(a) The Receivables were selected using selection procedures that were not known or intended by Santander Consumer to be adverse to the Issuer.
(b) The Receivables and the other Purchased Assets have been validly assigned by Santander Consumer to the Purchaser.
(c) The information with respect to the Receivables transferred on the Closing Date as set forth in the Schedule of Receivables was true and correct in all material respects as of the Cut-Off Date.
(d) No Receivables are pledged, assigned, sold, subject to a security interest or otherwise conveyed other than pursuant to the Transaction Documents. Santander Consumer has not authorized the filing of and is not aware of any financing statements against Santander Consumer or an Originator 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 Purchaser which security interest is prior to all other Liens (other than Permitted Liens) and is enforceable as such against all other creditors of and purchasers and assignees from Santander Consumer.
(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 to the extent that they are applicable.
SECTION 3.3 Representations and Warranties of Santander Consumer as to each Receivable. On the date hereof, Santander Consumer hereby makes the representations and warranties set forth on Schedule II to the Purchaser as to the Receivables sold, transferred, assigned, contributed and otherwise conveyed to the Purchaser under this Agreement on which such representations and warranties the Purchaser relies in acquiring the Receivables. Such representations and warranties shall survive the conveyance of the Purchased Assets to the Purchaser pursuant to this Agreement, the sale of the Receivables to the Issuer under the Sale and Servicing Agreement, and the Grant of the Receivables by the Issuer to the Indenture Trustee pursuant to the Indenture. Notwithstanding any statement to the contrary contained herein or in any other Transaction Document, Santander Consumer 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 the Transaction Documents. Santander Consumer hereby agrees that the Issuer shall have the right to enforce any and all rights under this
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Agreement assigned to the Issuer under the Sale and Servicing Agreement, including the right to cause Santander Consumer to repurchase any Receivable with respect to which it is in breach of any of its representation and warranties set forth in Schedule II, directly against Santander Consumer as though the Issuer were a party to this Agreement, and the Issuer shall not be obligated to exercise any such rights indirectly through the Depositor.
SECTION 3.4 Repurchase upon Breach. Upon discovery by or notice to the Purchaser or Santander Consumer 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 or the Noteholders in such Receivable, 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 Certificate shall be deemed to constitute prompt notice by Santander Consumer and the Purchaser of such breach; provided, further, that the failure to give such notice shall not affect any obligation of Santander Consumer hereunder. If the breach materially and adversely affects the interests of the Purchaser, the Issuer or the Noteholders in such Receivable, then Santander Consumer shall either (a) correct or cure such breach or (b) repurchase such Receivable from the Purchaser (or its assignee), in either case on or before the Payment Date following the end of the Collection Period which includes the 60th day (or, if Santander Consumer elects, an earlier date) after the date Santander Consumer 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 does not affect the ability of the Purchaser (or its assignee) to receive and retain timely payment in full on such Receivable. Any such purchase by Santander Consumer shall be at a price equal to the related Repurchase Price. In consideration for such repurchase, Santander Consumer shall make (or shall cause to be made) a payment to the Purchaser equal to the Repurchase Price by depositing such amount into the Collection Account prior to noon, New York City time, on such date of repurchase (or, if Santander Consumer elects, an earlier date). Upon payment of such Repurchase Price by Santander Consumer, the Purchaser (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 Santander Consumer to evidence such release, transfer or assignment or more effectively vest in Santander Consumer or its designee any Receivable and related Purchased Assets repurchased pursuant to this Section 3.4. It is understood and agreed that the obligation of Santander Consumer to repurchase any Receivable as described above shall constitute the sole remedy respecting such breach available to the Purchaser.
SECTION 3.5 Protection of Title.
(a) Santander Consumer shall authorize and file such financing statements and cause to be authorized and filed such continuation and other 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 Purchaser under this Agreement in the Receivables (other than any Related Security with respect thereto, to the extent that the interest of the Purchaser therein cannot be perfected by the filing of a financing statement). Santander Consumer shall deliver (or cause to be delivered) to the Purchaser file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing.
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(b) Santander Consumer shall notify the Purchaser in writing within ten (10) days following the occurrence of (i) any change in Santander Consumers organizational structure as a corporation, (ii) any change in Santander Consumers location (within the meaning of Section 9-307 of the UCC of all applicable jurisdictions) and (iii) any change in Santander Consumers name, and (A) shall have taken 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 possible to take such action in advance) reasonably necessary or advisable in the opinion of the Purchaser to amend all previously filed financing statements or continuation statements described in paragraph (a) above and (B) shall have delivered to the Indenture Trustee within 30 days after such change 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 in the Receivables or (b) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest.
(c) Santander Consumer shall maintain (or shall cause its Sub-Servicer to maintain) accounts and records as to each Receivable accurately and in sufficient detail to permit (i) the reader thereof to know at any time the status of such Receivable, including payments and recoveries made and payments owing (and the nature of each) and (ii) reconciliation between payments or recoveries on (or with respect to) each Receivable and the amounts from time to time deposited in the Collection Account in respect of such Receivable.
(d) Santander Consumer 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 Purchaser (or any subsequent assignee of the Purchaser) 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.
(e) If at any time Santander Consumer 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, Santander Consumer 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 Purchaser (or any subsequent assignee of the Purchaser).
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, Santander Consumer shall not sell, pledge, assign or transfer the Receivables or other property transferred to the Purchaser to any other Person, or grant, create, incur, assume or suffer to exist any Lien (other than Permitted Liens) on any interest therein, and Santander Consumer shall defend the right, title and interest of the Purchaser in, to and under such Receivables or other property transferred to the Purchaser against all claims of third parties claiming through or under Santander Consumer.
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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, assignments, contributions and conveyances without recourse 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 Purchased Assets shall not be part of Santander Consumers estate in the event of a bankruptcy or insolvency of Santander Consumer. The sales and transfers by Santander Consumer of the Receivables and related Purchased Assets hereunder are and shall be without recourse to, or representation or warranty (express or implied) by, Santander Consumer, except as otherwise specifically provided herein. The limited rights of recourse specified herein against Santander Consumer are intended to provide a remedy for breach of representations and warranties relating to the condition of the property sold, rather than to the collectability of the Receivables.
(b) Notwithstanding the foregoing, in the event that the Receivables and other Purchased Assets are held to be property of Santander Consumer, 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 provided for in Section 2.1 shall be deemed to be a grant by Santander Consumer of, and Santander Consumer hereby grants to the Purchaser, 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 Santander Consumer hereunder;
(iii) The possession by the Purchaser or its agent of the Receivable Files and any other property as 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 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 the Purchaser for the purpose of perfecting such security interest under applicable law.
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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 facsimile or by electronic transmission, and addressed in each case as specified on Schedule I to the Sale and Servicing 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 shall be given by first class mail, postage prepaid, at the address of such Noteholder 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 mailed within the time prescribed in this Agreement shall be conclusively presumed to have been duly given, whether or not the Noteholder 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, 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 Santander Consumer and the Purchaser 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) Santander Consumer or the Purchaser 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 Santander Consumer or the Purchaser 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 4.6 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.
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(b) This Agreement may also be amended from time to time by Santander Consumer and the Purchaser, with the consent of the Holders of Notes evidencing not less than a majority of the aggregate principal 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. 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 Santander Consumer and the Purchaser 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 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 Santander Consumer and the Purchaser 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, Santander Consumer and the Purchaser 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 4.6, Santander Consumer 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, Santander Consumer 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.
