EXECUTION COPY
Exhibit 10.2


 







 


SALE AND SERVICING AGREEMENT



by and among



USAA AUTO OWNER TRUST 2016-1



as Issuer



USAA ACCEPTANCE, LLC,



as Seller



USAA FEDERAL SAVINGS BANK,



as Servicer



and



U.S. Bank National Association,



as Indenture Trustee



Dated as of September 21, 2016


 






    	 



    	



    









TABLE OF CONTENTS


 


	 	 	Page	 
	 	 	 	 
	ARTICLE I definitions and usage	 	 	 	 
	 	 	 	 	 
	SECTION 1.1 Definitions	 	 	1	 
	SECTION 1.2 Other Interpretive Provisions	 	 	1	 
	 	 	 	 	 
	ARTICLE II CONVEYANCE OF TRANSFERRED Assets	 	 	 	 
	 	 	 	 	 
	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	 	 	 	 
	 	 	 	 	 
	SECTION 3.1 Duties of Servicer	 	 	4	 
	SECTION 3.2 Collection of Receivable Payments	 	 	5	 
	SECTION 3.3 Realization Upon Receivables	 	 	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 Servicer’s Certificate	 	 	8	 
	SECTION 3.9 Annual Officer’s Certificate; Notice of Servicer Replacement Event	 	 	9	 
	SECTION 3.10 Annual Registered Public Accounting Firm Attestation Report	 	 	9	 
	SECTION 3.11 Servicer Expenses	 	 	9	 
	SECTION 3.12 Exchange Act Filings	 	 	10	 
	SECTION 3.13 Noteholder Communication	 	 	10	 
	 	 	 	 	 
	ARTICLE IV DISTRIBUTIONS; ACCOUNTS; STATEMENTS TO THE certificateholder AND THE noteHOLDERs	 	 	 	 
	 	 	 	 	 
	SECTION 4.1 Establishment of Accounts	 	 	10	 
	SECTION 4.2 Remittances	 	 	12	 
	SECTION 4.3 Additional Deposits and Payments	 	 	13	 
	SECTION 4.4 Distributions	 	 	13	 
	SECTION 4.5 Net Deposits	 	 	14	 
	SECTION 4.6 Statements to Certificateholder and Noteholders	 	 	15	 
	SECTION 4.7 No Duty to Confirm	 	 	17	 
	 	 	 	 	 
	ARTICLE V THE SELLER	 	 	 	 
	 	 	 	 	 
	SECTION 5.1 Representations and Warranties of Seller	 	 	18	 
	SECTION 5.2 Liability of Seller; Indemnities	 	 	19	 
	SECTION 5.3 Merger or Consolidation of, or Assumption of the Obligations of, Seller	 	 	20	 
	SECTION 5.4 Limitation on Liability of Seller and Others	 	 	21	 
	SECTION 5.5 Seller May Own Notes	 	 	21	 
	SECTION 5.6 Sarbanes-Oxley Act Requirements	 	 	21	 
	SECTION 5.7 Compliance with Organizational Documents	 	 	21	 








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TABLE OF CONTENTS


(continued)


 


	 	 	Page	 
	 	 	 	 	 
	ARTICLE VI THE SERVICER	 	 	 	 
	 	 	 	 	 
	SECTION 6.1 Representations of Servicer	 	 	21	 
	SECTION 6.2 Indemnities of Servicer	 	 	22	 
	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	 	 	24	 
	SECTION 6.5 Delegation of Duties	 	 	25	 
	SECTION 6.6 The Bank Not to Resign as Servicer	 	 	25	 
	SECTION 6.7 Servicer May Own Notes	 	 	25	 
	 	 	 	 	 
	ARTICLE VII REPLACEMENT OF SERVICER	 	 	 	 
	 	 	 	 	 
	SECTION 7.1 Replacement of Servicer	 	 	26	 
	SECTION 7.2 Notification to Noteholders	 	 	27	 
	 	 	 	 	 
