iii) | Any requirements in the transaction agreements to maintain a back-up servicer for the pool assets are maintained. | |||
1122(d)(1)(iv) | A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements. | |||
1122(d)(1)(v) | Aggregation of information, as applicable, is mathematically accurate and the information conveyed accurately reflects the information. |
|||
Cash Collection and Administration | ||||
1122(d)(2)(i) | Payments on pool assets are deposited into the appropriate custodial bank accounts and related bank clearing accounts no more than two business days following receipt, or such other number of days specified in the transaction agreements. | |||
1122(d)(2)(ii) | Disbursements made via wire transfer on behalf of an obligor or to an investor are made only by authorized personnel. | |||
1122(d)(2)(iii) | Advances of funds or guarantees regarding collections, cash flows or distributions, and any interest or other fees charged for such advances, are made, reviewed and approved as specified in the transaction agreements. | |||
1122(d)(2)(iv) | The related accounts for the transaction, such as cash reserve accounts or accounts established as a form of overcollateralization, are separately maintained (e.g., with respect to commingling of cash) as set forth in the transaction agreements. | |||
1122(d)(2)(v) | Each custodial account is maintained at a federally insured depository institution as set forth in the transaction agreements. For purposes of this criterion, federally insured depository institution with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange Act. | |||
1122(d)(2)(vi) | Unissued checks are safeguarded so as to prevent unauthorized access. | |||
1122(d)(2)(vii) | Reconciliations are prepared on a monthly basis for all asset-backed securities related bank accounts, including custodial accounts and related bank clearing accounts. These reconciliations are (A) mathematically accurate; (B) prepared within 30 calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements; (C) reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items. These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the transaction agreements. |
A-1 | Exhibit A to the Servicing Agreement |
Servicing Criteria |
Applicable | |||
Reference |
Criteria |
|||
Investor Remittances and Reporting | ||||
1122(d)(3)(i) | Reports to investors, including those to be filed with the Commission, are maintained in accordance with the transaction agreements and applicable Commission requirements. Specifically, such reports (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements; (B) provide information calculated in accordance with the terms specified in the transaction agreements; (C) are filed with the Commission as required by its rules and regulations; and (D) agree with investors or the trustees records as to the total unpaid principal balance and number of pool assets serviced by the Servicer. | |||
1122(d)(3)(ii) | Amounts due to investors are allocated and remitted in accordance with timeframes, distribution priority and other terms set forth in the transaction agreements. | |||
1122(d)(3)(iii) | Disbursements made to an investor are posted within two business days to the Servicers investor records, or such other number of days specified in the transaction agreements. | |||
1122(d)(3)(iv) | Amounts remitted to investors per the investor reports agree with cancelled checks, or other form of payment, or custodial bank statements. | |||
Pool Asset Administration | ||||
1122(d)(4)(i) | Collateral or security on pool assets is maintained as required by the transaction agreements or related asset pool documents. | |||
1122(d)(4)(ii) | Pool assets and related documents are safeguarded as required by the transaction agreements | |||
1122(d)(4)(iii) | Any additions, removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or requirements in the transaction agreements. | |||
1122(d)(4)(iv) | Payments on pool assets, including any payoffs, made in accordance with the related pool asset documents are posted to the Servicers obligor records maintained no more than two business days after receipt, or such other number of days specified in the transaction agreements, and allocated to principal, interest or other items (e.g., escrow) in accordance with the related asset pool documents. | |||
1122(d)(4)(v) | The Servicers records regarding the accounts and the accounts agree with the Servicers records with respect to an obligors unpaid principal balance. | |||
1122(d)(4)(vi) | Changes with respect to the terms or status of an obligors account (e.g., loan modifications or re-agings) are made, reviewed and approved by authorized personnel in accordance with the transaction agreements and related pool asset documents. | |||
1122(d)(4)(vii) | Loss mitigation or recovery actions (e.g., forbearance plans, modifications and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are initiated, conducted and concluded in accordance with the timeframes or other requirements established by the transaction agreements. | |||
1122(d)(4)(viii) | Records documenting collection efforts are maintained during the period a pool asset is delinquent in accordance with the transaction agreements. Such records are maintained on at least a monthly basis, or such other period specified in the transaction agreements, and describe the entitys activities in monitoring delinquent pool assets including, for example, phone calls, letters and payment rescheduling plans in cases where delinquency is deemed temporary (e.g., illness or unemployment). | |||
1122(d)(4)(ix) | Adjustments to interest rates or rates of return for pool assets with variable rates are computed based on the related pool asset documents. |
A-2 | Exhibit A to the Servicing Agreement |
Servicing Criteria |
Applicable | |||
Reference |
Criteria |
|||
1122(d)(4)(x) | Regarding any funds held in trust for an obligor (such as escrow accounts): (A) such funds are analyzed, in accordance with the obligors Account documents, on at least an annual basis, or such other period specified in the transaction agreements; (B) interest on such funds is paid, or credited, to obligors in accordance with applicable Account documents and state laws; and (C) such funds are returned to the obligor within 30 calendar days of full repayment of the related Accounts, or such other number of days specified in the transaction agreements. | |||
1122(d)(4)(xi) | Payments made on behalf of an obligor (such as tax or insurance payments) are made on or before the related penalty or expiration dates, as indicated on the appropriate bills or notices for such payments, provided that such support has been received by the servicer at least 30 calendar days prior to these dates, or such other number of days specified in the transaction agreements. | |||
1122(d)(4)(xii) | Any late payment penalties in connection with any payment to be made on behalf of an obligor are paid from the servicers funds and not charged to the obligor, unless the late payment was due to the obligors error or omission. | |||
1122(d)(4)(xiii) | Disbursements made on behalf of an obligor are posted within two business days to the obligors records maintained by the servicer, or such other number of days specified in the transaction agreements. | |||
1122(d)(4)(xiv) | Delinquencies, charge-offs and uncollectible accounts are recognized and recorded in accordance with the transaction agreements. | |||
1122(d)(4)(xv) | Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction agreements. |
A-3 | Exhibit A to the Servicing Agreement |
EXHIBIT B
FORM OF INDENTURE TRUSTEES ANNUAL CERTIFICATION
Re: CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ]
I, [ ], the [ ] of [NAME OF COMPANY] (the Company), certify to the Seller, and its officers, with the knowledge and intent that they will rely upon this certification, that:
i. | I have reviewed the report on assessment of the Companys compliance provided in accordance with Rules 13a-18 and 15d-18 under the Securities Exchange Act of 1934, as amended (the Exchange Act), and Item 1122 of Regulation AB (the Servicing Assessment), the registered public accounting firms attestation report provided in accordance with Rules 13a-18 and 15d-18 under the Exchange Act and Item 1122(b) of Regulation AB (the Attestation Report), and any other information provided in furtherance of Item 1122(c) of Regulation AB pursuant to Section 8.19 of the Agreement (the Servicing Assessment Supplemental Information), that were delivered by the Company to the Seller pursuant to the Agreement (collectively, the Company Information); |
ii. | To the best of my knowledge, the Servicing Assessment and any Servicing Assessment Supplemental Information, taken as a whole, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in the light of the circumstances under which such statements were made, not misleading with respect to the period of time covered by the Servicing Assessment; |
iii. | To the best of my knowledge, all of the Company Information required to be provided by the Company under the Agreement has been provided to the Seller; and |
iv. | To the best of my knowledge, except as disclosed in the Servicing Assessment or the Attestation Report, the Company has fulfilled its obligations under the Agreement and the other Transaction Documents (as defined in the Agreement). |
Date: |
| |
By: |
| |
Name: |
||
Title: |
B-1 | Exhibit B to the Servicing Agreement |
EXHIBIT C
FORM OF INDENTURE TRUSTEES [MONTHLY][ANNUAL] CERTIFICATION
REGARDING ITEM 1117 AND ITEM 1119 OF REGULATION AB
Reference is made to the Form [10-D][10-K] of Capital One Prime Auto Receivables Trust 20[ ]-[ ] (the Form [10-D][10-K]) for the [reporting period][fiscal year] ended [ ], 20[ ]. Capitalized terms used but not otherwise defined herein shall have the respective meanings given to them in the Form [10-D][10-K].
[ ], a [ ] ([ ]), does hereby certify to the Bank, the Seller and the Issuing Entity that:
1. As of the date of the Form [10-D][10-K], there are no pending legal Proceedings against [ ] or Proceedings known to be contemplated by governmental authorities against [ ] that would be material to the investors in the Notes.
2. As of the date of the Form [10-D][10-K], there are the following affiliations, as contemplated by Item 1119 of Regulation AB, between [ ] and any of Capital One, National Association (in its capacity as Originator, Servicer and Administrator), [Capital One Auto Receivables, LLC], the Owner Trustee and the Issuing Entity, or any affiliates of such parties: [ ]
IN WITNESS WHEREOF, [ ] has caused this certificate to be executed in its corporate name by an officer thereunto duly authorized.
Dated: , 20[ ]
[ ], as Indenture Trustee | ||
By: |
| |
Name: |
||
Title: |
C-1 | Exhibit C to the Servicing Agreement |
Exhibit 10.4
FORM OF
ADMINISTRATION AGREEMENT
between
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ],
as Issuer,
CAPITAL ONE, NATIONAL ASSOCIATION,
as Administrator,
and
[ ],
as Indenture Trustee
Dated as of [ ], 20[ ]
Table of Contents
Page
1. | Duties of the Administrator | 1 | ||||
2. | Records | 3 | ||||
3. | Compensation; Payment of Fees and Expenses | 3 | ||||
4. | Independence of the Administrator | 3 | ||||
5. | No Joint Venture | 4 | ||||
6. | Other Activities of the Administrator | 4 | ||||
7. | Representations and Warranties of the Administrator | 4 | ||||
8. | Administrator Replacement Events; Termination of the Administrator | 5 | ||||
9. | Action upon Termination or Removal | 6 | ||||
10. | Liens | 6 | ||||
11. | Notices | 6 | ||||
12. | Amendments | 6 | ||||
13. | Governing Law; Submission to Jurisdiction; Waiver of Jury Trial | 8 | ||||
14. | Headings | 9 | ||||
15. | Counterparts | 9 | ||||
16. | Entire Agreement | 9 | ||||
17. | Severability of Provisions | 9 | ||||
18. | Not Applicable to the Bank in Other Capacities | 10 | ||||
19. | Benefits of the Administration Agreement | 10 | ||||
20. | Delegation of Duties | 10 | ||||
21. | Assignment | 10 | ||||
22. | Nonpetition Covenant | 10 | ||||
23. | Limitation of Liability | 11 | ||||
24. | [Limitation of Rights | 11 | ||||
25. | Compliance with the FDIC Rule | 11 |
i | Form of Administration Agreement |
THIS ADMINISTRATION AGREEMENT (as amended, supplemented or otherwise modified and in effect from time to time, this Agreement), dated as of [ ], 20[ ], is between CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ], a Delaware statutory trust (the Issuer), CAPITAL ONE, NATIONAL ASSOCIATION, a national banking association, as administrator (the Bank or the Administrator), and [ ], a [ ], as indenture trustee (the Indenture Trustee). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned such terms in Appendix A to the Sale Agreement, dated as of the date hereof (as amended, supplemented or otherwise modified and in effect from time to time, the Sale Agreement), between Capital One Auto Receivables, LLC (the Seller), and the Issuer, which contains rules as to usage and other interpretive provisions that are applicable herein.
W I T N E S S E T H :
WHEREAS, the Seller and [ ] (the Owner Trustee) have entered into the Amended and Restated Trust Agreement dated as of the date hereof (as amended, supplemented or otherwise modified and in effect from time to time, the Trust Agreement);
WHEREAS, the Issuer has issued the Notes pursuant to the Indenture and the Certificates pursuant to the Trust Agreement and has entered into certain agreements in connection therewith, including, (i) the Sale Agreement, (ii) the Servicing Agreement, (iii) the Indenture and (iv) the Depository Agreement[, and (v) the Interest Rate Swap Agreement] (the Trust Agreement and each of the agreements referred to in clauses (i) through [(v)] are referred to herein collectively as the Issuer Documents);
WHEREAS, to secure payment of the Notes, the Issuer has pledged the Collateral to the Indenture Trustee for the benefit of the Noteholders pursuant to the Indenture;
WHEREAS, pursuant to the Issuer Documents, the Issuer is required to perform certain duties;
WHEREAS, the Issuer desires to have the Administrator administer the affairs of the Issuer and perform certain of the duties of the Issuer, and to provide such additional services consistent with this Agreement and the Issuer Documents as the Issuer may from time to time request;
WHEREAS, the Administrator has the capacity to provide the services required hereby and is willing to perform such services for the Issuer on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual terms and covenants contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:
1. Duties of the Administrator.
(a) Duties with Respect to the Issuer Documents. The Administrator shall perform all of its duties as Administrator under this Agreement and the Issuer Documents and the duties and obligations of the Issuer under the Issuer Documents; provided,
1 | Form of Administration Agreement |
however, except as otherwise provided in the Issuer Documents, that the Administrator shall have no obligation to make any payment required to be made by the Issuer under any Issuer Document. In addition, the Administrator shall consult with the Issuer and the Owner Trustee regarding the Issuers duties and obligations under the Issuer Documents. The Administrator shall monitor the performance of the Issuer and shall advise the Issuer when action is necessary to comply with the Issuers duties and obligations under the Issuer Documents. Other than such items to be performed by the Owner Trustee pursuant to Section 5.3 of the Trust Agreement and the Certificate Paying Agent pursuant to Section 5.4 of the Trust Agreement and by the Paying Agent pursuant to Section 6.6(a) and (b) of the Indenture, the Administrator shall perform such calculations, and shall prepare for execution by the Issuer or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates, notices and opinions as it shall be the duty of the Issuer to prepare, execute, file or deliver pursuant to the Issuer Documents. In furtherance of the foregoing, the Administrator shall take all appropriate action that is the duty of the Issuer to take pursuant to the Issuer Documents, and shall prepare, execute, file and deliver on behalf of the Issuer all such documents, reports, filings, instruments, certificates, notices and opinions as it shall be the duty of the Issuer to prepare, execute, file or deliver pursuant to the Issuer Documents or otherwise by law.
(b) Notices to Rating Agencies. The Administrator, on behalf of the Issuer, shall give notice to each Rating Agency of (i) any material breach of the perfection representations, warranties and covenants contained in Schedule I of the Purchase Agreement, Schedule II of the Sale Agreement and Schedule I of the Indenture; (ii) the termination of, and/or appointment of a successor to, the Servicer pursuant to Sections 6.1 and 6.2 of the Servicing Agreement; (iii) any waiver of a Servicer Replacement Event pursuant to Section 6.1(b) of the Servicing Agreement; (iv) any amendment to the Servicing Agreement pursuant to Section 8.1 of the Servicing Agreement; (v) any Officers Certificate delivered pursuant to Section 3.12 of the Indenture with respect to any Event of Default under the Indenture; (vi) any officers certificate of the Issuer delivered pursuant to Section 3.9 of the Indenture; (vii) any resignation or removal of the Indenture Trustee pursuant to Section 6.8 of the Indenture; (viii) any merger or consolidation of the Indenture Trustee pursuant to Section 6.9 of the Indenture; (ix) any notice of Default pursuant to Section 6.5 of the Indenture; (x) any supplemental indenture pursuant to Sections 9.1 or 9.2 of the Indenture; (xi) any notice of merger, consolidation or succession of the Servicer pursuant to Section 5.3 of the Servicing Agreement; (xii) any amendment pursuant to Section 12 of this Agreement; and (xiii) any merger or consolidation of the Seller pursuant to Section 3.4 of the Sale Agreement, which notice shall be given promptly upon the Administrator being notified thereof by the Purchaser, the Owner Trustee (to the extent a Responsible Officer of the Owner Trustee has received written notice thereof), the Indenture Trustee (to the extent a Responsible Officer of the Indenture Trustee has received written notice or has actual knowledge thereof) or the Servicer.
(c) Dissolution of the Issuer. Upon dissolution of the Issuer, the Administrator shall wind up the business and affairs of the Issuer in accordance with Section 9.2 of the Trust Agreement.
2 | Form of Administration Agreement |
(d) No Action by Administrator. Notwithstanding anything to the contrary in this Agreement, the Administrator shall not be obligated to, and shall not, take any action that the Issuer directs the Administrator not to take or which would result in a violation or breach of the Issuers covenants, agreements or obligations under any of the Issuer Documents.
(e) Non-Ministerial Matters; Exceptions to Administrator Duties.
(i) Notwithstanding anything to the contrary in this Agreement, with respect to matters that in the reasonable judgment of the Administrator are non-ministerial, the Administrator shall not take any action unless, within a reasonable time before the taking of such action, the Administrator shall have notified the Issuer of the proposed action and the Issuer shall not have withheld consent or provided an alternative direction. For the purpose of the preceding sentence, non-ministerial matters shall include, without limitation:
(A) the initiation of any claim or lawsuit by the Issuer and the compromise of any action, claim or lawsuit brought by or against the Issuer;
(B) the appointment of successor Note Registrars, successor Paying Agents, successor Indenture Trustees, successor Administrators or successor Servicers, or the consent to the assignment by the Note Registrar, the Paying Agent or the Indenture Trustee of its obligations under the Indenture; and
(C) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement, the Administrator shall not be obligated to, and shall not, (x) make any payments to the Noteholders or Certificateholders under the Transaction Documents, (y) except as provided in the Transaction Documents, sell the Trust Estate or (z) take any other action that the Issuer directs the Administrator not to take on its behalf.
2. Records. The Administrator shall maintain appropriate books of account and records relating to services performed hereunder, which books of account and records shall be accessible for inspection upon reasonable written request by the Issuer, the Seller and the Indenture Trustee at any time during normal business hours.
3. Compensation; Payment of Fees and Expenses. As compensation for the performance of the Administrators obligations under this Agreement and as reimbursement for its expenses related thereto, the Administrator shall be entitled to receive $[ ] annually which shall be solely an obligation of the Servicer. The Administrator shall pay all expenses incurred by it in connection with its activities hereunder.
4. Independence of the Administrator. For all purposes of this Agreement, the Administrator shall be an independent contractor and shall not be subject to the supervision of the Issuer with respect to the manner in which it accomplishes the performance of its obligations hereunder. Unless expressly authorized by the Issuer, the Administrator shall have no authority to act for or to represent the Issuer in any way (other than as permitted hereunder) and shall not otherwise be deemed an agent of the Issuer.
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5. No Joint Venture. Nothing contained in this Agreement (i) shall constitute the Administrator and the Issuer as members of any partnership, joint venture, association, syndicate, unincorporated business or other separate entity, (ii) shall be construed to impose any liability as such on the Administrator or the Issuer or (iii) shall be deemed to confer on the Administrator or the Issuer any express, implied or apparent authority to incur any obligation or liability on behalf of the other.
6. Other Activities of the Administrator. Nothing herein shall prevent the Administrator or its Affiliates from engaging in other businesses or, in its sole discretion, from acting in a similar capacity as an Administrator for any other Person even though such Person may engage in business activities similar to those of the Issuer, the Owner Trustee or the Indenture Trustee.
7. Representations and Warranties of the Administrator. The Administrator represents and warrants to the Issuer and the Indenture Trustee as follows:
(a) Existence and Power. The Administrator is a national banking association validly subsisting under the laws of the United States of America and has, in all material respects, all power and authority to carry on its business as it is now conducted. The Administrator has obtained all necessary licenses and approvals in each jurisdiction where the failure to do so would materially and adversely affect the ability of the Administrator to perform its obligations under the Transaction Documents or affect the enforceability or collectability of the Receivables or any other part of the Collateral.
(b) Authorization and No Contravention. The execution, delivery and performance by the Administrator of the Transaction Documents to which it is a party (i) have been duly authorized by all necessary action on the part of the Administrator and (ii) do not contravene or constitute a default under (A) any applicable order, law, rule or regulation, (B) its organizational documents or (C) any material indenture or material agreement, contract, order or other instrument to which it is a party or its property is subject (other than violations which do not affect the legality, validity or enforceability of any of such agreements or which, individually or in the aggregate, would not materially and adversely affect the transactions contemplated by, or the Administrators ability to perform its obligations under, the Transaction Documents).
(c) No Consent Required. No approval or authorization by, or filing with, any Governmental Authority is required in connection with the execution, delivery and performance by the Administrator of any Transaction Document other than (i) UCC filings, (ii) approvals and authorizations that have previously been obtained and filings that have previously been made and (iii) approvals, authorizations or filings which, if not obtained or made, would not have a material adverse effect on the enforceability or collectibility of the Receivables or any other part of the Collateral or would not materially and adversely affect the ability of the Administrator to perform its obligations under the Transaction Documents.
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(d) Binding Effect. Each Transaction Document to which the Administrator is a party constitutes the legal, valid and binding obligation of the Administrator enforceable against the Administrator in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws affecting the enforcement of creditors rights generally and, if applicable, the rights of creditors of banking corporations from time to time in effect or by general principles of equity.
(e) No Proceedings. There are no Proceedings pending or, to the knowledge of the Administrator, threatened against the Administrator before or by any Governmental Authority that (i) assert the invalidity or unenforceability of this Agreement or (ii) seek any determination or ruling that would materially and adversely affect the performance by the Administrator of its obligations under this Agreement.
8. Administrator Replacement Events; Termination of the Administrator.
(a) Subject to clause (c) below, the Administrator may resign from its duties hereunder by providing the Issuer with at least sixty (60) days prior written notice.
(b) The occurrence of any one of the following events (each, an Administrator Replacement Event) shall also entitle the Issuer, subject to Section 21 hereof, to terminate and replace the Administrator:
(i) any failure by the Administrator to duly observe or perform in any material respect any other of its covenants or agreements in this Agreement, which failure materially and adversely affects the rights of the Issuer, the Noteholders or the Certificateholders, and which continues unremedied for ninety (90) days after discovery thereof by a Responsible Officer of the Administrator or receipt by the Administrator of written notice thereof from the Indenture Trustee (to the extent a Responsible Officer of the Indenture Trustee has actual knowledge or has received written notice thereof) or Noteholders evidencing at least a majority of the Outstanding Note Balance (or, if no Notes are Outstanding, by the Majority Certificateholders); or
(ii) the Administrator suffers a Bankruptcy Event;
provided, however, that if any delay or failure of performance referred to in clause (b)(i) above shall have been caused by force majeure or other similar occurrence, the ninety (90) day grace period referred to in such clause (b)(i) shall be extended for an additional sixty (60) days.
(c) If an Administrator Replacement Event shall have occurred, the Issuer may, subject to Section 21 hereof, by notice given to the Administrator and the Owner Trustee, terminate all or a portion of the rights and powers of the Administrator under this Agreement, including the rights of the Administrator to receive the annual fee for services hereunder for all periods following such termination; provided, however, that such termination shall not become effective until such time as the Issuer, subject to Section 21 hereof, shall have appointed a successor Administrator in the manner set forth
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below. Upon any such termination or upon a resignation of the Administrator in accordance with Section 8(a) hereof, all rights, powers, duties and responsibilities of the Administrator under this Agreement shall vest in and be assumed by any successor Administrator appointed by the Issuer, subject to Section 21 hereof, pursuant to a management or administration agreement between the Issuer and such successor Administrator, containing substantially the same provisions as this Agreement (including with respect to the compensation of such successor Administrator), and the successor Administrator is hereby irrevocably authorized and empowered to execute and deliver, on behalf of the Administrator, as attorney-in-fact or otherwise, all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect such vesting and assumption. Further, in such event, the Administrator shall use its commercially reasonable efforts to effect the orderly and efficient transfer of the administration of the Issuer to the new Administrator. No resignation or removal of the Administrator shall be effective until a successor Administrator shall have been appointed by the Issuer.
(d) The Issuer, subject to Section 21 hereof, may waive in writing any Administrator Replacement Event by the Administrator in the performance of its obligations hereunder and its consequences. Upon any such waiver of a past Administrator Replacement Event, such Administrator Replacement Event shall cease to exist, and any Administrator Replacement 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 Administrator Replacement Event or impair any right consequent thereon.
9. Action upon Termination or Removal. Promptly upon the effective date of termination of this Agreement pursuant to Section 8, or the removal or resignation of the Administrator pursuant to Section 8, the Administrator shall be entitled to be paid by the Servicer all fees and reimbursable expenses accruing to it to the date of such termination or removal.
10. Liens. The Administrator will not directly or indirectly create, allow or suffer to exist any Lien on the Collateral other than Permitted Liens.
11. Notices. All demands, notices and communications hereunder shall be in writing and shall be delivered or mailed by registered or certified first-class United States mail, postage prepaid, hand delivery, prepaid courier service, or by facsimile or e-mail (if an applicable facsimile number or e-mail address is provided on Schedule I to the Sale Agreement), and addressed in each case as specified on Schedule I to the Sale Agreement or at such other address as shall be designated by any of the specified addressees in a written notice to the other parties hereto. Delivery shall occur only upon receipt or reported tender of such communication by an officer of the recipient entitled to receive such notices located at the address of such recipient for notices hereunder.
12. Amendments.
(a) Any term or provision of this Agreement may be amended by the Administrator without the consent of the Indenture Trustee, any Noteholder, the Issuer, the Owner Trustee or any other Person subject to the satisfaction of one of the following conditions:
(i) the Administrator delivers an Opinion of Counsel or an Officers Certificate to the Indenture Trustee to the effect that such amendment will not materially and adversely affect the interests of the Noteholders; or
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(ii) the Rating Agency Condition is satisfied with respect to such amendment and the Administrator notifies the Indenture Trustee in writing that the Rating Agency Condition is satisfied with respect to such amendment.
[provided, that such amendment shall not materially and adversely affect the rights or obligations of the Swap Counterparty or the Issuer under the Interest Rate Swap Agreement unless the Swap Counterparty shall have consented in writing to such amendment (and such consent shall be deemed to have been given if the Swap Counterparty does not object in writing within ten (10) Business Days after receipt of a written request for such consent); provided, further, that any amendment requiring the Swap Counterpartys consent hereunder must also satisfy the Rating Agency Condition to be effective.]
(b) This Agreement may also be amended from time to time by the Administrator and the Indenture Trustee, with the consent of the Holders of Notes evidencing not less than a majority of the Outstanding Note Balance of the Controlling Class, 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, that such amendment shall not materially and adversely affect the rights or obligations of the Swap Counterparty or the Issuer under the Interest Rate Swap Agreement unless the Swap Counterparty shall have consented in writing to such amendment (and such consent shall be deemed to have been given if the Swap Counterparty does not object in writing within ten (10) Business Days after receipt of a written request for such consent); provided, further, that any amendment requiring the Swap Counterpartys consent hereunder must also satisfy the Rating Agency Condition to be effective]. It will not be necessary for the consent of Noteholders or Certificateholders to approve the particular form of any proposed amendment or consent, but it will be sufficient if such consent approves the substance thereof. The manner of obtaining such consents (and any other consents of Noteholders and Certificateholders provided for in this Agreement) and of evidencing the authorization of the execution thereof by Noteholders and Certificateholders will be subject to such reasonable requirements as the Indenture Trustee and Owner Trustee may prescribe, including the establishment of record dates pursuant to the Depository Agreement.
(c) Prior to the execution of any amendment pursuant to this Section 12, the Administrator shall provide written notification of the substance of such amendment to each Rating Agency and the Owner Trustee; and promptly after the execution of any such amendment, the Administrator shall furnish a copy of such amendment to each Rating Agency, the Owner Trustee and the Indenture Trustee; provided, that no amendment
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pursuant to this Section 12 shall be effective which materially and adversely affects the rights, protections or duties of the Indenture Trustee or the Owner Trustee without the prior written consent of such Person.
(d) Prior to the execution of any amendment to this Agreement, the Owner Trustee and the Indenture Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and an Officers Certificate of the Seller or the Administrator that all conditions precedent to the execution and delivery of such amendment have been satisfied. The Owner Trustee and the Indenture Trustee may, but shall not be obligated to, enter into any such amendment which materially and adversely affects the Owner Trustees or the Indenture Trustees, as applicable, own rights, privileges, indemnities, duties or obligations under this Agreement, the Transaction Documents or otherwise.
(e) Notwithstanding subsection (a) of this Section 12, this Agreement may only be amended by the Administrator if (i) the Majority Certificateholders [or, if 100% of the aggregate Percentage Interests is then beneficially owned by the Bank and/or its Affiliates, such Person (or Persons)], consent to such amendment or (ii) such amendment shall not, as evidenced by an Officers Certificate of the Administrator or an Opinion of Counsel delivered to the Indenture Trustee and the Owner Trustee, materially and adversely affect the interests of the Certificateholders. In determining whether 100% of the aggregate Percentage Interests is then beneficially owned by the Bank and/or its Affiliates for purposes of clause (i), any party shall be entitled to rely on an Officers Certificate or similar certification of the Bank or any Affiliate thereof to such effect.
(f) Notwithstanding anything herein to the contrary, for purposes of classifying the Issuer as a grantor trust under the Code, no amendment shall be made to this Agreement that would (i) result in a variation of the investment of the beneficial owners of the Certificates for purposes of the United States Treasury Regulation section 301.7701-4(c) without the consent of Noteholders evidencing at least a majority of the Outstanding Note Balance of the Controlling Class and the Majority Certificateholders or (ii) cause the Issuer (or any part thereof) to be classified as other than a grantor trust under subtitle A, chapter 1, subchapter J, part I, subpart E of the Code without the consent of all of the Noteholders and all of the Certificateholders.
13. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL, SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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(b) Each of the parties hereto hereby irrevocably and unconditionally:
(i) submits for itself and its property in any Proceeding relating to this Agreement or any documents executed and delivered in connection herewith, or for recognition and enforcement of any judgment in respect thereof, to the nonexclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof;
(ii) consents that any such Proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such Proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address determined in accordance with Section 11 of this Agreement;
(iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(v) to the extent permitted by applicable law, each party hereto irrevocably waives all right of trial by jury in any Proceeding or counterclaim based on, or arising out of, under or in connection with this Agreement, any other Transaction Document, or any matter arising hereunder or thereunder.
14. Headings. The section headings hereof have been inserted for convenience of reference only and shall not be construed to affect the meaning, construction or effect of this Agreement.
15. Counterparts. This Agreement may be executed in any number of counterparts (including by way of electronic or facsimile transmission), each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.
16. Entire Agreement. The Transaction Documents contain a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter thereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter thereof, superseding all prior oral or written understandings. There are no unwritten agreements among the parties.
17. Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.
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18. Not Applicable to the Bank in Other Capacities.
(a) Nothing in this Agreement shall affect any obligation the Bank may have in any other capacity.
(b) Any entity (i) into which the Administrator may be merged or converted or with which it may be consolidated, to which it may sell or transfer its business and assets as a whole or substantially as a whole or any entity resulting from any merger, sale, transfer, conversion or consolidation to which the Administrator shall be a party, or any entity succeeding to the business of the Administrator or (ii) more than 50% of the voting stock or voting power and 50% or more of the economic equity of which is owned directly or indirectly by Capital One Financial Corporation and which executes an agreement of assumption to perform every obligation of the Administrator under this Agreement, shall be the successor to the Administrator under this Agreement, in each case, without the execution or filing of any paper of any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
19. Benefits of the Administration Agreement. Nothing in this Agreement, expressed or implied, shall give to any Person other than the parties hereto and their successors hereunder, the Owner Trustee and any separate trustee or co-trustee appointed under Section 6.10 of the Indenture[, the Swap Counterparty] any benefit or any legal or equitable right, remedy or claim under this Agreement. For the avoidance of doubt, the Owner Trustee[ and the Swap Counterparty] is a third party beneficiary of this Agreement and is entitled to the rights and benefits hereunder and may enforce the provisions hereof as if it were a party hereto.
20. Delegation of Duties. The Administrator may, at any time without notice or consent, delegate (a) any or all of its duties under the Transaction Documents to any of its Affiliates or (b) specific duties to sub-contractors or other professional services firms (including accountants, outside legal counsel or similar concerns) who are in the business of performing such duties; provided, that no such delegation shall relieve the Administrator of its responsibility with respect to such duties and the Administrator shall remain obligated hereunder as if the Administrator alone were performing such duties.
21. Assignment. Each party hereto hereby acknowledges and consents to the mortgage, pledge, assignment and Grant of a security interest by the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the Noteholders of all of the Issuers rights under this Agreement. In addition, the Administrator hereby acknowledges and agrees that for so long as any Notes are outstanding, the Indenture Trustee will have, pursuant to the Transaction Documents, the right to exercise all waivers and consents, rights, remedies, powers, privileges and claims of the Issuer under this Agreement in the event the Issuer shall fail to exercise the same.
22. Nonpetition Covenant. Each party hereto agrees that, prior to the date which is one year and one day after payment in full of all obligations of each Bankruptcy Remote Party in
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respect of all securities issued by any Bankruptcy Remote Party, (i) such party shall not authorize any Bankruptcy Remote Party to commence a voluntary winding-up or other voluntary case or other Proceeding seeking liquidation, reorganization or other relief with respect to such Bankruptcy Remote Party or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction or seeking the appointment of an administrator, a trustee, receiver, liquidator, custodian or other similar official with respect to such Bankruptcy Remote Party or any substantial part of its property or to consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other Proceeding commenced against such Bankruptcy Remote Party, or to make a general assignment for the benefit of, its creditors generally, any party hereto or any other creditor of such Bankruptcy Remote Party, and (ii) such party shall not commence or join with any other Person in commencing any Proceeding against such Bankruptcy Remote Party under any bankruptcy, reorganization, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction.
23. Limitation of Liability. It is expressly understood and agreed by the parties hereto that (a) this Agreement is executed and delivered by [ ], not individually or personally but solely as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it under the Trust Agreement, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by [ ], but is made and intended for the purpose for binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on [ ], individually or personally, to perform any covenant, either express or implied, contained herein, all such liability, if any, being expressly waived by the parties hereto and any Person claiming by, through or under the parties hereto, (d) [ ] has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Agreement and (e) under no circumstances shall [ ] be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Agreement or the other related documents.
24. [Limitation of Rights. All of the rights of the Swap Counterparty in, to and under this Agreement (including, but not limited to, all of the Swap Counterpartys rights as a third party beneficiary of this Agreement and all of the Swap Counterpartys rights to receive notice of any action hereunder and to give or withhold consent to any action hereunder) shall terminate upon the termination of the Interest Rate Swap Agreement in accordance with the terms thereof and the payment in full of all amounts owing to the Swap Counterparty.]
25. Compliance with the FDIC Rule. The Administrator (i) shall perform the covenants set forth in Article XII of the Indenture applicable to it and (ii) shall facilitate compliance with Article XII of the Indenture by the Capital One Parties.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written.
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ] | ||
By: [ ], not in its individual capacity but solely as Owner Trustee |
By: |
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Name: | ||
Title: |
S-1 | COPAR 20[ ]-[ ] Administration Agreement |
CAPITAL ONE, NATIONAL ASSOCIATION, as Administrator |
By: |
|
Name: | ||
Title: |
S-2 | COPAR 20[ ]-[ ] Administration Agreement |
[ ], as Indenture Trustee |
By: |
|
Name: | ||
Title: |
S-3 | COPAR 20[ ]-[ ] Administration Agreement |
Exhibit 10.5
(MulticurrencyCross Border)
ISDA®
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of [ ]
[ ] and CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ]
have entered and/or anticipate entering into one or more transactions (each a Transaction) that are or will be governed by this Master Agreement, which includes the schedule (the Schedule), and the documents and other confirming evidence (each a Confirmation) exchanged between the parties confirming those Transactions.
Accordingly, the parties agree as follows:
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the Schedule will have the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement (including the Schedule), such Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this Agreement), and the parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement.
(ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement.
(b) Change of Account. Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the scheduled date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change.
Copyright © 1992 by International Swap Dealers Association, Inc.