(f) Notwithstanding subsections (a) and (b) of this Section 4.6, this Agreement may only be amended by the Seller and the Purchaser 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 the Purchaser or an Opinion of Counsel delivered to the Indenture Trustee and the Owner Trustee, materially and adversely affect the interests of the Certificateholders.
SECTION 4.7 Waivers. No failure or delay on the part of the Purchaser, the Servicer, Santander Consumer, 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
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further exercise thereof or the exercise of any other power or right. No notice to or demand on the Purchaser or Santander Consumer 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, Santander Consumer expressly acknowledges and consents to the sale of the Purchased Assets and the assignment of all rights of the Purchaser under this Agreement by the Purchaser to the Issuer pursuant to the Sale and Servicing Agreement and the Grant of a security interest in the Receivables, the other Purchased Assets and the Issuers rights under this Agreement by the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the Noteholders. In addition, Santander Consumer hereby acknowledges and agrees that for so long as the Notes are outstanding, the Indenture Trustee will have the right to exercise all powers, privileges and claims of the Purchaser under this Agreement in the event that the Purchaser 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 hereto 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
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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 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 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 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 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 4.15 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 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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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
| SANTANDER CONSUMER USA INC. | ||
| By: |
| |
| Name: |
||
| Title: |
| S-1 | Purchase Agreement (2016-1) |
| SANTANDER DRIVE AUTO RECEIVABLES LLC | ||
| By: |
| |
| Name: |
||
| Title: |
| S-2 | Purchase Agreement (2016-1) |
EXHIBIT A
FORM OF
ASSIGNMENT PURSUANT TO PURCHASE AGREEMENT
[ ], 2016
For value received, in accordance with the Purchase Agreement (the Agreement) dated as of February 17, 2016, between Santander Consumer USA Inc., an Illinois corporation (Santander Consumer), and Santander Drive Auto Receivables LLC, a Delaware limited liability company (the Purchaser), on the terms and subject to the conditions set forth in the Agreement, Santander Consumer does hereby irrevocably sell, transfer, assign, contribute and otherwise convey to the Purchaser on the Closing Date, without recourse (subject to the obligations in the Agreement), all right, title and interest of Santander Consumer, whether now owned or hereafter acquired, in, to and under the Receivables set forth on the schedule of Receivables delivered by Santander Consumer to the Purchaser on the date hereof, the Collections after the Cut-Off Date, the Receivable Files and the Related Security relating thereto, which sale shall be effective as of the Cut-Off Date.
The foregoing sale does not constitute and is not intended to result in an assumption by the Purchaser of any obligation of any 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.
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| A-1 | Purchase Agreement (2016-1) |
IN WITNESS HEREOF, the undersigned has caused this assignment to be duly executed as of the date first above written.
| SANTANDER CONSUMER USA INC. | ||
| By: |
| |
| Name: |
||
| Title: |
| A-2 | Purchase Agreement (2016-1) |
SCHEDULE I
PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS
In addition to the representations, warranties and covenants contained in the Agreement, Santander Consumer hereby represents, warrants, and covenants to the Purchaser as follows on the Closing 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 the Purchaser, which security interest is prior to all other Liens, and is enforceable as such as against creditors of and purchasers from Santander Consumer.
2. The Receivables constitute chattel paper, accounts, instruments or general intangibles, within the meaning of the UCC.
3. Immediately prior to the sale, assignment and transfer thereof pursuant to this Agreement, each Receivable was secured by a first priority validly perfected security interest in the related Financed Vehicle in favor of the applicable 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 applicable Originator (or its assignee), as secured party.
Creation
4. Immediately prior to the sale, transfer, assignment and conveyance of a Receivable by Santander Consumer to the Purchaser, Santander Consumer owned and had good and marketable title to such Receivable free and clear of any Lien and immediately after the sale, transfer, assignment and conveyance of such Receivable to the Purchaser, the Purchaser will have good and marketable title to such Receivable free and clear of any Lien.
5. Santander Consumer has received all consents and approvals to the sale of the Receivables hereunder to the Purchaser required by the terms of the Receivables that constitute instruments.
Perfection
6. Santander Consumer has caused or will have caused, within ten days after 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 Santander Consumer to the Purchaser, and the security interest in the Receivables granted to the Purchaser 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/Purchaser.
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7. With respect to Receivables that constitute instruments 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; 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. Santander Consumer has not authorized the filing of, and is not aware of, any financing statements against Santander Consumer that include a description of collateral covering the Receivables other than any financing statement (i) relating to the security interest granted to the Purchaser hereunder or (ii) that has been terminated.
9. Santander Consumer is not aware of any material judgment, ERISA or tax lien filings against Santander Consumer.
10. Neither Santander Consumer 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, tangible chattel paper or electronic chattel paper that constitute or evidence the Receivables has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Purchaser, the Issuer or the Indenture Trustee.
Survival of Perfection Representations
12. Notwithstanding any other provision of this Agreement or any other Transaction Document, 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 Transaction Documents and the Notes have been finally and fully paid and performed.
No Waiver
13. Santander Consumer 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
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) either (A) has been originated by a Dealer to finance the retail sale by that Dealer of the related Financed Vehicle and has been purchased by Santander Consumer in accordance with the terms of a dealer agreement between Santander Consumer and that Dealer, (B) has been originated by Santander Consumer or (C) has been acquired by Santander Consumer in accordance with the terms of a purchase agreement between the applicable Originator and Santander Consumer;
(iii) as of the Closing Date, is secured by a first priority validly perfected security interest in the Financed Vehicle in favor of the applicable 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 applicable 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 Principal Balance over the original term; provided, that the amount of the first or last 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 and denominated in Dollars;
(viii) is secured by a new or used automobile, light-duty truck or van;
(ix) has a Contract Rate of at least 0.00%;
(x) had an original term to maturity of not more than 75 months and each Receivable has a remaining term to maturity, as of the Cut-Off Date, of not more than 75 months and not less than 4 months;
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(xi) has an outstanding Principal Balance of at least $505.23 and no more than $114,503.79;
(xii) has a final scheduled payment due on or before May 30, 2022;
(xiii) was not more than 30 days past due as of the Cut-Off Date;
(xiv) was not noted in the records of the Originator or the Servicer as being the subject of any bankruptcy or insolvency proceeding;
(xv) is not subject to a force-placed Insurance Policy on the related Financed Vehicle;
(xvi) is a Simple Interest Receivable, and scheduled payments under such Receivable have been applied in accordance with the method for allocating principal and interest set forth in such Receivable; and
(xvii) 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.
| (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. |
| (c) | Binding Obligation. The Receivable constitutes the legal, valid and binding payment obligation in writing of the related 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 has the related Financed Vehicle been released from the lien of such Receivable in whole or in part. |
| (e) | No Default; No Waiver. Except for payment delinquencies continuing for a period of not more than 30 days as of the Cut-Off Date, 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 or that any continuing condition that with notice or lapse of time, or both, would constitute a default, breach, violation or event permitting acceleration under the terms of the Receivable had arisen as of the Cut-Off Date and the Seller has not waived any of the foregoing. |
| (f) | Insurance. The Receivable requires that the Obligor thereunder obtain comprehensive and collision insurance covering the related Financed Vehicle. |
| -2- | Purchase Agreement (2016-1) |
| (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, setting over, conveyance or pledge of such Receivable would be unlawful, void, or voidable. |
| (i) | Good Title. As of the Closing Date and immediately prior to the sale and transfer contemplated in the Sale and Servicing Agreement, the Seller had good and marketable title to and was the sole owner of each Receivable free and clear of all Liens (except any Lien which will be released prior to assignment of such Receivable hereunder), and, immediately upon the sale and transfer thereof, the Issuer will have good and marketable title to each Receivable, free and clear of all Liens (other than Permitted Liens). |
| (j) | Characterization of Receivables. Each Receivable constitutes either tangible 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 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 facts which would give rise to 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. |
| -3- | Purchase Agreement (2016-1) |
Exhibit 10.2
SALE AND SERVICING AGREEMENT
by and among
SANTANDER DRIVE AUTO RECEIVABLES TRUST 2016-1,
as Issuer
SANTANDER DRIVE AUTO RECEIVABLES LLC,
as Seller
SANTANDER CONSUMER USA INC.,
as Servicer
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Indenture Trustee
Dated as of February 17, 2016
Sale and Servicing Agreement (2016-1)
TABLE OF CONTENTS
| Page | ||||||
| ARTICLE I |
DEFINITIONS AND USAGE |
1 | ||||
| SECTION 1.1 |
Definitions |
1 | ||||
| SECTION 1.2 |
Other Interpretive Provisions |
1 | ||||
| ARTICLE II |
CONVEYANCE OF TRANSFERRED ASSETS |
2 | ||||
| SECTION 2.1 |
Conveyance of Transferred Assets |
2 | ||||
| SECTION 2.2 |
Custody of Receivable Files |
2 | ||||
| ARTICLE III |
ADMINISTRATION AND SERVICING OF RECEIVABLES AND TRUST PROPERTY |
5 | ||||
| SECTION 3.1 |
Duties of Servicer |
5 | ||||
| SECTION 3.2 |
Collection of Receivable Payments |
6 | ||||
| SECTION 3.3 |
Repossession of Financed Vehicles |
7 | ||||
| SECTION 3.4 |
Maintenance of Security Interests in Financed Vehicles |
7 | ||||
| SECTION 3.5 |
Covenants of Servicer |
8 | ||||
| SECTION 3.6 |
Purchase of Receivables Upon Breach |
8 | ||||
| SECTION 3.7 |
Servicing Fee |
8 | ||||
| SECTION 3.8 |
Servicers Certificate |
9 | ||||
| SECTION 3.9 |
Annual Officers Certificate; Notice of Servicer Replacement Event |
9 | ||||
| SECTION 3.10 |
Annual Registered Public Accounting Firm Attestation |
9 | ||||
| SECTION 3.11 |
Servicer Expenses |
10 | ||||
| SECTION 3.12 |
Exchange Act Filings |
10 | ||||
| SECTION 3.13 |
Noteholder Communication |
10 | ||||
| ARTICLE IV |
DISTRIBUTIONS; ACCOUNTS STATEMENTS TO THE CERTIFICATEHOLDERS AND THE NOTEHOLDERS |
11 | ||||
| SECTION 4.1 |
Establishment of Accounts |
11 | ||||
| SECTION 4.2 |
Remittances |
13 | ||||
| SECTION 4.3 |
Additional Deposits and Payments |
14 | ||||
| SECTION 4.4 |
Distributions |
14 | ||||
| SECTION 4.5 |
Net Deposits |
16 | ||||
| SECTION 4.6 |
Statements to Noteholders and Certificateholders |
16 | ||||
| SECTION 4.7 |
No Duty to Confirm |
18 | ||||
| ARTICLE V |
THE SELLER |
18 | ||||
| SECTION 5.1 |
Representations and Warranties of Seller |
18 | ||||
| SECTION 5.2 |
Liability of Seller; Indemnities |
20 | ||||
| SECTION 5.3 |
Merger or Consolidation of, or Assumption of the Obligations of, Seller |
21 | ||||
| SECTION 5.4 |
Limitation on Liability of Seller and Others |
21 | ||||
| SECTION 5.5 |
Seller May Own Notes |
22 | ||||
| SECTION 5.6 |
Sarbanes-Oxley Act Requirements |
22 | ||||
| SECTION 5.7 |
Compliance with Organizational Documents |
22 |
| -i- | Sale and Servicing Agreement (2016-1) |
TABLE OF CONTENTS
(continued)
| Page | ||||||
| ARTICLE VI |
THE SERVICER |
22 | ||||
| SECTION 6.1 |
Representations of Servicer |
22 | ||||
| SECTION 6.2 |
Indemnities of Servicer |
23 | ||||
| SECTION 6.3 |
Merger or Consolidation of, or Assumption of the Obligations of, Servicer |
24 | ||||
| SECTION 6.4 |
Limitation on Liability of Servicer and Others |
25 | ||||
| SECTION 6.5 |
Delegation of Duties |
25 | ||||
| SECTION 6.6 |
Santander Consumer Not to Resign as Servicer |
26 | ||||
| SECTION 6.7 |
Servicer May Own Notes |
26 | ||||
| ARTICLE VII |
TERMINATION OF SERVICER |
26 | ||||
| SECTION 7.1 |
Termination of Servicer |
26 | ||||
| SECTION 7.2 |
Notification to Noteholders |
27 | ||||
| ARTICLE VIII |
OPTIONAL PURCHASE |
27 | ||||
| SECTION 8.1 |
Optional Purchase of Trust Estate |
27 | ||||
| ARTICLE IX |
MISCELLANEOUS PROVISIONS |
28 | ||||
| SECTION 9.1 |
Amendment |
28 | ||||
| SECTION 9.2 |
Protection of Title |
29 | ||||
| SECTION 9.3 |
Other Liens or Interests |
30 | ||||
| SECTION 9.4 |
Transfers Intended as Sale; Security Interest |
31 | ||||
| SECTION 9.5 |
Information Requests |
32 | ||||
| SECTION 9.6 |
Notices, Etc. |
32 | ||||
| SECTION 9.7 |
Choice of Law |
32 | ||||
| SECTION 9.8 |
Headings |
32 | ||||
| SECTION 9.9 |
Counterparts |
32 | ||||
| SECTION 9.10 |
Waivers |
32 | ||||
| SECTION 9.11 |
Entire Agreement |
33 | ||||
| SECTION 9.12 |
Severability of Provisions |
33 | ||||
| SECTION 9.13 |
Binding Effect |
33 | ||||
| SECTION 9.14 |
Acknowledgment and Agreement |
33 | ||||
| SECTION 9.15 |
Cumulative Remedies |
33 | ||||
| SECTION 9.16 |
Nonpetition Covenant |
33 | ||||
| SECTION 9.17 |
Submission to Jurisdiction; Waiver of Jury Trial |
34 | ||||
| SECTION 9.18 |
Limitation of Liability |
34 | ||||
| SECTION 9.19 |
Third-Party Beneficiaries |
35 | ||||
| SECTION 9.20 |
Regulation AB |
35 | ||||
| SECTION 9.21 |
Information to Be Provided by the Indenture Trustee |
35 | ||||
| SECTION 9.22 |
Form 8-K Filings |
36 | ||||
| SECTION 9.23 |
Relevant Trustee |
37 | ||||
| SECTION 9.24 |
Dispute Resolution |
37 |
| -ii- | Sale and Servicing Agreement (2016-1) |
TABLE OF CONTENTS
(continued)
| Page | ||||||
| Schedule I |
Notice Addresses |
I-1 | ||||
| Exhibit A |
Form of Assignment pursuant to Sale and Servicing Agreement |
A-1 | ||||
| Exhibit B |
Perfection Representations, Warranties and Covenants |
B-1 | ||||
| Exhibit C |
Servicing Criteria to be Addressed in Indenture Trustees and Servicers Assessment of Compliance |
C-1 | ||||
| Exhibit D |
Form of Indenture Trustees Annual Certification |
D-1 | ||||
| Appendix A |
Definitions |
| -iii- | Sale and Servicing Agreement (2016-1) |
SALE AND SERVICING AGREEMENT, dated as of February 17, 2016 (as amended, supplemented or otherwise modified and in effect from time to time, this Agreement), by and among SANTANDER DRIVE AUTO RECEIVABLES TRUST 2016-1, a Delaware statutory trust (the Issuer), SANTANDER DRIVE AUTO RECEIVABLES LLC, a Delaware limited liability company, as seller (the Seller), SANTANDER CONSUMER USA INC., an Illinois corporation (Santander Consumer), as servicer (in such capacity, the Servicer), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as indenture trustee (the Indenture Trustee).