(c) Netting. If on any date amounts would otherwise be payable:
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each partys obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount will be determined in respect of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as being subject to the election, together with the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such Transactions from such date). This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect. If a party is so required to deduct or withhold, then that party (X) will:
(1) promptly notify the other party (Y) of such requirement;
(2) pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy), or other documentation reasonably acceptable to Y, evidencing such payment to such authorities; and
(4) if such Tax is an lndemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required. However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for:
(A) the failure by Y to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (I) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (II) a Change in Tax Law.
(ii) Liability. If:
(1) X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against X,
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then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability for interest, but including any related liability for penalties only if Y has failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as such overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment, at the Default Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. If, prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party defaults in the performance of any obligation required to be settled by delivery, it will compensate the other party on demand if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Section 3(f), at all times until the termination of this Agreement) that:
(a) Basic Representations.
(i) Status. It is duly organised and validly existing under the laws of the jurisdiction of its organisation or incorporation and, if relevant under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorise such execution, delivery and performance;
(iii) No Violation or Conflict. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and
(v) Obligations Binding. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganisation, insolvency, moratorium or similar laws affecting creditors rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
(b) Absence of Certain Events. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document.
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(d) Accuracy of Specified Information. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect.
(e) Payer Tax Representation. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and true.
(f) Payee Tax Representations. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true.
4. Agreements
Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:
(a) Furnish Specified Information. It will deliver to the other party or, in certain cases under subparagraph (iii) below, to such government or taxing authority as the other party reasonably directs:
(i) any forms, documents or certificates relating to taxation specified in the Schedule or anyConfirmation;
(ii) any other documents specified in the Schedule or any Confirmation; and
(iii) upon reasonable demand by such other party, any form or document that may be required or reasonably requested in writing in order to allow such other party or its Credit Support Provider to make a payment under this Agreement or any applicable Credit Support Document without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form or document would not materially prejudice the legal or commercial position of the party in receipt of such demand), with any such form or document to be accurate and completed in a manner reasonably satisfactory to such other party and to be executed and to be delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation made by it under Section 3(f) to be accurate and true promptly upon learning of such failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, organised, managed and controlled, or considered to have its seat, or in which a branch or office through which it is acting for the purpose of this Agreement is located (Stamp Tax Jurisdiction) and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other partys execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party.
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes an event of default (an Event of Default) with respect to such party:
(i) Failure to Pay or Deliver. Failure by the party to make, when due, any payment under thisAgreement or delivery under Section 2(a)(i) or 2(e) required to be made by it if such failure is notremedied on or before the third Local Business Day after notice of such failure is given to the party;
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(ii) Breach of Agreement. Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied on or before the thirtieth day after notice of such failure is given to the party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document to be in full force and effect for the purpose of this Agreement (in either case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support Document;
(iv) Misrepresentation. A representation (other than a representation under Section 3(e) or (f)) made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated;
(v) Default under Specified Transaction. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three Local Business Days if there is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf);
(vi) Cross Default. If Cross Default is specified in the Schedule as applying to the party, the occurrence or existence of (1) a default, event of default or other similar condition or event (however described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments, before it would otherwise have been due and payable or (2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments on the due date thereof in an aggregate amount of not less than the applicable Threshold Amount under such agreements or instruments (after giving effect to any applicable notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:
(1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not
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dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer:
(1) the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes an Illegality if the event is specified in (i) below, a Tax Event if the event is specified in (ii) below or a Tax Event Upon Merger if the event is specified in (iii) below, and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to (iv) below or an Additional Termination Event if the event is specified pursuant to (v) below:
(i) Illegality. Due to the adoption of, or any change in, any applicable law after the date on which a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law after such date, it becomes unlawful (other than as a result of a breach by the party of Section 4(b)) for such party (which will be the Affected Party):
(1) to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party to perform, any contingent or other obligation which the party (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (y) a Change in Tax Law, the party (which will be the Affected Party) will, or there is a substantial likelihood that it will, on the next succeeding Scheduled Payment Date (1) be required to pay to the other party an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is required to be deducted or withheld for or on account of a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect of such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B));
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(iii) Tax Event Upon Merger. The party (the Burdened Party) on the next succeeding Scheduled Payment Date will either (1) be required to pay an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been deducted or withheld for or on account of any Indemnifiable Tax in respect of which the other party is not required to pay an additional amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a party consolidating or amalgamating with, or merging with or into, or transferring all or substantially all its assets to, another entity (which will be the Affected Party) where such action does not constitute an event described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If Credit Event Upon Merger is specified in the Schedule as applying to the party, such party (X), any Credit Support Provider of X or any applicable Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving or transferee entity is materially weaker than that of X, such Credit Support Provider or such Specified Entity, as the case may be, immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); or
(v) Additional Termination Event. If any Additional Termination Event is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the Affected Party or Affected Parties shall be as specified for such Additional Termination Event in the Schedule or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which would otherwise constitute or give rise to an Event of Default also constitutes an Illegality, it will be treated as an Illegality and will not constitute an Event of Default.
6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an Event of Default with respect to a party (the Defaulting Party) has occurred and is then continuing, the other party (the Non-defaulting Party) may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, Automatic Early Termination is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction and will also give such other information about that Termination Event as the other party may reasonably require.
(ii) Transfer to Avoid Termination Event. If either an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, excluding immaterial, incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(i) all its rights and obligations under this Agreement in respect of the Affected Transactions to another of its Offices or Affiliates so that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give notice to the other party to that effect within such 20 day period, whereupon the other party may effect such a transfer within 30 days after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the prior written consent of the other party, which consent will not be withheld if such other partys policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed.
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(iii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days after notice thereof is given under Section 6(b)(i) on action to avoid that Termination Event,
(iv) Right to Terminate. If:
(1) a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the case may be, has not been effected with respect to all Affected Transactions within 30 days after an Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the Affected Party,
either party in the case of an Illegality, the Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if there is more than one Affected Party, or the party which is not the Affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, by not more than 20 days notice to the other party and provided that the relevant Termination Event is then continuing, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under Section 6(a) or (h), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement. The amount, if any, payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations (including all relevant quotations and specifying any amount payable under Section 6(e)) and (2) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation obtained in determining a Market Quotation. the records of the party obtaining such quotation will be conclusive evidence of the existence and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in respect of any Early Termination Date under Section 6(e) will be payable on the day that notice of the amount payable is effective (in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on the day which is two Local Business Days after the day on which notice of the amount payable is effective (in the case of an Early Termination Date which is designated as a result of a Termination Event). Such amount will be paid together with (to the extent permitted under applicable law) interest thereon (before as well as after judgment) in the Termination Currency, from (and including) the relevant Early Termination Date to (but excluding) the date such amount is paid, at the Applicable Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs, the following provisions shall apply based on the parties election in the Schedule of a payment measure, either Market Quotation or Loss, and a payment method, either the First Method or the Second Method. If the parties fail to designate a payment measure or payment method in the Schedule, it will be deemed that Market Quotation or the Second Method, as the case may be, shall apply. The amount, if any, payable in respect of an Early Termination Date and determined pursuant to this Section will be subject to any Set-off.
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(i) Events of Default. If the Early Termination Date results from an Event of Default:
(1) First Method and Market Quotation. If the First Method and Market Quotation apply, the Defaulting Party will pay to the Non-defaulting Party the excess, if a positive number, of (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party over (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting Party, if a positive number, the Non-defaulting Partys Loss in respect of this Agreement.
(3) Second Method and Market Quotation. If the Second Method and Market Quotation apply, an amount will be payable equal to (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss apply, an amount will be payable equal to the Non-defaulting Partys Loss in respect of this Agreement. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a Termination Event:
(1) One Affected Party. If there is one Affected Party, the amount payable will be determined in accordance with Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in either case, references to the Defaulting Party and to the Non-defaulting Party will be deemed to be references to the Affected Party and the party which is not the Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being terminated, Loss shall be calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:
(A) if Market Quotation applies, each party will determine a Settlement Amount in respect of the Terminated Transactions, and an amount will be payable equal to (I) the sum of (a) one-half of the difference between the Settlement Amount of the party with the higher Settlement Amount (X) and the Settlement Amount of the party with the lower Settlement Amount (Y) and (b) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in respect of this Agreement (or, if fewer than all the Transactions are being terminated, in respect of all Terminated Transactions) and an amount will be payable equal to one-half of the difference between the Loss of the party with the higher Loss (X) and the Loss of the party with the lower Loss (Y).
If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of that amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early Termination Date occurs because Automatic Early Termination applies in respect of a party, the amount determined under this Section 6(e) will be subject to such adjustments as are appropriate and permitted by law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d)(ii).
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(iv) Pre-Estimate. The parties agree that if Market Quotation applies an amount recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks and except as otherwise provided in this Agreement neither party will be entitled to recover any additional damages as a consequence of such losses.
7. Transfer
Subject to Section 6(b)(ii), neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that:
(a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. Contractual Currency
(a) Payment in the Contractual Currency. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the Contractual Currency). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in a reasonable manner and in good faith in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess.
(b) Judgments. To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purposes of such judgment or order and the rate of exchange at which such party is able, acting in a reasonable manner and in good faith in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or order actually received by such party. The term rate of exchange includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law, these indemnities constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient for a party to demonstrate that it would have suffered a loss had an actual exchange or purchase been made.
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9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation shall he entered into as soon as practicable and may he executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex or electronic message constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement.
10. Offices; Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to the other party that, notwithstanding the place of booking office or jurisdiction of incorporation or organisation of such party, the obligations of such party are the same as if it had entered into the Transaction through its head or home office. This representation will be deemed to be repeated by such party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives payments or deliveries for the purpose of a Transaction without the prior written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make and receive payments or deliveries under any Transaction through any Office listed in the Schedule, and the Office through which it makes and receives payments or deliveries with respect to a Transaction will be specified in the relevant Confirmation.
11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection.
11 | ISDA ® 1992 |
12. Notices
(a) Effectiveness. Any notice or other communication in respect of this Agreement may be given in any manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system) to the address or number or in accordance with the electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated:
(i) if in writing and delivered in person or by courier, on the date it is delivered;
(ii) if sent by telex, on the date the recipients answerback is received;
(iii) if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the senders facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system details at which notices or other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement (Proceedings), each party irrevocably:
(i) submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law, or to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City, if this Agreement is expressed to be governed by the laws of the State of New York; and
(ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or re-enactment thereof for the time being in force) nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent (if any) specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings. If for any reason any partys Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12. Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by law.
(d) Waiver of Immunities. Each party irrevocably waives, to the fullest extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings.
12 | ISDA ® 1992 |
14. Definitions
As used in this Agreement:
Additional Termination Event has the meaning specified in Section 5(b).
Affected Party has the meaning specified in Section 5(b).
Affected Transactions means (a) with respect to any Termination Event consisting of an Illegality, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event and (b) with respect to any other Termination Event, all Transactions.
Affiliate means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, control of any entity or person means ownership of a majority of the voting power of the entity or person.
Applicable Rate means:
(a) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either party from and after the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate; and
(d) in all other cases, the Termination Rate.
Burdened Party has the meaning specified in Section 5(b).
Change in Tax Law means the enactment, promulgation, execution or ratification of, or any change in or amendment to, any law (or in the application or official interpretation of any law) that occurs on or after the date on which the relevant Transaction is entered into.
consent includes a consent, approval, action, authorisation, exemption, notice, filing, registration or exchange control consent.
Credit Event Upon Merger has the meaning specified in Section 5(b).
Credit Support Document means any agreement or instrument that is specified as such in this Agreement. Credit Support Provider has the meaning specified in the Schedule.
Default Rate means a rate per annum equal to the cost (without proof or evidence of any actual cost) tothe relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum.
Defaulting Party has the meaning specified in Section 6(a).
Early Termination Date means the date determined in accordance with Section 6(a) or 6(h)(iv).
Event of Default has the meaning specified in Section 5(a) and, if applicable, in the Schedule.
Illegality has the meaning specified in Section 5(b).
Indemnifiable Tax means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organised, present or engaged in a trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document).
13 | ISDA ® 1992 |
law includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of any relevant governmental revenue authority) and lawful and unlawful will be construed accordingly.
Local Business Day means, subject to the Schedule, a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to any obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other payment, in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment, (c) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), in the city specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (d) in relation to Section 5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction.
Loss means, with respect to this Agreement or one or more Terminated Transactions, as the case may be, and a party, the Termination Currency Equivalent of an amount that party reasonably determines in good faith to be its total losses and costs (or gain, in which case expressed as a negative number) in connection with this Agreement or that Terminated Transaction or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at the election of such party but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any gain resulting from any of them). Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a partys legal fees and out-of-pocket expenses referred to under Section 11. A party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. A party may (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets.
Market Quotation means, with respect to one or more Terminated Transactions and a party making the determination, an amount determined on the basis of quotations from Reference Market-makers. Each quotation will be for an amount, if any, that would be paid to such party (expressed as a negative number) or by such party (expressed as a positive number) in consideration of an agreement between such party (taking into account any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference Market-maker to enter into a transaction (the Replacement Transaction) that would have the effect of preserving for such party the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date. For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each applicable condition precedent) after that Early Termination Date is to be included. The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree. The party making the determination (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably practicable after the relevant Early Termination Date. The day and time as of which those quotations are to be obtained will be selected in good faith by the party obliged to make a determination under Section 6(e), and, if each party is so obliged, after consultation with the other. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group of Terminated Transactions cannot be determined.
Non-default Rate means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the Non-defaulting Party (as certified by it) if it were to fund the relevant amount.
Non-defaulting Party has the meaning specified in Section 6(a).
14 | ISDA ® 1992 |
Office means a branch or office of a party, which may be such partys head or home office.
Potential Event of Default means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.
Reference Market-makers means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable, from among such dealers having an office in the same city.
Relevant Jurisdiction means, with respect to a party, the jurisdictions (a) in which the party is incorporated, organised, managed and controlled or considered to have its seat, (b) where an Office through which the party is acting for purposes of this Agreement is located, (c) in which the party executes this Agreement and (d) in relation to any payment, from or through which such payment is made.
Scheduled Payment Date means a date on which a payment or delivery is to be made under Section 2(a)(i) with respect to a Transaction.
Set-off means set-off, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under this Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer.
Settlement Amount means, with respect to a party and any Early Termination Date, the sum of:
(a) the Termination Currency Equivalent of the Market Quotations (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation is determined; and
(b) such partys Loss (whether positive or negative and without reference to any Unpaid Amounts) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation cannot be determined or would not (in the reasonable belief of the party making the determination) produce a commercially reasonable result.
Specified Entity has the meanings specified in the Schedule.
Specified Indebtedness means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money.
Specified Transaction means, subject to the Schedule, (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation.
Stamp Tax means any stamp, registration, documentation or similar tax.
Tax means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (includinginterest, penalties and additions thereto) that is imposed by any government or other taxing authority inrespect of any payment under this Agreement other than a stamp, registration, documentation or similar tax.
Tax Event has the meaning specified in Section 5(b).
Tax Event Upon Merger has the meaning specified in Section 5(b).
Terminated Transactions means with respect to any Early Termination Date (a) if resulting from a Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions (in either case) in effect immediately before the effectiveness of the notice designating that Early Termination Date (or, if Automatic Early Termination applies, immediately before that Early Termination Date).
Termination Currency has the meaning specified in the Schedule.
15 | ISDA ® 1992 |
Termination Currency Equivalent means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the Other Currency), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date, or, if the relevant Market Quotation or Loss (as the case may be), is determined as of a later date, that later date, with the Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below) for the purchase of such Other Currency with the Termination Currency at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date or that later date. The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the parties.
Termination Event means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event.
Termination Rate means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts.
Unpaid Amounts owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market value of that which was (or would have been) required to be delivered as of the originally scheduled date for delivery, in each case together with (to the extent permitted under applicable law) interest, in the currency of such amounts, from (and including) the date such amounts or obligations were or would have been required to have been paid or performed to (but excluding) such Early Termination Date, at the Applicable Rate. Such amounts of interest will be calculated on the basis of daily compounding and the actual number of days elapsed. The fair market value of any obligation referred to in clause (b) above shall be reasonably determined by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it shall be the average of the Termination Currency Equivalents of the fair market values reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document.
[ ] | CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ] | |||||||||
By: | [ ], not in its individual capacity but solely as Owner Trustee | |||||||||
By: |
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Name: | ||||||||||
Title: | ||||||||||
By: |
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Name: | ||||||||||
Title:PDSP3 |
16 | ISDA ® 1992 |
ISDA
International Swap Dealers Association, Inc.
SCHEDULE
to the
Master Agreement
dated as of [ ]
between
[ ] (Party A) and
Capital One Prime Auto Receivables Trust [ ][ ] (Party B)
Part 1. Termination Provisions.
(a) | The following shall apply: |
(i) Termination by Party AEvents of Default. Notwithstanding the provisions of Section 5(a), the only events which will constitute Events of Default when they occur in relation to Party B will be those events specified in Sections 5(a)(i) (Failure To Pay Or Deliver), and Section 5(a)(vii) (Bankruptcy), provided that with respect to Party B the provisions of Section 5(a)(vii) clauses (2), (7) and (9) will not be applicable as an Event of Default; clause (3) will not apply to Party B to the extent it refers to any assignment, arrangement or composition that is effected by or pursuant to the Indenture; clause (4) will not apply to Party B to the extent that it refers to proceedings or petitions instituted or presented by Party A or any of its Affiliates; clause(6) will not apply to Party B to the extent that it refers to (i) any appointment that is contemplated or effected by the Indenture (as defined herein) or (ii) any appointment that Party B has not become subject to); clause (8) will not apply to Party B to the extent that it applies to Section 5(a)(vii)(2), (4), (6), and (7) (except to the extent that such provisions are not disapplied with respect to Party B).
Accordingly, the provisions of Section 5(a)(ii) (Breach Of Agreement), the provisions of Section 5(a)(iii) (Credit Support Default) (other than Section 5(a)(iii)(1)), the provisions of Section 5(a)(iv) (Misrepresentation), the provisions of Section 5(a)(v) (Default Under Specified Transaction), the provisions of Section 5(a)(vi) (Cross Default), the provisions of Section 5(a)(vii) (Bankruptcy) set forth in the proviso in the preceding paragraph and the provisions of Section 5(a)(viii) (Merger Without Assumption) will in no circumstances be regarded as having given rise to an Event of Default with respect to Party B.
(ii) Termination by Party ATermination Events Notwithstanding the provisions of Section 5(b), and save as otherwise provided herein, the only events which will constitute Termination Events when they occur in relation to Party B will be those events specified in Section 5(b)(i) (Illegality), Section 5(b)(ii) (Tax Event), Section 5(b)(iii) (Tax Event Upon Merger) and Section 5(b)(v) (Additional Termination Event); provided that Party A shall not be entitled to designate an Early Termination Date by reason of a Tax Event Upon Merger in respect of which it is the Affected Party. Accordingly, the provisions of Section 5(b)(iv) (Credit Event Upon Merger) will not be regarded as having given rise to a Termination Event with respect to Party B.
Schedule to ISDA Master Agreement |
(iii) Termination by Party BEvents of Default and Termination Events. Save as otherwise provided herein, the provisions of Section 5 will apply with respect to Party A without amendment. For purposes of Section 5(a)(vi) (Cross Default), the Threshold Amount applicable to Party A shall be 3% of shareholder equity (excluding deposits).
(b) | Specified Entity none specified in relation to either Party A or Party B. |
(c) | Specified Transaction will have the meaning specified in Section 14 of this Agreement. |
(d) | The Automatic Early Termination provision of Section 6(a) of this Agreement will not apply to Party A and will not apply to Party B. |
(e) | Payments on Early Termination. For the purpose of Section 6(e) of this Agreement: |
Market Quotation will apply and the Second Method will apply; [provided, however, with respect to an early termination in which Party A is the Defaulting Party or sole Affected Party in respect of an Additional Termination Event or Tax Event Upon Merger, notwithstanding Section 6 of this Agreement, the following amendment to this Agreement set forth in paragraphs (i) to (vi) below shall apply:
(i) The definition of Market Quotation shall be deleted in its entirety and replaced with the following:
Market Quotation means, with respect to one or more Terminated Transactions, a Firm Offer which is (1) made by a Reference Market-maker that is an Eligible Replacement, (2) for an amount that would be paid to Party B (expressed as a negative number) or by Party B (expressed as a positive number) in consideration of an agreement between Party B and such Reference Market-maker to enter into a transaction (the Replacement Transaction) that would have the effect of preserving for such party the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i) in respect of such Terminated Transactions or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that Date, (3) made on the basis that Unpaid Amounts in respect of the Terminated Transaction or group of Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each applicable condition precedent) after that Early Termination Date is to be included and (4) made in respect of a Replacement Transaction with commercial terms substantially the same as those of this Agreement (save for the exclusion of provisions relating to Transactions that are not Terminated Transactions).
2 | Schedule to ISDA Master Agreement |
(ii) The definition of Settlement Amount shall be deleted in its entirety and replaced with the following:
Settlement Amount means, with respect to any Early Termination Date, an amount (as determined by Party B) equal to:
(a) if, on or prior to such Early Termination Date, a Market Quotation for the relevant Terminated Transaction or group of Terminated Transactions is accepted by Party B so as to become legally binding, the Termination Currency Equivalent of the amount (whether positive or negative) of such Market Quotation;
(b) if, on such Early Termination Date, no Market Quotation for the relevant Terminated Transaction or group of Terminated Transactions is accepted by Party B so as to become legally binding and one or more Market Quotations have been communicated to Party B and remain capable of becoming legally binding upon acceptance by Party B, the Termination Currency Equivalent of the amount (whether positive or negative) of the lowest of such Market Quotations; and
(c) if, on such Early Termination Date, no Market Quotation for the relevant Terminated Transaction or group of Terminated Transactions is accepted by Party B so as to become legally binding and no Market Quotations have been communicated to Party B and remain capable of becoming legally binding upon acceptance by Party B, Party Bs Loss (whether positive or negative and without reference to Unpaid Amounts) for the relevant Terminated Transaction or group of Terminated Transactions.
(iii) For the purpose of sub-paragraph (4) of the definition of Market Quotation, Party B shall determine in its sole discretion, acting in a commercially reasonable manner, whether a Firm Offer is made in respect of a Replacement Transaction with commercial terms substantially the same as those of this Agreement (save for the exclusion of provisions relating to Transactions that are not Terminated Transactions).
(iv) Party B undertakes to use its reasonable efforts to obtain at least one Market Quotation before the Early Termination Date.
(v) If Party B requests Party A in writing to obtain Market Quotations, Party A shall use its reasonable efforts to do so before the Early Termination Date.
(vi) If the Settlement Amount is a negative number, Section 6(e)(i)(3) of this Agreement shall be deleted in its entirety and replaced with the following:
Second Method and Market Quotation. If Second Method and Market Quotation apply, (1) Party B shall pay to Party A an amount equal to the absolute value of the Settlement Amount in respect of the Terminated Transactions, (2) Party B shall pay to Party A the Termination Currency Equivalent of the Unpaid Amounts owing to Party A and (3) Party A shall pay to Party B the Termination Currency Equivalent of the Unpaid Amounts owing to Party B, provided that, (i) the amounts payable under (2) and (3) shall be subject to netting in accordance with Section 2(c) of this Agreement and (ii) notwithstanding any other provision of this Agreement, any amount payable by Party A under (3) shall not be netted-off against any amount payable by Party B under (1).] [To be included if Moodys is rating the transaction]
(f) | Termination Currency means U.S. Dollars. |
3 | Schedule to ISDA Master Agreement |
(g) | Additional Termination Event will apply. Each of the following events shall constitute an Additional Termination Event hereunder: |
(i) Liquidations of Collateral. The following shall constitute an Additional Termination Event in which Party B shall be the sole Affected Party: Any liquidation of the Collateral occurs following an Event of Default under the Indenture or the Notes are otherwise redeemed or prepaid in full other than in connection with an optional purchase of Receivables pursuant to Section 7.01 of the Servicing Agreement.
(ii) Regulation AB Financial Disclosure. The following shall constitute an Additional Termination Event in which Party A shall be the sole Affected Party: The failure of Party A to materially comply with or materially perform any agreement or undertaking to be complied with or performed by Party A under Part 5(s) of this Schedule.
(iii) [Include relevant rating agency downgrade triggers, as applicable]
Part 2. Tax Representations
(a) | Payer Representations. For the purpose of Section 3(e) of this Agreement, Party A will make the following representation and Party B will make the following representation: |
It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party under this Agreement. In making this representation, it may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of this Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of this Agreement, provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) of this Agreement by reason of material prejudice to its legal or commercial position.
(b) | Payee Representations. For the purpose of Section 3(f) of this Agreement, Party A and Party B will make the representations in (i) and (ii) below. |
(i) | Party A represents that it is a [___________] organized under the laws of [________]. |
(ii) | Party B represents that it is a [Delaware statutory trust] organized or formed under the laws of the [State of Delaware]. |
Part 3. Agreement to Deliver Documents.
For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party agrees to deliver the following documents, as applicable:
4 | Schedule to ISDA Master Agreement |
(a) Tax forms, documents or certificates to be delivered are:
Party A and Party B shall promptly deliver to the other party (or as directed) any form or document accurately completed and in a manner reasonably satisfactory to the other party that may be required or reasonably requested in order to allow the other party to make a payment under a Transaction without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate, promptly upon reasonable demand by the other party.
(b) Other documents to be delivered are:
Party required to deliver document |
Form/Document/ |
Date by which to be delivered |
Covered by Section 3(d) | |||
Party A and Party B | Evidence of the authority of the signatories of this Agreement including specimen signatures of such signatories. | Upon execution of this Agreement. | Yes | |||
Party A | An opinion of counsel addressed to Party B in form and substance reasonably acceptable to Party B. | Upon execution of this Agreement. | No | |||
Party B | An opinion of Party Bs counsel addressed to Party A in form and substance reasonably acceptable to Party A. | Upon execution of this Agreement. | No | |||
Party B | A duly executed certificate of the secretary or assistant secretary of the Owner Trustee of Party B certifying the name and true signature of each person authorized to execute this Agreement and enter into Transactions for Party B. | Upon execution of this Agreement. | Yes | |||
Party B | Copies of executed Indenture and Sale and Agreement. | Upon execution of such Agreements | Yes | |||
Party A | Financial data relating to Party A, as required pursuant to Part 5(s) of this Schedule. | As required pursuant to Part 5(s) of this Schedule. | Yes |
5 | Schedule to ISDA Master Agreement |
Party required to deliver document |
Form/Document/ |
Date by which to be delivered |
Covered by Section 3(d) | |||
Party A | Executed Indemnification and Disclosure Agreement, among Party A, Capital One, National Association and Capital One Auto Receivables, LLC relating to Party As furnished information for use in the Prospectus and other matters. | Upon or prior to execution of this Agreement | Yes |
Part 4. Miscellaneous.
(a) Addresses for Notices. For the purpose of Section 12(a) of this Agreement:
Address for notices or communications to Party A:
[____________]
[____________]
[____________]
[____________]
[____________]
[____________]
Address for notices or communications to Party B:
[____________]
[____________]
[____________]
[____________]
[____________]
With a copy to:
Capital One, National Association
1680 Capital One Drive
McLean, Virginia 22102
Attention: [____________]
With a copy to the Indenture Trustee at:
[____________]
[____________]
[____________]
6 | Schedule to ISDA Master Agreement |
[____________]
(b) Process Agent. For the purpose of Section 13(c) of this Agreement:
Party A appoints as its Process Agent [____________]
Party B appoints as its Process Agent Not applicable
(c) | Notices. Section 12(a) of the Agreement is amended by adding the words in the third line thereof after the phrase messaging system and before the ) the words ; provided, however, any such notice or other communication may be given by facsimile transmission if telex is unavailable, no telex number is supplied by the party providing notice, or if answer back confirmation is not received from the party to whom the telex is sent. |
(d) | Offices. The provisions of Section 10(a) of this Agreement will apply to this Agreement. |
(e) Multibranch Party. For the purpose of Section 10(c) of this Agreement:
[Party A is not a Multibranch Party.]
Party B is not a Multibranch Party.
(f) | Calculation Agent. The Calculation Agent is Party B, unless otherwise specified in a Confirmation in relation to the relevant Transaction. |
(g) Credit Support Document. Details of any Credit Support Document:
With respect to Party A: The Credit Support Annex and any Eligible Guarantee in support of Party As obligations under this Agreement
With respect to Party B:Not applicable.
(h) Credit Support Provider. Credit Support Provider means in relation to
Party A: The guarantor under any Eligible Guarantee in support of Party As obligations under this Agreement.
Party B: Not applicable.
(i) | Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York (without reference to choice of laws doctrine except Section 5-1401 and Section 5-1402 of the New York General Obligation Law). |
(j) | Netting of Payments. The limitation set forth in Section 2(c)(ii) of this Agreement will apply and therefore the netting in Section 2(c) of this Agreement will be limited to the same Transaction. |
(k) | Affiliate will have the meaning specified in Section 14 of this Agreement. |
(l) | No Gross Up by Party B. Section 2(d)(i)(4) is hereby deleted and replaced by the following: |
7 | Schedule to ISDA Master Agreement |
(4) (A) If Party A is the party so required to deduct or withhold, then Party A shall make such additional payment as is necessary to ensure that the net amount actually received by Party B (free and clear of all Taxes, whether assessed against it or Party B) will equal the full amount Party B would have received had no such deduction or withholding been required; and
(B) if Party B is the party so required to deduct or withhold, then Party B shall make the relevant payment subject to such deduction or withholding and Party B will not be required to gross up.
For the avoidance of doubt, the fact that any payment is made by Party B subject to the provisions of (B) above shall at no time affect the obligations of Party A under (A) above.
Part 5. Other Provisions.
(a) | ISDA Definitions |
The definitions and provisions contained in the 2006 ISDA Definitions (the 2006 Definitions) as published by the International Swaps and Derivatives Association, Inc. are incorporated by reference into this Agreement. The Agreement and each Transaction will be governed by the 2006 Definitions as they may be officially amended and supplemented from time to time by ISDA.
For the sake of clarity, unless otherwise specified in this Agreement, the following documents shall govern in the order in which they are listed in the event of any inconsistency between any of the documents:
(i) the Confirmation;
(ii) the Schedule;
(iii) the 2006 Definitions; and
(iv) the printed form of ISDA Master Agreement.
(b) | Relationship Between Parties |
Each party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for the Transaction):
(i) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate or proper for it based upon its own judgement and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction; it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. It has not received from the other party any assurance or guarantee as to the expected results of that Transaction.
(ii) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction.
8 | Schedule to ISDA Master Agreement |
(iii) Status of Parties. Each party is acting as principal and not as agent and the other party is not acting as a fiduciary for or as an advisor to it in respect of that Transaction.
(iv) Eligible Contract Participant. It is an eligible contract participant as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended, 7 U.S.C. Section 1a(18).
(v) ERISA. It continuously represents that it is not (i) an employee benefit plan (an ERISA Plan) as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), subject to Title 1 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended, (ii) a person or entity acting on behalf of an ERISA Plan or (iii) a person or entity the assets of which constitute assets of an ERISA Plan. It will provide notice to the other party in the event that it is aware that it is in breach of any aspect of this representation or is aware that with the passing of time, giving of notice or expiry of any applicable grace period, it will breach this representation.
(c) | Waiver of Jury Trial. Each party hereby irrevocably waives any and all rights to trial by jury with respect to any legal proceeding arising out of or relating to this Agreement or any Transaction contemplated hereby. |
(d) | Severability. Any provision of this Agreement which 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 of the Agreement or affecting the validity or enforceability of such provision in any other jurisdiction unless such severance shall substantially impair the benefits of the remaining portions of this Agreement or changes the reciprocal obligations of the parties. The parties hereto shall endeavour in good faith negotiations to replace the prohibited or unenforceable provision with a valid provision, the economic effect of which comes as close as possible to that of the prohibited or unenforceable provision. |
(e) | Transfers. Notwithstanding the provisions of Section 7: |
(i) No transfer by Party A of this Agreement or any interest or obligation in or of Party A under this Agreement shall be effective unless:
(A) | Party B consents to such transferee; |
(B) | The Rating Agency Condition shall have been satisfied; |
(C) | Party A shall have given Party B, the Servicer and the Indenture Trustee at least twenty days prior written notice of the proposed transfer; and |
(D) | such transfer otherwise complies with the terms of the Indenture and the other Transaction Agreements. |
(ii) Except to the extent contemplated by the Indenture, neither this Agreement nor any interest in or under this Agreement may be transferred by Party B to any other entity save with Party As prior written consent (such consent not to be unreasonably withheld or delayed).
9 | Schedule to ISDA Master Agreement |
(f) | Permitted Security Interest. For purposes of Section 7 of this Agreement, Party A hereby consents to the Permitted Security Interest. |
Permitted Security Interest means the pledge and assignment by Party B of the Swap Collateral to the Indenture Trustee pursuant to the Indenture, and the granting to the Indenture Trustee of a security interest in the Swap Collateral pursuant to the Indenture.
Swap Collateral means all right, title and interest of Party B in this Agreement, each Transaction hereunder, and all present and future amounts payable by Party A to Party B under or in connection with this Agreement or any Transaction governed by this Agreement, including, without limitation, any transfer or termination of any such Transaction.
Indenture Trustee means [_________] or any successor, acting as Indenture Trustee pursuant to the Indenture.
(g) | Absence of Certain Events. Section 3(b) of this Agreement is hereby amended by inserting the parenthetical (with respect to Party A only) immediately after the phrase No Event of Default or. |
(h) | Payment on Early Termination. If an Early Termination Date occurs in respect of which Party A is the Defaulting Party or the sole Affected Party with respect to an Additional Termination Event, Party B will not be required to pay any amounts payable to Party A under Section 6(e) in respect of such Early Termination Date, and Party A will not be permitted to set-off in respect of such amounts, until payment in full of all amounts outstanding under the Notes. |
(i) | No Set-Off. Party A and Party B hereby waive any and all right of set-off with respect to any amounts due under this Agreement or any Transaction, provided that nothing herein shall be construed to waive or otherwise limit the netting provisions contained in Sections 2(c) of this Agreement. |
(j) | Indenture. Party B hereby acknowledges that Party A is a secured party under the Indenture with respect to this Agreement, and Party B agrees for the benefit of Party A that it will not amend the Indenture in a manner which materially and adversely affects the rights or obligations of Party A under the Indenture unless Party A shall have consented in writing to such action, if such consent is required pursuant to the Indenture. |
(k) | Limited Recourse. The liability of Party B to Party A hereunder is limited in recourse solely to the amounts payable to Party A from the Available Funds and the Reserve Account Draw Amount in accordance with the priority of payments set forth in Section 8.5(a) of the Indenture. The provisions of this paragraph shall survive the termination of this Agreement. |
10 | Schedule to ISDA Master Agreement |
(l) | No Petition. Party A hereby covenants and agrees that prior to the date which is one year (or, if longer, the applicable preference period) and one day after payment in full of all obligations of each Bankruptcy Remote Party in respect of all securities issued by any Bankruptcy Remote Party (i) it shall not authorize any Bankruptcy Remote Party to commence a voluntary winding-up or other voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to such Bankruptcy Remote Party or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction or seeking the appointment of an administrator, a trustee, receiver, liquidator, custodian or other similar official with respect to such Bankruptcy Remote Party or any substantial part of its property or to consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against such Bankruptcy Remote Party, or to make a general assignment for the benefit of any party hereto or any other creditor of such Bankruptcy Remote Party, and (ii) it shall not commence or join with any other Person in commencing any proceeding against such Bankruptcy Remote Party under any bankruptcy, reorganization, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction. This section shall survive the termination of this Agreement. |
As used above, Bankruptcy Remote Party means Capital One Auto Receivable, LLC and Party B.