WHEREAS, the Issuer desires to purchase from the Seller 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 and vans;
WHEREAS, the Seller is willing to sell such portfolio of motor vehicle receivables and related property to the Issuer; and
WHEREAS, Santander Consumer 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 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.
Sale and Servicing Agreement (2016-1)
ARTICLE II
CONVEYANCE OF TRANSFERRED ASSETS
SECTION 2.1 Conveyance of Transferred Assets. In consideration of the Issuers sale and delivery to, or upon the order of, the Seller of all of the Notes and the Certificate on the Closing 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 Transferred Assets, as evidenced by an Assignment substantially in the form of Exhibit A 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 applicable Originator to the Obligors, the Dealers 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 Custody of Receivable Files.
(a) Custody. To assure uniform quality in servicing the Receivables and to reduce administrative costs, the Issuer and the Indenture Trustee, not in its individual capacity but solely as Indenture Trustee, upon the execution and delivery of this Agreement, hereby revocably appoint the Servicer, and the Servicer hereby accepts such appointment, to act as the agent of the Issuer and the Indenture Trustee as custodian of the Receivable Files, which are hereby or will hereby be constructively delivered to the Indenture Trustee (or its agent or designee), as pledgee of the Issuer pursuant to the Indenture. Receivable File means, with respect to each Receivable, the following documents or instruments (but only to the extent applicable to such Receivable), which may be held in tangible paper form or electronic form:
| (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 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 applicable 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 and/or hold Certificates of Title; and |
| (iii) | any and all other documents that the Servicer or the Seller keeps on file, in accordance with its Customary Servicing Practices, relating to a Receivable, an Obligor or a Financed Vehicle. |
| 2 | Sale and Servicing Agreement (2016-1) |
(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. The Servicer will promptly report to the Issuer and the Indenture Trustee any failure on its part to hold a material portion of the Receivable Files or to maintain its accounts, records, and computer systems as herein provided and shall promptly take appropriate action to remedy any such failure. 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.
(c) Maintenance of and Access to Records. The Servicer will maintain 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 6.5). 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 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 at the respective offices of the Servicer.
(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. 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.
(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 6.2, 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 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 or the enforcement of its rights (including indemnification rights) under the Transaction Documents; provided, however, that the Servicer as custodian will not be liable (i) to the Indenture Trustee or the Issuer for any portion of any such amount
| 3 | Sale and Servicing Agreement (2016-1) |
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 2.2(d). The provisions of this Section 2.2(f) shall survive the 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 2.2(f), to the extent not paid by the Servicer, shall be paid by the Issuer in accordance with Section 4.4 of this Agreement or Section 5.4(b) of the Indenture, as applicable.
(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 Santander Consumer 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 7.1, the appointment of the Servicer as custodian hereunder may be terminated by the Indenture Trustee, or by the Noteholders of Notes evidencing not less than a majority of the Note Balance of the Controlling Class, in the same manner as the Indenture Trustee or such Noteholders may terminate the rights and obligations of the Servicer under Section 7.1. As soon as practicable after any termination of such appointment, the Servicer will deliver to the Indenture Trustee (or, at the direction of the Indenture Trustee, to its agent) the Receivable Files and the related accounts and records maintained by the Servicer at such place or places as the Indenture Trustee may reasonably designate.
(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.
| 4 | Sale and Servicing Agreement (2016-1) |
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY
SECTION 3.1 Duties of Servicer.
(a) The Servicer is hereby appointed by the Issuer and authorized to act as agent for the Issuer and in such capacity shall manage, service, administer and make collections on the Receivables, and perform the other actions required by the Servicer under this Agreement. The Servicer agrees that its servicing of the Receivables will be carried out 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 Servicers duties will include collection and posting of all payments, responding to inquiries of Obligors on such Receivables, investigating delinquencies, sending invoices or payment coupons to Obligors, reporting any required tax information to Obligors, accounting for Collections and furnishing monthly and annual statements to the Indenture Trustee with respect to distributions and performing the other duties specified herein. 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. No payments or disbursements shall 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) 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. Without limiting the generality of the foregoing, the Servicer is hereby authorized and empowered to execute and deliver, on behalf of itself, the Issuer, the Owner Trustee, the Indenture Trustee, the 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 the 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 legal proceeding to enforce a Receivable or an Insurance Policy or to commence or participate in any other legal 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 legal proceeding to enforce a Receivable or an Insurance Policy, 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 enforcement suit or legal 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
| 5 | Sale and Servicing Agreement (2016-1) |
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, required by the laws of any jurisdiction 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 7.1, and, in any case, in a manner which the Indenture Trustee 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.
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. Subject to Section 3.5, the Servicer may grant extensions, rebates, deferrals, amendments, modifications, temporary reduction in payments or adjustments 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 immediately prior to the Class E Final Scheduled Payment Date, (ii) reduces the Contract Rate with respect to any Receivable other than as required by applicable law (including, without limitation, the Servicemembers Civil Relief Act) or court order or (iii) reduces the Principal Balance with respect to any Receivable other than (A) as required by applicable law, (B) in connection with a settlement in the event the Receivable becomes a Defaulted Receivable or (C) in connection with a Cram Down Loss relating to such Receivable, it will promptly purchase such Receivable in the manner provided in Section 3.6. The Servicer may in its discretion waive any late payment charge or any other fees that may be collected in the ordinary course of servicing a Receivable. The Servicer shall not be required to make any advances of funds or guarantees regarding collections, cash flows or distributions. Payments on the Receivables, including payoffs, made in accordance with the related documentation for such Receivables, shall be posted to the Servicers Obligor records in accordance with the Servicers Customary Servicing Practices. Such payments shall be allocated to principal, interest or other items in accordance with the related documentation for such Receivables.