(m) | Confirmation. Each party acknowledges and agrees that the Confirmations executed as of the date hereof and designated as Party A [____________] shall be the only Transaction governed by this Agreement (it being understood that, in the event such Confirmations shall be amended (in any respect), such amendment shall not constitute (for purposes of this paragraph) a separate Transaction or a separate Confirmation). Party A and Party B shall not enter into any additional Confirmations or Transactions hereunder. |
(n) | Potential Events of Default. Section 2(a)(iii) is amended by the deletion of the words or Potential Event of Default. |
(o) | Limitation of Liability. Notwithstanding anything contained herein to the contrary, in executing this Agreement (including the Schedule, Credit Support Annex and each Confirmation) on behalf of Party B, [____________] (the Owner Trustee) and the Indenture Trustee are acting solely in its capacity as owner trustee of Party B and indenture trustee, respectively, and not in its individual capacity, and in no event shall either one of them, in their individual capacity, have any liability for the representations, warranties, covenants, agreements or other obligations of Party B hereunder, for which recourse shall be had solely to the assets of Party B, except to the extent of its fraud, breach of trust or willful misconduct. |
(p) | [Insert rating agency downgrade provisions, as applicable] |
(q) | Definitions. |
(i) | Reference is made to that certain Sale Agreement dated as of the date hereof (the Sale Agreement) among Party B as the Issuer, and Capital One Auto Receivables, LLC, as Indenture Trustee. Capitalized terms used but not defined in this Agreement or this Schedule will have the meanings ascribed to them in the Sale Agreement or, if not defined therein, in the Indenture (as defined below). |
11 | Schedule to ISDA Master Agreement |
(ii) | As used herein: |
Credit Support Annex means the 1994 ISDA Credit Support Annex between Party A and Party B dated as of the date hereof.
Depositor means Capital One Auto Receivables, LLC.
Eligible Collateral has the meaning set forth in the Credit Support Annex.
Eligible Guarantee means an unconditional and irrevocable guarantee that is provided by a guarantor that has Rated Debt as principal debtor rather than surety and is directly enforceable by Party B, the form and substance of which guarantee are subject to the Rating Agency Condition, where either (A) a law firm has given a legal opinion confirming that none of the guarantors payments to Party B under such guarantee will be subject to withholding for tax or (B) such guarantee provides that, in the event that any of such guarantors payments to Party B are subject to withholding for tax, such guarantor is required to pay such additional amount as is necessary to ensure that the net amount actually received by Party B (free and clear of any withholding tax) will equal the full amount Party B would have received had no such withholding been required.
Eligible Replacement means an entity (A)(i) with the [Required Ratings] and that has Rated Debt with respect to [Insert relevant rating agencies]that is the subject of a legal opinion given by a law firm confirming that none of its payments to Party B will be subject to withholding for tax or (ii) whose present and future obligations owing to Party B are guaranteed pursuant to an Eligible Guarantee provided by a guarantor that has Rated Debt with respect to [Insert relevant rating agencies] and with the [Required Ratings] and (B) could become a party to this Agreement (or party to an agreement in form and substance satisfactory to Party B, the Servicer and the Indenture Trustee) in accordance with Part 5(e) of this Schedule and pursuant to documentation which would not be less favorable to Party B than this Agreement.
Financial Institution means a bank, broker/dealer, insurance company, structured investment vehicle or derivative product company.
[Fitch means Fitch, Inc. or its successor.]
[Fitch Approved Ratings means a long-term unsecured and unsubordinated debt rating from Fitch of at least [ ] and a short-term unsecured and unsubordinated debt rating from Fitch of at least [ ].]
[Fitch Required Ratings means a long-term unsecured and unsubordinated debt rating from Fitch of at least [ ].]
Free Writing Prospectus means any free writing prospectus prepared in connection with the public offering of the Notes.
Indenture means that certain Indenture dated as of the date hereof between Party B, as Issuer, and [____________], as Indenture Trustee.
[Moodys means Moodys Investors Service, Inc. or its successor.]
12 | Schedule to ISDA Master Agreement |
[Moodys Short-term Rating means a rating assigned by Moodys under its short-term rating scale in respect of an entitys short-term, unsecured and unsubordinated debt obligations.]
Notes mean the asset-backed notes issued by Party B under the Indenture.
Preliminary Prospectus means any preliminary prospectus prepared in connection with the public offering and sale of the Notes.
Prospectus means any prospectus prepared in connection with the public offering and sale of the Notes.
[Rated Debt means, with respect to a Relevant Entity, (1) in the case of S&P, (i) if such Relevant Entity is not a Financial Institution, S&P assigns (x) a long-term debt rating equal to or higher than [ ] to the counterparty, or (y) assigns a short-term debt rating equal to or higher than [ ] to the counterparty, or (ii) if such Relevant Entity is a Financial Institution, S&P assigns (x) a long-term debt rating equal to or higher than [ ] to the counterparty, or (y) assigns a short-term debt rating equal to or higher than [ ] to the counterparty, (2) in the case of Moodys (i) Moodys assigns (x) a long-term debt rating equal to or higher than [ ] to the counterparty, and (y) a short-term debt rating equal to or higher than [ ] to the counterparty (if the counterparty has both long-term and short-term debt ratings), or (ii) Moodys assigns a long-term debt rating equal to or higher than [ ] to the counterparty (if the counterparty only has a long-term debt rating) and (3) in the case of Fitch, assigns a long-term unsecured and unsubordinated debt rating from Fitch of at least [ ] and a short-term unsecured and unsubordinated debt rating from Fitch of at least [ ].]
Rating Agencies means [S&P, Moodys and Fitch].
Rating Agency Condition means, with respect to any event or circumstance and each Rating Agency, either (a) written confirmation (which may be in the form of a letter, press release or other publication, or a change in such Rating Agencys published ratings criteria to this effect) by such Rating Agency that the occurrence of such event or circumstance will not cause it to downgrade, qualify or withdraw its rating assigned to any of the Notes or (b) that such Rating Agency shall have been given notice of such event or circumstance at least ten days prior to the occurrence of such event or circumstance (or, if ten days advance notice is impracticable, as much advance notice as is practicable) and such Rating Agency shall not have issued any written notice that the occurrence of such event or circumstance will cause it to downgrade, qualify or withdraw its rating assigned to the Notes.
Relevant Entities means Party A and any guarantor under an Eligible Guarantee in respect of all of Party As present and future obligations under this Agreement.
[S&P means Standard & Poors Ratings Services, or its successor.]
Servicer means Capital One, National Association, a national banking association.
(r) | Amendments. Section 9(b) of this Agreement is hereby amended by inserting the following at the end thereof: |
it being a further condition to any such amendment or modification that the Rating Agency Condition shall have been satisfied.
13 | Schedule to ISDA Master Agreement |
(s) | Regulation AB Financial Disclosure. |
Subject to the last two paragraphs of this clause, so long as Party B, the Depositor or any of such parties Affiliates (collectively, Capital One) shall file reports in respect of the Notes with the Securities and Exchange Commission (the SEC) pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), Party A agrees to Deliver within ten (10) calendar days of receipt of a written request therefor by Party B or the Depositor, such information relating to Party A as may be necessary to enable Capital One to comply with any SEC disclosure requirements, including without limitation information concerning Party A required by Items 1115 of Regulation AB and Forms 8-K, 10-D and 10-K and any information to be provided pursuant to or in accordance with any SEC comments to any of the foregoing; it being understood that Capital One shall not be required to voluntarily suspend its reporting obligation with respect to the Notes at any time. To the extent necessary to comply with Regulation AB, Party A shall obtain any necessary auditors consents related to any financial statements of Party A required to be incorporated by reference into any Free Writing Prospectus, Preliminary Prospectus or Prospectus or report filed by Capital One with the SEC and promptly to forward to the Depositor any such auditor consents obtained. The information provided, or authorized to be incorporated by reference, by Party A pursuant to this provision is referred to as the Additional Information.
For the purpose of this Part 5(s):
Deliver includes actual delivery or transmission of information in an EDGAR-compatible format or, in the case of any financial information required to be delivered pursuant to Item 1115 of Regulation AB and Forms 8-K, 10-D and 10-K, making such financial information available in an EDGAR-compatible format for incorporation by reference to the extent permitted by Regulation AB, together with actual delivery of all necessary auditors consents.
EDGAR means the SECs Electronic Data Gathering, Analysis and Retrieval system.
Regulation AB means Subpart 229.1100Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1125, as such may be amended from time to time, and subject to such clarification and interpretation as have been provided by the SEC in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the SEC, or as may be provided by the SEC or its staff from time to time.
14 | Schedule to ISDA Master Agreement |
If at any time during a period that reports are being filed with respect to Party B and the Notes in accordance with the Exchange Act and the rules and regulations of the SEC, as reasonably calculated by the Depositor, the significance percentage of this Agreement for any class of the Notes is [8]% or more, Party A shall within five (5) Local Business Days following receipt of request therefor demonstrate to the satisfaction of the Depositor that it is able to provide the Additional Information required under Item 1115(b)(1) of Regulation AB for Party A. If Party A is unable to satisfy the Depositor as to its ability to provide such information, Party A shall within five (5) Local Business Days following receipt of request therefor, at the sole expense of Party A, without any expense or liability to the Depositor or Party B, either (i) post Eligible Collateral, in form, substance and amount satisfactory to the Depositor, or (ii) cause an Eligible Replacement (which satisfies the Rating Agency Condition and any other requirements of this Agreement, including the requirement to deliver the indemnification and contribution agreement referred to in Part 3(b)) to replace Party A as party to this Agreement that has agreed to Deliver any information, report, certification or accountants consent when and as required under this Part 5(s) hereof.
If at any time during a period that reports are being filed with respect to Party B and the Notes in accordance with the Exchange Act and the rules and regulations of the SEC, as reasonably calculated by the Depositor, the significance percentage of this Agreement for any class of the Notes is [18]% or more, Party A shall within five (5) Local Business Days following receipt of request therefor demonstrate to the satisfaction of the Depositor that it is able to provide the Additional Information required under Item 1115(b)(2) of Regulation AB for Party A. If Party A is unable to satisfy the Depositor as to its ability to provide such information, Party A shall within five (5) Local Business Days following receipt of request therefor, at the sole expense of Party A, without any expense or liability to the Depositor or Party B, cause an Eligible Replacement (which satisfies the Rating Agency Condition and any other requirements of this Agreement, including the requirement to deliver the indemnification and contribution agreement referred to in Part 3(b)) to replace Party A as party to this Agreement that has agreed to Deliver any information, report, certification or accountants consent when and as required under this Part 5(s) hereof.
[signature pages follow]
15 | Schedule to ISDA Master Agreement |
IN WITNESS WHEREOF, the parties have executed this Schedule by their duly authorized officers as of the date first above written.
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[__][_] | ||
By: |
[ ], | |
not in its individual capacity but solely as owner trustee | ||
By: |
| |
Name: | ||
Title: | ||
[ ] | ||
By: |
| |
Name: | ||
Title: |
S1 | 20[ ]-[ ] Trust Schedule to ISDA Master Agreement |
Exhibit 10.6
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_]
FORM OF
AMENDED AND RESTATED
TRUST AGREEMENT
between
CAPITAL ONE AUTO RECEIVABLES, LLC,
as the Depositor
and
[____________],
as the Owner Trustee
Dated as of [___________], 20[__]
Form of Amended and Restated
Trust Agreement
TABLE OF CONTENTS
Page | ||||||
ARTICLE I |
DEFINITIONS |
1 | ||||
SECTION 1.1. |
Capitalized Terms |
1 | ||||
SECTION 1.2. |
Other Interpretive Provisions |
1 | ||||
ARTICLE II |
ORGANIZATION |
2 | ||||
SECTION 2.1. |
Name |
2 | ||||
SECTION 2.2. |
Office |
2 | ||||
SECTION 2.3. |
Purposes and Powers |
2 | ||||
SECTION 2.4. |
Appointment of the Owner Trustee |
3 | ||||
SECTION 2.5. |
Initial Capital Contribution of Trust Estate |
3 | ||||
SECTION 2.6. |
Declaration of Trust |
3 | ||||
SECTION 2.7. |
Organizational Expenses; Liabilities of the Holders |
4 | ||||
SECTION 2.8. |
Title to the Trust Estate |
5 | ||||
SECTION 2.9. |
Representations and Warranties of the Depositor |
5 | ||||
SECTION 2.10. |
Situs of Issuer |
6 | ||||
SECTION 2.11. |
Covenants of the Certificateholders |
6 | ||||
ARTICLE III |
CERTIFICATES AND TRANSFER OF CERTIFICATES |
6 | ||||
SECTION 3.1. |
Initial Ownership |
6 | ||||
SECTION 3.2. |
Authorization of the Certificates |
6 | ||||
SECTION 3.3. |
The Certificates |
6 | ||||
SECTION 3.4. |
Notices to Clearing Agency |
8 | ||||
SECTION 3.5. |
Definitive Certificates |
9 | ||||
SECTION 3.6. |
Registration of the Certificates |
10 | ||||
SECTION 3.7. |
Transfer of the Certificates |
10 | ||||
SECTION 3.8. |
Lost, Stolen, Mutilated or Destroyed Certificates |
17 | ||||
SECTION 3.9. |
Appointment of the Certificate Paying Agent |
17 | ||||
SECTION 3.10. |
Maintenance of Office or Agency |
18 | ||||
ARTICLE IV |
ACTIONS BY OWNER TRUSTEE |
18 | ||||
SECTION 4.1. |
Prior Notice to Certificateholders with Respect to Certain Matters |
18 | ||||
SECTION 4.2. |
Action by Certificateholders with Respect to Certain Matters |
19 | ||||
SECTION 4.3. |
Action by Certificateholders with Respect to Bankruptcy |
19 |
-i- | Form of Amended and Restated Trust Agreement |
TABLE OF CONTENTS
(continued)
Page | ||||||
SECTION 4.4. |
Restrictions on Certificateholders Power |
19 | ||||
SECTION 4.5. |
Acts of Certificateholders; Majority Control |
19 | ||||
SECTION 4.6. |
Compliance with the FDIC Rule |
20 | ||||
ARTICLE V |
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES |
20 | ||||
SECTION 5.1. |
Application of Trust Funds |
20 | ||||
SECTION 5.2. |
Method of Payment |
20 | ||||
SECTION 5.3. |
Reports by Owner Trustee to Certificateholders |
21 | ||||
SECTION 5.4. |
Certificate Distribution Account |
21 | ||||
SECTION 5.5. |
Withholding |
22 | ||||
SECTION 5.6. |
No Reinvestment |
22 | ||||
SECTION 5.7. |
Sarbanes-Oxley Act |
22 | ||||
ARTICLE VI |
AUTHORITY AND DUTIES OF OWNER TRUSTEE |
22 | ||||
SECTION 6.1. |
General Authority |
22 | ||||
SECTION 6.2. |
General Duties |
23 | ||||
SECTION 6.3. |
Action upon Instruction |
23 | ||||
SECTION 6.4. |
No Duties Except as Specified in this Agreement or in Instructions |
24 | ||||
SECTION 6.5. |
No Action Except under Specified Documents or Instructions |
24 | ||||
SECTION 6.6. |
Restrictions |
25 | ||||
SECTION 6.7. |
Relevant Trustee |
25 | ||||
ARTICLE VII |
CONCERNING OWNER TRUSTEE |
25 | ||||
SECTION 7.1. |
Acceptance of Trusts and Duties |
25 | ||||
SECTION 7.2. |
Furnishing of Documents |
27 | ||||
SECTION 7.3. |
Preservation of Information; Communications to Certificateholders |
27 | ||||
SECTION 7.4. |
Statements to Certificateholders |
28 | ||||
SECTION 7.5. |
Notice of Events of Default and Servicer Replacement Event |
28 | ||||
SECTION 7.6. |
Representations and Warranties |
28 | ||||
SECTION 7.7. |
Reliance; Advice of Counsel |
29 | ||||
SECTION 7.8. |
Not Acting in Individual Capacity |
30 |
-ii- | Form of Amended and Restated Trust Agreement |
TABLE OF CONTENTS
(continued)
Page | ||||||
SECTION 7.9. |
The Owner Trustee May Own Notes |
30 | ||||
SECTION 7.10. |
Rule 144A Information |
30 | ||||
ARTICLE VIII |
COMPENSATION OF OWNER TRUSTEE |
30 | ||||
SECTION 8.1. |
The Owner Trustees Compensation |
30 | ||||
SECTION 8.2. |
Indemnification |
31 | ||||
SECTION 8.3. |
Payments to the Owner Trustee |
31 | ||||
SECTION 8.4. |
Rights, Protections, Immunities and Indemnities of the Relevant Trustee |
31 | ||||
ARTICLE IX |
TERMINATION OF TRUST AGREEMENT |
31 | ||||
SECTION 9.1. |
Dissolution of Issuer |
31 | ||||
SECTION 9.2. |
Termination of Trust Agreement |
32 | ||||
SECTION 9.3. |
Limitations on Termination |
33 | ||||
ARTICLE X |
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES |
33 | ||||
SECTION 10.1. |
Eligibility Requirements for the Owner Trustee |
33 | ||||
SECTION 10.2. |
Resignation or Removal of the Owner Trustee |
33 | ||||
SECTION 10.3. |
Successor Owner Trustee |
34 | ||||
SECTION 10.4. |
Merger or Consolidation of the Owner Trustee |
34 | ||||
SECTION 10.5. |
Appointment of Co-Trustee or Separate Trustee |
35 | ||||
ARTICLE XI |
MISCELLANEOUS |
36 | ||||
SECTION 11.1. |
Amendments |
36 | ||||
SECTION 11.2. |
No Legal Title to Trust Estate in Certificateholders |
37 | ||||
SECTION 11.3. |
Limitations on Rights of Others |
38 | ||||
SECTION 11.4. |
Notices |
38 | ||||
SECTION 11.5. |
Severability |
38 | ||||
SECTION 11.6. |
Separate Counterparts |
38 | ||||
SECTION 11.7. |
Successors and Assigns |
38 | ||||
SECTION 11.8. |
No Petition |
38 | ||||
SECTION 11.9. |
Information Request |
40 | ||||
SECTION 11.10. |
Headings |
40 | ||||
SECTION 11.11. |
GOVERNING LAW |
40 | ||||
SECTION 11.12. |
Waiver of Jury Trial |
40 |
-iii- | Form of Amended and Restated Trust Agreement |
TABLE OF CONTENTS
(continued)
Page | ||||||
SECTION 11.13. |
Information to Be Provided by the Owner Trustee |
40 | ||||
SECTION 11.14. |
Form 10-D Filings, Item 1117 and Item 1119 of Regulation AB |
40 | ||||
SECTION 11.15. |
Form 8-K Filings |
41 | ||||
SECTION 11.16. |
[Limitation of Rights |
41 |
EXHIBIT A |
Form of Certificate | |
EXHIBIT B |
Form of Certificate Investor Representation Letter | |
EXHIBIT C |
Form of Notice of Requests to Repurchase Receivables | |
EXHIBIT D |
Form of Registration of Definitive Certificate Transfer Direction Letter Pursuant to the Trust Agreement | |
EXHIBIT E |
Form of Owner Trustees Annual Certification Regarding Item 1117 and Item 1119 of Regulation AB |
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This AMENDED AND RESTATED TRUST AGREEMENT is made as of [___________], 20[__] (as amended, supplemented or otherwise modified and in effect from time to time, this Agreement or this Trust Agreement) between CAPITAL ONE AUTO RECEIVABLES, LLC, a Delaware limited liability company, as the depositor (the Depositor), and [____________], a [_________________], as the owner trustee ([____________], and in such capacity, the Owner Trustee).
RECITALS
WHEREAS, the Depositor and the Owner Trustee entered into that certain trust agreement dated as of [___________], 20[__] (the Original Trust Agreement) and filed a certificate of trust with the Secretary of State of the State of Delaware pursuant to which the Issuer (as defined below) was created; and
WHEREAS, in connection with the issuance of the Notes, the parties have agreed to amend and restate the Original Trust Agreement;
NOW THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Capitalized Terms. Except as otherwise defined herein or as the context may otherwise require, capitalized terms used but not otherwise defined herein are defined in Appendix A to the Sale Agreement, dated as of the date hereof (as amended, supplemented, or otherwise modified and in effect from time to time, the Sale Agreement), between the Issuer and the Depositor, which also contains rules as to usage that are applicable herein.
SECTION 1.2. Other Interpretive Provisions. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document delivered pursuant hereto unless otherwise defined therein. For purposes of this Agreement and all such certificates and other documents, unless the context otherwise requires: (a) accounting terms not otherwise defined in this Agreement, and accounting terms partly defined in this Agreement to the extent not defined, shall have the respective meanings given to them under GAAP (provided, that, to the extent that the definitions in this Agreement and GAAP conflict, the definitions in this Agreement shall control); (b) terms defined in Article 9 of the UCC as in effect in the State of Delaware and not otherwise defined in this Agreement are used as defined in that Article; (c) the words hereof, herein and hereunder and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) references to any Article, Section, Schedule or Exhibit are references to Articles, Sections, Schedules and Exhibits in or to this Agreement, and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (e) the term including and all variations thereof means including without limitation; (f) references to any law or regulation refer to that law or regulation as
Form of Amended and Restated
Trust Agreement
amended from time to time and include any successor law or regulation; (g) references to any Person include that Persons successors and assigns; and (h) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof.
ARTICLE II
ORGANIZATION
SECTION 2.1. Name. The trust created under the Original Trust Agreement is known as Capital One Prime Auto Receivables Trust 20[_]-[_] (the Issuer), in which name the Owner Trustee, the Administrator or the Servicer (to the extent set forth in the Transaction Documents) may conduct the business of such trust, make and execute contracts and other instruments on behalf of such trust and sue and be sued.
SECTION 2.2. Office. The office of the Issuer shall be in care of the Owner Trustee at the Corporate Trust Office or at such other address as the Owner Trustee may designate by written notice to each Certificateholder, the Depositor and the Administrator.
SECTION 2.3. Purposes and Powers. The purpose of the Issuer is, and the Issuer shall have the power and authority, to engage in the following activities:
(a) to issue the Notes pursuant to the Indenture and the Certificates pursuant to this Agreement, and to sell, transfer and exchange the Notes and the Certificates and to pay interest on and principal of the Notes to the Noteholders and to make distributions to the Certificateholders;
(b) [enter into and perform its obligations under any interest rate protection agreement or agreements relating to the Notes between the Issuer and one or more counterparties, including any confirmations, evidencing the transactions thereunder, each of which is an interest rate swap, an interest rate cap, an obligation to enter into any of the foregoing, or any combination of any of the foregoing;]
(c) to acquire the property and assets set forth in the Sale Agreement from the Depositor pursuant to the terms thereof, to make deposits to and withdrawals from the Collection Account, the Principal Distribution Account, the Certificate Distribution Account[, the Pre-Funding Account] and the Reserve Account and to pay the organizational, start-up and transactional expenses of the Issuer;
(d) to assign, Grant, transfer, pledge, mortgage and convey the Trust Estate pursuant to the Indenture and to hold, manage and distribute to the Certificateholders any portion of the Trust Estate released from the Lien of, and remitted to the Issuer pursuant to, the Indenture;
(e) to enter into and perform its obligations under the Transaction Documents to which it is a party;
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(f) 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
(g) subject to compliance with the Transaction 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 payments to the Noteholders.
Each of the Owner Trustee and the Administrator, as applicable, is hereby authorized to engage in the foregoing activities on behalf of the Issuer. Neither the Issuer nor any Person acting on behalf of the Issuer shall 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 other Transaction Documents.
Notwithstanding anything to the contrary in the Transaction Documents or in any other document, neither the Issuer nor the Owner Trustee (nor any agent of either person) shall be authorized or empowered to acquire any other investments, reinvest any proceeds of the Issuer or engage in activities other than the foregoing, and, in particular neither the Issuer nor the Owner Trustee (nor any agent of either person) shall be authorized or empowered to do anything that would cause the Issuer to fail to qualify as a grantor trust for United States federal income tax purposes.
SECTION 2.4. Appointment of the Owner Trustee. The Depositor hereby appoints the Owner Trustee as trustee of the Issuer effective as of the date hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.5. Initial Capital Contribution of Trust Estate. As of the date of the Original Trust Agreement, the Depositor sold, assigned, transferred, conveyed and set over to the Owner Trustee the sum of $1. The Owner Trustee hereby acknowledges receipt in trust from the Depositor, as of such date, of the foregoing contribution, which shall constitute the initial Trust Estate and shall be deposited in the Collection Account.
SECTION 2.6. 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 Issuer under the Transaction Documents. It is the intention of the parties hereto that the Issuer constitute a statutory trust under the Statutory Trust Statute and that (i) this Agreement constitute the governing instrument of such statutory trust and (ii) for United States federal, state and local income and franchise tax purposes, the Issuer shall be treated as a grantor trust for United States federal income tax purposes, with the assets of the Issuer constituting the Receivables and other assets held by the Issuer, and the Notes constituting non-recourse debt of the Certificateholder(s), provided that if it is successfully asserted by the appropriate tax authorities that the Issuer is not properly characterized as a grantor trust for United States federal income tax purposes, the Issuer shall be treated, for United States federal, state and local income and franchise tax purposes, as (A) a disregarded entity if there is only one beneficial owner for United States federal income tax purposes of the Certificates and any Notes that are treated as equity in the Issuer, or (B) a
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partnership (other than an association or publicly traded partnership taxable as a corporation) if there is more than one beneficial owner for United States federal income tax purposes of the Certificates and any Notes that are treated as equity for United States federal income tax purposes in the Issuer, with the assets of the partnership being the Receivables and other assets held by the Issuer, the partners of the partnership being the Certificateholders and the holders of the Notes that are treated as equity in the Issuer for United States federal income tax purposes, and the remaining Notes constituting indebtedness of the partnership. The parties hereto and each Certificateholder, by acceptance of a Certificate, agree to treat the Issuer in accordance with the intention that the Issuer be characterized as a grantor trust for United States federal income tax purposes and, unless otherwise required by appropriate taxing authorities or by law, not to take any action or, direct any other party to take any action, inconsistent therewith, including, but not limited to, modifying, or directing any other party to modify, the terms of a Receivable unless the modification is a Permitted Modification. In furtherance of the foregoing, (i) the purpose of the Issuer shall be to protect and conserve the assets of the Issuer, and the Issuer shall not at any time engage in or carry on any kind of business for United States federal income tax purposes or any kind of commercial activity and (ii) the Issuer and Owner Trustee (upon direction from the Certificateholders) (and any agent of either person) shall take, or refrain from taking, all such action as is necessary to maintain the status of the Issuer as a grantor trust for United States federal income tax purposes. Notwithstanding anything to the contrary in this Agreement or otherwise, neither the Issuer nor the Owner Trustee (nor any agent of either person) shall (1) acquire any assets or dispose of any portion of the Issuer other than pursuant to the specific provisions of this Agreement, (2) vary the investment of the Issuer within the meaning of Treasury Regulation section 301.7701-4(c) or (3) substitute new investments or reinvest so as to enable the Issuer to take advantage of variations in the market to improve the investment of any Certificateholder. The provisions of this Trust Agreement shall be interpreted consistently with and to further this intention of the parties. The parties agree that, unless otherwise required by appropriate tax authorities, the Issuer will file or cause to be filed annual or other necessary tax returns, reports and other forms consistent with the foregoing characterization of the Issuer for United States federal, state and local income and franchise tax purposes. No election will be made by or on behalf of the Issuer to be classified as an association taxable as a corporation for United States federal income tax purposes. Effective as of the date hereof, the Owner Trustee shall have all rights, powers and duties set forth herein and, to the extent not inconsistent herewith, in the Statutory Trust Statute with respect to accomplishing the purposes of the Issuer. The Owner Trustee has heretofore filed the Certificate of Trust with the Secretary of State of the State of Delaware as required by Section 3810(a) of the Statutory Trust Statute, such filing hereby being ratified and approved in all respects. Notwithstanding anything herein or in the Statutory Trust Statute to the contrary, it is the intention of the parties hereto that the Issuer constitute a business trust within the meaning of Section 101(9)(A)(v) of the Bankruptcy Code.
SECTION 2.7. Organizational Expenses; Liabilities of the Holders.
(a) The Servicer shall pay organizational expenses of the Issuer as they may arise.
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(b) No Certificateholder (including the Depositor if the Depositor becomes a Certificateholder) shall have any personal liability for any liability or obligation of the Issuer.
SECTION 2.8. Title to the Trust Estate. Legal title to all of the Trust Estate shall be vested at all times in the Issuer as a separate legal entity.
SECTION 2.9. Representations and Warranties of the Depositor. The Depositor hereby represents and warrants to the Owner Trustee that:
(a) Existence and Power. The Depositor is a limited liability company validly existing and in good standing under the laws of the State of Delaware and has, in all material respects, all power and authority required to carry on its business as it is now conducted. The Depositor has obtained all necessary licenses and approvals in each jurisdiction where the failure to do so would materially and adversely affect the ability of the Depositor to perform its obligations under the Transaction Documents.
(b) Authorization and No Contravention. The execution, delivery and performance by the Depositor of the Transaction Documents to which it is a party (i) have been duly authorized by all necessary limited liability company action on the part of the Depositor and (ii) do not contravene or constitute a default under (A) any applicable law, rule or regulation, (B) its organizational documents or (C) any material indenture or material agreement or other instrument to which it is a party or its property is subject (other than violations which do not affect the legality, validity or enforceability of any of such agreements or which, individually or in the aggregate, would not materially and adversely affect the transactions contemplated by, or the Depositors ability to perform its obligations under, the Transaction Documents to which it is a party).
(c) No Consent Required. No approval or authorization by, or filing with, any Governmental Authority is required in connection with the execution, delivery and performance by the Depositor of any Transaction Document other than (i) UCC filings, (ii) approvals and authorizations that have previously been obtained and filings that have previously been made and (iii) approvals, authorizations or filings which, if not obtained or made, would not have a material adverse effect on the ability of the Depositor to perform its obligations under the Transaction Documents to which it is a party.
(d) Binding Effect. Each Transaction Document to which the Depositor is a party constitutes the legal, valid and binding obligation of the Depositor enforceable against the Depositor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws affecting creditors rights generally and, if applicable, the rights of creditors of limited liability companies from time to time in effect or by general principles of equity or other similar laws of general application relating to or affecting the enforcement of creditors rights generally and subject to general principles of equity.
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(e) No Proceedings. There are no Proceedings pending or, to the knowledge of the Depositor, threatened against the Depositor before or by any Governmental Authority that (i) assert the invalidity or unenforceability of this Agreement or any of the other Transaction Documents, (ii) seek to prevent the issuance of the Notes or the consummation of any of the transactions contemplated by this Agreement or any of the other Transaction Documents or (iii) seek any determination or ruling that would materially and adversely affect the performance by the Depositor of its obligations under this Agreement or any of the other Transaction Documents.
SECTION 2.10. Situs of Issuer. The Issuer shall be located in the State of Delaware (it being understood that the Issuer may have bank accounts located and maintained outside of Delaware).
SECTION 2.11. Covenants of the Certificateholders. Each Certificateholder, by becoming an owner of a Certificate and beneficial owner of the Issuer, hereby acknowledges and agrees (a) that the Certificateholder is subject to the terms, provisions and conditions of this Agreement, to which the Certificateholder agrees to be bound; and (b) that it shall not take any position in such Certificateholders tax returns inconsistent with Section 2.6 herein and Section 2.15 of the Indenture.
ARTICLE III
CERTIFICATES AND TRANSFER OF CERTIFICATES
SECTION 3.1. Initial Ownership. Upon the formation of the Issuer and until the issuance of the Certificates, the Depositor shall be the sole beneficiary of the Issuer and, upon the issuance of the Certificates, the Depositor will no longer be a beneficiary of the Issuer, except to the extent that the Depositor is a Certificateholder.
SECTION 3.2. Authorization of the Certificates. Concurrently with the sale of the Transferred Assets to the Issuer pursuant to the Sale Agreement, at the direction of the Depositor, (a) one or more Book-Entry Certificates substantially in the form of Exhibit A hereto shall be executed by the Owner Trustee on behalf of the Issuer and authenticated and delivered by the Certificate Registrar in the name of Cede & Co. or (b) one or more Definitive Certificates substantially in the form of Exhibit A hereto shall be executed by the Owner Trustee on behalf of the Issuer and authenticated and delivered by the Certificate Registrar to or upon the written order of the Depositor. The Certificates shall, in the aggregate, represent 100% of the Percentage Interest in the Issuer and shall be fully paid and nonassessable.
SECTION 3.3. The Certificates.
(a) To the extent Book-Entry Certificates have been issued, such Certificates will be issued substantially in the form of Exhibit A hereto, representing the Certificates to be delivered to the Certificate Registrar, as initial agent for the Clearing Agency, by, or on behalf of, the Issuer. The Retained Certificate will be delivered by the Certificate Registrar to or upon the written order of the Depositor. The Certificates will be issued in an aggregate nominal principal amount of $100,000 (which shall be deemed to be the
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equivalent of 100,000 units), and all beneficial interests in the Book-Entry Certificates shall be owned, in the minimum principal amount of $[_____] and integral multiples of $1 in excess thereof. The Issuer shall not issue any Certificate that would cause the aggregate nominal principal amount of all Certificates to exceed $100,000, or 100,000 units, without the prior written consent of all Certificateholders. No distributions of moneys to the Certificateholders under the Transaction Documents shall be deemed to reduce the nominal principal amount of any Certificate prior to payment in full of all Notes; provided, however, that the final aggregate $100,000 distributed to the Certificateholders under the Transaction Documents upon final distribution of the Trust Estate and termination of the Issuer pursuant to Sections 9.1 and 9.2 shall be deemed to repay the aggregate nominal principal amount of the Certificates in full; provided, further, that any failure to pay in full the nominal principal amount of a Certificate on such final distribution date shall not result in any recourse to, claim against or liability of any Person for such shortfall. Any amounts payable to the Certificateholders on or in respect of the Certificates under the Transaction Documents shall be paid and allocated to the various Certificateholders ratably based on their respective Percentage Interests. To the extent Book-Entry Certificates have been issued, unless the Seller directs otherwise pursuant to Section 3.2, such Certificates shall initially be registered on the Certificate Register in the name of Cede & Co., the nominee of DTC as the initial Clearing Agency, and no Certificateholder of a Book-Entry Certificate will receive a Definitive Certificate representing such Certificateholders interest in such Certificate, except as provided in Section 3.5. Except with respect to the Retained Certificate, unless and until definitive, fully registered Certificates (the Definitive Certificates) have been issued to the applicable Certificateholders pursuant to Section 3.2 or 3.5:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Certificate Registrar, the Certificate Paying Agent, the Indenture Trustee and the Owner Trustee shall be entitled to deal with the Clearing Agency for all purposes of this Agreement (including the payment of amounts payable under the Transaction Documents and the giving of instructions or directions hereunder) as the sole Certificateholders, and shall have no obligation to the Certificate Owners;
(iii) to the extent that the provisions of this Section conflict with any other provisions of this Agreement, the provisions of this Section shall control;
(iv) the rights of Certificate Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and/or agreement between or among such Certificate Owners and the Clearing Agency and/or the Clearing Agency Participants or Persons acting through Clearing Agency Participants. Pursuant to the Depository Agreement, unless and until Definitive Certificates (other than the Retained Certificate) are issued pursuant to Section 3.5, the initial Clearing Agency shall make book-entry transfers among the Clearing Agency Participants and receive and transmit payments due under the Transaction Documents with regard to the Certificates to such Clearing Agency Participants;
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(v) whenever this Agreement requires or permits actions to be taken based upon instructions or directions of Certificateholders evidencing a specified percentage of the Percentage Interest, the Clearing Agency shall deliver instructions to the Owner Trustee only to the extent that it has received instructions to such effect from Certificate Owners and/or Clearing Agency Participants or Persons acting through Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Certificates;
(vi) owners of a beneficial interest in a Book-Entry Certificate will not be entitled to have any portion of a Book-Entry Certificate registered in their names and will not be considered to be the Certificate Owners or Certificateholders of any Certificates under this Agreement; and
(vii) payments on a Book-Entry Certificate will be made to the Clearing Agency, or its nominee, as the registered owner thereof, and none of the Issuer, the Owner Trustee, the Indenture Trustee or the Certificate Paying Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Book-Entry Certificate or for maintaining, supervising or reviewing any records relating to the beneficial ownership interests.