(b) Subject to the proviso of the second sentence of Section 3.2(a), the Servicer and its Affiliates may engage in any marketing practice or promotion or any sale of any products, goods or services 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.
(c) Notwithstanding anything in this Agreement to the contrary, the Servicer may refinance any Receivable and deposit the full outstanding Principal Balance of such Receivable
| 6 | Sale and Servicing Agreement (2016-1) |
into the Collection Account. The receivable created by such refinancing shall not be property of the Issuer. The Servicer and its Affiliates may also sell insurance or debt cancellation products, including products which result in the cancellation 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.
(d) Records documenting collection efforts shall be maintained during the period a Receivable is delinquent in accordance with the Servicers Customary Servicing Practices. Such records shall be maintained on at least a periodic basis that is not less frequent than as prescribed by the Servicers Customary Servicing Practices, 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) in accordance with the Servicers Customary Servicing Practices.
(e) The Servicer shall not be required to maintain a fidelity bond or errors and omissions policy.
SECTION 3.3 Repossession of Financed Vehicles. 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 and liquidate the Financed Vehicle securing any Receivable as to which the Servicer has determined eventual payment in full is unlikely; provided, however, that the Servicer may elect not to repossess a Financed Vehicle if in its sole discretion it determines that repossession will not increase the amounts described in clauses (a) through (c) of the definition of Liquidation Proceeds by an amount greater than the expense of such repossession or that the proceeds ultimately recoverable with respect to such Receivable would be increased by forbearance. The Servicer is authorized as it deems necessary or advisable, consistent with its Customary Servicing Practices, to make reasonable efforts to realize upon any recourse to any Dealer and to sell the related 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 unless it determines in its sole discretion that such repair and/or repossession will increase the amounts described in clauses (a) through (c) of the definition of Liquidation Proceeds with respect to such Financed Vehicle by an amount greater than the amount of such expenses. The Servicer, in its sole discretion, may in accordance with its Customary Servicing Practices sell any 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 Receivable 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 Documents with respect to the maintenance of collateral or security on the
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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 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 on behalf of the Issuer and the Indenture Trustee 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, the Servicer will not release the Financed Vehicle securing any Receivable from the security interest granted by such Receivable in whole or in part except (i) 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, (ii) in connection with repossession or (iii) 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 which materially and adversely affects the interests of the Issuer or the Noteholders in any Receivable, the party discovering or receiving written notice of such breach shall give prompt written notice thereof to the other parties hereto; provided, (i) that the delivery of a Servicers Certificate shall be deemed to constitute prompt notice by the Servicer and the Issuer of such 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 such notice shall not affect any obligation of the Servicer under this Section 3.6. If the breach materially and adversely affects the interests of the Issuer or the Noteholders in such Receivable, then the Servicer shall either (a) correct or cure such breach or (b) purchase such Receivable from the Issuer, in either case on or before the Business Day 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 such breach. Any such breach or failure will be deemed not to have a material and adverse effect if such breach or failure does not affect 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 related Repurchase Price. In consideration for such repurchase, 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 noon, New York City time, on such date of repurchase (or, if the Servicer elects, an earlier date). Upon payment of such Repurchase Price by the Servicer, the Indenture Trustee, on behalf of the Noteholders, and the Issuer 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 Servicer to evidence such release, transfer or assignment or more effectively vest in the Servicer or its designee all of the Issuers and Indenture Trustees rights in any Receivable and related Transferred Assets repurchased pursuant to this Section 3.6. 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.
SECTION 3.7 Servicing Fee. On each Payment Date, the Indenture Trustee on behalf of the Issuer shall pay to the Servicer the Servicing Fee in accordance with Section 4.4 for
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the immediately preceding Collection Period as compensation for its services. In addition, the Servicer will be entitled to retain all Supplemental Servicing Fees. The Servicer also will be entitled to receive investment earnings (net of investment losses and expenses) on funds on deposit in the Collection Account and the Reserve Account during each Collection Period.
SECTION 3.8 Servicers Certificate. On or before the Determination Date preceding each Payment Date, the Servicer shall deliver to the Indenture Trustee, the Owner Trustee and each Paying Agent, with a copy to each of the Rating Agencies, a Servicers Certificate executed by an Authorized Officer of the Servicer containing all information necessary to make the payments, transfers and distributions pursuant to Sections 4.3 and 4.4 on such Payment Date, together with the written statements to be furnished by the Indenture Trustee to the Noteholders pursuant to Section 4.6 hereof and Section 6.6 of the Indenture. At the sole option of the Servicer, each Servicers Certificate may be delivered in electronic format or hard copy format.
SECTION 3.9 Annual Officers Certificate; Notice of Servicer Replacement Event.
(a) The Servicer will deliver to the Issuer, with a copy to the Indenture Trustee, on or before March 30th of each year, beginning on March 30, 2017, an Officers Certificate, dated as of December 31 of the immediately preceding year, 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 within five (5) Business Days after having obtained knowledge thereof written notice in an Officers Certificate of any event which 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 3.9(b), Section 7.2 and Section 9.22 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 30th of each year, beginning on March 30th, 2017, a report regarding the Servicers assessment of compliance with the Servicing Criteria specified in Exhibit C as applicable to the Servicer 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, or Rule 15d-18 of the Exchange Act and Item 1122 of Regulation AB.
SECTION 3.10 Annual Registered Public Accounting Firm Attestation.
(a) On or before March 30th of each year, beginning March 30, 2017, the Servicer shall cause a registered public accounting firm, which may also render other services to the Servicer or to its Affiliates, to furnish to the Issuer, with a copy to the Indenture Trustee, 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
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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) The Servicer, however, shall not be obligated to deliver any report described above to 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.
SECTION 3.11 Servicer Expenses. The Servicer will be required to pay all expenses (other than expenses described in the definition of Liquidation Proceeds) 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 and disbursements of the Indenture Trustee (in accordance with Section 6.7 of the Indenture), Owner Trustee (in accordance with Section 8.1 of the Trust Agreement) and Administrator and organizational expenses of the Issuer.
SECTION 3.12 Exchange Act Filings. The Issuer hereby authorizes the Servicer and the Seller, or either of them, 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.
SECTION 3.13 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. Each request must include (i) the name of the Noteholder or Note Owner, as applicable, making the request, (ii) the date the request was received, (iii) 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 their rights under the Transaction Documents and (iv) a description of the method other Noteholders or Note Owners, as applicable, may use to contact the requesting Noteholder or Note Owner. Additionally, in the case of such requesting Note Owner, the Seller may require such Note Owner to provide Verification Documents. A Noteholder or Note Owner, as applicable, that delivers a request under this Section 3.13 will be deemed to have certified to the Issuer and Santander Consumer that its request to communicate with other Noteholders or Note Owners, as applicable, relates solely to a possible exercise of their rights under the Indenture or the other Transaction Documents, and will not be used for other purposes. The Seller shall include in each monthly distribution report on Form 10-D any request that complies with the requirements of this Section 3.13 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.