(b) Notwithstanding any provision to the contrary herein, so long as a Book-Entry Certificate remains outstanding and is held by or on behalf of the Clearing Agency, transfers of a Book-Entry Certificate, in whole or in part, shall only be made in accordance with Section 3.3(a). Subject to clauses (i) through (iii) of Section 3.3(a), transfers of a Book-Entry Certificate shall be limited to transfers of such Book-Entry Certificate in whole, but not in part, to a nominee of the Clearing Agency or to a successor of the Clearing Agency or such successors nominee.
In the event that a Book-Entry Certificate is exchanged for one or more Definitive Certificates pursuant to Section 3.5, such Certificates may be exchanged for one another only in accordance with the provisions of this Agreement and with such procedures as may be from time to time adopted by the Issuer and the Owner Trustee.
SECTION 3.4. Notices to Clearing Agency. Whenever a notice or other communication to the Certificateholders is required under this Agreement, except with respect to the Retained Certificate, and otherwise, unless and until Definitive Certificates shall have been issued to Certificate Owners pursuant to Section 3.5, the Owner Trustee shall give all such notices and communications specified herein to be given to the Certificateholders to the Clearing Agency, and shall have no obligation to the Certificate Owners.
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SECTION 3.5. Definitive Certificates.
(a) Except with respect to the Retained Certificate (which will be originally issued as a Definitive Certificate), if (i) the Depositor advises the Owner Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities with respect to the Certificates, and the Depositor is unable to locate a qualified successor or (ii) the Depositor at its option advises the Owner Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency, then the Clearing Agency shall notify all Certificate Owners and the Owner Trustee of the occurrence of any such event and of the availability of Definitive Certificates representing the Certificates to Certificate Owners requesting the same. Upon surrender to the Owner Trustee of the typewritten Certificate or Certificates representing the Book-Entry Certificates by the Clearing Agency, accompanied by re-registration instructions, the Issuer shall execute and the Certificate Registrar shall authenticate the Definitive Certificates representing the Certificates in accordance with the instructions of the Clearing Agency. None of the Issuer, the Certificate Registrar or the Owner 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 Certificates representing the Certificates, the Owner Trustee shall recognize such Holders of the Definitive Certificates as the applicable Certificateholders.
(b) Subject to the transfer restrictions contained herein and in the Certificates, any Holder of a Definitive Certificate may transfer all or any portion of the Percentage Interest (subject to the requirements set forth in Sections 3.3 and 3.7) evidenced by such Certificate upon surrender thereof to the Certificate Registrar accompanied by the documents required by this Section 3.5. Such transfer may be made by a registered Certificateholder in person or by his attorney duly authorized in writing upon surrender of the Certificate to the Certificate Registrar accompanied by (a) a written instrument of transfer in the form of the Assignment attached to the Form of Certificate attached hereto as Exhibit A and with such signature guarantees and evidence of authority of the Persons signing the instrument of transfer as the Certificate Registrar may reasonably require, (b) an executed direction letter regarding registration of such transfer in the form attached hereto as Exhibit B, and (c) the documents required by Section 3.7(c) hereof. Promptly upon the receipt of such documents and receipt by the Certificate Registrar of the transferors Certificate, the Certificate Registrar shall record the name of such transferee as a Certificateholder and its Percentage Interest in the Certificate Register and the Owner Trustee shall execute, and the Certificate Registrar shall authenticate and deliver to such Certificateholder, a Certificate evidencing such Percentage Interest. In the event a transferor transfers only a portion of its Percentage Interest, the Owner Trustee shall execute, and the Certificate Registrar shall register, authenticate and deliver to such transferor, a new Certificate evidencing such transferors new Percentage Interest and the Owner Trustee shall execute, and the Certificate Registrar shall register, authenticate and deliver to such transferee, a new Certificate evidencing such transferees Percentage Interest. Subsequent to each transfer of a beneficial interest and upon the issuance of the new Certificate or Certificates, the Certificate Registrar shall cancel and destroy in accordance with its customary practices the Certificate surrendered to it in connection
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with such transfer. The Owner Trustee, the Certificate Registrar and the Indenture Trustee shall treat, for all purposes whatsoever (other than as required by Section 3.7 or under applicable law), the Person in whose name any Certificate is registered as the owner of the Percentage Interest evidenced by such Certificate without regard to any notice to the contrary.
Definitive Certificates will not be eligible for clearing or settlement through DTC, Euroclear or Clearstream.
SECTION 3.6. Registration of the Certificates. The Indenture Trustee, as an agent of the Issuer, in its capacity as Certificate Registrar (the Certificate Registrar) shall maintain at its Corporate Trust Office, or at the office of any agent appointed by it and approved in writing by the Certificateholders at the time of such appointment, a register (the Certificate Register) for the registration and transfer of any Certificate. Prior to the due presentment for registration of transfer of any Certificate, the Owner Trustee, the Indenture Trustee and the Certificate Registrar or any agent of the Owner Trustee, the Indenture Trustee or the Certificate Registrar shall treat the Person in whose name any Certificate is registered (as of the applicable Record Date) as the owner of such Certificate for the purpose of receiving distributions on such Certificate and for all other purposes whatsoever. For the avoidance of doubt, a Certificate is not negotiable and the records maintained by the Certificate Registrar in the Certificate Register with respect to each Certificate and its related registered owner are intended to cause the Certificates to be issued in registered form, within the meaning of Treasury Regulation section 5f.103-1(c), and shall record (a) the Percentage Interest evidenced by each Certificate and (b) all distributions made to each Certificateholder with respect to the Issuers assets.
SECTION 3.7. Transfer of the Certificates.
(a) A Certificateholder may assign, convey or otherwise transfer all or any of its right, title and interest in the related Certificate. Each purchaser and transferee of a Definitive Certificate (other than the Retained Certificate), and any fiduciary acting on behalf of a purchaser or transferee of a Definitive Certificate (other than the Retained Certificate), will be required to provide a Certificate Investor Representation Letter substantially in the form of Exhibit B and each purchaser and transferee of a beneficial interest in a Book-Entry Certificate shall be deemed to represent and warrant:
(i) (a) such transferee is either an Affiliate of the Depositor or (b) (1) is a Qualified Institutional Buyer, (2) is aware that the sale of the Certificates (other than a sale of the Certificates by the Depositor or any of its Affiliates as part of the initial distribution or any redistribution of the Certificates by the Depositor or any of its Affiliates) to it is being made in reliance on the exemption from registration provided by Rule 144A, and (3) is acquiring the Certificates for its own account or for one or more accounts, each of which is a Qualified Institutional Buyer, and as to each of which the owner exercises sole investment discretion or for resale pursuant to Rule 144A;
(ii) such transferee understands that the Certificates will bear the applicable legends substantially as set forth in Section 3.7(g);
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(iii) such transferee understands that the Certificates are being offered only in a transaction not involving any public offering in the United States within the meaning of the Securities Act, none of the Certificates have been or will be registered under the Securities Act, and, if in the future the transferee decides to offer, resell, pledge or otherwise transfer the Certificates, such Certificates may be offered, resold, pledged or otherwise transferred solely in accordance with this Agreement and the applicable legend or legends on such Certificates. The transferee acknowledges that no representation is being made by the Issuer as to the availability of any exemption under the Securities Act or any applicable State securities laws for resale of the Certificates;
(iv) such transferee understands that an investment in the Certificates involves certain risks, including the risk of loss of all or a substantial part of its investment under certain circumstances. The transferee has had access to such financial and other information concerning the Issuer and the Certificates as it deemed necessary or appropriate in order to make an informed investment decision with respect to its purchase of the Certificates. The transferee has such knowledge and experience in financial and business matters that the transferee is capable of evaluating the merits and risks of its investment in the Certificates, and the transferee and any accounts for which it is acting are each able to bear the economic risk of such investment;
(v) such transferee will not make any general solicitation by means of general advertising or in any other manner, or take any other action that would constitute a distribution of the Certificates under the Securities Act or that would render the disposition of the Certificates a violation of Section 5 of the Securities Act or any other applicable securities laws or require registration pursuant thereto, and will not authorize any Person to act on its behalf, in such manner with respect to the Certificates;
(vi) such transferee is not acquiring the Certificates with a view to the resale, distribution or other disposition thereof in violation of the Securities Act;
(vii) such transferee will provide notice to each Person to whom it proposes to transfer any interest in the Certificates of the transfer restrictions and representations set forth in this Agreement, including the Exhibits hereto;
(viii) such transferee is not acquiring such Certificate (or any interest therein) on behalf of or with any assets of (i) a Benefit Plan, or (ii) any governmental plan, non-U.S. plan, church plan or any other plan or arrangement that is subject to Similar Law;
(ix) such transferee acknowledges that the Issuer, the Owner Trustee, the Depositor and others will rely upon the truth and accuracy of the acknowledgements, representations, warranties and agreements in this Section 3.7 and agrees that if any of the acknowledgements, representations, warranties or agreements made by it in connection with its purchase of the Certificates are no longer accurate, the transferee will promptly notify the Issuer, the Owner Trustee and the Depositor;
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(x) such transferee acknowledges that in connection with the transfer of the Certificates: (a) none of the Issuer, the Servicer, the Depositor or the Owner Trustee is acting as a fiduciary or financial or investment adviser for the transferee; (b) the transferee is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel or representations (whether written or oral) of the Issuer, the Servicer, the Depositor or the Owner Trustee other than in the most current private placement memorandum for such Certificates and any representations expressly set forth in a written agreement with such party; (c) none of the Issuer, the Servicer, the Depositor or the Owner Trustee has given to the transferee (directly or indirectly through any other Person, in any documentation for the Certificates or otherwise) any assurance, guarantee or representation whatsoever as to the expected or projected success, profitability, return, performance, result, effect, consequence or benefit (including legal, regulatory, tax, financial, accounting or otherwise) of its purchase of the Certificates; (d) the transferee has consulted with its own legal, regulatory, tax, business, investment, financial, and accounting advisers to the extent it has deemed necessary and it has made its own investment decisions (including decisions regarding the suitability of any transaction pursuant to or contemplated by this Agreement) based upon its own judgment and upon any advice from such advisers as it has deemed necessary and not upon any view expressed by the Issuer, the Servicer, the Depositor or the Owner Trustee; (e) the transferee has determined that the rates, prices or amounts and other terms of the purchase and sale of the applicable Certificates reflect those in the relevant market for similar transactions; (f) the transferee is purchasing the Certificates with a full understanding of all of the terms, conditions and risks thereof (economic and otherwise), and is capable of assuming and willing to assume (financially and otherwise) these risks; and (g) the transferee is a sophisticated investor familiar with transactions similar to its investment in the Certificates; and
(xi) no transfers shall be permitted if such transfer is effected through an established securities market or secondary market (or the substantial equivalent thereof) within the meaning of the Code Section 7704 and any proposed, temporary or final Treasury regulations thereunder.
By accepting and holding a Certificate (or any interest therein), the Holder, and any fiduciary acting on behalf of a Holder, shall be deemed to have represented and warranted that it is not, and is not purchasing the Certificate (or any interest therein) on behalf of or with any assets of, a Benefit Plan or any governmental, non-U.S., church or any other plan or arrangement that is subject to Similar Law. Subject to the transfer restrictions contained herein and in the Certificates, any Certificateholder may transfer all or any portion of the Percentage Interest evidenced by such Certificate upon surrender thereof to the Owner Trustee accompanied by the documents required by this Section. Such transfer may be made by the registered Certificateholder in person or by his attorney duly authorized in writing upon surrender of the Certificate to the Owner Trustee accompanied by: (a) a written instrument of transfer in the form
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of the Assignment attached to the Form of Certificate (attached hereto as Exhibit A) and with such signature guarantees and evidence of authority of the Persons signing the instrument of transfer as the Owner Trustee may reasonably require; provided, however, that the Owner Trustee shall not require the signature of the Depositor to be medallion guaranteed for the transfers from the Depositor to the applicable transferees on the date hereof; (b) an executed direction letter regarding registration of such transfer in the form attached hereto as Exhibit D; (c) the documents required by Section 3.7(c); and (d) a Certificate Investor Representation Letter substantially in the form attached hereto as Exhibit B. Promptly upon the receipt of such documents and receipt by the Owner Trustee of the transferors Certificate, the Owner Trustee shall record the name of such transferee as a Certificateholder and its Percentage Interest in the Certificate Register and issue, execute and deliver to such Certificateholder a Certificate evidencing such Percentage Interest. In the event a transferor transfers only a portion of its Percentage Interest, the Owner Trustee shall issue, execute and deliver to such transferor a new Certificate evidencing such transferors new Percentage Interest. Subsequent to a transfer of a Percentage Interest and upon the related issuance of the new Certificate or Certificates, the Owner Trustee shall cancel and destroy the Certificate surrendered to it in connection with such transfer. Unless otherwise provided in this Section 3.7 or under applicable law, the Owner Trustee may treat the Person in whose name any Certificate is registered as the sole owner of the beneficial interest in the Issuer evidenced by such Certificate.
(b) As a condition precedent to any registration of transfer under this Section 3.7, the Owner Trustee may require the payment of a sum sufficient to cover the payment of any tax or taxes or other governmental charges required to be paid in connection with such transfer.
(c) Each registered owner of and, if different, each owner of a beneficial interest in, a Certificate that is a U.S. Tax Person shall deliver to the Owner Trustee, the Administrator and the Certificate Paying Agent two properly completed and duly executed originals of U.S. Internal Revenue Service Form W-9 (or applicable successor form) certifying that it is not subject to backup withholding and that it is a U.S. Tax Person. Each registered owner of and, if different, each owner of a beneficial interest in, a Certificate that is not a U.S. Tax Person shall deliver to the Owner Trustee, the Administrator and the Certificate Paying Agent two properly completed and duly executed originals of U.S. Internal Revenue Service Form W-8BEN (Certification of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)), U.S. Internal Revenue Service Form W-8BEN-E (Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)), U.S. Internal Revenue Service Form W-8IMY (Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting) or U.S. Internal Revenue Service Form W-8ECI (Certificate of Foreign Persons Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States), or any applicable successors to such U.S. Internal Revenue Service forms or other reasonable information or certification requested by the Owner Trustee, the Administrator or the Certificate Paying Agent (i) to permit the Owner Trustee, the Administrator and the Certificate Paying Agent to make payments to the registered owner of, and if different, each owner of a beneficial interest in, a Certificate without withholding or deduction (including any FATCA Withholding Tax), (ii) to
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enable the Issuer to qualify for a reduced rate of withholding in any jurisdiction from or through which the Issuer receives payments on its assets, or (iii) to enable the Owner Trustee, the Administrator and the Certificate Paying Agent to satisfy any reporting or other obligations under any applicable tax law (including FATCA), and will update or replace such form, certification or other information as necessary in accordance with its terms or its subsequent amendments. The applicable U.S. Internal Revenue Service forms and information required to be delivered, as described above, shall be delivered on or prior to the date on which a Certificateholder and, if different, a Certificate Owner becomes a Certificateholder or Certificate Owner under this Agreement and from time to time thereafter as prescribed by applicable law or upon the request of the Certificate Paying Agent.
(d) Each registered owner of, and, if different, each owner of a beneficial interest in, a Certificate represents to the Issuer and Owner Trustee by acceptance of a Certificate or interest therein that it is not and will not become subject to any FATCA Withholding. In the case of a Certificateholder that is not a U.S. Tax Person and provides a U.S. Internal Revenue Service Form W-8BEN or U.S. Internal Revenue Service Form W-8BEN-E under Section 3.7(c) in order to claim the benefits of the exemption for portfolio interest under sections 871 or 881 of the Code (instead of, for example, claiming the benefits of an income tax treaty to which the United States is a party), such Certificateholder (or in the case of a Certificateholder providing U.S. Internal Revenue Service Form W-8IMY, the beneficial owner of the Certificate) hereby represents that it is not (i) a bank within the meaning of Code section 881(c)(3), (ii) a 10 percent shareholder of an obligor on a Receivable within the meaning of Code section 871(h) or 881(c)(3) (as the case may be) or (iii) a controlled foreign corporation with respect to such an obligor described in Code section 881(c)(3).
(e) Each registered owner of, and, if different, each owner of a beneficial interest in, a Certificate represents to the Issuer and Owner Trustee by acceptance of this Certificate or interest therein that it is not and will not become subject to any FATCA Withholding Tax.
(f) Each purchaser, beneficial owner and subsequent transferee of Certificates or an interest therein will be required or deemed to acknowledge that the Issuer may provide such information and any other information concerning its investment in the Certificates to the U.S. Internal Revenue Service. In addition, each purchaser, beneficial owner and subsequent transferee of Certificates or an interest therein will be required or deemed to understand and acknowledge that the Issuer has the right, hereunder, to withhold on any beneficial owner of an interest in a Certificate that fails to comply with the foregoing requirements.
(g) Each Certificate shall bear a legend in substantially the following form, unless the Depositor determines otherwise in accordance with applicable law:
THIS CERTIFICATE OR ANY INTEREST HEREIN HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR THE SECURITIES LAWS OF ANY STATE OF
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THE UNITED STATES, AND THE ISSUER HAS NOT BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE INVESTMENT COMPANY ACT). THIS CERTIFICATE OR ANY INTEREST HEREIN MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT (A) (1) TO A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (A QUALIFIED INSTITUTIONAL BUYER) WHO IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (2) TO THE DEPOSITOR OR ANY OF ITS AFFILIATES AND BY THE DEPOSITOR OR ANY OF ITS AFFILIATES AS PART OF THE INITIAL DISTRIBUTION OR ANY REDISTRIBUTION OF THE CERTIFICATES BY THE DEPOSITOR OR ANY OF ITS AFFILIATES AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. EACH PURCHASER WILL BE DEEMED TO HAVE MADE CERTAIN REPRESENTATIONS AND AGREEMENTS SET FORTH IN THE TRUST AGREEMENT. ANY TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE OWNER TRUSTEE, OR ANY INTERMEDIARY. IF AT ANY TIME, THE ISSUER DETERMINES OR IS NOTIFIED THAT THE HOLDER OF SUCH CERTIFICATE OR PERCENTAGE INTEREST IN SUCH CERTIFICATE WAS IN BREACH, AT THE TIME GIVEN, OF ANY OF THE REPRESENTATIONS SET FORTH IN THE TRUST AGREEMENT, THE ISSUER AND THE OWNER TRUSTEE MAY CONSIDER THE ACQUISITION OF THIS CERTIFICATE OR SUCH INTEREST IN SUCH CERTIFICATE VOID AND REQUIRE THAT THIS CERTIFICATE OR SUCH INTEREST HEREIN BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER.
BY ACQUIRING THIS CERTIFICATE, EACH PURCHASER AND TRANSFEREE, AND ANY FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE, WILL BE DEEMED TO REPRESENT AND WARRANT THAT IT IS NOT ACQUIRING THIS CERTIFICATE (OR ANY INTEREST HEREIN) ON BEHALF OF OR WITH ANY ASSETS OF (I) AN EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (ERISA), WHICH IS SUBJECT TO TITLE I OF ERISA, (II) A PLAN AS DESCRIBED BY SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE CODE), WHICH IS SUBJECT TO SECTION 4975 OF THE CODE, (III) ANY ENTITY DEEMED TO HOLD THE PLAN ASSETS OF ANY OF THE FOREGOING BY REASON OF SUCH EMPLOYEE BENEFIT PLANS OR PLANS INVESTMENT IN THE ENTITY, OR (IV) ANY GOVERNMENTAL, CHURCH, NON-U.S. OR OTHER PLAN OR ARRANGEMENT THAT IS SUBJECT TO ANY FEDERAL, STATE, LOCAL OR OTHER LAW THAT IS SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE.
(h) If a Responsible Officer of the Owner Trustee has actual knowledge that (1) a transfer or attempted or purported transfer of any Certificate or interest therein was consummated in compliance with the provisions of this Section 3.7 on the basis of a
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materially incorrect certification from the transferor or purported transferee, (2) a transferee of a Definitive Certificate failed to deliver to the Owner Trustee a Certificate Investor Representation Letter substantially in the form of Exhibit B hereto or (3) the Certificateholder of any Certificate or interest therein is in material breach of any representation or agreement set forth in any Certificate or any deemed representation or agreement of such Certificateholder, the Owner Trustee will direct the Certificate Registrar not to register such attempted or purported transfer and, if a transfer has been registered, such transfer shall be absolutely null and void ab initio and shall not operate to transfer any rights to the purported transferee (such purported transferee, a Disqualified Transferee) and the last preceding Certificateholder of such Certificateholder that was not a Disqualified Transferee shall be restored to all rights as a Certificateholder thereof retroactively to the date of the purported transfer of such Certificate by such Certificateholder.
(i) After the Closing Date, a Certificate (or beneficial interest therein) may not be sold or transferred to a Person that beneficially owns a Note (or interest therein) if such sale or transfer will result in such Person beneficially owning more than 99% of the Certificates of the Issuer (and any other interest in the Issuer treated as equity for United States federal income tax purposes); provided, however, that such sale or transfer shall be permitted if such Person covenants and agrees in writing, in form and substance satisfactory to the Issuer and Indenture Trustee, that it will not transfer its Certificates or Notes except upon prior delivery to the Indenture Trustee of an Opinion of Counsel substantially to the effect described in Section 2.17(a) of the Indenture and subject to any tracking conditions that may be imposed by the Administrator with respect to such Notes pursuant to Section 2.17(a).
(j) In the case of the first transfer of a Certificate that will result in the Issuer being deemed to have more than one beneficial owner for United States federal income tax purposes, the Seller shall be entitled to request an Initial Certificate Transfer Opinion.
(k) Unless the Depositor has received an opinion from a nationally recognized tax counsel that the restriction on the proposed acquisition or ownership of a Certificate (or interest therein) described by this paragraph is no longer necessary to conclude that any such acquisition (and subsequent resale of the applicable Notes described below) will not cause the Treasury Regulations under Code section 385 to apply to the applicable Notes described below in a manner that could cause a material adverse effect on the Issuer or the Issuer to be treated as other than a grantor trust for U.S. federal income tax purposes, (A) a Section 385 Certificateholder cannot acquire or hold a Certificate (or interest therein) if (i) a member of any expanded group (as defined in Treasury Regulation Section 1.385-1(c)(4)) that includes the Section 385 Certificateholder owns any Notes or (ii) a Section 385 Controlled Partnership of such expanded group owns any Notes and (B) a Section 385 Certificateholder cannot hold a Certificate (or interest therein) if (i) a member of any expanded group (as defined in Treasury Regulation Section 1.385-1(c)(4)) that includes the Section 385 Certificateholder acquires any Notes from the Issuer or any Affiliate of the Issuer or through the marketplace or (ii) a Section 385 Controlled Partnership of such expanded group acquires any Notes from the Issuer or any Affiliate of the Issuer or through the marketplace. The preceding sentence shall not
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apply if the holder or potential holder of the applicable Notes is a U.S. corporate member of the same U.S. corporate affiliated group (as defined in Section 1504 of the Code) filing a consolidated federal income tax return that includes each of any applicable related Section 385 Certificateholders (including in the case of a partnership, the relevant expanded group partner (as defined in Treasury Regulation Section 1.385-3(g)(12)). If a Certificateholder (or Certificate Owner) fails to comply with the requirements of this paragraph, the Issuer or Depositor is authorized, at its discretion, to compel such Certificateholder (or Certificate Owner) to sell its Certificate (or interest therein) to a Person whose ownership does not result in a failure to comply with this paragraph so long as such sale does not otherwise cause a material adverse effect on the Issuer or the Issuer to be treated as other than a grantor trust for U.S. federal income tax purposes.
SECTION 3.8. Lost, Stolen, Mutilated or Destroyed Certificates. If (i) any mutilated Certificate is surrendered to the Owner Trustee, or (ii) the Owner Trustee receives evidence to its satisfaction that any Certificate has been destroyed, lost or stolen, and upon proof of ownership satisfactory to the Owner Trustee together with such security or indemnity as may be requested by the Owner Trustee to save it and the Issuer harmless, the Owner Trustee shall execute and deliver a new Certificate for the same Percentage Interest as the Certificate so mutilated, destroyed, lost or stolen, of like tenor and bearing a different issue number, with such notations, if any, as the Owner Trustee shall determine. Upon the issuance of any new Certificate under this Section 3.8, the Issuer or Owner Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of the Certificate and any other reasonable expenses (including the reasonable fees and expenses of the Issuer and the Owner Trustee) connected therewith. Any duplicate Certificate issued pursuant to this Section 3.8 shall constitute complete and indefeasible evidence of ownership in the Issuer, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. The provisions of this Section 3.8 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, defaced, destroyed, lost or stolen Certificates.
SECTION 3.9. Appointment of the Certificate Paying Agent. To the extent Definitive Certificates have been issued, the Certificate Paying Agent shall make distributions to Certificateholders pursuant to Section 5.1 and shall report the amounts of such distributions to the Owner Trustee and the Servicer; provided, however, that no such reports shall be required so long as the Depositor or an affiliate of the Depositor is the sole Certificateholder. Any Certificate 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 Issuer may revoke such power and remove the Certificate Paying Agent if the Issuer determines in its sole discretion that the Certificate Paying Agent shall have failed to perform its obligations under this Agreement in any material respect. The Certificate Paying Agent shall initially be the Indenture Trustee and any co-paying agent chosen by the Certificate Paying Agent. The Indenture Trustee shall be permitted to resign as Certificate Paying Agent upon thirty (30) days written notice to the Administrator. If the Indenture Trustee shall no longer be the Certificate Paying Agent, the Administrator shall appoint a successor to act as Certificate Paying Agent (which shall be a bank or trust company). The Administrator shall cause such successor Certificate Paying Agent or any additional Certificate Paying Agent appointed by the Administrator to execute and deliver a written agreement in which such successor Certificate
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Paying Agent or additional Certificate Paying Agent shall agree with the Issuer that, as Certificate Paying Agent, such successor Certificate Paying Agent or additional Certificate Paying Agent shall 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. Subject to applicable laws with respect to the escheat of funds, the Certificate Paying Agent shall return all funds that have remained unclaimed by a Certificateholder for two years to the Owner Trustee and, upon removal of a Certificate Paying Agent, such Certificate Paying Agent shall also return all funds (including any unclaimed funds) in its possession to the Owner Trustee. The rights, protections, indemnities and immunities of the Indenture Trustee under the Indenture and the Servicing Agreement shall apply to the Indenture Trustee also in its role as Certificate Paying Agent or Certificate Registrar for so long as the Indenture Trustee shall act as Certificate Paying Agent or Certificate Registrar and, to the extent applicable, to any other paying agent, certificate registrar or authenticating agent appointed hereunder. Any reference in this Agreement to the Certificate Paying Agent shall include any co-paying agent unless the context requires otherwise.
SECTION 3.10. Maintenance of Office or Agency. As long as any of the Certificates remain outstanding, the Issuer shall maintain an office or agency where Certificates may be surrendered for registration of transfer or exchange, and where notices and demands to or upon the Issuer in respect of the Certificates and this Agreement may be served. The Issuer hereby initially designates the Corporate Trust Office of the Certificate Registrar for the foregoing purposes. The Issuer shall give prompt written notice to the Owner Trustee and the Indenture Trustee 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 Owner Trustee and the Indenture Trustee with the address thereof, such surrenders, notices and demands may be made or served at the applicable Corporate Trust Office, and the Issuer hereby appoints the Owner Trustee as its agent to receive all such surrenders, notices and demands.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Certificateholders with Respect to Certain Matters. With respect to the following matters, unless the Administrator provides written notice to the Owner Trustee that the relevant Transaction Document provides that the consent of the Certificateholders shall not be required, the Owner Trustee shall not take action unless, at least ten (10) Business Days before the taking of such action (or if ten (10) Business Days advance notice is impracticable, as much advance notice as is practicable), the Owner Trustee shall have notified the Certificateholders in writing of the proposed action and no Certificateholder shall have notified the Owner Trustee in writing within such notice period that such Certificateholder has withheld consent or provided alternative direction:
(a) the appointment pursuant to the Indenture of a successor Indenture Trustee;
(b) the appointment pursuant to the Servicing Agreement of a successor Servicer; or
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(c) the consent to the assignment by the Note Registrar or the Indenture Trustee of its obligations under the Indenture or this Agreement.
SECTION 4.2. Action by Certificateholders with Respect to Certain Matters. The Owner Trustee shall not have the power, except upon the direction of the Majority Certificateholders, to (a) except as expressly provided in the Transaction Documents, sell the Collateral after the termination of the Indenture in accordance with its terms, (b) remove the Administrator under the Administration Agreement pursuant to Section 8 thereof or (c) appoint a successor Administrator pursuant to Section 8 of the Administration Agreement. The Owner Trustee shall take the actions referred to in the preceding sentence only upon written instructions signed by the Majority Certificateholders.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.
(a) The Owner Trustee shall not have the power to commence a voluntary Proceeding in bankruptcy relating to the Issuer until one year and one day after the Note Balance of all Notes has been reduced to zero [and all amounts owed to the Swap Counterparty under the Transaction Documents have been paid] without the prior written approval of each Certificateholder and the delivery to the Owner Trustee by each Certificateholder of a certificate certifying that such Certificateholder reasonably believe that the Issuer is insolvent.
(b) The parties hereto stipulate and agree that no Certificateholder has the power to commence any Bankruptcy Event on the part of the Issuer.
SECTION 4.4. Restrictions on Certificateholders Power. The Certificateholders shall not direct the Owner Trustee to take or refrain from taking any action if such action or inaction would be contrary to any obligation of the Issuer or the Owner Trustee under this Agreement or any of the Transaction Documents or would be contrary to Section 2.3, nor shall the Owner Trustee be obligated to follow any such direction, if given.
SECTION 4.5. Acts of Certificateholders; Majority Control.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement to be given or taken by Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Certificateholders 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 Owner 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 Certificateholders 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 Agreement and (subject to Article VI) conclusive in favor of the Owner Trustee and the Issuer, if made in the manner provided in this Section.
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(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 Owner Trustee deems sufficient.
(c) The ownership of Certificates shall be proved by the Certificate Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by any Certificateholder shall bind the Holder of every Certificate 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 Owner Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Certificate.
(e) Except as otherwise provided herein, to the extent that there is more than one Certificateholder, any action which may be taken or consent or instructions which may be given by the Certificateholder under this Agreement may be taken by the Majority Certificateholders at the time of such action.
SECTION 4.6. Compliance with the FDIC Rule. The Owner Trustee shall (i) perform the covenants set forth in Article XII of the Indenture applicable to it and (ii) use reasonable efforts to comply with any request of the Depositor or the Servicer to facilitate compliance with Article XII of the Indenture by the Capital One Parties.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. Application of Trust Funds. Deposits into the Certificate Distribution Account shall be made in accordance with the provisions of the Indenture and this Agreement. On each Payment Date to the extent Definitive Certificates have been issued, the Certificate Paying Agent shall withdraw from the Certificate Distribution Account and distribute to the Certificateholders, pro rata based on the Percentage Interest of each Certificateholder (or in the case of the Retained Certificate, deposit directly to the Certificate Distribution Account), all funds received in accordance with the provisions of the Indenture and this Agreement. Subject to the Lien of the Indenture and Section 5.5 of this Agreement, the Certificate Paying Agent shall promptly distribute to the Certificateholders all other amounts (if any) received by the Certificate Paying Agent on behalf of the Issuer in respect of the Trust Estate (pro rata based on the Percentage Interest of each such Certificateholder). After the termination of the Indenture in accordance with its terms, the Certificate Paying Agent shall distribute all amounts received (if any) by the Issuer and the Owner Trustee in respect of the Trust Estate at the direction of the Certificateholders.
SECTION 5.2. Method of Payment. Subject to the Indenture, distributions required to be made to the Certificateholders on any Payment Date and all amounts received by the Issuer or the Owner Trustee on any other date that are payable to the Certificateholders pursuant to this Agreement or any other Transaction Document shall be made to the Certificateholders by wire transfer, in immediately available funds, to the account of each Certificateholder designated by such Certificateholder to the Owner Trustee and Indenture Trustee in writing.
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SECTION 5.3. Reports by Owner Trustee to Certificateholders.
(a) The Owner Trustee shall prepare (or cause to be prepared) and shall sign pursuant to the power granted thereto pursuant to Section 2.4, on behalf of the Issuer, the Issuers tax returns, if any, unless applicable law requires a Certificateholder to sign such documents.
(b) The Owner Trustee, shall: (a) maintain (or cause to be maintained) the books of the Issuer on a calendar year basis and the accrual method of accounting; (b) deliver (or cause to be delivered) to each Certificateholder such information in its possession hereunder that is customarily provided to a Certificateholder to enable such Holder to prepare its United States federal and state income tax returns and any further information reasonably requested by such Certificateholder to the extent such information is reasonably obtainable, and may be required to enable each Certificateholder to prepare its United States federal and state income tax returns; (c) prepare (or cause to be prepared), file (or cause to be filed) such tax returns relating to the Issuer (including, if applicable, a trust return U.S. Internal Revenue Service Form 1041, U.S. Internal Revenue Service Form 1099, or reporting for widely held fixed investment trusts under Treasury Regulations Section 1.671-5); (d) upon direction from the Certificateholders (or any agent of such persons) 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 Issuers tax characterization as described in Section 2.6 hereof; and (e) collect or cause to be collected any withholding tax as described in Section 5.5 and in accordance with Section 5.1 with respect to income or distributions to Certificateholders.
(c) The Depositor shall cause to be provided to the Owner Trustee upon its reasonable request from time to time such information and documentation as may be available to the Depositor (including without limitation Servicers Reports) to enable the Owner Trustee to perform its obligations under this Section 5.3.
SECTION 5.4. Certificate Distribution Account. The Certificate Distribution Account shall be established pursuant to Section 8.2 of the Indenture if any Definitive Certificates are issued and outstanding. If a Certificate Distribution Account is established, the Certificateholders shall possess all beneficial right, title and interest in and to all funds on deposit from time to time in the Certificate Distribution Account and all proceeds thereof. Except as otherwise provided herein or in the Indenture, the Certificate Distribution Account shall be under the sole dominion and control of the Certificate Paying Agent for the benefit of the Certificateholders. Except as otherwise provided herein or in the Indenture, if, at any time, the Certificate Distribution Account ceases to be an Eligible Account, the Servicer shall within ten (10) Business Days establish a new Certificate Distribution Account as an Eligible Account and shall cause the transfer of any cash then on deposit in the Certificate Distribution Account to such new Certificate Distribution Account. For the avoidance of doubt, distributions payable to the Depositor, as holder of the Retained Certificate, shall be made to the Certificate Distribution Account.
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SECTION 5.5. Withholding. In the event that any withholding tax is imposed on the Issuers payment (or allocations of income) to a Certificateholder, such tax shall reduce the amount otherwise distributable to the Certificateholder. The Owner Trustee and Certificate Paying Agent are hereby authorized and directed, and the Indenture Trustee is authorized pursuant to Section 3.3(c) of the Indenture, to retain from amounts otherwise distributable to the Certificateholders sufficient funds for the payment of any tax that is legally payable by the Issuer (but such authorization shall not prevent the Owner Trustee or Certificate Paying Agent from contesting any such tax in an appropriate Proceeding and withholding payment of such tax, if permitted by law, pending the outcome of such Proceeding). 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 Issuer and remitted to the appropriate taxing authority. If there is a possibility that withholding tax is payable with respect to any distribution (such as any distribution to a non-U.S. Tax Person), the Owner Trustee or Certificate Paying Agent may in its sole discretion withhold such amounts in accordance with this Section 5.5 and the Indenture Trustee may withhold such amounts in accordance with Section 3.3(c) of the Indenture.
SECTION 5.6. No Reinvestment. The Certificate Paying Agent shall distribute all amounts collected in respect of the assets of the Issuer and neither the Certificate Paying Agent nor the Owner Trustee shall apply any such amounts toward the purchase of additional assets on behalf of the Issuer; provided, however, that such amounts may be invested in Permitted Investments selected in writing by the Servicer but only until the next Payment Date (and only where such investments mature on or prior to such Payment Date without a disposition thereof prior to maturity), when they shall be distributed.
SECTION 5.7. Sarbanes-Oxley Act. Notwithstanding anything to the contrary herein or in any Transaction Document, the Owner Trustee shall not be required to execute, deliver or certify in accordance with the provisions of the Sarbanes-Oxley Act on behalf of the Issuer or any other Person, any periodic reports filed pursuant to the Exchange Act, or any other documents pursuant to the Sarbanes-Oxley Act.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority. The Owner Trustee is authorized and directed to execute and deliver (i) the Transaction Documents to which the Issuer is named as a party and (ii) each certificate or other document attached as an exhibit to or contemplated by the Transaction Documents to which the Issuer or the Owner Trustee is named as a party and any amendment thereto, in each case, in such form as the Depositor shall approve, as evidenced conclusively by the Owner Trustees execution thereof, and at the written direction of the Depositor, to execute on behalf of the Issuer and to direct the Indenture Trustee to authenticate and deliver Notes in the aggregate principal amount of $[__________]. In addition to the foregoing, the Owner Trustee is authorized, but shall not be obligated, to take all actions required of the Issuer pursuant to the Transaction Documents. The Owner Trustee is further authorized from time to time to take such action as the Depositor, the Administrator or the Majority Certificateholders recommend or direct in writing with respect to the Transaction Documents, except to the extent that this Agreement expressly requires the consent of each Certificateholder for such action.
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SECTION 6.2. General Duties. It shall be the duty of the Owner Trustee to discharge (or cause to be discharged) all of its responsibilities pursuant to the terms of this Agreement and the other Transaction Documents and to administer the Issuer in the interest of the Certificateholders, subject to Transaction 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 Transaction Documents to the extent the Administrator has agreed in the Administration Agreement to perform any act or to discharge any duty of the Issuer or the Owner Trustee hereunder or under any Transaction Document, and the Owner Trustee shall not be liable for the default or failure of the Administrator to carry out its obligations under the Administration Agreement and shall have no duty to monitor or supervise the performance of the Administrator or any other Person under the Administration Agreement or any other document. The Owner Trustee shall have no obligation to administer, service or collect the Receivables or to maintain, monitor or otherwise supervise the administration, servicing or collection of the Receivables. For the avoidance of doubt, the Owner Trustee shall not be required to perform any of the obligations of the Issuer under any Transaction Document that are required to be performed by the Sponsor, the Servicer, the Depositor, the Administrator or the Indenture Trustee.
SECTION 6.3. Action upon Instruction.
(a) Subject to Article IV, and in accordance with the Transaction Documents, each of the Certificateholders and the Administrator may, by written instruction, direct the Owner Trustee in the management of the Issuer. Such direction may be exercised at any time by written instruction of the Certificateholders pursuant to Article IV. Further, with respect to provisions hereunder that provide for instruction by the Certificateholders, for so long as all outstanding Certificates are Book-Entry Certificates, if the Owner Trustee shall have notified the Certificateholders in writing of a proposed action and within fifteen (15) days of such notice none of the Certificateholders shall have notified the Owner Trustee in writing that such Certificateholder has withheld consent or provided alternative instruction, the Owner Trustee, in the place of Certificateholder instruction hereunder, may accept and rely on written instruction of the Administrator. If subsequently the Owner Trustee receives alternative written instruction from the Certificateholders, such instruction shall control.
(b) Subject to Section 7.1, the Owner Trustee shall not be required to take any action hereunder or under any Transaction Document if the Owner Trustee shall have reasonably determined or 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 Transaction 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 any Transaction Document or is unsure as to the application of any provision of this Agreement or any Transaction Document or any such provision is ambiguous as to its application, or is, or
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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 shall promptly give notice (in such form as shall be appropriate under the circumstances) to the Certificateholders or the Administrator requesting instruction as to the course of action to be adopted or application of such provision, and to the extent the Owner Trustee acts or refrains from acting in good faith in accordance with any written instruction of the Majority Certificateholders or the Administrator (or, if specifically required hereunder, all Certificateholders) 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 ten (10) Business 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 Transaction 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) The Owner Trustee shall not be personally liable for any distribution made in accordance with the provisions set forth in Section 9.1(b).
SECTION 6.4. 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 Issuer or 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 6.3; and no implied duties (including fiduciary duties existing at law or in equity) or obligations shall be read into this Agreement or any Transaction 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 Commission filing (including any filings required under the Sarbanes-Oxley Act), for the Issuer or to record this Agreement or any Transaction Document. [____________] 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, [____________] that are not related to the ownership or the administration of the Trust Estate. The Owner Trustee shall have no responsibility or liability for or with respect to the genuineness, value, sufficiency or validity of the Trust Estate.
SECTION 6.5. 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 Transaction Documents and (iii) in accordance with any document or instruction delivered to the Owner Trustee pursuant to Section 6.3.
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SECTION 6.6. Restrictions. The Owner Trustee shall not take any action (a) that is inconsistent with the purposes of the Issuer set forth in Section 2.3 or (b) that, to the actual knowledge of a Responsible Officer of the Owner Trustee, would (i) affect the treatment of the Notes as indebtedness for United States federal income, state and local income and franchise tax purposes, (ii) be deemed to cause a taxable exchange of the Notes for United States federal income or state income or franchise tax purposes or (iii) cause the Issuer or any portion thereof to be treated as an association or publicly traded partnership taxable as a corporation for United States federal income, state and local income or franchise tax purposes or cause the Issuer to be treated as other than a grantor trust for United States federal income tax purposes. Neither the Depositor, the Administrator nor any Certificateholder shall direct the Owner Trustee to take action that would violate the provisions of this Section.
SECTION 6.7. Relevant Trustee. Following the payment in full of principal and interest on the Notes, the Owner Trustee shall assume the role of Relevant Trustee for purposes of Section 6.1(a) of the Servicing Agreement and Section 7.4 and Article VIII of the Indenture (notwithstanding the satisfaction and discharge of the Indenture following payment in full of principal and interest on the Notes), which are incorporated by reference into this Agreement; provided, however, that, for purposes of Section 7.4 of the Indenture, the Owner Trustee shall disseminate the Servicers Report in the manner set forth in Section 7.4(b) hereof.
ARTICLE VII
CONCERNING OWNER TRUSTEE
SECTION 7.1. 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 Transaction Documents and this Agreement. The Owner Trustee shall not be personally liable or accountable hereunder or under any Transaction Document under any circumstances notwithstanding anything herein or in the Transaction Documents to the contrary, except (i) for its own willful misconduct, bad faith or gross negligence, (ii) in the case of the inaccuracy of any representation or warranty contained in Section 7.6 expressly made by [____________] in its individual capacity, (iii) for liabilities arising from the failure of [____________] to perform obligations expressly undertaken by it in the second to last sentence of Section 6.4 or (iv) for taxes, fees or other charges on, based on or measured by, any fees, commissions or compensation received by the Owner Trustee. In particular, but not by way of limitation (and subject to the exceptions set forth in the preceding sentence) of the foregoing:
(a) The Owner Trustee shall not be liable for any action it takes or omits to take in accordance with a direction received by it from the Administrator or the required Certificateholders, as the case may be, in accordance with the Transaction Documents;
(b) No provision of this Agreement or any Transaction Document shall require the Owner Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or under any Transaction Document or in the exercise of any of its rights or powers, if the Owner Trustee shall
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have reasonable grounds to believe that repayment of such funds or indemnity reasonably satisfactory to the Owner Trustee against such risk or liability is not reasonably assured to it;
(c) The Owner Trustee shall not be liable solely for any action or inaction of the Issuer, the Depositor or the Certificateholders or any other party (or agent thereof) to any Transaction Document, and may assume compliance by such parties with their obligations under this Agreement or any other Transaction Document unless a Responsible Officer of the Owner Trustee has actual knowledge of or has received written notice to the contrary;
(d) The Owner Trustee shall not be under any 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 Transaction Document, at the request, order or direction of any of the Certificateholders or the Administrator, unless such Certificateholders or the Administrator have offered to the Owner Trustee security or indemnity reasonably satisfactory to the Owner Trustee against the reasonable costs, expenses and liabilities that may be incurred by it therein or thereby;
(e) The Owner Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God; it being understood that the Owner Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance of their respective obligations as soon as practicable under the circumstances;
(f) Notwithstanding anything to the contrary herein or otherwise, under no circumstances will the Owner Trustee be liable for special, punitive, indirect or consequential loss or damage of any kind whatsoever (including lost profits);
(g) The Owner Trustee shall not be deemed to have knowledge or notice of any event or information, including any Event of Default, or be required to act upon any event or information (including the sending of any notice), unless written notice of such event or information is received by a Responsible Officer of the Owner Trustee and such notice references the event or information. Absent written notice in accordance with this Section or actual knowledge of such event or information by a Responsible Officer of the Owner Trustee, the Owner Trustee may assume that no such event has occurred. The Owner Trustee shall not have any obligation to inquire into, or investigate as to, the occurrence of any such event (including any Event of Default). For purposes of determining the Owner Trustees responsibility and liability hereunder, whenever reference is made in this Trust Agreement to any event (including, but not limited to, an Event of Default), such reference shall be construed to refer only to such event of which the Owner Trustee has actual knowledge or has received written notice as described in this Section. Knowledge of the Owner Trustee shall not be attributed or imputed to BNY Mellon Trust of Delawares other roles in the transaction (if any);
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(h) Under no circumstances shall the Owner Trustee be personally liable for any representation, warranty, covenant, obligation or indebtedness of the Issuer;
(i) The Owner Trustee shall not be personally responsible for or in respect of the validity or sufficiency of this Agreement or for the due execution hereof by any Person other than the Owner Trustee or for the form, character, genuineness, sufficiency, value or validity of the Trust Estate, or for or in respect of the accuracy, validity or sufficiency of any statement of any other party in the Transaction Documents, the Certificates or any other document supplied to the Owner Trustee;
(j) The Owner Trustee shall not be personally liable for any error of judgment made in good faith by any of its officers or employees unless it is proved that such Persons were negligent in ascertaining the pertinent facts; and
(k) The Owner Trustee shall not be required to investigate any claims with respect to any breach of a representation or warranty under any of the Transaction Documents.
SECTION 7.2. 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 Transaction Documents.
SECTION 7.3. Preservation of Information; Communications to Certificateholders.
(a) The Certificate Registrar shall preserve, in as current a form as is reasonably practicable, the names and addresses of Certificateholders received by the Indenture Trustee in its capacity as the Certificate Registrar; provided, however, that so long as the Indenture Trustee is the Certificate Registrar, no list separate from the Certificate Register shall be required to be preserved or maintained.
(b) The Certificateholders may communicate with other Certificateholders with respect to their rights under this Agreement or under the Certificates. Upon receipt by the Certificate Registrar of any written request by three or more Certificateholders or by one or more Certificateholders holding in the aggregate more than 25% of the Percentage Interests to receive a copy of the most current list of Certificateholders together with a copy of the communication that the applicant proposes to send, the Certificate Registrar shall distribute such list to the requesting Certificateholders; provided, that the Certificate Registrar may elect not to afford the requesting Certificateholders access to the list of Certificateholders if it agrees to mail the desired communication or proxy, on behalf of and at the expense of the requesting Certificateholders, to all Certificateholders. Each Certificateholder or Certificate Owner, by receiving and holding a Certificate or interest therein, shall be deemed to have agreed not to hold the Certificate Registrar accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived.
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SECTION 7.4. Statements to Certificateholders.
(a) The Owner Trustee shall promptly give notice to each Certificateholder of any change in the Indenture Trustees website pursuant to which the Servicers Report is made available to the extent the Owner Trustee is notified of such change by the Administrator, the Servicer or the Indenture Trustee in writing.
(b) To the extent the Owner Trustee has assumed the role of Relevant Trustee pursuant to the terms of Section 6.7, the Owner Trustee may make all reports or notices required to be provided by the Owner Trustee under Section 7.4 of the Indenture available via its website; provided, however, that the Owner Trustee shall, if requested by the Administrator, deliver any such reports or notices in writing or via email to the Administrator. Any information that is disseminated in accordance with the provisions of this Section 7.4 shall not be required to be disseminated in any other form or manner. The Owner Trustee will make no representations or warranties as to the accuracy or completeness of such documents and will assume no responsibility therefor.
(c) The Owner Trustees website shall be initially located at [__________] or at such other address as shall be specified by the Owner Trustee from time to time in writing to the Certificateholders, the Servicer, the Issuer or any Paying Agent. In connection with providing access to the Owner Trustees website, the Owner Trustee may require registration and the acceptance of a disclaimer. The Owner Trustee shall not be liable for the dissemination of information in accordance with this Agreement. The Owner Trustee shall notify Certificateholders in writing of any changes in the address or means of access to the website where the reports are accessible. Assistance in access to the website can be obtained by calling the Owner Trustees customer service desk at [____________].
(d) Upon receipt by the Owner Trustee from the Depositor of any reports or general loan data, the Owner Trustee will make such reports or data available to the Certificateholders via its website as specified pursuant to clause (c) above; provided, that the Owner Trustee shall not be required to forward any such reports to any Certificateholder who is the Depositor or an Affiliate of the Depositor. The Owner Trustee shall have no duty or obligations to review, verify or confirm the reports or any information contained therein, and shall have no liability in connection therewith.
SECTION 7.5. Notice of Events of Default and Servicer Replacement Event. The Owner Trustee shall promptly give notice to each Certificateholder of any (a) Default or Event of Default of which it has been provided notice pursuant to Section 6.5 of the Indenture and (b) Servicer Replacement Event of which it has been provided notice pursuant to Section 6.1 of the Servicing Agreement.
SECTION 7.6. Representations and Warranties. The Owner Trustee hereby represents and warrants to the Depositor for the benefit of the Certificateholders, that:
(a) It is a [____________] formed and validly existing in good standing under the federal laws of the United States of America and having its principal place of business within the State of [____________]. It has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement.
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(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) This Agreement constitutes a legal, valid and binding obligation of the Owner Trustee, enforceable against the Owner Trustee in accordance with its terms, subject, as to enforceability, to applicable bankruptcy, insolvency, reorganization, conservatorship, receivership, liquidation and other similar laws affecting enforcement of the rights of creditors of banks generally and to equitable limitations on the availability of specific remedies.
(d) Neither the execution nor 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 by-laws.
SECTION 7.7. Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no personal 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 the 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, secretary 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 Transaction Documents, the Owner Trustee (i) may act directly or through its agents or attorneys pursuant to agreements entered into with any of them, but the Owner Trustee shall not be personally liable for the conduct or misconduct of such agents, custodians, nominees (including Persons acting under a power of attorney) or attorneys selected in good faith and (ii) may consult with counsel, accountants and other skilled Persons knowledgeable in the relevant area to be selected in good faith and employed by it at the expense of the Issuer. The Owner Trustee shall not be personally 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.
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SECTION 7.8. Not Acting in Individual Capacity. Except as provided in this Article VII, in accepting the trusts hereby created, the Owner Trustee acts solely as the 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 Transaction Document shall look only to the Trust Estate for payment or satisfaction thereof.
SECTION 7.9. The Owner Trustee May Own Notes. The Owner Trustee in its individual or any other capacity may become the owner or pledgee of Notes. The Owner Trustee may deal with the Depositor, the Indenture Trustee, the Administrator and their respective Affiliates in banking transactions with the same rights as it would have if it were not the Owner Trustee, and the Depositor, the Indenture Trustee, the Administrator and their respective Affiliates may maintain normal commercial banking relationships with the Owner Trustee and its Affiliates.
SECTION 7.10. Rule 144A Information. At any time when the Depositor is not subject to Section 13 or 15(d) of the Exchange Act and is not exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, upon the request of a Certificateholder in connection with the sale or transfer of such Certificateholders Certificate, the Depositor shall promptly furnish or cause to be furnished Rule 144A Information to such Certificateholder, to a prospective purchaser of such Certificate (as designated by such Certificateholder) or to the Owner Trustee for delivery (and the Owner Trustee shall deliver such Rule 144A Information) to such Certificateholder or such prospective purchaser, as the case may be, in order to permit compliance by such Certificateholder with Rule 144A in connection with the resale of such Certificate by such Certificateholder.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. The Owner Trustees Compensation. The Depositor shall cause the Servicer to agree to pay to the Owner Trustee pursuant to Section 3.11 of the Servicing Agreement from time to time compensation for all services rendered by the Owner Trustee under this Agreement pursuant to a fee letter between the Servicer and the Owner Trustee (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust). The Servicer, pursuant to Section 3.11 of the Servicing Agreement and the fee letter between the Servicer and the Owner Trustee, shall reimburse the Owner Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Owner Trustee in accordance with any provision of this Agreement (including the reasonable compensation, expenses and disbursements of such agents, experts and counsel as the Owner Trustee may employ in connection with the exercise and performance of its rights and its duties hereunder), except any such expense as may be attributable to its willful misconduct, gross negligence (other than an error in judgment) or bad faith. To the extent not paid by the Servicer, such fees and reasonable expenses shall be paid by the Issuer in accordance with Sections 8.5 or 5.4(b) of the Indenture, as applicable.
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SECTION 8.2. Indemnification. The Depositor shall cause the Servicer to agree to indemnify the Owner Trustee in its individual capacity and as Owner Trustee and its successors, assigns, directors, officers, employees and agents (the Indemnified Parties) from and against, any and all loss, liability, expense, tax, penalty or claim (including reasonable legal fees and expenses, including legal fees and expenses in connection with enforcement of its rights to indemnity hereunder) of any kind and nature whatsoever which may at any time be imposed on, incurred by, or asserted against the Owner Trustee in its individual capacity and as Owner Trustee or any Indemnified Party in any way relating to or arising out of this Agreement, the Transaction Documents, the Trust Estate, the administration of the Trust Estate or the action or inaction of the Owner Trustee hereunder and those incurred in connection with any action, claim or suit brought to enforce the owner trustees right to indemnification; provided, however, that neither the Depositor nor the Servicer shall be liable for or required to indemnify the Owner Trustee from and against any of the foregoing expenses or indemnities arising or resulting from (i) its own willful misconduct, gross negligence or bad faith, (ii) the inaccuracy of any representation or warranty contained in Section 7.6 expressly made by the Owner Trustee in its individual capacity, (iii) liabilities arising from the failure of the Owner Trustee in its individual capacity to perform obligations expressly undertaken by it in the second to last sentence of Section 6.4 or (iv) taxes, fees or other charges on, based on or measured by, any fees, commissions or compensation received by the Owner Trustee in its individual capacity. To the extent not paid by the Servicer, such indemnification shall be paid by the Issuer in accordance with, and solely to the extent set forth in Sections 8.5 or 5.4(b) of the Indenture, as applicable. The provisions of this Section 8.2 shall survive the termination of this Agreement and the resignation or removal of the Owner Trustee.
SECTION 8.3. Payments to the Owner Trustee. Any amounts paid to the Owner Trustee pursuant to this Article VIII and the Indenture shall be deemed not to be a part of the Trust Estate immediately after such payment.
SECTION 8.4. Rights, Protections, Immunities and Indemnities of the Relevant Trustee. The rights, protections, immunities and indemnities of the Owner Trustee under this Agreement are hereby extended to the Owner Trustee as Relevant Trustee.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1. Dissolution of Issuer. (a) The Issuer shall wind up and dissolve and this Agreement shall terminate (other than provisions hereof which by their terms survive termination) upon the final distribution by the Issuer and the Certificate Paying Agent of all moneys or other property or proceeds of the Trust Estate in accordance with the terms of the Indenture, the Servicing Agreement and Article V hereof. The bankruptcy, liquidation, dissolution, death or incapacity of a Certificateholder shall not (x) operate to terminate this Agreement or the Issuer, nor (y) entitle any such Certificateholders legal representatives or heirs to claim an accounting or to take any Proceeding in any court for a partition or winding up of all or any part of the Issuer or Trust Estate nor (z) otherwise affect the rights, obligations and liabilities of the parties hereto.
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(b) Notice of any dissolution and termination of the Issuer, specifying the Payment Date upon which Certificateholders shall surrender their Certificates to the Owner Trustee for payment of the final distribution and cancellation, shall be given by the Owner Trustee to Certificateholders, and if the Owner Trustee is notified of a redemption of the Notes by the Administrator or the Issuer pursuant to Section 10.1(c) of the Indenture, such notice shall be mailed within five (5) Business Days of the Owner Trustees receipt of such notice from the Issuer or Administrator. Each such notice to a Certificateholder shall state (i) the Payment Date upon or with respect to which final payment of the Certificates shall be made upon presentation and surrender of the Certificates at the office of the Owner Trustee therein designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such Payment Date is not applicable and that payments are being made only upon presentation and surrender of the Certificates at the office of the Owner Trustee therein specified. The Owner Trustee shall give such notice to the Certificate Registrar (if other than the Owner Trustee) and the Certificate Paying Agent at the time such notice is given to Certificateholders. Upon presentation and surrender of each Certificate, the Certificate Paying Agent shall cause to be distributed to such Certificateholders, subject to Section 3808 of the Statutory Trust Statute, amounts distributable on such Payment Date pursuant to Article V.
(c) In the event that any of the Certificateholders shall not surrender their Certificates for cancellation within six (6) 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 Certificates for cancellation and receive the final distribution with respect thereto. If within one year after the second notice any of the 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 Certificates and the cost thereof shall be paid out of the funds and other assets that shall remain subject to this Agreement. Subject to applicable escheat laws, any funds remaining in the Trust Estate after exhaustion of such remedies shall be distributed by the Certificate Paying Agent to the last Certificateholder of record identified in the Certificate Register for each such remaining Certificate.
SECTION 9.2. Termination of Trust Agreement. Upon dissolution of the Issuer, the Owner Trustee shall, at the direction of the Administrator, wind up the business and affairs of the Issuer as required by Section 3808 of the Statutory Trust Statute. Upon the satisfaction and discharge of the Indenture, and receipt of a certificate from the Indenture Trustee stating that all Noteholders have been paid in full and that no Responsible Officer of the Indenture Trustee has actual knowledge or has received written notice of any claims remaining against the Issuer in respect of the Indenture and the Notes, the Administrator, in the absence of actual knowledge of any other claim against the Issuer, shall be deemed to have made reasonable provision to pay all claims and obligations (including conditional, contingent or unmatured obligations) for purposes of Section 3808(e) of the Statutory Trust Statute. The Certificate Paying Agent, upon surrender of the outstanding Certificates shall distribute the remaining Trust Estate (if any) in accordance with Article V hereof and, at the written direction and expense of the Administrator, the Owner Trustee shall cause the Certificate of Trust to be cancelled by filing a certificate of cancellation
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with the Delaware Secretary of State in accordance with the provisions of Section 3810 of the Statutory Trust Statute, at which time the Issuer shall terminate and this Agreement (other than Article VIII) shall be of no further force or effect.
SECTION 9.3. Limitations on Termination. Except as provided in Section 9.1, neither the Depositor nor any Certificateholders shall be entitled to revoke or terminate the Issuer.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL
OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for the Owner Trustee. The Owner Trustee shall at all times be a bank (i) authorized to exercise corporate trust powers, (ii) having a combined capital and surplus of at least $50,000,000 and (iii) subject to supervision or examination by Federal or state authorities. If such bank 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 10.2.
SECTION 10.2. Resignation or Removal of the 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 Depositor, the Administrator, the Servicer, the Indenture Trustee and each Certificateholder. Upon receiving such notice of resignation, the Depositor and the Administrator, acting jointly, shall promptly appoint a successor Owner Trustee which satisfies the eligibility requirements set forth in Section 10.1 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 thirty (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; provided, however, that such right to appoint or to petition for the appointment of any such successor shall in no event relieve the resigning Owner Trustee from any obligations otherwise imposed on it under the Transaction Documents until such successor has in fact assumed such appointment.
If at any time the Owner Trustee shall cease to be eligible in accordance with the provisions of Section 10.1 and shall fail to resign after written request therefor by the Depositor or 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 Depositor or the Administrator may remove the Owner Trustee. If the Depositor or the Administrator shall remove the Owner Trustee under the authority of the immediately preceding sentence, the Depositor and the Administrator, acting jointly, shall promptly appoint a successor
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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 10.3 and payment of all fees and expenses owed to the outgoing Owner Trustee. The Depositor shall provide (or shall cause to be provided) notice of such resignation or removal of the Owner Trustee to each of the Rating Agencies.
SECTION 10.3. Successor Owner Trustee. Any successor Owner Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the Depositor, the Administrator 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 the 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 Depositor 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 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to this Section, the Depositor shall mail (or shall cause to be mailed) notice of the successor of such Owner Trustee to the Certificateholders, Indenture Trustee, the Noteholders and each of the Rating Agencies. If the Depositor shall fail to mail (or cause to be mailed) such notice within ten (10) days after acceptance of appointment by the successor Owner Trustee, the successor Owner Trustee shall cause such notice to be mailed at the expense of the Depositor. Any successor Owner Trustee appointed pursuant to this Section 10.3 shall promptly file an amendment to the Certificate of Trust with the Secretary of State identifying the name and the principal place of business of such successor Owner Trustee in the State of Delaware.
SECTION 10.4. Merger or Consolidation of the Owner Trustee. Any Person into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Owner Trustee, shall, 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, be the successor of the Owner Trustee hereunder; provided that such Person shall be eligible pursuant to Section 10.1; and provided, further, that the Owner Trustee shall file an amendment to the Certificate of Trust of the Issuer, if required by applicable law, and mail notice of such merger or consolidation to the Depositor and the Administrator.
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SECTION 10.5. 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 may at the time be located, the Depositor 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 Owner Trustee to act as co-trustee, jointly with the Owner Trustee, or 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 Estate, or any part thereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Depositor and the Owner Trustee may consider necessary or desirable. If the Depositor shall not have joined in such appointment within fifteen (15) days after the receipt by it of a request to do so, the Owner Trustee 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 trustee pursuant to Section 10.1 and no notice of the appointment of any co-trustee or separate trustee shall be required pursuant to Section 10.3.
Each 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 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;
(ii) no trustee under this Agreement shall be personally liable by reason of any act or omission of any other trustee under this Agreement; and
(iii) the Depositor 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 copies thereof given to the Depositor and the Administrator.
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Any separate trustee or co-trustee may at any time appoint the Owner 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 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 trustee. The Owner Trustee shall have no obligation to determine whether a co-trustee or separate trustee is legally required in any jurisdiction in which any part of the Trust Estate may be located.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Amendments.
(a) Any term or provision of this Agreement may be amended by the Depositor and the Owner Trustee, at the direction of the Administrator, without the consent of the Indenture Trustee, any Noteholder, any Certificateholder, the Issuer or any other Person subject to the satisfaction of one of the following conditions:
(i) The Depositor delivers an Opinion of Counsel or an Officers Certificate to the Indenture Trustee to the effect that such amendment will not materially and adversely affect the interests of the Noteholders; or
(ii) The Rating Agency Condition is satisfied with respect to such amendment and the Depositor notifies the Indenture Trustee in writing that the Rating Agency Condition is satisfied with respect to such amendment.
(b) This Agreement may also be amended from time to time by the Depositor and the Owner Trustee, with the consent of the Holders of Notes evidencing not less than a majority of the Outstanding Note Balance of the Controlling Class, 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. It will not be necessary for the consent of Noteholders or Certificateholders to approve the particular form of any proposed amendment or consent, but it will be sufficient if such consent approves the substance thereof. The manner of obtaining such consents (and any other consents of Noteholders and Certificateholders provided for in this Agreement) and of evidencing the authorization of the execution thereof by Noteholders and Certificateholders will be subject to such reasonable requirements as the Indenture Trustee and Owner Trustee may prescribe, including the establishment of record dates pursuant to the Depository Agreement.
(c) Prior to the execution of any amendment pursuant to this Section 11.1, the Depositor shall provide written notification of the substance of such amendment to each
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Rating Agency and the Owner Trustee; and promptly after the execution of any such amendment, the Depositor shall furnish a copy of such amendment to each Rating Agency, the Owner Trustee, the Issuer and the Indenture Trustee; provided, that no amendment pursuant to this Section 11.1 shall be effective which materially and adversely affects the rights, protections or duties of the Indenture Trustee without the prior written consent of such Person.
(d) Prior to the execution of any amendment to this Agreement, the Owner Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and an Officers Certificate from the Depositor or the Administrator stating that all conditions precedent to the execution and delivery of such amendment have been satisfied. The Owner Trustee may, but shall not be obligated to, enter into any such amendment which materially and adversely affects the Owner Trustees own rights, duties or immunities under this Agreement.
(e) Notwithstanding subsections (a) and (b) of this Section 11.1, this Agreement may only be amended by the Depositor and the Owner Trustee at the direction of the Administrator if (i) the Majority Certificateholders [or, if 100% of the aggregate Percentage Interests is then beneficially owned by the Bank and/or its Affiliates, such Person (or Persons)], consent to such amendment or (ii) such amendment shall not, as evidenced by an Officers Certificate of the Depositor or an Opinion of Counsel delivered to the Owner Trustee, materially and adversely affect the interests of the Certificateholders. In determining whether 100% of the aggregate Percentage Interests is then beneficially owned by the Bank and/or its Affiliates for purposes of clause (i), any party shall be entitled to rely on an Officers Certificate or similar certification of the Bank or any Affiliate thereof to such effect.
(f) Notwithstanding anything herein to the contrary, for purposes of classifying the Issuer as a grantor trust under the Code, no amendment shall be made to this Agreement that would (i) result in a variation of the investment of the beneficial owners of the Certificates for purposes of the United States Treasury Regulation section 301.7701-4(c) without the consent of Noteholders evidencing at least a majority of the Outstanding Note Balance of the Controlling Class and the Majority Certificateholders or (ii) cause the Issuer (or any part thereof) to be classified as other than a grantor trust for United States federal income tax purposes without the consent of all of the Noteholders and all of the Certificateholders.
SECTION 11.2. No Legal Title to Trust Estate in Certificateholders. Neither the Depositor nor any Certificateholder shall have legal title to any part of the Trust Estate. Each Certificateholder shall be entitled to receive distributions with respect to its undivided Percentage 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 a Certificateholder to and in its 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.
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SECTION 11.3. Limitations on Rights of Others. The provisions of this Agreement are solely for the benefit of the Owner Trustee, the Depositor, the Administrator, the Certificateholders 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 11.4. Notices.
(a) Unless otherwise expressly specified or permitted by the terms hereof, all notices shall be in writing and shall be delivered or mailed by registered or certified first-class United States mail, postage prepaid, hand delivery, prepaid courier service, by facsimile or, if so provided on Schedule I to the Sale Agreement, by electronic transmission, and addressed in each case as specified on Schedule I to the Sale Agreement, or at such other address as shall be designated by any of the specified addressees in a written notice to the other parties hereto.
(b) Any notice required or permitted to be given to any Certificateholder shall be given by first-class mail, postage prepaid, at the address 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 11.5. 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 11.6. 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, regardless of whether delivered in physical or electronic form, but all such counterparts shall together constitute but one and the same instrument.
SECTION 11.7. Successors and Assigns. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Depositor, 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 11.8. No Petition.
(a) To the fullest extent permitted by applicable law, each of the Owner Trustee (in its individual capacity and as the Owner Trustee by entering into this Agreement), the Depositor, each Certificateholder, by accepting a Certificate, and the Indenture Trustee and each Noteholder or Note Owner by accepting the benefits of this Agreement, hereby covenants and agrees that prior to the date which is one year and one day after payment
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in full of all obligations of each Bankruptcy Remote Party in respect of all securities issued by the Bankruptcy Remote Parties (i) such party shall not authorize any Bankruptcy Remote Party to commence a voluntary winding-up or other voluntary case or other Proceeding seeking liquidation, reorganization or other relief with respect to such Bankruptcy Remote Party or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction or seeking the appointment of an administrator, a trustee, receiver, liquidator, custodian or other similar official with respect to such Bankruptcy Remote Party or any substantial part of its property or to consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other Proceeding commenced against such Bankruptcy Remote Party, or to make a general assignment for the benefit of, its creditors generally, any party hereto or any other creditor of such Bankruptcy Remote Party, and (ii) such party shall not commence, join or institute against, with any other Person, any Proceeding against such Bankruptcy Remote Party under any bankruptcy, reorganization, arrangement, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction. Without limiting the foregoing, in no event shall the Owner Trustee authorize, institute or join in any bankruptcy or similar Proceeding described in the preceding sentence other than in accordance with Section 4.3; provided, however, nothing in this Section shall prevent the Owner Trustee from (i) filing a proof of claim in any such Proceeding or (ii) from commencing against the Issuer or any of its property any legal action which is not a bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation Proceeding.
(b) The Depositors obligations under this Agreement are obligations solely of the Depositor and will not constitute a claim against the Depositor to the extent that the Depositor does not have funds sufficient to make payment of such obligations. In furtherance of and not in derogation of the foregoing, each of the Owner Trustee (in its individual capacity and as the Owner Trustee), by entering into or accepting this Agreement, each Certificateholder, by accepting a Certificate, and the Indenture Trustee and each Noteholder or Note Owner, by accepting the benefits of this Agreement, hereby acknowledges and agrees that such Person has no right, title or interest in or to the Other Assets of the Depositor. To the extent that, notwithstanding the agreements and provisions contained in the preceding sentence, each of the Owner Trustee, the Indenture Trustee, each Noteholder or Note Owner and each Certificateholder either (i) asserts an interest or claim to, or benefit from, Other Assets, or (ii) is deemed to have any such interest, claim to, or benefit in or from Other Assets, whether by operation of law, legal process, pursuant to applicable provisions of insolvency laws or otherwise (including by virtue of Section 1111(b) of the Bankruptcy Code or any successor provision having similar effect under the Bankruptcy Code), then such Person further acknowledges and agrees that any such interest, claim or benefit in or from Other Assets is and will be expressly subordinated to the indefeasible payment in full of the other obligations and liabilities, which, under the terms of the relevant documents relating to the securitization or conveyance of such Other Assets, are entitled to be paid from, entitled to the benefits of, or otherwise secured by such Other Assets (whether or not any such entitlement or security interest is legally perfected or otherwise entitled to a priority of distributions or application under applicable law, including insolvency laws, and whether or not asserted against the Depositor), including the payment of post-petition interest on such other
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obligations and liabilities. This subordination agreement will be deemed a subordination agreement within the meaning of Section 510(a) of the Bankruptcy Code. Each of the Owner Trustee (in its individual capacity and as the Owner Trustee), by entering into or accepting this Agreement, each Certificateholder, by accepting a Certificate, and the Indenture Trustee and each Noteholder or Note Owner, by accepting the benefits of this Agreement, hereby further acknowledges and agrees that no adequate remedy at law exists for a breach of this Section and the terms of this Section may be enforced by an action for specific performance. The provisions of this Section will be for the third party benefit of those entitled to rely thereon and will survive the termination of this Agreement.
SECTION 11.9. Information Request. The Owner Trustee shall provide any information regarding the Issuer in its possession reasonably requested by the Servicer, the Administrator, the Depositor or any of their Affiliates, in order to comply with or obtain more favorable treatment under any current or future law, rule, regulation, accounting rule or principle.