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SECTION 3.14 Back-up Servicing. In the event that Santander Consumer is the Servicer, and (i) the long-term unsecured debt rating by Moodys of Banco Santander, S.A. falls below Baa3 (a Ratings Trigger Event) or (ii) Banco Santander, S.A. ceases to directly or indirectly own at least 50% of the common stock of Santander Consumer (an Ownership Trigger Event), Santander Consumer shall have in place a back-up servicing arrangement consistent with Moodys published ratings criteria at the time of the Ratings Trigger Event or Ownership Trigger Event, as applicable, within 90 days of such Ratings Trigger Event or Ownership Trigger Event, respectively, unless it shall be acceptable to Moodys at such time, or otherwise satisfy the Rating Agency Condition with respect to Moodys, for Santander Consumer not to have in place a back-up servicing arrangement or to deviate from such published criteria.
ARTICLE IV
DISTRIBUTIONS; ACCOUNTS
STATEMENTS TO THE CERTIFICATEHOLDERS
AND THE NOTEHOLDERS
SECTION 4.1 Establishment of Accounts.
(a) The Servicer shall cause to be established on or prior to the Closing Date:
| (i) | (x) Prior to the payment in full of the principal of and interest on the Notes, for the benefit of the Noteholders in the name of the Indenture Trustee, 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 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 established by and maintained with the Certificate Paying Agent, 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, in the name of the Indenture Trustee, an Eligible Account (the Reserve Account), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Noteholders, which Eligible Account shall be 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. |
| (iii) | Upon the issuance of any Definitive Certificate in accordance with the terms of the Trust Agreement, for the benefit of the Certificateholders, in the name of the Issuer, a non-interest bearing Eligible Account (the Certificate Distribution Account) bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the |
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| 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. Funds on deposit in the Certificate Distribution Account shall be held uninvested. |
(b) Funds on deposit in the Collection Account and the Reserve Account (collectively, the Trust Accounts), if any, shall be invested by the Relevant Trustee in Eligible 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 neither the Servicer, the Relevant Trustee (subject to Section 6.1(c) of the Indenture) nor the Issuer shall be liable for any loss arising from such investment in Eligible Investments. All such Eligible 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 Noteholders, for the Certificateholders); provided, that on each Payment Date all interest and other investment income (net of losses and investment expenses) on funds on deposit in the Trust Accounts shall be distributed to the Servicer and shall not be available to pay the distributions provided for in Section 4.4. Except to the extent the Rating Agency Condition is satisfied, all investments of funds on deposit in the Trust Accounts shall mature so that such funds will be available on the Business Day immediately preceding the immediately following Payment Date. No Eligible Investment shall be sold or otherwise disposed of prior to its scheduled maturity unless a default occurs with respect to such Eligible Investment and the Servicer directs the Relevant Trustee in writing to dispose of such Eligible Investment.
(c) 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 Noteholders, for 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 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 in writing to transfer any cash and/or any investments to such new Trust Account.
(d) 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 Indenture Trustee or its designee shall have sole signature authority with respect thereto; |
| (ii) | any Trust Account Property that constitutes Physical Property shall be delivered to the Indenture Trustee or its designee, in accordance with |
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| paragraph (a) of the definition of Delivery and shall be held, pending maturity or disposition, solely by the Indenture Trustee or any such designee; |
| (iii) | any Trust Account Property that is an uncertificated security under Article 8 of the UCC and that is not governed by clause (iv) 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 Indenture 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 |
| (iv) | 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 Indenture 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 Indenture Trustee or such designee, pending maturity or disposition, through continued book-entry registration of such Trust Account Property as described in such paragraph. |
(e) Except for the Collection Account, the Reserve Account and the Certificate Distribution Account, there are no accounts required to be maintained under the Transaction Documents.
SECTION 4.2 Remittances. The Servicer shall deposit an amount equal to all Collections into the Collection Account within two Business Days after identification; provided, however, that if the Monthly Remittance Condition is satisfied, then the Servicer shall not be required to deposit into the Collection Account an amount equal to the Collections received during any Collection Period until noon, New York City time, on the Business Day prior to the related Payment Date. The Monthly Remittance Condition shall be deemed to be satisfied if (i) Santander Consumer or one of its Affiliates is the Servicer, (ii) no Event of Default or Servicer Replacement Event has occurred and is continuing and (iii) the Servicers short-term unsecured debt is rated at least P-1 by Moodys, A-1 by Standard & Poors, F1 by Fitch and at least investment grade by DBRS; provided, however, that, notwithstanding a failure to satisfy the condition set forth in clause (iii), the Servicer may remit Collections to the Collection Account on any other alternate remittance schedule (but not later than the Business Day prior to the related Payment Date) if the Rating Agency Condition is satisfied with respect to such alternate remittance schedule. Pending deposit into the Collection Account, Collections may be commingled and used by the Servicer at its own risk and are not required to be segregated from its own funds.
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SECTION 4.3 Additional Deposits and Payments.
(a) On the date specified in Section 3.6 hereof or Section 3.4 of the Purchase Agreement, as applicable, the Servicer and Santander Consumer, as applicable, will deposit into the Collection Account the aggregate Repurchase Price with respect to Repurchased Receivables purchased or repurchased by the Servicer or Santander Consumer, respectively, on such date, and on the Payment Date specified in Section 8.1, the Servicer will deposit into the Collection Account all amounts, if any, to be paid under Section 8.1. All such deposits with respect to any such date which is a Payment Date will be made, in immediately available funds by noon, New York City time, on the Business Day immediately preceding such Payment Date related to such Collection Period.
(b) The Indenture Trustee will, on or before the Payment Date relating to each Collection Period, withdraw from the Reserve Account the Reserve Account Draw Amount and deposit such amounts in the Collection Account in accordance with the Servicers Certificate.
(c) The Indenture Trustee will, on each Payment Date, withdraw from the Reserve Account (i) all investment earnings (net of investment losses and expenses on funds on deposit in the Reserve Account during the related Collection Period) and distribute such investment earnings to the Servicer and (ii) the Reserve Account Excess Amount, if any, for such Payment Date and deposit such amount in the Collection Account.
(d) On the Closing Date the Seller will cause the amount available in the Reserve Account to equal the Initial Reserve Account Deposit Amount through a cash deposit from proceeds of the sale of the Notes.
(e) On or prior to the third Business Day preceding each Determination Date, the Relevant Trustee shall send a written notice, or make such information available electronically, to the Servicer stating the amount of investment income earned, if any, during the related Collection Period on each Trust Account maintained at the Relevant Trustee.
SECTION 4.4 Distributions.