SECTION 11.10. 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 11.11. 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 11.12. Waiver of Jury Trial. To the extent permitted by applicable law, each party hereto irrevocably waives all right of trial by jury in any Proceeding or counterclaim based on, or arising out of, under or in connection with this Agreement, any other Transaction Document, or any matter arising hereunder or thereunder.
SECTION 11.13. Information to Be Provided by the Owner Trustee. The Owner Trustee shall provide the Depositor, the Bank and the Servicer (each, a Transaction Party and, collectively, the Transaction Parties) with (i) notification, as soon as practicable and in any event within ten (10) Business Days, of all demands communicated to a Responsible Officer of the Owner Trustee for the purchase, repurchase or replacement of any Receivable pursuant to Section 3.4 of the Purchase Agreement, and (ii) promptly upon reasonable request in writing by a Transaction Party, any other information in the Owner Trustees possession reasonably requested by a Transaction Party to facilitate compliance by the Transaction Parties with Rule 15Ga-1 under the Exchange Act. In no event shall the Owner Trustee be deemed to be a securitizer as defined in Section 15G(a) of the Exchange Act with respect to the transactions contemplated by the Transaction Documents, nor shall it have any responsibility for making any filing to be made by a securitizer under the Exchange Act with respect to the transactions contemplated by the Transaction Documents. Such notification to be substantially in the form of Exhibit C hereto.
SECTION 11.14. Form 10-D Filings, Item 1117 and Item 1119 of Regulation AB. So long as the Depositor is filing Exchange Act Reports with respect to the Issuer and until the
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Depositor notifies the Owner Trustee that such action is no longer required on or before the 15th of each calendar month for so long as the Depositor is filing Exchange Act Reports with respect to the Issuer, commencing on [_________ 15], 20[ ], the Owner Trustee shall deliver to the Depositor (but only upon receipt of written direction from the Depositor to do so) the certification substantially in the form attached hereto as Exhibit E or such form as mutually agreed upon by the Depositor and the Owner Trustee regarding any affiliations or relationships (as contemplated in Item 1119 of Regulation AB) between the Owner Trustee and any Item 1119 Party and any Form 10-D Disclosure Item.
SECTION 11.15. Form 8-K Filings. So long as the Depositor is filing Exchange Act Reports with respect to the Issuer and until the Depositor notifies the Owner Trustee that such action is no longer required, the Owner Trustee shall promptly notify the Depositor, but in no event later than four (4) Business Days after its occurrence, of any Reportable Event described in clause (e) of the definition thereof with respect to the Owner Trustee of which a Responsible Officer of the Owner Trustee has actual knowledge (other than a Reportable Event described in clause (e) of the definition thereof as to which the Depositor or the Servicer has actual knowledge). The Owner Trustee shall be deemed to have actual knowledge of any such event to the extent that it relates to the Owner Trustee in its individual capacity or any action by the Owner Trustee under this Agreement.
SECTION 11.16. [Limitation of Rights. All of the rights of the Swap Counterparty in, to and under this Agreement (including, but not limited to, all of the Swap Counterpartys rights to receive notice of any action hereunder and to give or withhold consent to any action hereunder) shall terminate upon the termination of the Interest Rate Swap Agreement in accordance with the terms thereof and the payment in full of all amounts owing to the Swap Counterparty.]
[Remainder of Page Intentionally Left Blank]
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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.
[____________], as Owner Trustee | ||
By: |
| |
Name: | ||
Title: |
S-1 | Amended and Restated Trust Agreement |
CAPITAL ONE AUTO RECEIVABLES, LLC | ||
By: |
| |
Name: | ||
Title: |
S-2 | Amended and Restated Trust Agreement |
Acknowledged and Agreed:
[____________], as Certificate Registrar and Certificate Paying Agent | ||
By: |
| |
Name: | ||
Title: |
S-3 | Amended and Restated Trust Agreement |
EXHIBIT A
FORM OF CERTIFICATE
NUMBER | Principal Amount of this Certificate: $[___________] | |
R-______ | Aggregate Amount of all Certificates: $100,000 (which shall be | |
deemed to be the equivalent of 100,000 units) | ||
Percentage Interest of this Certificate: [__]% | ||
CUSIP NO. ____________ | ||
ISIN ____________ |
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_]
CERTIFICATE
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
(This Certificate does not represent an interest in or obligation of Capital One Auto Receivables, LLC, Capital One, National Association or any of their respective Affiliates, except to the extent described below.)
THIS CERTIFICATE IS NOT NEGOTIABLE.
THIS CERTIFICATE OR ANY INTEREST HEREIN HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND THE ISSUER HAS NOT BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE INVESTMENT COMPANY ACT). THIS CERTIFICATE OR ANY INTEREST HEREIN MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT (A) (1) TO A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (A QUALIFIED INSTITUTIONAL BUYER) WHO IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (2) TO THE DEPOSITOR OR ANY OF ITS AFFILIATES AND BY THE DEPOSITOR OR ANY OF ITS AFFILIATES AS PART OF THE
A-1 | Amended and Restated Trust Agreement |
INITIAL DISTRIBUTION OR ANY REDISTRIBUTION OF THE CERTIFICATES BY THE DEPOSITOR OR ANY OF ITS AFFILIATES AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. EACH PURCHASER WILL BE DEEMED TO HAVE MADE CERTAIN REPRESENTATIONS AND AGREEMENTS SET FORTH IN THE TRUST AGREEMENT. ANY TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE OWNER TRUSTEE, OR ANY INTERMEDIARY. IF AT ANY TIME, THE ISSUER DETERMINES OR IS NOTIFIED THAT THE HOLDER OF SUCH CERTIFICATE OR PERCENTAGE INTEREST IN SUCH CERTIFICATE WAS IN BREACH, AT THE TIME GIVEN, OF ANY OF THE REPRESENTATIONS SET FORTH IN THE TRUST AGREEMENT, THE ISSUER AND THE OWNER TRUSTEE MAY CONSIDER THE ACQUISITION OF THIS CERTIFICATE OR SUCH INTEREST IN SUCH CERTIFICATE VOID AND REQUIRE THAT THIS CERTIFICATE OR SUCH INTEREST HEREIN BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER.
BY ACQUIRING THIS CERTIFICATE, EACH PURCHASER AND TRANSFEREE, AND ANY FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE, WILL BE DEEMED TO REPRESENT AND WARRANT THAT IT IS NOT ACQUIRING THIS CERTIFICATE (OR ANY INTEREST HEREIN) ON BEHALF OF OR WITH ANY ASSETS OF (I) AN EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (ERISA), WHICH IS SUBJECT TO TITLE I OF ERISA, (II) A PLAN AS DESCRIBED BY SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE CODE), WHICH IS SUBJECT TO SECTION 4975 OF THE CODE, (III) ANY ENTITY DEEMED TO HOLD THE PLAN ASSETS OF ANY OF THE FOREGOING BY REASON OF SUCH EMPLOYEE BENEFIT PLANS OR PLANS INVESTMENT IN THE ENTITY, OR (IV) ANY GOVERNMENTAL, CHURCH, NON-U.S. OR OTHER PLAN OR ARRANGEMENT THAT IS SUBJECT TO ANY FEDERAL, STATE, LOCAL OR OTHER LAW THAT IS SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE.
THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF $[2,000] AND INTEGRAL MULTIPLES OF $1 IN EXCESS THEREOF. NO DISTRIBUTIONS OF MONEYS TO THE CERTIFICATEHOLDERS UNDER THE TRANSACTION DOCUMENTS SHALL BE DEEMED TO REDUCE THE NOMINAL PRINCIPAL AMOUNT OF ANY CERTIFICATE PRIOR TO PAYMENT IN FULL OF ALL OUTSTANDING NOTES; PROVIDED, THAT THE FINAL AGGREGATE $100,000 DISTRIBUTED TO THE CERTIFICATEHOLDERS UNDER THE TRANSACTION DOCUMENTS UPON FINAL DISTRIBUTION OF THE TRUST ESTATE AND TERMINATION OF THE ISSUER SHALL BE DEEMED TO REPAY THE AGGREGATE NOMINAL PRINCIPAL AMOUNT OF THE CERTIFICATES IN FULL; PROVIDED, FURTHER, THAT ANY FAILURE TO PAY IN FULL THE OUTSTANDING PRINCIPAL BALANCE OF A CERTIFICATE ON SUCH FINAL DISTRIBUTION DATE SHALL NOT RESULT IN ANY RECOURSE TO, CLAIM AGAINST OR LIABILITY OF ANY PERSON FOR SUCH SHORTFALL.
A-2 | Amended and Restated Trust Agreement |
THIS CERTIFIES THAT _______________________________ is the registered owner of a ___% nonassessable, fully-paid, Percentage Interest in CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_], a Delaware statutory trust (the Issuer) formed by CAPITAL ONE AUTO RECEIVABLES, LLC, a Delaware limited liability company, as depositor (the Depositor).
The Issuer was created pursuant to a Trust Agreement dated as of [___________], 20[__] (as amended and restated as of [___________], 20[__], the Trust Agreement), between the Depositor, and [____________], as owner trustee (the Owner Trustee), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in Appendix A to the Sale Agreement, dated as of [___________], 20[__], between the Depositor and the Issuer, as the same may be amended or supplemented from time to time.
This Certificate is issued under and is subject to the terms, provisions and conditions of the Trust Agreement, to which Trust Agreement the Holder of this Certificate by virtue of the acceptance hereof assents and by which such Holder is bound. The provisions and conditions of the Trust Agreement are hereby incorporated by reference as though set forth in their entirety herein.
The Holder of this Certificate acknowledges and agrees that its rights to receive distributions in respect of this Certificate are subordinated to the rights of the Noteholders as described in the Indenture and the Trust Agreement, as applicable.
THIS CERTIFICATE 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.
By accepting this Certificate, the Certificateholder hereby covenants and agrees that prior to the date which is one year and one day after payment in full of all obligations of each Bankruptcy Remote Party in respect of all securities issued by the Bankruptcy Remote Parties such Person shall not commence, join or institute against, with any other Person, any proceeding against such Bankruptcy Remote Party under any bankruptcy, reorganization, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction.
By accepting and holding this Certificate (or any interest herein), the holder hereof, and any fiduciary acting on behalf of a holder, shall be deemed to have represented and warranted that it is not acquiring this Certificate (or any interest herein) on behalf of or with any assets of, (i) an employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), which is subject to Title I of ERISA, (ii) a plan as described by Section 4975(e)(1) of the U.S. Internal Revenue Code of 1986, as amended (the Code), which is subject to Section 4975 of the Code, (iii) any entity deemed to hold the plan
A-3 | Amended and Restated Trust Agreement |
assets of any of the foregoing by reason of such employee benefit plans or plans investment in the entity or (iv) any governmental, church, non-U.S. or other plan or arrangement that is subject to any federal, state, local or other law that is substantially similar to Title I of ERISA or Section 4975 of the Code.
It is the intention of the parties to the Trust Agreement that, for purposes of United States federal, state and local income and franchise tax purposes, the Issuer will be treated as a grantor trust under subtitle A, chapter 1, subchapter J, part I, subpart E of the Code. By accepting this Certificate, the Certificateholder consents to and agrees to take no action inconsistent with, the foregoing intended tax treatment.
By accepting this Certificate, the Certificateholder acknowledges that this Certificate represents a Percentage Interest only and does not represent interests in or obligations of the Depositor, the Servicer, the Administrator, the Owner Trustee, the Indenture Trustee or any of their respective Affiliates and no recourse may be had against such parties or their assets, except as expressly set forth or contemplated in this Certificate, the Trust Agreement or any other Transaction Document.
Each Certificateholder, by acceptance of this Certificate, acknowledges and agrees that the purpose of Article XII of the Indenture is to facilitate compliance with the FDIC Rule by the Bank, the Depositor, the Servicer and the Issuer (collectively, the Capital One Parties) and that the interpretations of the requirements of the FDIC Rule may change over time, whether due to interpretive guidance provided by the FDIC or its staff, consensus amount participants in the asset-backed securities markets, advice of counsel, or otherwise, and agrees that the provisions set forth in Article XII of the Indenture shall have the effect and meanings that are appropriate under the FDIC Rule as such effect and meanings change over time on the basis of evolving interpretations of the FDIC Rule.
A-4 | Amended and Restated Trust Agreement |
IN WITNESS WHEREOF, the Issuer has caused this Certificate to be duly executed.
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_] | ||||||||
By: | [____________], not in its individual capacity, but solely as Owner Trustee | |||||||
Dated: |
|
By: |
|
A-5 | Amended and Restated Trust Agreement |
CERTIFICATE REGISTRARS CERTIFICATE OF AUTHENTICATION
This is the Certificate referred to in the within-mentioned Trust Agreement.
[____________], not in its individual capacity but solely as Certificate Registrar | ||
By: |
| |
Authenticating Agent | ||
By: |
| |
Authorized Signatory |
A-6 | Amended and Restated Trust Agreement |
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
[__________________]
(Please print or type name and address, including postal zip code, of assignee)
the within Certificate, (Asset Backed Certificate No. R-[__] issued by CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_]), and all rights thereunder, hereby irrevocably constituting and appointing
Attorney to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises
Dated: ___________________, 20[__] | ||||||||
[ ] | ||||||||
By: |
| |||||||
Name: | ||||||||
Title: |
A-7 | Amended and Restated Trust Agreement |
EXHIBIT B
FORM OF CERTIFICATE INVESTOR REPRESENTATION LETTER
[ ], 20__
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_]
[Address]
[____________],
[Address]
[Transferor]
[Address]
Attention: CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_]
Re: Transfer of CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_] Certificates, (the Certificates)
Ladies and Gentlemen:
a. | This letter is delivered pursuant to Section 3.7 of the Amended and Restated Trust Agreement, dated as of [___________], 20[__] (the Trust Agreement), between CAPITAL ONE AUTO RECEIVABLES, LLC, as Depositor (the Depositor), and [____________], as Owner Trustee (the Owner Trustee), in connection with the transfer by _________________________ (the Transferor) to the undersigned (the Transferee) of [__]% Percentage Interest of the Certificates with a nominal principal amount of $[ ]1. Capitalized terms used and not otherwise defined herein have the meanings assigned to such terms in the Trust Agreement. |
In connection with such transfer, the undersigned hereby represents and warrants to you and the addressees hereof as follows:
(i) The Transferee is either (a) an Affiliate of the Depositor or (b) (1) is a Qualified Institutional Buyer, (2) is aware that the sale of the Certificates (other than a sale of the Certificates by the Depositor or any of its Affiliates as part of the initial distribution or any redistribution of the Certificates by the Depositor or any of its Affiliates) to it is being made in reliance on the exemption from registration provided by Rule 144A, and (3) is acquiring the Certificates for its own account or for one or more accounts, each of which is a Qualified Institutional Buyer, and as to each of which the owner exercises sole investment discretion;
1 | In minimum denominations of $[] and integral multiples of $1 in excess thereof. |
B-1 | Amended and Restated Trust Agreement |
(ii) The Transferee understands that the Certificates will bear a legend to the following effect:
THIS CERTIFICATE OR ANY INTEREST HEREIN HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND THE ISSUER HAS NOT BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE INVESTMENT COMPANY ACT). THIS CERTIFICATE OR ANY INTEREST HEREIN MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT (A) (1) TO A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (A QUALIFIED INSTITUTIONAL BUYER) WHO IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (2) TO THE DEPOSITOR OR ANY OF ITS AFFILIATES AND BY THE DEPOSITOR OR ANY OF ITS AFFILIATES AS PART OF THE INITIAL DISTRIBUTION OR ANY REDISTRIBUTION OF THE CERTIFICATES BY THE DEPOSITOR OR ANY OF ITS AFFILIATES AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. EACH PURCHASER WILL BE DEEMED TO HAVE MADE CERTAIN REPRESENTATIONS AND AGREEMENTS SET FORTH IN THE TRUST AGREEMENT. ANY TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE OWNER TRUSTEE, OR ANY INTERMEDIARY. IF AT ANY TIME, THE ISSUER DETERMINES OR IS NOTIFIED THAT THE HOLDER OF SUCH CERTIFICATE OR PERCENTAGE INTEREST IN SUCH CERTIFICATE WAS IN BREACH, AT THE TIME GIVEN, OF ANY OF THE REPRESENTATIONS SET FORTH IN THE TRUST AGREEMENT, THE ISSUER AND THE OWNER TRUSTEE MAY CONSIDER THE ACQUISITION OF THIS CERTIFICATE OR SUCH INTEREST IN SUCH CERTIFICATE VOID AND REQUIRE THAT THIS CERTIFICATE OR SUCH INTEREST HEREIN BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER.
BY ACQUIRING THIS CERTIFICATE, EACH PURCHASER AND TRANSFEREE, AND ANY FIDUCIARY ACTING ON BEHALF OF A PURCHASER OR TRANSFEREE, WILL BE DEEMED TO REPRESENT
B-2 | Amended and Restated Trust Agreement |
AND WARRANT THAT IT IS NOT ACQUIRING THIS CERTIFICATE (OR ANY INTEREST HEREIN) ON BEHALF OF OR WITH ANY ASSETS OF (I) AN EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (ERISA), WHICH IS SUBJECT TO TITLE I OF ERISA, (II) A PLAN AS DESCRIBED BY SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE CODE), WHICH IS SUBJECT TO SECTION 4975 OF THE CODE, (III) ANY ENTITY DEEMED TO HOLD THE PLAN ASSETS OF ANY OF THE FOREGOING BY REASON OF SUCH EMPLOYEE BENEFIT PLANS OR PLANS INVESTMENT IN THE ENTITY, OR (IV) ANY GOVERNMENTAL, CHURCH, NON-U.S. OR OTHER PLAN OR ARRANGEMENT THAT IS SUBJECT TO ANY FEDERAL, STATE, LOCAL OR OTHER LAW THAT IS SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE.
(iii) The Transferee understands that the Certificates are being offered only in a transaction not involving any public offering in the United States within the meaning of the Securities Act, none of the Certificates have been or will be registered under the Securities Act, and, if in the future the Transferee decides to offer, resell, pledge or otherwise transfer the Certificates, such Certificates may only be offered, resold, pledged or otherwise transferred in accordance with the Trust Agreement. The Transferee acknowledges that no representation is being made by the Issuer as to the availability of any exemption under the Securities Act or any applicable State securities laws for resale of the Certificates;
(iv) The Transferee understands that an investment in the Certificates involves certain risks, including the risk of loss of all or a substantial part of its investment under certain circumstances. The Transferee has had access to such financial and other information concerning the Issuer and the Certificates as it deemed necessary or appropriate in order to make an informed investment decision with respect to its purchase of the Certificates. The Transferee has such knowledge and experience in financial and business matters that the Transferee is capable of evaluating the merits and risks of its investment in the Certificates, and the transferee and any accounts for which it is acting are each able to bear the economic risk of its investment;
(v) The Transferee will not make any general solicitation by means of general advertising or in any other manner, or take any other action that would constitute a distribution of the Certificates under the Securities Act or that would render the disposition of the Certificates a violation of Section 5 of the Securities Act or any other applicable securities laws or require registration pursuant thereto, and will not authorize any Person to act on its behalf, in such manner with respect to the Certificates;
(vi) The Transferee is not acquiring the Certificates with a view to the resale, distribution or other disposition thereof in violation of the Securities Act;
B-3 | Amended and Restated Trust Agreement |
(vii) The transferee will provide notice to each Person to whom it proposes to transfer any interest in the Certificates of the transfer restrictions and representations set forth in the Trust Agreement, including the Exhibits thereto;
(viii) The Transferee agrees that it will not offer or sell, or otherwise transfer the Certificates to any person unless the transferee of the Certificates has executed a Certificate Investor Representation Letter;
(ix) The Transferee is not acquiring the Certificates (or any interest therein) with the assets of (a) an employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), which is subject to Title I of ERISA, (b) a plan as described by Section 4975(e)(1) of the U.S. Internal Revenue Code of 1986, as amended (the Code), which is subject to Section 4975 of the Code, (c) any entity deemed to hold the plan assets of any of the foregoing by reason of such employee benefit plans or plans investment in the entity or (d) any governmental, church, non-U.S. or other plan or arrangement that is subject to any federal, state, local or other law that is substantially similar to Title I of ERISA or Section 4975 of the Code;
(x) The Transferee acknowledges that the Issuer, the Owner Trustee, the Depositor and others will rely upon the truth and accuracy of the acknowledgements, representations, warranties and agreements herein and in the Trust Agreement and agrees that if any of the acknowledgements, representations, warranties or agreements made by it in connection with its purchase of any Certificates are no longer accurate, the Transferee will promptly notify the Issuer, the Owner Trustee and the Depositor;
(xi) The Transferee understands that if Responsible Officer of the Owner Trustee becomes aware that (a) a transfer or attempted or purported transfer of any Certificate or interest therein was consummated in compliance with the provisions of the Trust Agreement on the basis of a materially incorrect certification from the Transferor or purported transferee, (b) a transferee failed to deliver to the Owner Trustee a Certificate Investor Representation Letter or (c) the Certificateholder of any Certificate or interest therein is in material breach of any representation or agreement set forth in any certificate or any deemed representation or agreement of such Certificateholder, the Owner Trustee will direct the Certificate Registrar not to register such attempted or purported transfer and, if a transfer has been registered, such transfer shall be absolutely null and void ab initio and shall not operate to transfer any rights to the purported transferee (such purported transferee, a Disqualified Transferee) and the last preceding Certificateholder of such Certificateholder that was not a Disqualified Transferee shall be restored to all rights as a Certificateholder thereof retroactively to the date of the purported transfer of such Certificate by such Certificateholder;
B-4 | Amended and Restated Trust Agreement |
(xii) The Transferee acknowledges and agrees that it has complied with the following representations, to the extent applicable:
a. Each registered owner of and, if different, each owner of a beneficial interest in, a Certificate that is a U.S. Tax Person shall deliver to the Owner Trustee, the Administrator and the Certificate Paying Agent two properly completed and duly executed originals of U.S. Internal Revenue Service Form W-9 (or applicable successor form) certifying that it is not subject to backup withholding and that it is a U.S. Tax Person. Each registered owner of and, if different, each owner of a beneficial interest in, a Certificate that is not a U.S. Tax Person shall deliver to the Owner Trustee, the Administrator and the Certificate Paying Agent two properly completed and duly executed originals of U.S. Internal Revenue Service Form W-8BEN (Certification of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)), U.S. Internal Revenue Service Form W-8BEN-E (Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)), U.S. Internal Revenue Service Form W-8IMY (Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting) or U.S. Internal Revenue Service Form W-8ECI (Certificate of Foreign Persons Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States), or any applicable successors to such U.S. Internal Revenue Service forms or other reasonable information or certification requested by the Owner Trustee, the Administrator or the Certificate Paying Agent (i) to permit the Owner Trustee, the Administrator and the Certificate Paying Agent to make payments to the registered owner of, and if different, each owner of a beneficial interest in, a Certificate without withholding or deduction (including any FATCA Withholding Tax), (ii) to enable the Issuer to qualify for a reduced rate of withholding in any jurisdiction from or through which the Issuer receives payments on its assets, or (iii) to enable the Owner Trustee, the Administrator and the Certificate Paying Agent to satisfy any reporting or other obligations under any applicable tax law (including FATCA), and will update or replace such form, certification or other information as necessary in accordance with its terms or its subsequent amendments. The applicable U.S. Internal Revenue Service forms required to be delivered, as described above, shall be delivered on or prior to the date on which a registered owner of, and, if different, each owner of a beneficial interest in, a Certificate becomes a holder of a Certificate and from time to time thereafter as prescribed by applicable law or upon the request of the Certificate Paying Agent.
b. Each registered owner of, and, if different, each owner of a beneficial interest in, a Certificate represents to the Issuer and Owner Trustee by acceptance of a Certificate or interest therein that it is not and will not become subject to any FATCA Withholding. In the case of a
B-5 | Amended and Restated Trust Agreement |
Certificateholder that is not a U.S. Tax Person and provides an U.S. Internal Revenue Service Form W-8BEN or U.S. Internal Revenue Service Form W-8BEN-E under Section 3.7(c) in order to claim the benefits of the exemption for portfolio interest under Sections 871 or 881 of the Code (instead of, for example, claiming the benefits of an income tax treaty to which the United States is a party), such Certificateholder (or in the case of a Certificateholder providing U.S. Internal Revenue Service Form W-8IMY, the beneficial owner of the Certificate) hereby represents that it is not (i) a bank within the meaning of Code section 881(c)(3), (ii) a 10 percent shareholder of an obligor on a Receivable within the meaning of Code section 871(h) or 881(c)(3) (as the case may be) or (iii) a controlled foreign corporation with respect to such an obligor described in Code section 881(c)(3).
c. Each registered owner of, and, if different, each owner of a beneficial interest in, a Certificate represents to the Issuer and Owner Trustee by acceptance of this Certificate or interest therein that it is not and will not become subject to any FATCA Withholding Tax.
d. Each purchaser, beneficial owner and subsequent transferee of Certificates or an interest therein will be required or deemed to acknowledge that the Issuer may provide such information and any other information concerning its investment in the Certificates to the U.S. Internal Revenue Service. In addition, each purchaser, beneficial owner and subsequent transferee of Certificates or an interest therein will be required or deemed to understand and acknowledge that the Issuer has the right, hereunder, to withhold on any beneficial owner of an interest in a Certificate that fails to comply with the foregoing requirements.
(xiii) The Transferee acknowledges that in connection with the transfer of the Certificates (a) none of the Issuer, the Servicer, the Depositor nor the Owner Trustee is acting as a fiduciary or financial or investment adviser for the transferee, (b) the transferee is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel or representations (whether written or oral) of the Issuer, the Servicer, the Depositor or the Owner Trustee other than in the most current private placement memorandum for such Certificates and any representations expressly set forth in a written agreement with such party, (c) none of the Issuer, the Servicer, the Depositor or the Owner Trustee has given to the transferee (directly or indirectly through any other person) any assurance, guarantee or representation whatsoever as to the expected or projected success, profitability, return, performance, result, effect, consequence or benefit (including legal, regulatory, tax, financial, accounting or otherwise) of its purchase or the documentation for the Certificates, (d) the transferee has consulted with its own legal, regulatory, tax, business, investment, financial, and accounting advisers to the extent it has deemed necessary, and it has made its own investment decisions (including decisions regarding the suitability of any transaction pursuant to the Trust Agreement) based upon its own judgment and
B-6 | Amended and Restated Trust Agreement |
upon any advice from such advisers as it has deemed necessary and not upon any view expressed by the Issuer, the Servicer, the Depositor or the Owner Trustee, (e) the transferee has determined that the rates, prices or amounts and other terms of the purchase and sale of the Certificates reflect those in the relevant market for similar transactions, (f) the transferee is purchasing the Certificates with a full understanding of all of the terms, conditions and risks thereof (economic and otherwise), and is capable of assuming and willing to assume (financially and otherwise) these risks, and (g) the transferee is a sophisticated investor familiar with transactions similar to its investment in the Certificates.
(xiv) No transfers shall be permitted if such transfer is effected through an established securities market or secondary market (or the substantial equivalent thereof) within the meaning of the Code Section 7704 and any proposed, temporary or final Treasury regulations thereunder.
B-7 | Amended and Restated Trust Agreement |
Any photocopy, facsimile or other copy of this letter shall be deemed of equal effect as a signed original.
Executed by | ||
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Name of Transferee | ||
By: |
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Name: | ||
Title: |
Transferees Address: |
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Telephone: |
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Facsimile: |
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B-8 | Amended and Restated Trust Agreement |
EXHIBIT C
FORM OF NOTICE OF REQUESTS TO REPURCHASE RECEIVABLES
[________], 20[ ]
[Depositor]
[Servicer]
Re:CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[_]-[_] Notice of Requests to Repurchase Receivables
Reference is hereby made to the Amended and Restated Trust Agreement, dated as of [___________], 20[__] (the Trust Agreement), between CAPITAL ONE AUTO RECEIVABLES, LLC, as depositor (the Depositor), and [____________], as owner trustee (the Owner Trustee). Capitalized terms used herein and not otherwise defined shall have the meanings assigned such terms in the Trust Agreement. This Notice is being delivered pursuant to Section 11.13 of the Trust Agreement.
The Owner Trustee hereby certifies as to the checked option below:
[ ] During the period from and including [_________] to but excluding [________], the Owner Trustee received no requests from the holders of any of the Notes or Certificates outstanding during that period requesting that any Receivables be purchased, repurchased or replaced with respect to such Notes or Certificates.
[ ] During the period from and including [___________] to but excluding [_________], the Owner Trustee received one or more requests from the holders of any of the Notes or Certificates outstanding during that period requesting that any Receivables be purchased, repurchased or replaced with respect to such Notes or Certificates. Copies of such requests received in writing are attached hereto, and details of any such requests received orally are as set forth below:
Date of Request
Number of Receivables
Aggregate Principal Balance of Receivables Subject to Request
[REMINDER OF PAGE INTENTIONALLY LEFT BLANK]
C-1 | Amended and Restated Trust Agreement |
[ ], not in its individual capacity but solely as Owner Trustee | ||
By: |
| |
Name: | ||
Title: |
C-2 | Amended and Restated Trust Agreement |
EXHIBIT D
FORM OF REGISTRATION OF DEFINITIVE CERTIFICATE TRANSFER DIRECTION
LETTER PURSUANT TO THE TRUST AGREEMENT
[ ], 20[ ]
[ ],
[Address]
Reference is hereby made to the Amended and Restated Trust Agreement, dated as of [ ], 20[ ] (the Trust Agreement), between CAPITAL ONE AUTO RECEIVABLES, LLC, as Depositor (the Depositor), [ ], and as Owner Trustee (the Owner Trustee), governing CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ] (the Issuer). Capitalized terms not defined herein shall have the meanings assigned to such terms in the Trust Agreement.
You are hereby notified that [name of Transferor] (the Transferor) has transferred its [ ]% beneficial interest in the Issuer evidenced by Certificate No. . Enclosed, please find the following documentation as required by the Trust Agreement:
1. | Original Certificate No. R-[ ] for cancellation; |
2. | Written instrument of transfer executed by Transferor with signature medallion guaranteed;2 |
3. | Incumbency certificate of Transferor certified by an officer of the Transferor; |
4. | Certificate Investor Representation Letter executed by Transferee; |
5. | [FormW-9][Form W-8BEN][Form W-8BEN-E][Form W-8ECI][Form W-8IMY][applicable successor form] of Transferee. |
You are hereby directed, as Owner Trustee and Certificate Registrar, to take the following actions to register the certificate transfer in the order enumerated below:
(a) | cancel and dispose of, in accordance with the customary practices of the Owner Trustee, the Certificate representing [ ] Percentage Interest in the Issuer, bearing certificate number R- , registered in the name of the Transferor; |
(b) | execute and authenticate one or more Certificates, as specified in Schedule A hereto, representing the relevant Percentage Interest in the Issuer specified in Schedule A hereto, bearing such appropriate certificate number as determined by the Certificate Registrar and to register said Certificate in the name of the Transferee specified in the corresponding column on Schedule A hereto; and |
(c) | to deliver said authenticated Certificates to the addresses specified in the corresponding column on Schedule A hereto. |
2 | [Please use form of Assignment attached to the back of the Form of Certificate on Exhibit A of the Trust Agreement.] |
D-1 | Amended and Restated Trust Agreement |
The wire instructions of each Certificateholder are set forth on Schedule A hereto.
The undersigned Transferee hereby certifies to the Owner Trustee that (i) the transfer requested hereby does not violate any of the transfer restrictions stated in the Trust Agreement, including but not limited to clauses (d) and (e) of Section 3.5 thereof.
[Signature Page Follows]
D-2 | Amended and Restated Trust Agreement |
[TRANSFEROR] | ||
By: |
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Name: |
||
Title: |
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[TRANSFEREE] | ||
By: |
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Name: |
||
Title: |
D-3 | Amended and Restated Trust Agreement |
SCHEDULE A
[To be updated]
Name of Transferee |
Tax ID Number of Transferee |
Principal Amount3 |
Percentage Interest3 |
Delivery |
Wire | |||||
3 | Aggregate Percentage Interest and Principal Amount of new Certificates must match the Percentage Interest and Principal Amount of the transferred Certificate being cancelled pursuant to (a) above. |
D-4 | Amended and Restated Trust Agreement |
EXHIBIT E
FORM OF OWNER TRUSTEES [MONTHLY][ANNUAL] CERTIFICATION
REGARDING ITEM 1117 AND ITEM 1119 OF REGULATION AB
Reference is made to the Form [10-D][10-K] of CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ] (the Form 10-K) for the [month ended [ ], 20[ ]][fiscal year ended December 31, 20[ ]]. Capitalized terms used but not otherwise defined herein shall have the respective meanings given to them in the Form [10-D][10-K].
[ ], a [ ] ([ ]), does hereby certify to the Sponsor, the Depositor and the Issuing Entity that:
1. As of the date of the Form [10-D][10-K], there are no pending legal Proceedings against [ ] or Proceedings known to be contemplated by governmental authorities against [ ] that would be material to the investors in the Notes.
2. As of the date of the Form [10-D][10-K], there are no affiliations, as contemplated by Item 1119 of Regulation AB, between [ ] and any of Capital One, National Association, Capital One Auto Receivables, LLC, [ ] (the Indenture Trustee) and the Issuing Entity, or any affiliates of such parties.
IN WITNESS WHEREOF, [ ] has caused this certificate to be executed in its corporate name by an officer thereunto duly authorized.