(a) Unless the Notes have been accelerated pursuant to Section 5.2 of the Indenture, on each Payment Date, the Relevant Trustee (based on information contained in the Servicers Certificate delivered on or before the related Determination Date pursuant to Section 3.8) 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:
| (1) | first, to the Indenture Trustee, the Owner Trustee and the Asset Representations Reviewer, any accrued and unpaid fees (including unpaid Indenture Trustee fees, Owner Trustee fees and Asset Representations Reviewer fees with respect to prior periods) and any reasonable expenses (including indemnification amounts) not previously paid by Santander Consumer (in the case of Asset Representations Reviewer fees) or the Servicer (in the case of Indenture Trustee fees and Owner Trustee fees), as applicable; provided, however, that fees, expenses and indemnification |
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| amounts payable to the Indenture Trustee, the Owner Trustee and the Asset Representations Reviewer pursuant to this clause first shall be limited to $300,000 per annum in the aggregate; |
| (2) | second, to the Servicer, the Servicing Fee and all unpaid Servicing Fees with respect to prior periods; |
| (3) | third, to the Noteholders of the Class A Notes, the Accrued Class A Note Interest due and accrued for the related Interest Period; 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 such 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; |
| (4) | fourth, for distribution to the Noteholders pursuant to Section 8.2(b) of the Indenture, the First Allocation of Principal, if any; |
| (5) | fifth, to the Noteholders of the Class B Notes, the Accrued Class B Note Interest due and accrued for the related Interest Period; |
| (6) | sixth, for distribution to the Noteholders in accordance with Section 8.2(b) of the Indenture, the Second Allocation of Principal, if any; |
| (7) | seventh, to the Noteholders of Class C Notes, the Accrued Class C Note Interest due and accrued for the related Interest Period; |
| (8) | eighth, for distribution to the Noteholders in accordance with Section 8.2(b) of the Indenture, the Third Allocation of Principal, if any; |
| (9) | ninth, to the Noteholders of Class D Notes, the Accrued Class D Note Interest due and accrued for the related Interest Period; |
| (10) | tenth, for distribution to the Noteholders in accordance with Section 8.2(b) of the Indenture, the Fourth Allocation of Principal, if any; |
| (11) | eleventh, to the Noteholders of Class E Notes, the Accrued Class E Note Interest due and accrued for the related Interest Period; |
| (12) | twelfth, for distribution to the Noteholders in accordance with Section 8.2(b) of the Indenture, the Fifth Allocation of Principal, if any; |
| (13) | thirteenth, 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; |
| (14) | fourteenth, for distribution to the Noteholders in accordance with Section 8.2(b) of the Indenture, the Regular Allocation of Principal, if any; and |
| (15) | 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. |
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Notwithstanding any other provision of this Section 4.4, following the occurrence and during the continuation of an Event of Default which has resulted in an acceleration of the Notes, the Indenture Trustee shall apply all amounts on deposit in the Collection Account pursuant to Section 5.4(b) of the Indenture.
(b) After the payment in full of the Notes and all other amounts payable under Section 4.4(a), all Collections shall be paid to or in accordance with the instructions provided from time to time by the Certificateholders.
SECTION 4.5 Net Deposits. If the Monthly Remittance Condition is satisfied, the Servicer shall be permitted to deposit into the Collection Account by noon, New York City time, on the Business Day prior to the related Payment Date only the net amount distributable to Persons other than the Servicer and its Affiliates on such Payment Date. The Servicer shall be permitted to pay the Optional Purchase Price pursuant to Section 8.1 net of amounts to be distributed to the Servicer or its Affiliates on the related Redemption Date, and accounts between the Servicer and such Affiliates shall be adjusted accordingly. The Servicer shall, however, account for all deposits and distributions in the Servicers Certificate as if the amounts were deposited and/or distributed separately.
SECTION 4.6 Statements to Noteholders and Certificateholders. On or before each Determination Date, the Servicer shall provide to the Certificate Paying Agent and to the Relevant Trustee (with a copy to each Rating Agency and the Issuer), and the Relevant Trustee shall forward (or make available on its website, as described below) to each Noteholder and Certificateholder of record as of the most recent Record Date, 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 aggregate 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 B Note Balance, the Class C Note Balance, the Class D Note Balance, the Class E Note Balance and the Note Factor with respect to each Class of Notes, in each case after giving effect to payments on such Payment Date;
(c) (i) the amount on deposit in the Reserve Account and the Specified Reserve Account Balance, each as of the beginning and end of the related Collection Period, (ii) the amount to be deposited in the Reserve Account in respect of such Payment Date, if any, (iii) the Reserve Account Draw Amount and the Reserve Account Excess Amount, if any, to be withdrawn from the Reserve Account on such Payment Date, (iv) the balance on deposit in the Reserve Account on such Payment Date after giving effect to withdrawals therefrom and deposits thereto in respect of such Payment Date and (v) the change in such balance from the immediately preceding Payment Date;
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(d) the First Allocation of Principal, the Second Allocation of Principal, the Third Allocation of Principal, the Fourth Allocation of Principal, the Fifth Allocation of Principal and the Regular Allocation of Principal for such Payment Date;
(e) the Pool Balance and the Pool Factor as of the close of business on the last day of the preceding Collection Period;
(f) the amount of the Servicing Fee to be paid to the Servicer with respect to the related Collection Period and the amount of any unpaid Servicing Fees and the change in such amount from that of the prior Payment Date;
(g) the amount of fees to be paid to the Indenture Trustee, the Owner Trustee and the Asset Representations Reviewer with respect to the related Payment Date and the amount of any unpaid fees to the Indenture Trustee, the Owner Trustee and the Asset Representations Reviewer and the change in such amount from that of the prior Payment Date;
(h) the amount of the Class A Noteholders Interest Carryover Shortfall, the Class B Noteholders Interest Carryover Shortfall, the Class C Noteholders Interest Carryover Shortfall, the Class D Noteholders Interest Carryover Shortfall and the Class E Noteholders Interest Carryover Shortfall, if any, on such Payment Date and the change in such amounts from the preceding Payment Date;
(i) the aggregate Repurchase Price with respect to Repurchased Receivables paid by the Servicer or Santander Consumer with respect to the related Collection Period;
(j) the aggregate Principal Balance of Receivables that are more than 30 days delinquent as of the end of the related Collection Period;
(k) the Cumulative Net Loss Ratio for the related Collection Period;
(l) the aggregate Principal Balance of 60 Day Delinquent Receivables as of such Payment Date;
(m) the Delinquency Percentage for the related Collection Period;
(n) the Delinquency Trigger for such Payment Date; and
(o) the number, dollar amount and percentage of Receivables that are 31-60, 61-90, 91-120 and over 120 days delinquent as of the end of the related Collection Period.
Each amount set forth pursuant to clause (a) or (h) above relating to the Notes shall be expressed as a dollar amount per $1,000 of the aggregate principal amount of the Notes (or Class thereof).
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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 shall make available via the Relevant Trustees internet website all reports or notices required to be provided by the Relevant Trustee under this Section 4.6 (which reports may include information with respect to the Non-Investment Grade Notes). Any information that is disseminated in accordance with the provisions of this Section 4.6 shall not be required to be disseminated in any other form or manner. The Relevant Trustee will make no representation or warranty 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 www.ctslink.com 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 Agreement. 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
SECTION 4.7 No Duty to Confirm. The Relevant Trustee shall have no duty or obligation to verify or confirm the accuracy of any of the information or numbers set forth in the Servicers Certificate delivered by the Servicer to the Relevant Trustee, and the Relevant Trustee shall be fully protected in relying upon such Servicers Certificate.
ARTICLE V
THE SELLER
SECTION 5.1 Representations and Warranties of 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. The representations and warranties speak as of the execution and delivery of this Agreement and 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 Seller is a Delaware limited liability company validly existing and in good standing under the laws of its state of organization 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 the Transaction Documents to which it is a party. 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 the Transaction Documents 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 the Transaction Documents to which it is a party have been duly authorized by all necessary limited liability company action on the part of the Seller and do not contravene or constitute a default under (i) any applicable law, rule or regulation, (ii) its organizational documents or (iii) any indenture or agreement or instrument to which the Seller is a party or by which its properties are bound (other than violations of such laws, rules, regulations, 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 the Sellers 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 Seller 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 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 the Transaction Documents.