Dated: , 20[ ]
[ ] | ||
By: |
| |
Name: | ||
Title: |
E-1
Exhibit 10.7
FORM OF
ASSET REPRESENTATIONS REVIEW AGREEMENT
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ],
as Issuer,
CAPITAL ONE, NATIONAL ASSOCIATION,
as Sponsor and Servicer
and
[ ],
as Asset Representations Reviewer
Dated as of [ ], 20[ ]
TABLE OF CONTENTS
Page | ||||||
ARTICLE I DEFINITIONS | 1 | |||||
Section 1.1 |
Definitions | 1 | ||||
Section 1.2 |
Additional Definitions | 1 | ||||
ARTICLE II ENGAGEMENT; ACCEPTANCE | 3 | |||||
Section 2.1 |
Engagement; Acceptance | 3 | ||||
Section 2.2 |
Eligibility of Asset Representations Reviewer | 3 | ||||
Section 2.3 |
Independence of the Asset Representations Reviewer | 3 | ||||
ARTICLE III DUTIES OF THE ASSET REPRESENTATIONS REVIEWER | 3 | |||||
Section 3.1 |
Review Scope | 3 | ||||
Section 3.2 |
Review Notices | 3 | ||||
Section 3.3 |
Review Materials | 4 | ||||
Section 3.4 |
Missing or Incomplete Review Materials | 4 | ||||
Section 3.5 |
The Asset Review | 5 | ||||
Section 3.6 |
Review Period | 5 | ||||
Section 3.7 |
Review Report | 5 | ||||
Section 3.8 |
Resolution of Review for Certain Subject Receivables | 6 | ||||
Section 3.9 |
Termination of Review | 6 | ||||
Section 3.10 |
Review and Procedure Limitations | 6 | ||||
Section 3.11 |
Review Systems | 6 | ||||
Section 3.12 |
Representatives. | 7 | ||||
Section 3.13 |
Dispute Resolution | 7 | ||||
Section 3.14 |
Records Retention | 7 | ||||
Section 3.15 |
No Delegation | 7 | ||||
ARTICLE IV PAYMENTS TO ASSET REPRESENTATIONS REVIEW | 7 | |||||
Section 4.1 |
Annual Fee | 7 | ||||
Section 4.2 |
Review Fee | 8 | ||||
Section 4.3 |
Dispute Resolution; Travel Expenses | 8 | ||||
Section 4.4 |
Payment | 8 | ||||
Section 4.5 |
Payments by the Issuer | 9 | ||||
ARTICLE V OTHER MATTERS PERTAINING TO THE ASSET REPRESENTATIONS REVIEWER | 9 | |||||
Section 5.1 |
Representations and Warranties of the Asset Representations Reviewer | 9 | ||||
Section 5.2 |
Limitation of Liability of Asset Representations Reviewer | 10 | ||||
Section 5.3 |
Indemnification of Asset Representations Reviewer | 10 | ||||
Section 5.4 |
Indemnification by Asset Representations Reviewer | 11 | ||||
ARTICLE VI REMOVAL, RESIGNATION; SUCCESSOR ASSET REPRESENTATION REVIEWER | 12 | |||||
Section 6.1 |
Eligibility Requirements for Asset Representations Reviewer | 12 |
i |
TABLE OF CONTENTS
(continued)
Page | ||||||
Section 6.2 |
Resignation and Removal of Asset Representations Reviewer. |
|
12 |
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Section 6.3 |
Successor Asset Representations Reviewer. | 13 | ||||
Section 6.4 |
Merger, Consolidation or Succession | 14 | ||||
ARTICLE VII TREATMENT OF CONFIDENTIAL INFORMATION | 14 | |||||
Section 7.1 |
Confidential Information. | 14 | ||||
Section 7.2 |
Safeguarding Personally Identifiable Information. | 16 | ||||
ARTICLE VIII OTHER MATTERS PERTAINING TO THE ISSUER | 17 | |||||
Section 8.1 |
Termination of this Agreement | 17 | ||||
Section 8.2 |
Limitation of Liability | 17 | ||||
ARTICLE IX MISCELLANEOUS PROVISIONS | 18 | |||||
Section 9.1 |
Amendment | 18 | ||||
Section 9.2 |
Notices, Etc. | 19 | ||||
Section 9.3 |
Severability Clause | 19 | ||||
Section 9.4 |
Governing Law | 19 | ||||
Section 9.5 |
Headings | 20 | ||||
Section 9.6 |
Counterparts | 20 | ||||
Section 9.7 |
Waivers | 20 |
ii
TABLE OF CONTENTS
(continued)
Page | ||||||
Section 9.8 |
Entire Agreement |
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20 |
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Section 9.9 |
Severability of Provisions | 20 | ||||
Section 9.10 |
Binding Effect | 20 | ||||
Section 9.11 |
Cumulative Remedies | 20 | ||||
Section 9.12 |
Nonpetition Covenant | 20 | ||||
Section 9.13 |
Submission to Jurisdiction; Waiver of Jury Trial | 21 | ||||
Section 9.14 |
Third-Party Beneficiaries | 21 |
EXHIBITS
Exhibit A | Agreed-Upon Procedures |
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ASSET REPRESENTATIONS REVIEW AGREEMENT
This ASSET REPRESENTATIONS REVIEW AGREEMENT is made and entered into as of [________], 20[__] (this Agreement), by and between CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[__]-[_], a Delaware statutory trust (the Issuer), CAPITAL ONE, NATIONAL ASSOCIATION, a national banking association (the Bank, and in its capacity as sponsor, the Sponsor, and in its capacity as servicer, the Servicer), and [______________], a [_____________], ([______], and in its capacity as asset representations reviewer, the Asset Representations Reviewer).
WHEREAS, the Issuer has determined to engage the Asset Representations Reviewer to perform reviews of Receivables for compliance with the representations and warranties made by the Sponsor regarding such Receivables; and
WHEREAS, the Asset Representations Reviewer desires to accept such engagement;
NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Except as otherwise defined herein or as the context may otherwise require, capitalized terms used but not otherwise defined herein are defined in Appendix A to the Sale Agreement dated as of the date hereof (as from time to time amended, supplemented or otherwise modified and in effect, the Sale Agreement) between the Issuer and Capital One Auto Receivables, LLC, as seller, which also contains rules as to usage that are applicable herein.
Section 1.2 Additional Definitions. Whenever used in this Agreement, the following words and phrases shall have the following meanings:
Annual ARR Fee has the meaning set forth in Section 4.1.
Asset Review means the completion by the Asset Representations Reviewer of the Tests set forth in Exhibit A for each Subject Receivable as further described in Section 3.5.
Client Records has the meaning set forth in Section 3.14.
Confidential Information has the meaning set forth in Section 7.1.
Disclosing Party has the meaning set forth in Section 7.1.
Eligible Asset Representations Reviewer means a Person who (i) is not, and is not Affiliated with, the Sponsor, the Seller, the Servicer, the Indenture Trustee, the Owner Trustee or any of their respective Affiliates and (ii) was not engaged or Affiliated with a Person that was engaged by the Sponsor or any Underwriter to perform due diligence work on the Receivables prior to the Closing Date.
Eligibility Representations shall mean those representations identified within the Tests included in Exhibit A.
Indemnified Person has the meaning set forth in Section 5.3.
Personally Identifiable Information or PII has the meaning set forth in Section 7.2.
Privacy Laws has the meaning set forth in Section 7.2.
Receiving Party has the meaning set forth in Section 7.1.
Representatives has the meaning set forth in Section 7.1.
Review Fee has the meaning set forth in Section 4.2.
Review Invoice means, with respect to any Asset Review, a detailed invoice prepared by the Asset Representations Reviewer setting forth the calculation of the applicable Review Fee for such Asset Review.
Review Materials means, the documents, data, and other information required for each Test in Exhibit A.
Review Period has the meaning set forth in Section 3.6.
Review Report has the meaning set forth in Section 3.7.
Subject Receivables means, for any Asset Review, all Receivables which are 60-Day Delinquent Receivables as of the related Review Satisfaction Date; provided, that any Receivable repurchased by the Sponsor or the Servicer in accordance with the Transaction Documents or paid in full by the related Obligor after the [Review Satisfaction Date] will no longer be a Subject Receivable.
Tests mean the procedures listed in Exhibit A as applied to the process described in Section 3.5.
Test Fail has the meaning set forth in Section 3.5.
Test Incomplete has the meaning set forth in Section 3.5.
Test Otherwise Resolved has the meaning set forth in Section 3.8.
Test Pass has the meaning set forth in Section 3.5.
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ARTICLE II
ENGAGEMENT; ACCEPTANCE
Section 2.1 Engagement; Acceptance. The Issuer hereby engages [______________] to act as the Asset Representations Reviewer for the Issuer. The Asset Representations Reviewer hereby accepts the engagement and agrees to perform the obligations of the Asset Representations Reviewer on the terms stated in this Agreement.
Section 2.2 Eligibility of Asset Representations Reviewer. [______________] represents and warrants to the Issuer and the Sponsor that it is an Eligible Asset Representations Reviewer. The Asset Representations Reviewer will notify the Issuer, the Sponsor and the Servicer promptly if it is not, or on the occurrence of any action that would result in it not being, an Eligible Asset Representations Reviewer.
Section 2.3 Independence of the Asset Representations Reviewer. The Asset Representations Reviewer will be an independent contractor and will not be subject to the supervision of the Issuer, the Sponsor, the Servicer, the Indenture Trustee or the Owner Trustee for the manner in which it accomplishes the performance of its obligations under this Agreement. Unless expressly authorized by the Issuer, the Sponsor, the Servicer, the Indenture Trustee or the Owner Trustee, the Asset Representations Reviewer will have no authority to act for or represent the Issuer, the Sponsor, the Servicer, the Indenture Trustee or the Owner Trustee, respectively, and will not be considered an agent of the Issuer, the Sponsor, the Servicer, the Indenture Trustee or the Owner Trustee. Nothing in this Agreement will make the Asset Representations Reviewer and any of the Issuer, the Sponsor, the Servicer, the Indenture Trustee or the Owner Trustee, members of any partnership, joint venture or other separate entity or impose any liability as such on any of them.
ARTICLE III
DUTIES OF THE ASSET REPRESENTATIONS REVIEWER
Section 3.1 Review Scope. The parties confirm that the Asset Representations Review is not responsible for (a) reviewing the Receivables for compliance with the representations and warranties under the Transaction Documents, except as described in this Agreement or (b) determining whether noncompliance with the representations and warranties constitutes a breach of the Eligibility Representations. For the avoidance of doubt, the parties confirm that the review is not designed to determine why an Obligor is delinquent or the creditworthiness of the Obligor, either at the time of any Asset Review or at the time of origination of the related Receivable. Further, the Asset Review is not designed to establish cause, materiality or recourse for any Test Fail.
Section 3.2 Review Notices. Upon (i) receipt of a Review Notice from the Indenture Trustee in accordance with Section 7.6(b) of the Indenture and (ii) obtaining access to the Review Materials in accordance with Section 3.3 of this Agreement, the Asset Representations Reviewer will start an Asset Review. The Asset Representations Reviewer will not be obligated to begin, and may not begin, an Asset Review until the Asset Representations Reviewer receives
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a Review Notice. Within ten (10) Business Days of receipt of a Review Notice, the Servicer shall provide the list of Subject Receivables to the Asset Representations Reviewer in the format selected by the Servicer to the address specified in Section 9.2.
None of the Issuer, the Servicer, the Sponsor or the Asset Representations Reviewer is obligated to verify whether the Indenture Trustee properly determined that a Review Notice was required. None of the Issuer, the Sponsor or the Asset Representations Reviewer is obligated to verify the accuracy or completeness of the list of Subject Receivables provided by the Servicer.
Section 3.3 Review Materials. The Servicer will provide reasonable assistance to the Asset Representations Reviewer to facilitate the Asset Review. Within sixty (60) days of receipt by the Servicer of the Review Notice, the Servicer will provide the Asset Representations Reviewer with access to the Review Materials for all Subject Receivables in one or more of the following ways, as elected by the Servicer: (i) by providing access to the Servicers receivables system, either remotely or at one or more of the properties of the Servicer; (ii) by electronic posting of Review Materials to a password-protected website to which the Asset Representations Reviewer has access; (iii) by providing originals or photocopies at one or more of the offices of the Servicer (or any subservicer or vendor) where the Receivable Files are located[;(iv) by sending originals or photocopies of Review Materials to the Asset Representations Reviewer at the address specified in Section 9.2;] or [(v)] in another manner agreed to by the Servicer and the Asset Representations Reviewer. The Servicer may redact or remove Personally Identifiable Information from the Review Materials so long as such redaction or removal does not result in a change in the meaning or usefulness of the Review Materials. The Asset Representations Reviewer shall not be liable for any failure of the Review Materials to be accurate and complete, including any failure that results in the Review Materials being misleading in any material respect.
If the Servicer provides access to the Review Materials at one of its offices, such access will be afforded without additional charge but only (i) upon reasonable notice, (ii) during normal business hours, (iii) subject to the Servicers normal security and confidentiality procedures and (iv) at offices designated by the Servicer.
Section 3.4 Missing or Incomplete Review Materials. The Asset Representations Reviewer will complete the Tests for each Eligibility Representation only using documentation that is made available to it. Upon receipt of the Review Materials, the Asset Representations Reviewer will complete an initial document inventory to determine if any Review Materials are missing or insufficient for the Asset Representations Reviewer to perform any Test. If the Asset Representations Reviewer reasonably determines that any of the Review Materials are missing or insufficient for the Asset Representations Reviewer to perform any Test, the Asset Representations Reviewer will notify the Servicer promptly, and in any event no less than twenty (20) calendar days before completing the Review, and the Servicer will use reasonable efforts to provide the Asset Representations Reviewer access to such missing Review Materials or other documents or information to correct the insufficiency within fifteen (15) calendar days. Once the Asset Representations Reviewer has confirmed the majority of the Review Materials have been provided in accordance with Section 3.3, the Asset Representations Reviewer will commence the Asset Review. In instances where Review Material is not accessible, clearly unidentifiable, and/or illegible, the Asset Representations Reviewer will request that the Servicer (with a copy
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to the Sponsor) provide an updated copy of such Review Material. If the Servicer and the Sponsor have not provided the missing Review Material for a Subject Receivable to the Asset Representations Reviewer within sixty (60) days of notification by the Asset Representations Reviewer, the parties agree that such Subject Receivable will have a Test Incomplete for the related Test(s) and the Review Report will indicate the reason for the Test Incomplete.
Section 3.5 The Asset Review.
(a) For an Asset Review, the Asset Representations Reviewer will perform for each Subject Receivable the applicable procedures listed under Tests in Exhibit A for each Eligibility Representation. In the course of its review, the Asset Representations Reviewer will use the Review Materials listed in Exhibit A. For each Test and Subject Receivable, the Asset Representations Reviewer will determine if the Test has been satisfied (a Test Pass), if the Test has not been satisfied (a Test Fail) or if the Test could not be concluded as a result of missing or incomplete Review Materials (a Test Incomplete); provided, however, that prior to determining that the Test has not been satisfied, the Asset Representations Reviewer will consult with the Servicer to determine whether the Servicer is able to provide supplemental information to the Asset Representations Reviewer for the related Subject Receivable in connection with such Test, pursuant to the procedure described in Section 3.4.
(b) If a Subject Receivable was included in a prior Asset Review, the Asset Representations Reviewer will not conduct additional Tests on any such duplicate Subject Receivable unless such Subject Receivable was deemed a Test Incomplete as a result of the failure of the Servicer and the Sponsor to provide missing Review Materials for such Subject Receivable and the Sponsor elects to have such Subject Receivable included in the current Asset Review. The Asset Representations Reviewer will include the previously reported Test results for any such duplicate Subject Receivable within the Review Report for the current Asset Review.
Section 3.6 Review Period. The Asset Representations Reviewer will complete the Review within sixty (60) days of receiving access to the Review Materials in accordance with Section 3.3 (such time period, the Review Period); provided, that if additional Review Materials are provided to the Asset Representations Reviewer as described in Section 3.4 or Section 3.5, the Review Period will be extended for an additional thirty (30) days.
Section 3.7 Review Report. Within ten (10) Business Days following the end of the applicable Review Period described in Section 3.6, the Asset Representations Reviewer will provide the Issuer, the Servicer and the Indenture Trustee with a report (a Review Report) specifying for each Subject Receivable whether there was a Test Pass, a Test Fail, a Test Incomplete (as contemplated by Section 3.5) or a Test Otherwise Resolved (as contemplated by Section 3.8) for each Test and Subject Receivable. The Review Report will include a summary of the findings and conclusions of the Asset Representations Reviewer with respect to the Asset Review to be included in the Form 10-D for the Issuer for the Collection Period in which the Review Report is received. The Asset Representations Reviewer will ensure that the Review Report does not contain any Personally Identifiable Information. Upon reasonable request of the Servicer, the Asset Representations Reviewer will provide additional detail regarding the Test results. For the avoidance of doubt, the Indenture Trustee shall have no obligation to forward the Review Report to any Noteholder or any other person.
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Section 3.8 Resolution of Review for Certain Subject Receivables. Following the delivery of the list of the Subject Receivables and before the delivery of the Review Report by the Asset Representations Reviewer, the Servicer may notify the Asset Representations Reviewer if a Subject Receivable is paid in full by or on behalf of the Obligor or purchased from the Issuer by the Sponsor or the Servicer in accordance with the Transaction Documents. On receipt of notice, the Asset Representations Reviewer will immediately terminate all Tests of such Receivables and the Asset Review of such Receivables will be considered resolved (a Test Otherwise Resolved). In this case, the Review Report will indicate a Test Otherwise Resolved for the Receivables and the related reason.
Section 3.9 Termination of Review. If an Asset Review is in process and the Notes will be paid in full on the next Payment Date (including any payment in full as a result of any early redemption of the Notes), the Servicer will notify the Asset Representations Reviewer and the Indenture Trustee no less than ten (10) days before that Payment Date. On receipt of notice, the Asset Representations Reviewer will terminate the Asset Review immediately and will not be obligated to deliver a Review Report. Within ten (10) days after receipt of such notice, the Asset Representations Reviewer will provide the Issuer, the Servicer and the Indenture Trustee with the related Review Invoice.
Section 3.10 Review and Procedure Limitations. The Asset Representations Reviewer will have no obligation (i) to determine whether a Delinquency Trigger has occurred, (ii) to determine whether the required percentage of Noteholders has voted to direct an Asset Review and may rely on the information in any Review Notice delivered by the Indenture Trustee, (iii) to determine which Receivables are Subject Receivables and may rely on the list of Subject Receivables provided by the Servicer, (iv) to confirm the validity of the Review Materials, (v) other than as specified in Section 3.3, to obtain missing or insufficient Review Materials, or (vi) to take any action or to cause any other party to take any action under any of the Transaction Documents to enforce any remedies for any breach of a representation, warranty or covenant, including any Eligibility Representation. The Asset Representations Reviewer shall be required to perform only the testing procedures listed under Tests in Exhibit A, and shall have no obligation to perform additional testing procedures on any Subject Receivables or to consider any additional information provided by any party. The Asset Representations Reviewer shall have no obligation to provide reporting or other information other than the Review Report described in Section 3.7. However, the Asset Representations Reviewer may provide additional information about any Subject Receivable that it determines in good faith to be material to its performance of an Asset Review.
Section 3.11 Review Systems. The Asset Representations Reviewer shall maintain and utilize an electronic case management system to manage the Tests and to provide systematic control over each step in the Asset Review process and ensure consistency and repeatability for the Tests. [The Asset Representations Reviewer will ensure that these systems allow for each Subject Receivable and the related Review Materials to be individually tracked and stored as contemplated by this Agreement.] The Asset Representations Reviewer will maintain adequate staff that is properly trained to conduct Asset Reviews as required by this Agreement.
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Section 3.12 Representatives.
(a) Servicer Representative. The Servicer will provide reasonable access to one or more designated representatives to respond to reasonable requests and inquiries made by the Asset Representations Reviewer in its completion of an Asset Review.
(b) Asset Representations Review Representative. The Asset Representations Reviewer will provide reasonable access to one or more designated representatives to respond to reasonable requests and inquiries made by the Servicer, the Sponsor, the Issuer or the Indenture Trustee during the Asset Representations Reviewers completion of an Asset Review. The Asset Representations Reviewer shall have no obligation to respond to requests or inquires, and other than as specified in Section 3.13 shall not respond to requests or inquiries, made by any Person not party to this Agreement other than the Indenture Trustee; provided, that if the Asset Representations Reviewer receives any request or inquiry from a Person not a party to this Agreement, then the Asset Representations Reviewer may inform such Person that they may contact the Servicer and/or the Indenture Trustee with respect to such request or inquiry.
Section 3.13 Dispute Resolution. If a Subject Receivable that was reviewed by the Asset Representations Reviewer during an Asset Review is the subject of a dispute resolution proceeding under Section 3.11 of the Purchase Agreement, the Asset Representations Reviewer shall participate in the dispute resolution proceeding on request of a party to the proceeding. The reasonable out-of-pocket expenses and reasonable compensation of the Asset Representations Reviewer for its participation in any dispute resolution proceeding will be considered expenses of the Requesting Party for the dispute resolution and (subject to Section 4.3) will be paid by a party to the dispute resolution as determined by the mediator or arbitrator for the dispute resolution according to Section 3.11 of the Purchase Agreement.
Section 3.14 Records Retention. The Asset Representations Reviewer will maintain copies of Review Materials, Review Reports and internal work papers and correspondence (collectively the Client Records) for a period of three (3) years after the termination of this Agreement. At the expiration of the retention period, the Asset Representations Reviewer, at the option of the Servicer, (i) shall return all Client Records to the Servicer, in electronic format or, to the extent held in tangible form, in that form, or (ii) shall destroy such Client Records, in each case in accordance with Section 7.1(e) of this Agreement. Upon the return or destruction of the Client Records, as applicable, the Asset Representations Reviewer shall have no obligation to retain such Client Records or to respond to inquiries concerning any Asset Review.
Section 3.15 No Delegation. The Asset Representations Reviewer may not delegate or subcontract its obligations under this Agreement to any Person without the consent of the Issuer, the Sponsor and the Servicer.
ARTICLE IV
PAYMENTS TO ASSET REPRESENTATIONS REVIEW
Section 4.1 Annual Fee. As compensation for its activities hereunder, the Asset Representations Reviewer shall be entitled to receive an annual fee in an amount equal to
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$5,000.00 (the Annual ARR Fee) during the term of this Agreement, which shall be paid by or on behalf of the Sponsor within thirty (30) days of the date hereof, with respect to the initial Annual ARR Fee, and within thirty (30) days of the annual anniversary of this Agreement with respect to each subsequent Annual ARR Fee; provided, however, that if the Asset Representations Reviewer resigns or is removed in accordance with Section 6.2, then the Asset Representations Reviewer shall refund to the Sponsor the portion of the Annual ARR Fee attributable to the portion of the annual period during which [_________] will no longer act as the Asset Representations Reviewer, assuming for purposes of such calculation that the Annual ARR Fee for each day during the annual period is an amount equal to the Annual ARR Fee divided by 365.
Section 4.2 Review Fee. Following the completion of an Asset Review and delivery to the Indenture Trustee, the Sponsor, the Servicer and the Issuer of the Review Report, or, if earlier, the termination of Asset Review according to Section 3.9, and the delivery to the Sponsor of the related Review Invoice, the Sponsor shall pay to the Asset Representations Reviewer a fee of $200.00 for each Subject Receivable for which the Asset Review was completed plus reasonable out-of-pocket expenses incurred in connection with travel to the location at which Review Materials are made available in accordance with Section 3.3 (the Review Fee). However, no Review Fee will be charged for any Subject Receivable which was included in a prior Asset Review or for which no Tests were completed prior to the Asset Representations Reviewer being notified of a termination of the Asset Review according to Section 3.9 or the Asset Representations Reviewer being notified of the payment in full or purchase of any Subject Receivable according to Section 3.8.
Section 4.3 Dispute Resolution; Travel Expenses.
(a) Dispute Resolution Expenses. If the Asset Representations Reviewer participates in a dispute resolution proceeding under Section 3.13 and its reasonable out-of-pocket expenses and reasonable compensation for the time it incurs in participating in the proceeding are not paid by a party to the dispute resolution within ninety (90) days of the end of the proceeding, the Sponsor will reimburse the Asset Representations Reviewer for such expenses upon receipt of a detailed invoice. If the Sponsor makes any payment under this Section and the Asset Representations Reviewer later collects any of the amounts for which the payments were made to it from others, the Asset Representations Reviewer will promptly repay the amounts to the Sponsor.
(b) Reimbursement of Travel Expenses. If the Servicer provides access to the Review Materials at one of its properties, the Sponsor will reimburse the Asset Representations Reviewer for its reasonable travel expenses incurred in connection with the Asset Review upon receipt of a detailed invoice.
Section 4.4 Payment . All payments made to the Asset Representations Reviewer shall be made to the account specified by the Asset Representations Reviewer from time to time in writing to the Indenture Trustee, the Sponsor, the Servicer and the Issuer. For the avoidance of doubt, there shall be no aggregate limit on the Review Fee, reimbursable expenses, or indemnities payable by the Sponsor or the Issuer (subject to Section 4.5) to the Asset Representations Reviewer pursuant to this Article IV.
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Section 4.5 Payments by the Issuer. To the extent not paid by the Sponsor and outstanding for at least sixty (60) days after receipt by the Indenture Trustee, the Sponsor, the Servicer and the Issuer of the Review Invoice, the Asset Representations Reviewer may provide notice to the Indenture Trustee, the Sponsor, the Servicer and the Issuer that the Review Fee shall be paid by the Issuer pursuant to the priority of payments set forth in Section 8.5(a) of the Indenture or Section 5.4(b) of the Indenture, as applicable. After receipt of such notice, the Sponsor shall either (i) cause the Servicer to include such Review Fee in the Servicers Report to be delivered on the Determination Date following the receipt of such notice for payment on the corresponding Payment Date (or, if such notice was received less than five (5) Business Days prior to such Determination Date, on the next succeeding Determination Date for payment on the related Payment Date) pursuant to the priority of payments set forth in Section 8.5(a) of the Indenture or Section 5.4(b) of the Indenture, as applicable or (ii) pay such Review Fee directly to the Asset Representations Reviewer prior to the Payment Date following receipt of such notice. The Asset Representations Reviewer acknowledges and agrees that any payments payable by the Issuer under this Agreement, including pursuant to this Article IV or Section 5.3, shall be limited to amounts available to make such payments pursuant to Section 8.5(a) of the Indenture and Section 5.4(b) of the Indenture, as applicable.
ARTICLE V
OTHER MATTERS PERTAINING TO THE ASSET REPRESENTATIONS REVIEWER
Section 5.1 Representations and Warranties of the Asset Representations Reviewer. [________] hereby makes the following representations and warranties as of the date hereof:
(a) Existence and Power. [________] is a limited liability company validly existing and in good standing under the laws of its state of formation and has, in all material respects, full power and authority to own its assets and operate its business as presently owned or operated, and to execute, to deliver and to perform its obligations under this Agreement. [________] has obtained all necessary licenses and approvals in each jurisdiction where the failure to do so would materially and adversely affect the ability of [________] to perform its obligations under this Agreement.
(b) Authorization and No Contravention. The execution, delivery and performance by [________] of the Transaction Documents to which it is a party have been duly authorized by all necessary limited liability company action on the part of [________] and do not contravene or constitute a default under (i) any applicable law, rule or regulation, (ii) its organizational documents or (iii) any material indenture or material agreement or instrument to which [________] is a party or by which its properties are bound (other than violations of such laws, rules, regulations, organizational documents, indentures, agreements or instruments which do not affect the legality, validity or enforceability of any of such agreements and which, individually or in the aggregate, would not materially and adversely affect the transactions contemplated by, or [________]s ability to perform its obligations under, this Agreement).
(c) No Consent Required. No approval or authorization by, or filing with, any Governmental Authority is required in connection with the execution, delivery and performance by [________] of this Agreement other than (i) approvals and authorizations that have previously
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been obtained and filings that have previously been made and (ii) approvals, authorizations or filings which, if not obtained or made, would not have a material adverse effect on the ability of [________] to perform its obligations under this Agreement.
(d) Binding Effect. This Agreement constitutes the legal, valid and binding obligation of [________] enforceable against [________] in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws affecting the enforcement of creditors rights generally and, if applicable, the rights of creditors of corporations from time to time in effect or by general principles of equity.
(e) No Proceedings. There are no actions, orders, suits or proceedings pending or, to the knowledge of [________], threatened against [________] before or by any Governmental Authority that (i) assert the invalidity or unenforceability of this Agreement or (ii) seek any determination or ruling that would materially and adversely affect the performance by [________] of its obligations under this Agreement.
(f) Eligibility. The Asset Representations Reviewer is an Eligible Asset Representations Reviewer.
Section 5.2 Limitation of Liability of Asset Representations Reviewer
To the fullest extent permitted by applicable law, the Asset Representations Reviewer shall not be under any liability to the Issuer, the Servicer, the Seller, the Indenture Trustee, the Owner Trustee, any Noteholder or any other Person for any action taken or for refraining from the taking of an action in its capacity as Asset Representations Reviewer pursuant to this Agreement, or for errors in judgment, whether arising from express or implied duties under this Agreement; provided, however, that this provision shall not protect the Asset Representations Reviewer against any liability which would otherwise be imposed by reason of willful misconduct, bad faith, breach of this Agreement or negligence in the performance of its duties. In no event will the Asset Representations Reviewer be liable for special, indirect or consequential loss or damage (including loss of profit) even if the Asset Representations Reviewer has been advised of the likelihood of the loss or damage and regardless of the form of action.
The Asset Representations Reviewer and any director, officer, employee, or agent may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder. The Asset Representations Reviewer shall not be under any obligation to appear in, prosecute or defend any legal action which is not incidental to its duties as Asset Representations Reviewer hereunder.
Section 5.3 Indemnification of Asset Representations Reviewer.
(a) The Sponsor will indemnify the Asset Representations Reviewer and its officers, directors, employees and agents (each, an ARR Indemnified Person), for all reasonable and documented costs, expenses, losses, damages and liabilities resulting from any third-party claim arising out of the performance of the Asset Representations Reviewers obligations under this Agreement (including the costs and expenses of defending itself against
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any loss, damage or liability), but excluding any cost, expense, loss, damage or liability resulting from (i) the Asset Representations Reviewers willful misconduct, bad faith or negligence or (ii) the Asset Representations Reviewers breach of any of its representations, warranties or covenants in this Agreement. To the extent not paid by the Sponsor and outstanding for at least sixty (60) days after receipt by the Indenture Trustee, the Sponsor, the Servicer and the Issuer of an invoice with reasonable detail of indemnification amounts, the Asset Representations Reviewer may provide notice to the Indenture Trustee, the Sponsor, the Servicer and the Issuer that any such indemnification amounts shall be paid by the Issuer pursuant to the priority of payments set forth in Section 8.5(a) of the Indenture or Section 5.4(b) of the Indenture, as applicable. After receipt of such notice, the Sponsor shall either (i) cause the Servicer to include such indemnification amounts in the Servicers Report to be delivered on the Determination Date following the receipt of such notice for payment on the corresponding Payment Date (or, if such notice was received less than five (5) Business Days prior to such Determination Date, on the next succeeding Determination Date for payment on the related Payment Date) pursuant to the priority of payments set forth in Section 8.5(a) of the Indenture or Section 5.4(b) of the Indenture, as applicable or (ii) pay such indemnification amounts directly to the Asset Representations Reviewer prior to the Payment Date following receipt of such notice.
(b) In case any such action, investigation or proceeding will be brought involving an ARR Indemnified Person as contemplated by Section 5.3(a), the Sponsor will assume the defense thereof, including the employment of counsel and the payment of all expenses. The Asset Representations Reviewer will have the right to employ separate counsel in any such action, investigation or proceeding and to participate in the defense thereof and the reasonable fees and expenses of such counsel will be paid by the Sponsor. In the event of any claim, action, or proceeding for which indemnity will be sought pursuant to this Section 5.3, the Asset Representations Reviewers choice of legal counsel shall be subject to the good faith objection by the Sponsor to a conflict of interest under the applicable rules of professional conduct. If there is a conflict, the Sponsor will pay for the reasonable fees and expenses of separate counsel to the ARR Indemnified Person. No settlement may be made without the approval of the Sponsor and the ARR Indemnified Person, which approval will not be unreasonably withheld.
(c) The indemnification set forth in this Section 5.3 will survive the termination of this Agreement and the resignation or removal of the Asset Representations Reviewer.
(d) If the Sponsor or the Issuer makes any payment under this Section 5.3 and the ARR Indemnified Person later collects any of the amounts for which the payments were made to it from others, the ARR Indemnified Person will promptly repay the amount to the Sponsor or the Issuer, as applicable.
Section 5.4 Indemnification by Asset Representations Reviewer
(a) To the fullest extent permitted by law, the Asset Representations Reviewer shall indemnify and hold harmless each of the Issuer, the Sponsor, the Servicer and the Indenture Trustee, and its respective officers, directors, successors, assigns, legal representatives, agents, and servants (each an Indemnified Person), from and against any and all fees, liabilities,
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obligations, losses, damages, penalties, taxes, claims, actions, investigations, proceedings, costs, expenses or disbursements (including reasonable legal fees, expenses and court costs incurred by an Indemnified Person in connection with the enforcement of any indemnification or other obligation of the Asset Representations Reviewer) of any kind and nature whatsoever which may be imposed on, incurred by, or asserted at any time against an Indemnified Person (whether or not also indemnified against by any other person) which arose out of the negligence, willful misconduct or bad faith of the Asset Representations Reviewer in the performance of its obligations and duties under this Agreement; provided, however, that the Asset Representations Reviewer shall not be liable for or required to indemnify an Indemnified Person from and against expenses arising or resulting from (i) the Indemnified Persons own willful misconduct, bad faith or negligence, or (ii) the breach of any representation, warranty or covenant made by the Indemnified Person.
(b) In case any such action, investigation or proceeding will be brought involving an Indemnified Person as contemplated by Section 5.4(a), the Asset Representations Reviewer will assume the defense thereof, including the employment of counsel and the payment of all expenses. The Issuer, the Servicer, the Sponsor and the Indenture Trustee each will have the right to employ separate counsel in any such action, investigation or proceeding and to participate in the defense thereof and the reasonable fees and expenses of such counsel will be paid by the Asset Representations Reviewer. In the event of any claim, action, or proceeding for which indemnity will be sought pursuant to this Section 5.4, the Issuers, the Servicers, the Sponsors and the Indenture Trustees choice of legal counsel shall be subject to the good faith objection by the Asset Representations Reviewer to a conflict of interest under the applicable rules of professional conduct. If there is a conflict, the Asset Representations Reviewer will pay for the reasonable fees and expenses of separate counsel to the Indemnified Person. No settlement may be made without the approval of the Asset Representations Reviewer and the Indemnified Person, which approval will not be unreasonably withheld.
(c) The indemnification set forth in this Section 5.4 will survive the termination or assignment of this Agreement and the resignation or removal of the Asset Representations Reviewer or any Indemnified Person.
ARTICLE VI
REMOVAL, RESIGNATION; SUCCESSOR ASSET REPRESENTATION REVIEWER
Section 6.1 Eligibility Requirements for Asset Representations Reviewer. The Asset Representations Reviewer must be an Eligible Asset Representations Reviewer.
Section 6.2 Resignation and Removal of Asset Representations Reviewer.
(a) No Resignation of Asset Representations Reviewer. The Asset Representations Reviewer may not resign as Asset Representations Reviewer except (i) if the Asset Representations Reviewer is no longer an Eligible Asset Representations Reviewer, (ii) upon a determination that the performance of its duties under this Agreement is no longer permissible under applicable law, as evidenced by an Opinion of Counsel delivered to the Issuer, the Sponsor and the Indenture Trustee, or (iii) if it does not receive payment in full of any
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amounts required to be paid to the Asset Representations Reviewer in accordance with the terms of Article IV and pursuant to an undisputed invoice. Without limiting the foregoing, the Asset Representations Review shall promptly resign if it is no longer an Eligible Asset Representations Reviewer. If the Asset Representations Reviewer resigns pursuant to clause (ii) above, the Asset Representations Reviewer shall deliver a notice of resignation to the Issuer and the Servicer, with a copy to the Indenture Trustee, no less than thirty (30) days prior to the date of its resignation.
(b) Removal of Asset Representations Reviewer. If any of the following events occur, the Indenture Trustee may, or, at the direction of Noteholders evidencing a majority of the aggregate Outstanding Amount of the Notes shall, by notice to the Asset Representations Reviewer, remove the Asset Representations Reviewer and terminate its rights and obligations under this Agreement:
(i) the Asset Representations Reviewer is no longer an Eligible Asset Representations Reviewer;
(ii) the Asset Representations Reviewer breaches any of its representations, warranties, covenants or obligations in this Agreement; or
(iii) a Bankruptcy Event of the Asset Representations Reviewer occurs.
(c) Notice of Resignation or Removal. The Servicer will notify the Issuer, the Owner Trustee and the Indenture Trustee of any resignation or removal of the Asset Representations Reviewer.
Section 6.3 Successor Asset Representations Reviewer.
(a) Engagement of Successor Asset Representations Reviewer. Following the resignation or removal of the Asset Representations Reviewer, (i) if the Delinquency Percentage has exceeded the Delinquency Trigger as of the most recent Payment Date, the Indenture Trustee (at the direction of the Noteholders, provided, that if the Indenture Trustee has received conflicting or inconsistent requests from two or more groups of Noteholders, each representing less than the majority of the Note Balance, the Indenture Trustee shall follow the direction of the Noteholders representing the greater percentage of the Note Balance) and (ii) if the Delinquency Percentage has not exceeded the Delinquency Trigger as of the most recent Payment Date, the Sponsor, will appoint a successor Asset Representations Reviewer which is an Eligible Asset Representations Reviewer.