(d) Binding Effect. Each Transaction Document to which the Seller is a party 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) Lien Filings. The Seller is not aware of any material judgment, ERISA or tax lien filings against the Seller.
(f) No Proceedings. There are no actions, orders, suits, investigations or 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 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, (iii) seek any determination or ruling that would materially and adversely affect the performance by the Seller of its obligations under this Agreement or any of the other Transaction Documents or the collectability or enforceability of the Receivables, or (iv) relate to the Seller that would materially and adversely affect the federal or Applicable Tax State income, excise, franchise or similar tax attributes of the Notes.
(g) Investment Company Act. The Seller 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.
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(h) Assignment. The Receivables and the other Transferred Assets have been validly assigned by the Seller to the Issuer.
(i) Security Interests. 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 (other than Permitted Liens) and is enforceable as such against all other creditors of and purchasers and assignees from the Seller.
(j) Creation, Perfection and Priority of Security Interests. The representations and warranties regarding creation, perfection and priority of security interests in the Transferred Assets, which are attached to this Agreement as Exhibit B, are true and correct to the extent that they are applicable.
SECTION 5.2 Liability of Seller; Indemnities. The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement, and hereby agrees to the following:
(a) The Seller shall indemnify, defend, and hold harmless the Issuer, the Owner Trustee and the Indenture Trustee (including when performing its duties as Relevant Trustee) from and against any loss, liability or expense incurred by reason of the Sellers violation of federal or State securities laws in connection with the registration or the sale of the Notes.
(b) Indemnification under this Section 5.2 will survive the resignation or removal of the Owner Trustee or the Indenture Trustee and the termination 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 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 Seller, without interest.
(c) The Sellers obligations under this Section 5.2 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 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
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(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, as applicable, 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 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 5.2(c) and the terms of this Section 5.2(c) may be enforced by an action for specific performance. The provisions of this Section 5.2(c) will be for the benefit of those entitled to rely thereon and will survive the termination or assignment of this Agreement, and the resignation or removal of any indemnified party. Any amounts payable to the Indenture Trustee pursuant to this Section 5.2(c), to the extent not paid by the Seller, shall be paid by the Issuer in accordance with Section 4.4 of this Agreement or Section 5.4(b) of the Indenture, as applicable.
SECTION 5.3 Merger or Consolidation of, or Assumption of the Obligations of, Seller. Any entity (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 or any entity resulting from any merger, sale, transfer, conversion or consolidation to which the Seller shall be a party, or any entity succeeding to the business of the Seller 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 Banco Santander, S.A. and which executes an agreement of assumption to perform every obligation of the Seller under this agreement, shall be the successor to the Seller under this Agreement, in each case, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Within thirty days following the consummation of any of the foregoing transactions in which the Seller is not the surviving entity, the Seller shall deliver to the Indenture 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 in the Receivables or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest.
SECTION 5.4 Limitation on Liability of Seller and Others. The Seller and any officer or employee or agent of the Seller may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising hereunder. The Seller will not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its obligations under this Agreement and that in its opinion may involve it in any expense or liability.
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SECTION 5.5 Seller May Own Notes. The Seller, and any Affiliate of the Seller, may in its individual or any other capacity become the owner or pledgee of Notes with the same rights as it would have if it were not the Seller or an Affiliate thereof, except as otherwise expressly provided herein or in the other Transaction Documents. Except as set forth herein or in the other Transaction Documents, Notes 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. Unless all Notes are owned by the Issuer, the Seller, any Certificateholder, the Servicer, the Administrator or any of their respective Affiliates, any Notes owned by the Issuer, the Seller, any Certificateholder, the Servicer, the Administrator or any of their respective Affiliates shall be disregarded with respect to the determination of any request, demand, authorization, direction, notice, consent, vote or waiver hereunder or under any other Transaction Document.
SECTION 5.6 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 and the Seller, or either of them, to prepare, sign, certify and file any such documents or certifications on behalf of the Issuer.
SECTION 5.7 Compliance with Organizational Documents. The Seller shall comply with its limited liability company agreement and other organizational documents.
ARTICLE VI
THE SERVICER
SECTION 6.1 Representations of 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. The representations and warranties speak as of the execution and delivery of this Agreement and 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 an Illinois corporation validly existing and in good standing under the laws of its state of organization 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 the Transaction Documents to which it is a party. 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 the Transaction Documents 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 the Transaction Documents to which it is a party have been duly authorized by all necessary action on the part of the Servicer 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 the Servicer is a party or by
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which its properties are bound, in each case, 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 the Servicers 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 Servicer 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 or approvals, authorizations or filings that will be made on a timely basis and (iii) approval, authorizations or filings that, 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 the Transaction Documents.
(d) Binding Effect. Each Transaction Document to which the Servicer is a party 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 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, suits, investigations or 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 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, (iii) seek any determination or ruling that would materially and adversely affect the performance by the Servicer of its obligations under this Agreement or any of the other Transaction Documents or (iv) relate to the Servicer that would materially and adversely affect the federal or Applicable Tax State income, excise, franchise or similar tax attributes of the Notes.
SECTION 6.2 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 (including when performing its duties as Relevant 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 or any sub-contractor hired by the Servicer or such Affiliate of a Financed Vehicle.
(b) The Servicer will indemnify, defend and hold harmless the Issuer, the Owner Trustee and the Indenture Trustee (including when performing its duties as Relevant 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,
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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 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 6.2(b), to the extent not paid by the Servicer, shall be paid by the Issuer in accordance with Section 4.4 of this Agreement or Section 5.4(b) of the Indenture, as applicable.
(c) The Servicer will indemnify, defend and hold harmless the Issuer, the Owner Trustee, the Indenture Trustee (including when performing its duties as Relevant 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 purchase of the affected Receivables is specified as the sole remedy pursuant to Section 3.6.
(d) The Servicer will compensate and indemnify the Indenture Trustee (including when performing its duties as Relevant Trustee) and the Owner Trustee to the extent and subject to the conditions set forth in Section 6.7 of the Indenture and Section 8.2 of the Trust Agreement, as applicable, except, with respect to the Indenture Trustee, 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 6.2 by Santander Consumer (or any successor thereto pursuant to Section 7.1) as Servicer, with respect to the period such Person was the Servicer, will survive the termination or assignment of such Person as Servicer or a resignation by such Person as Servicer as well as the termination or assignment of this Agreement or the resignation or removal of the Owner Trustee or the Indenture Trustee (including when performing its duties as Relevant Trustee) and will include reasonable fees and expenses of counsel and expenses of litigation. If the Servicer has made any indemnity payments pursuant to this Section 6.2 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 6.3 Merger or Consolidation of, or Assumption of the Obligations of, Servicer. Any entity (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
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or substantially as a whole or any entity resulting from any merger, sale, transfer, conversion or consolidation to which the Servicer shall be a party, or any entity succeeding to the business of the Servicer or (ii) of which more than 50% of the voting stock or voting power and 50% or more of the economic equity is owned directly or indirectly by Banco Santander, S.A. and which executes an agreement of assumption to perform every obligation of the Servicer under this Agreement, shall be the successor to the Servicer under this Agreement, in each case, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
SECTION 6.4 Limitation on Liability of Servicer and Others.