(b) Effectiveness of Resignation or Removal. No resignation or removal of the Asset Representations Reviewer will be effective until the successor Asset Representations Reviewer has executed and delivered to the Issuer, the Sponsor and the Servicer an agreement accepting its engagement and agreeing to perform the obligations of the Asset Representations Reviewer under this Agreement or entered into a new agreement with the Issuer and the Servicer on substantially the same terms as this Agreement.
(c) Transition and Expenses. If the Asset Representations Review resigns or is removed, the Asset Representations Reviewer will cooperate with the Issuer and take all actions reasonably requested to assist the Issuer in making an orderly transition of the Asset
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Representations Reviewers rights and obligations under this Agreement to the successor Asset Representations Reviewer. Except for a permitted resignation pursuant to Section 6.2(a)(iii), the Asset Representations Reviewer will pay the reasonable expenses (including the fees and expenses of counsel) of transitioning the Asset Representations Reviewers obligations under this Agreement and preparing the successor Asset Representations Reviewer to take on such obligations on receipt of an invoice with reasonable detail of the expenses from the Issuer or the successor Asset Representations Reviewer.
Section 6.4 Merger, Consolidation or Succession. Any Person (a) into which the Asset Representations Reviewer is merged or consolidated, (b) resulting from any merger or consolidation to which the Asset Representations Reviewer is a party or (c) succeeding to the business of the Asset Representations Reviewer, if that Person is an Eligible Asset Representations Reviewer, will be the successor to the Asset Representations Reviewer under this Agreement. Such Person will execute and deliver to the Issuer, the Sponsor and the Servicer an agreement to assume the Asset Representations Reviewers obligations under this Agreement (unless the assumption happens by operation of law).
ARTICLE VII
TREATMENT OF CONFIDENTIAL INFORMATION
Section 7.1 Confidential Information.
(a) Confidential Information Defined. For the purposes of this Agreement, Confidential Information means information that (i) is identified as non-public, confidential or proprietary information or (ii) a reasonable person would deem to be non-public, confidential or proprietary information of a party (the Disclosing Party) that is disclosed to the other party (the Receiving Party) by the Disclosing Party or any of its Representatives in connection with the performance of this Agreement, including but not limited to: (A) business or technical processes, formulae, source codes, object code, product designs, sales, cost and other unpublished financial information, customer information, product and business plans, projections, marketing data or strategies, trade secrets, intellectual property rights, know-how, expertise, methods and procedures for operation, information about employees, customer names, business or technical proposals, and any other information which is or should reasonably be understood to be confidential or proprietary to the Disclosing Party; (B) Personally Identifiable Information (as defined in Section 7.2 of this Agreement); and (C) Review Materials. The foregoing definition of Confidential Information applies to: (i) all such information, whether tangible or intangible and regardless of the medium in which it is stored or presented; and (ii) all copies of such information, as well as all memoranda, notes, summaries, analyses, computer records, and other materials prepared by the Receiving Party or any of its employees, agents, advisors, directors, officers, and subcontractors, (collectively Representatives) that contain or reflect the Confidential Information.
(b) Use of Confidential Information. Each party acknowledges that during the term of this Agreement it may be exposed to or acquire Confidential Information of the other party or its Affiliates. The Receiving Party shall hold the Confidential Information of the Disclosing Party in strict confidence and will not disclose such information except to its
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Representatives who have a need to know such information in connection with the performance of this Agreement and who are informed by the Receiving Party of the confidential nature of the Confidential Information and are directed by the Receiving Party to treat the Confidential Information in a manner consistent with the terms of this Agreement. The Receiving Party shall be responsible for the breach of this Agreement by any of its Representatives. The Receiving Party will hold and protect the Disclosing Partys Confidential Information using the same degree of care that it uses to protect its own confidential, non-public and/or proprietary information, but in no event with less than a commercially reasonable standard of care.
(c) Exceptions. Confidential Information shall not include, and this Agreement imposes no obligations with respect to, information that:
(i) was, at the time of disclosure to the Receiving Party, in the public domain or, after disclosure to the Receiving Party, has become part of the public domain through no act or omission of the Receiving Party;
(ii) was in the possession of the Receiving Party, with confidentiality restrictions, at the time of disclosure to the Receiving Party hereunder;
(iii) was or hereafter is independently developed by a party outside of this Agreement and without use of, reference to, access to or reliance on any Confidential Information of the other party; or
(iv) was lawfully and independently obtained by the Receiving Party from a third party who, to the knowledge of the Receiving Party after reasonable inquiry, is not subject to an obligation of confidentiality or otherwise prohibited from disclosing or transmitting the information to the Receiving Party.
The foregoing exceptions shall not apply to any Personally Identifiable Information, which shall remain confidential in all circumstances, except as required or permitted to be disclosed by applicable law, statute, or regulation.
(d) Disclosure by Operation of Law. If any party or any of its Representatives is requested or required (orally or in writing, by law, regulation or interrogatory, request for information or documents, court order, subpoena, deposition, administrative proceedings, inspection, audit, civil investigative demand or other legal, governmental or regulatory process) to disclose all or any part of any Confidential Information, such party shall (i) to the extent permitted by law, rule and regulation, promptly notify the other party of the existence, terms and circumstances surrounding such request; (ii) consult with the other party on the advisability of taking legally available steps to resist or narrow such request and cooperate with such party on any steps it considers advisable; and (iii) if disclosure of the Confidential Information is required or deemed advisable, exercise commercially reasonable efforts to obtain an order, stipulation or other reliable assurance that confidential treatment shall be accorded to such portion of the Confidential Information to be disclosed. Each party shall reimburse the other party for reasonable legal fees and expenses incurred in connection with such partys efforts to comply with this section. Notwithstanding anything to the contrary contained herein, the Servicer and its Affiliates may disclose Confidential Information, without notice to the Asset Representations
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Reviewer, to any governmental agency, regulatory authority or self-regulatory authority (including, without limitation, bank and securities examiners) having or claiming to have authority to regulate or oversee any aspect of the Servicers business or that of its Affiliates in connection with the exercise of such authority or claimed authority.
(e) Return of Confidential Information. Upon the written request of the Disclosing Party, the Receiving Party shall return or destroy all Confidential Information to the Disclosing Party provided to it pursuant to this Agreement; provided, however, (i) the Receiving Party shall be permitted to retain copies of the Disclosing Partys Confidential Information solely for archival, audit, disaster recovery, legal, and/or regulatory purposes or, if longer, for the period of time set forth in Section 3.14, and (ii) the Receiving Party shall be permitted to retain copies of the Disclosing Partys Confidential Information to the extent it would be unreasonably burdensome to return or destroy such Confidential Information; provided further, that (x) any Confidential Information so retained will remain subject to the obligations and restrictions contained in this Agreement, notwithstanding any termination hereof, and (y) the Receiving Party will not use the retained Confidential Information for any other purpose.
(f) Remedies. Each of the parties acknowledges that all Confidential Information of the other party is considered to be proprietary and of competitive value, and in many instances, trade secrets. Each of the parties hereto agrees that because of the unique nature of such Confidential Information, any breach of this Section by it or its Representatives would cause irreparable harm to the Disclosing Party and that money damages and other remedies available at law in the event of a breach would not be adequate to compensate the Disclosing Party for any such breach. Accordingly, each party shall be entitled, without the requirement of posting a bond or other security, to equitable relief, including, without limitation, injunctive relief and specific performance, as a remedy for any such breach. Such relief shall be in addition to, and not in lieu of, all other remedies available to such party, whether under this Agreement, at law or in equity.
Section 7.2 Safeguarding Personally Identifiable Information.
(a) Definition. Personally Identifiable Information, or PII, means information in any format about an identifiable individual, including, name, address, phone number, e-mail address, account number(s), identification number(s), any other actual or assigned attribute associated with or identifiable to an individual and any information that when used separately or in combination with other information could identify an individual, as further described in § 501(b) of the Gramm-Leach-Bliley Act and the Interagency Guidelines Establishing Standards for Safeguarding Customer Information (12 C.F.R. Section 208, Appendix D-2) (collectively, the Privacy Laws), that is provided or made available to the Asset Representations Reviewer pursuant to this Agreement.
(b) Non-Disclosure. To the extent the Asset Representations Reviewer receives Personally Identifiable Information in the performance its obligations hereunder, the Asset Representations Reviewer agrees that it will not disclose or use any Personally Identifiable Information except (i) to the extent necessary to carry out its obligations under the Agreement and for no other purpose; or (ii) as may be required by valid operation of law.
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(c) Safeguards. To the extent the Asset Representations Reviewer receives Personally Identifiable Information in the performance of services under this Agreement, the Asset Representations Reviewer represents and warrants that it has, and will continue to have adequate administrative, technical, and physical safeguards: (i) to ensure the security and confidentiality of Personally Identifiable Information; (ii) to protect against any anticipated threats or hazards to the security or integrity of Personally Identifiable Information; and (iii) to protect against unauthorized acquisition of, access to or use of Personally Identifiable Information which could result in a breach as that term is defined under applicable Privacy Laws.
(d) Information. The Asset Representations Reviewer agrees to provide the Issuer and the Sponsor with information regarding its privacy and information security systems, policies and procedures as the Issuer may reasonably request relating to compliance with this Agreement and applicable Privacy Laws. The Asset Representations Reviewer agrees to provide training in the Privacy Laws and the Asset Representations Reviewers information security policies to all personnel whose duties pursuant to this Agreement could bring them in contact with Personally Identifiable Information.
(e) Breach. In the event of any actual or apparent theft, unauthorized use or disclosure of any Personally Identifiable Information, the Asset Representations Reviewer will commence all reasonable efforts to investigate and correct the causes and remediate the results thereof. As soon as practicable following discovery of any such event, the Asset Representations Reviewer will provide the Issuer, the Servicer and the Sponsor notice thereof, and shall cooperate with the Servicer and the Sponsor (including by providing any further information and assistance as may be reasonably requested) to expeditiously implement the data security breach investigation and response protocols of the Servicer and the Sponsor.
ARTICLE VIII
OTHER MATTERS PERTAINING TO THE ISSUER
Section 8.1 Termination of this Agreement. This Agreement will terminate, except for obligations under Section 5.3, Section 5.4, Section 9.13 and Article VII, on the earlier of (a) the payment in full of all outstanding Notes and the satisfaction and discharge of the Indenture and (b) the date the Issuer is terminated under the Trust Agreement.
Section 8.2 Limitation of Liability. It is expressly understood and agreed by the parties that (a) this document is executed and delivered by [ ], not individually or personally, but solely as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, pursuant to the Trust Agreement, (b) each of the representations, warranties, covenants, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, warranties, covenants undertakings and agreements by [ ], but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on [ ], individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any person claiming by, through or under the parties hereto, and (d) under no circumstances shall
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[ ] be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Agreement or under the Notes or any of the other Transaction Documents or in any of the certificates, notices or agreements delivered pursuant thereto, as to all of which recourse shall be had solely to the assets of the Issuer.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 Amendment. (a) Any term or provision of this Agreement may be amended by the Sponsor, the Servicer and the Asset Representations Reviewer without the consent of the Indenture Trustee, any Noteholder, the Issuer, the Owner Trustee or any other Person subject to the satisfaction of one of the following conditions:
(i) the Sponsor or the Servicer delivers an Opinion of Counsel to the Indenture Trustee to the effect that such amendment will not materially and adversely affect the interests of the Noteholders; or
(ii) the Rating Agency Condition is satisfied with respect to such amendment and the Servicer notifies the Indenture Trustee in writing that the Rating Agency Condition is satisfied with respect to such amendment;
provided, that no amendment pursuant to this Section 9.1(a) shall be effective which affects the rights, protections or duties of the Indenture Trustee or the Owner Trustee without the prior written consent of such Person.
(b) This Agreement may also be amended from time to time by the Sponsor, the Servicer and the Asset Representations Reviewer, with the consent of the Holders of Notes evidencing not less than a majority of the aggregate Note Balance of the Controlling Class, 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, provided, that no amendment pursuant to this Section 9.1(b) shall be effective which affects the rights, protections or duties of the Indenture Trustee or the Owner Trustee without the prior written consent of such Person. It will not be necessary for the consent of Noteholders to approve the particular form of any proposed amendment or consent, but it will be sufficient if such consent approves the substance thereof. The manner of obtaining such consents (and any other consents of Noteholders provided for in this Agreement) and of evidencing the authorization of the execution thereof by Noteholders will be subject to such reasonable requirements as the Indenture Trustee may prescribe, including the establishment of record dates pursuant to the Depository Agreement.
(c) Any term or provision of this Agreement may also be amended from time to time by the Sponsor, the Servicer and the Asset Representations Reviewer for the purpose of conforming the terms of this Agreement to the description thereof in the Prospectus or, to the extent not contrary to the Prospectus, [to the description thereof in an offering memorandum
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with respect to the Non-Investment Grade Notes or] the Certificates without the consent of the Indenture Trustee, any Noteholder, the Issuer, the Owner Trustee or any other Person, provided, however, that the Sponsor, the Servicer and the Asset Representations Reviewer shall provide written notification of the substance of such amendment to the Indenture Trustee, the Issuer and the Owner Trustee and promptly after the execution of such amendment, the Sponsor and the Servicer shall furnish a copy of such amendment to the Indenture Trustee, the Issuer and the Owner Trustee.
(d) Prior to the execution of any amendment or consent pursuant to this Section 9.1, the Sponsor shall provide written notification of the substance of such amendment to each Rating Agency; and promptly after the execution of any such amendment or consent, the Sponsor shall furnish a copy of such amendment or consent to each Rating Agency and the Indenture Trustee.
(e) Prior to the execution of any amendment to this Agreement, the Owner Trustee and the Indenture Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent to the execution and delivery of such amendment have been satisfied. The Owner Trustee and the Indenture Trustee may, but shall not be obligated to, enter into any such amendment which adversely affects the Owner Trustees or the Indenture Trustees, as applicable, own rights, duties or immunities under this Agreement.
Section 9.2 Notices, Etc.. All demands, notices and communications hereunder shall be in writing and shall be delivered or mailed by registered or certified first-class United States mail, postage prepaid, hand delivery, prepaid courier service, or by electronic transmission (when receipt is confirmed by telephone or reply email from the recipient), and addressed in each case as specified on Schedule I to the Sale Agreement, or at such other address as shall be designated by any of the specified addressees in a written notice to the other parties hereto. Delivery shall occur only upon receipt or reported tender of such communication by an officer of the recipient entitled to receive such notices located at the address of such recipient for notices hereunder.
Section 9.3 Severability Clause. This Agreement constitutes the entire agreement between the Asset Representations Reviewer, the Issuer, the Servicer, and the Sponsor. All prior representations, statements, negotiations and undertakings with regard to the subject matter hereof are superseded hereby.
If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remaining terms and provisions of this Agreement, or the application of such terms or provisions to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.
Section 9.4 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL, SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES
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THEREOF RELATING TO CONFLICTS OF LAW, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.5 Headings. The section headings hereof have been inserted for convenience only and shall not be construed to affect the meaning, construction or effect of this Agreement.
Section 9.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.
Section 9.7 Waivers. No failure or delay on the part of the Servicer, the Asset Representations Reviewer, the Issuer or the Indenture Trustee in exercising any power or right hereunder (to the extent such Person has any power or right hereunder) shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on any party hereto in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by either party under this Agreement shall, except as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval under this Agreement shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.
Section 9.8 Entire Agreement. This Agreement contains a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter thereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter thereof, superseding all prior oral or written understandings. There are no unwritten agreements among the parties.
Section 9.9 Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.
Section 9.10 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect until such time as the parties hereto shall agree.
Section 9.11 Cumulative Remedies. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.
Section 9.12 Nonpetition Covenant. Each party hereto agrees that, prior to the date which is one year and one day after payment in full of all obligations of each Bankruptcy Remote Party in respect of all securities issued by any Bankruptcy Remote Party (i) such party hereto shall not authorize any Bankruptcy Remote Party to commence a voluntary winding-up or
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other voluntary case or other Proceeding seeking liquidation, reorganization or other relief with respect to such Bankruptcy Remote Party or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction or seeking the appointment of an administrator, a trustee, receiver, liquidator, custodian or other similar official with respect to such Bankruptcy Remote Party or any substantial part of its property or to consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other Proceeding commenced against such Bankruptcy Remote Party, or to make a general assignment for the benefit of its creditors generally, any party hereto or any other creditor of such Bankruptcy Remote Party, and (ii) such party shall not commence, join with any other Person in commencing or institute with any other Person, any Proceeding against such Bankruptcy Remote Party under any bankruptcy, reorganization, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction. This Section shall survive the termination of this Agreement.
Section 9.13 Submission to Jurisdiction; Waiver of Jury Trial. Each of the parties hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to this Agreement or any documents executed and delivered in connection herewith, or for recognition and enforcement of any judgment in respect thereof, to the nonexclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought and maintained in such courts and waives any objection that it may now or hereafter have to the venue of such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address determined in accordance with Section 9.2 of this Agreement;
(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) to the extent permitted by applicable law, each party hereto irrevocably waives all right of trial by jury in any action, proceeding or counterclaim based on, or arising out of, under or in connection with this Agreement, any other Transaction Document, or any matter arising hereunder or thereunder.
Section 9.14 Third-Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns and the Indenture Trustee shall be an express third-party beneficiary hereof and may enforce the provisions hereof as if it were a party hereto. Except as otherwise provided in this Section, no other Person will have any right hereunder.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
CAPITAL ONE, NATIONAL ASSOCIATION | ||
By: |
| |
Name: | ||
Title: | ||
CAPITAL ONE PRIME AUTO RECEIVABLES TRUST 20[ ]-[ ] | ||
By: | [ ], not in its individual capacity but solely as Owner Trustee | |
By: |
| |
Name: | ||
Title: | ||
[ ], as Asset Representations Reviewer | ||
By: |
| |
Name: | ||
Title: |
[Signature Page to Asset Representations Review Agreement]
Exhibit A
Capital One Agreed Upon Procedures
Representation
Characteristics of Receivables
As of the Cut-Off Date (or such other date as may be specifically set forth below), each Receivable:
(i) has been fully and properly executed or electronically authenticated by the Obligor thereto;
(ii) has been originated by a Dealer to finance the retail sale by that Dealer of the related Financed Vehicle and has been purchased by the Bank from that Dealer;
(iii) as of the Closing Date, is secured by a first priority validly perfected security interest in the Financed Vehicle in favor of the Originator, as secured party, or all necessary actions have been commenced that would result in a first priority security interest in the Financed Vehicle in favor of the Originator, as secured party;
(iv) contains customary and enforceable provisions such that the rights and remedies of the holder thereof are adequate for realization against the collateral of the benefits of the security;
(v) provided, at origination, for level monthly payments which fully amortize the initial Outstanding Principal Balance over the original term; provided, that the amount of the first or last scheduled payment may be different from the level payment but in no event more than [ ] times the level monthly payment;
(vi) provides for interest at the Contract Rate specified in the Schedule of Receivables;
(vii) was originated in the United States;
(viii) is secured by a new or used automobile, light duty truck, SUV or van;
(ix) has a Contract Rate of at least [ ]%;
Exh. A - 1
(x) had an original term to maturity of not more than [ ] months and each Receivable has a remaining term to maturity, as of the Cut-Off Date, of not more than [ ] months and not less than [ ] months;
(xi) has an Outstanding Principal Balance of at least $[ ];
(xii) has a final scheduled payment due on or before [ ];
(xiii) was not more than [ ] days past due as of the Cut-Off Date;
(xiv) was not noted in the records of the Servicer as being the subject of any verified bankruptcy or insolvency Proceeding;
(xv) is a Simple Interest Receivable; and
(xvi) provides that a prepayment by the related Obligor will fully pay the Outstanding Principal Balance and accrued interest through the date of prepayment based on the Receivables Contract Rate.
Documents
Retail Sale Contract
Title Documents
Receivable File
Schedule of Receivables
Servicing System/Data Tape
Procedures to be Performed
i) | Confirm the contract was signed or electronically authenticated by the Obligor |
ii) | Origination of the Receivable |
a. | Review the Retail Sale Contract and confirm that Capital One, National Association or another Approved Party is listed as the Assignee within the Assignment Section1 |
iii) | Security Interest Enforcement |
a. | Confirm the title documents show Capital One, National Association or another Approved Party as the first lienholder |
1 | Approved Party means a party specified as an Approved Party on the list of Approved Parties provided by Capital One to [ ]. |
Exh. A - 2
b. | Review the servicing system and confirm the Rpt. Branch Code in the system matches the Rpt. Branch Code for the transaction related to the deal |
iv) | Customary and Enforceable Provisions |
a. | Confirm the Contract form number is listed on the Approved Contract Form List2 |
v) | Fully Amortizing Payment Schedule |
a. | Confirm all payments are equivalent with the possible exception that the first and last payments may be different from the level monthly payment |
i. | If the first and last payments are different from the level monthly payment, confirm that these payments are no more than [ ] times the level monthly payment amount |
b. | Review the Truth in Lending section of the Retail Sale Contract and calculate the product of the Amount of Payments with the Number of Payments and confirm that this amount is equal to the Total of Payments |
vi) | Provides for Interest at the Contract Rate |
a. | Review the Schedule of Receivables and confirm that the stated rate is equal to the APR as shown in the Federal Truth in Lending section of the Retail Sale Contract |
vii) | Origination of the Receivable |
a. | Review the Retail Sale Contract and confirm the Dealer address is in the United States |
viii) | Condition, Make and Model of Financed Vehicle |
a. | Review the New/Used section of the Retail Sale Contract and confirm that the Financed Vehicle is stated to be new or used |
b. | Review the Year and Make and Model sections of the Retail Sale Contract and confirm that the Financed Vehicle constitutes an automobile, light-duty truck, SUV or van |
ix) | Contract Annual Percentage Rate |
a. | Review the Federal Truth in Lending Section of the Retail Sale Contract and Confirm that the Annual Percentage Rate is greater than the minimum allowed percentage rate |
2 | Approved Contract Form List means a list of Approved Contract Forms provided by Capital One to [________]. |
Exh. A - 3
x) | Remaining Maturity Date |
a. | Confirm that the Number of Payments section within the Truth in Lending section of the Retail Sale Contract indicates a number of payments that does not exceed the maximum allowable number of payments |
b. | Review the Data Tape and confirm that the remaining term to maturity is within the stated allowable limits |
xi) | Outstanding Principal Balance |
a. | Review the Data Tape and confirm that the unpaid Outstanding Principal Balance as of the Cut-Off Date is within the stated allowable limits |
xii) | Final Schedule Payment Date |
a. | Review the Data Tape and confirm that the Final Scheduled Payment Due Date will occur on or before the latest allowable final payment date |
xiii) | Days Past Due |
a. | Review the data file and confirm the Receivable was not more than [ ] days past due as of the Cut-Off Date |
xiv) | Bankruptcy |
a. | Review the Receivable File and any applicable servicing notes and confirm there is no indication of pending bankruptcy or insolvency proceedings as of the Cut-Off Date |
xv) | Force Place Insurance |
a. | Review the servicing system and confirm the Receivable did not have Force Place Insurance as of the Cut-Off Date |
xvi) | Simple Interest Receivable |
a. | Confirm that interest under the Contract is calculated pursuant to the Simple Interest Method |
b. | Review the payment history and confirm the first payment was appropriately applied to principal and interest |
xvii) | Prepayment |
a. | Confirm the Contract contains the appropriate Prepayment Disclosures |
xviii) | If sections i through xvii are confirmed, then Test Pass |
Exh. A - 4
Representation
Compliance with Law
The Receivable complied at the time it was originated or made in all material respects with all requirements of applicable federal, state and local laws, and regulations thereunder, except where the failure to comply (i) was remediated or cured in all material respects prior to the Cut-Off Date, or (ii) would not render such Receivable unenforceable or create liability for COAR or the Issuer, as an assignee of such Receivable.
Documents
Retail Sale Contract
Servicing System/Data Tape
Approved Contract Form List
Procedures to be Performed
i) | Confirm the Contract Form number and revision date are on the Approved Contract Form List |
ii) | Confirm the Contract is complete |
a. | Confirm that all lines in the Contract are filled out appropriately |
b. | Confirm the Name and address of Creditor, APR, Finance Charge, Amount of Payments, Total of Payments and Total Sale Price are properly filled out |
c. | Confirm all lines on the Contract are completed or properly left blank |
iii) | Confirm the Amount Financed is correctly calculated |
a. | Calculate the Amount Financed using the Cash Price, Total Down Payment and Total Amount Paid on Buyers Behalf |
b. | Confirm the Calculated Amount Financed matches the Amount Financed as stated within the Truth in Lending section of the Contract |
iv) | Confirm the Total Sale Price is correctly calculated |
a. | Calculate the Total Sale Price by taking the difference of the Total of Payments as stated within the Truth in Lending section and the Total Down Payment as stated within the Itemization of Amount Financed |
b. | Confirm the Calculated Total Sale Price matches the Total Sale Price as stated within the Truth in Lending section of the Contract |
v) | Confirm the Total of Payments is correctly calculated |
a. | Calculate the Total of Payments by taking the product of the Number of Payments and Amount of Payments as stated within the Truth in Lending section of the Contract |
Exh. A - 5
b. | Confirm the Calculated Total of Payments from step (a) is equal to the Total of Payments as stated within the Truth in Lending section of the Contract |
c. | Calculate the Total of Payment by taking the sum of the Finance Charge and Amount Financed as stated within the Truth in Lending section of the Contract |
d. | Confirm the Calculated Total of Payments from step (c) is equal to the Total of Payments as stated within the Truth in Lending section of the Contract |
vi) | Confirm the APR is correctly calculated |
a. | Calculate the APR using information within the Truth in Lending section of the Contract |
b. | Confirm the Calculated APR is within an acceptable range of the APR as stated within the Truth in Lending Section of the Contract |
vii) | Confirm the first payment due date as stated within the When Payments are Due section of the Truth in Lending section of the Contract is within an acceptable timeframe of the Contract Date |
viii) | If Steps i through vii are confirmed, then Test Pass |
Exh. A - 6
Representation
Binding Obligation
The Receivable constitutes the legal, valid and binding payment obligation in writing of the Obligor, enforceable by the holder thereof in accordance with its terms, except (i) as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, liquidation or other similar laws and equitable principles relating to or affecting the enforcement of creditors rights generally and (ii) as such Receivable may be modified by the application after the Cut-Off Date of the Servicemembers Civil Relief Act, as amended, to the extent applicable to the related Obligor.
Documents
Retail Sale Contract
Procedures to be Performed
i) | Confirm the Contract Form number is on the Approved Contract Form List |
ii) | Confirm the borrower and co-borrower (if applicable) signed the Contract |
iii) | If Steps i and ii are confirmed, then Test Pass |
Exh. A - 7
Representation
Receivable in Force
The Receivable has not been satisfied, subordinated or rescinded nor do the records of the Servicer indicate that the related Financed Vehicle been released from the lien of such Receivable in whole or in part.
Documents
Servicing System/Data Tape
Title Documents
Procedures to be Performed
i) | Confirm the Receivable exists on the Servicing System as an active Receivable |
ii) | Confirm the title documents show Capital One, National Association or another Approved Party as the first lienholder |
iii) | If Steps i and ii are confirmed, then Test Pass |
Exh. A - 8
Representation
No Default; No Waiver
Except for payment delinquencies continuing for a period of not more than [ ] days as of the Cut-Off Date or the failure of the Obligor to maintain physical damage insurance covering the related Financed Vehicle in accordance with the requirements of the Receivable, the records of the Servicer did not disclose that any default, breach, violation or event permitting acceleration under the terms of the Receivable existed as of the Cut-Off Date.
Documents
Receivable File
Servicing System/Data Tape
Procedures to be Performed
i) | Confirm there is no indication of a default, breach, violation or event that would permit acceleration under the terms of the Receivable except for payment default within [ ] days of the Cut-Off Date |
ii) | Confirm that no continuing condition would constitute a default, breach, violation or event permitting acceleration under the terms of the Receivable |
iii) | If Steps (i) and (ii) are confirmed, then Test Pass |
Exh. A - 9
Representation
Insurance
The Receivable requires that the Obligor thereunder obtain physical damage insurance covering the related Financed Vehicle.
Documents
Retail Sale Contract
Procedures to be Performed
i) | Confirm the Retail Sale Contract contains language that required the Obligor to obtain and maintain insurance against physical damage to the Financed Vehicle |
ii) | If confirmed, then Test Pass |
Exh. A - 10
Representation
No Government Obligor
The Obligor on the Receivable is not the United States of America or any state thereof or any local government, or any agency, department, political subdivision or instrumentality of the United States of America or any state thereof or any local government.
Documents
Retail Sale Contract
Procedures to be Performed
i) | Review the buyer section on the Contract and confirm a persons or business name is reported |
ii) | If the buyer section on the Contract does not report a persons or business name, confirm internet search results do not indicate the buyer to be a government agency, department, political subdivision or instrumentality |
iii) | If (i) and (ii) are confirmed, then Test Pass |
Exh. A - 11
Representation
Assignment
No Receivable has been originated in, or is subject to the laws of, any jurisdiction under which the sale, transfer, assignment, contribution, conveyance or pledge of such Receivable would be unlawful, void, or voidable.
Documents
Retail Sale Contract
Receivable File
Servicing System
Procedures to be Performed
i) | Confirm the Retail Sale Contract was completed on a contract form included in the Approved Contract Form List |
ii) | If Step (i) is confirmed, then Test Pass |
Exh. A - 12
Representation
Good Title
As of the Closing Date and immediately prior to the sale and transfer contemplated in the Purchase Agreement, the Bank had good and marketable title to and was the sole owner of each Receivable free and clear of all Liens created by the Bank (except any Lien which will be released prior to assignment of such Receivable thereunder), and, immediately upon the sale and transfer by the Bank to COAR, COAR will have good and marketable title to each Receivable, free and clear of all Liens created by COAR (other than Permitted Liens). Immediately upon the sale and transfer by COAR to the Issuer pursuant to the Sale Agreement, the Issuer will have good and marketable title to each Receivable, free and clear of all Liens created by the Issuer (other than Permitted Liens).
Documents
Title Documents
Procedures to be Performed
i) | Confirm the title documents show Capital One, National Association or another Approved Party as the first lienholder |
ii) | Review the servicing system and confirm the Rpt. Branch Code in the system matches the Rpt. Branch Code for the transaction related to the deal |
iii) | If (i) and (ii) are confirmed, then Test Pass |
Exh. A - 13
Representation
Characterizations of Receivables
Each Receivable constitutes either tangible chattel paper, electronic chattel paper, an account, an instrument, or a general intangible, each as defined in the UCC.
Documents
Contract
Title Documents
Approved Contract Form List
Procedures to be Performed
i) | Confirm the Contract form number is on the Approved Contract Form List |
ii) | Confirm the Amount Financed as reported on the Contract is greater than zero |
iii) | Confirm there is documentation of a lien against the financed vehicle |
iv) | If tests (i) through (iii) are confirmed, then Test Pass |
Exh. A - 14
Representation
One Original
There is only one executed original, electronically authenticated original or authoritative copy of the Contract (in each case within the meaning of the UCC) related to each Receivable.
Documents
Contract
Procedures to be Performed
i) | Confirm there is a final version of the Contract available for review |
ii) | Confirm the Contract was signed by the buyer(s) and the Dealer |
iii) | If (i) and (ii) are confirmed, then Test Pass |
Exh. A - 15
Representation
No Defenses
The records of the Servicer do not reflect any material facts which have not been remediated or cured which would constitute the basis for any right of rescission, offset, claim, counterclaim or defense with respect to such Receivable or the same being asserted or threatened with respect to such Receivable.
Documents
Receivable File
Procedures to be Performed
i) | Review the Receivable File and servicing system and confirm there is no evidence of litigation or other attorney involvement as of the Cut-Off Date |
ii) | If confirmed, then Test Pass |
Exh. A - 16
Exhibit 24.2
Capital One Auto Receivables, LLC
November 3, 2021
I, Sean Flanagan, am Treasurer of Capital One Auto Receivables, LLC (the Company) and do certify that the attached resolutions were duly adopted by unanimous written consent of the board of managers of the Company on November 3, 2021, and such resolutions have not been amended, rescinded or otherwise modified.
/s/ Sean Flanagan |
Name: Sean Flanagan |
Title: Treasurer |
I, Eric Bauder, as Assistant Vice President of the Company, certify that Sean Flanagan is the duly elected and qualified Treasurer of the Company and that the signature above is his signature.
EXECUTED as of November 3, 2021.
/s/ Eric Bauder |
Name: Eric Bauder |
Title: Assistant Vice President |
* * *
RESOLVED, that the President, Treasurer, Deputy Controller, Managing Vice President, Accounting, Secretary, Tax Officer and any Assistant Secretary, any Assistant Vice President and any other duly appointed officer of the Company (each, a Designated Officer and collectively, the Designated Officers) are each hereby authorized, in the name and on behalf of the Company, to prepare, execute and file, or cause to be prepared and filed with the SEC (i) a registration statement on Form SF-3 for registration under the Securities Act of 1933, as amended (the Securities Act), in an amount to be determined by the Company and CONA, of asset-backed securities (the Securities) secured by motor vehicle retail installment sale contracts and other related assets, and any and all amendments (including, without limitation, post-effective amendments) or supplements thereto, together with the prospectus, all documents required as exhibits to such registration statement or any amendments or supplements and other documents which may be required to be filed with the SEC with respect to the registration of the Securities under the Securities Act (such registration statement, the New Shelf Registration Statement) and (ii) any other documents, including without limitation Form 8-Ks, Form 10-Ks, Form 10-Ds, Form ABS15-Gs or letters or agreements relating to the asset-backed securities issued in connection with the registration statement on Form SF-3, and to take any and all other action that any such Designated Officer shall deem necessary or advisable in connection with the foregoing;
* * *
RESOLVED FURTHER, that the foregoing resolutions shall not limit the persons who are authorized to execute the New Shelf Registration Statement and it is hereby provided that each of the members of the Board and each of the officers of the Company are authorized, but not required, to sign the New Shelf Registration Statement and each member of the Board and each officer of the Company signing the New Shelf Registration Statement is authorized to appoint an agent and/or attorney-in-fact to execute future amendments and other documents relating to the New Shelf Registration Statement.
Exhibit 36.1
Form of Certification
I, [identify the certifying individual], certify as of [the date of the final prospectus under 17 CFR §230.424] that:
1. | I have reviewed the prospectus relating to the [Class A-1, Class A-2[-A], [Class A-2-B], Class A-3, Class A-4, Class B, Class C [and Class D Notes]] of Capital One Prime Auto Receivables Trust 20[ ][ ] (the securities) and am familiar with, in all material respects, the following: The characteristics of the securitized assets underlying the offering (the securitized assets), the structure of the securitization, and all material underlying transaction agreements as described in the prospectus; |
2. | Based on my knowledge, the prospectus does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading; |
3. | Based on my knowledge, the prospectus and other information included in the registration statement of which it is a part fairly present, in all material respects, the characteristics of the securitized assets, the structure of the securitization and the risks of ownership of the securities, including the risks relating to the securitized assets that would affect the cash flows available to service payments or distributions on the securities in accordance with their terms; and |
4. | Based on my knowledge, taking into account all material aspects of the characteristics of the securitized assets, the structure of the securitization, and the related risks as described in the prospectus, there is a reasonable basis to conclude that the securitization is structured to produce, but is not guaranteed by this certification to produce, expected cash flows at times and in amounts to service scheduled payments of interest and the ultimate repayment of principal on the securities (or other scheduled or required distributions on the securities, however denominated) in accordance with their terms as described in the prospectus. |
5. | The foregoing certifications are given subject to any and all defenses available to me under the federal securities laws, including any and all defenses available to an executive officer that signed the registration statement of which the prospectus referred to in this certification is part. |
Date: [ ] [ ], 20[ ].
By: |
[Name] |
Title: (chief executive officer of the depositor) |
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