	ARTICLE VIII OPTIONAL PURCHASE	 	 	 	 
	 	 	 	 	 
	SECTION 8.1 Optional Purchase of Trust Estate	 	 	27	 
	 	 	 	 	 
	ARTICLE IX MISCELLANEOUS PROVISIONS	 	 	 	 
	 	 	 	 	 
	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	 	 	30	 
	SECTION 9.5 Notices, Etc	 	 	31	 
	SECTION 9.6 Choice of Law	 	 	32	 
	SECTION 9.7 Headings	 	 	32	 
	SECTION 9.8 Counterparts	 	 	32	 
	SECTION 9.9 Waivers	 	 	32	 
	SECTION 9.10 Entire Agreement	 	 	32	 
	SECTION 9.11 Severability of Provisions	 	 	32	 
	SECTION 9.12 Binding Effect	 	 	32	 
	SECTION 9.13 Acknowledgment and Agreement	 	 	33	 
	SECTION 9.14 Cumulative Remedies	 	 	33	 
	SECTION 9.15 Nonpetition Covenant	 	 	33	 
	SECTION 9.16 Submission to Jurisdiction; Waiver of Jury Trial	 	 	33	 
	SECTION 9.17 Limitation of Liability	 	 	34	 
	SECTION 9.18 Third-Party Beneficiaries	 	 	35	 
	SECTION 9.19 Information Requests	 	 	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 Further Assurances	 	 	37	 
	SECTION 9.24 Cooperation	 	 	37	 
	SECTION 9.25 Rights of the Certificateholder	 	 	37	 
	SECTION 9.26 Dispute Resolution	 	 	37	 










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TABLE OF CONTENTS


(continued)


 


	 	Page
	 	 
	Appendix A 	Definitions
	 	 






	Schedule I 	Notice Addresses
	 	 






	Exhibit A 	Form of Assignment pursuant to Sale and Servicing Agreement
	Exhibit B	Perfection Representations, Warranties and Covenants
	Exhibit C	Servicing Criteria to be Addressed in Indenture Trustee’s Assessment of Compliance
	Exhibit D	Form of Indenture Trustee’s Annual Certification
	Exhibit E	Form of Indenture Trustee’s Annual Certification Regarding Item 1117 and Item 1119 of Regulation AB












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SALE AND SERVICING AGREEMENT, dated
as of September 21, 2016 (together with all exhibits, schedules and appendices hereto and as from time to time amended, supplemented
or otherwise modified and in effect, this “Agreement”), by and among USAA AUTO OWNER TRUST 2016-1 (the
“Issuer”), a Delaware statutory trust, USAA ACCEPTANCE, LLC, a Delaware limited liability company, as
seller (the “Seller”), USAA FEDERAL SAVINGS BANK, a federally chartered savings association (the “Bank”),
as servicer (in such capacity, the “Servicer”), and U.S.
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 retail motor vehicle installment loans that are secured by new and
used automobiles and light-duty trucks;


 


WHEREAS, the Seller is willing to sell such
portfolio of motor vehicle receivables and related property to the Issuer; and


 


WHEREAS, the Bank is willing to service such
motor vehicle receivables and related property on behalf of the Issuer;


 


NOW, THEREFORE, in consideration of the premises
and the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as follows:


 


ARTICLE
I



definitions and usage


 


SECTION 1.1Definitions. 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.


 


SECTION 1.2Other 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 Person’s successors and assigns; and



    	 



    	



    



(h) unless the context otherwise requires,
defined terms shall be equally applicable to both the singular and plural forms.


 


ARTICLE
II



CONVEYANCE OF TRANSFERRED Assets


 


SECTION 2.1Conveyance of Transferred
Assets. In consideration of the Issuer’s 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 and to the Transferred Assets, described in the assignment substantially in the form of Exhibit A (the “Assignment”)
delivered on the Closing Date. The sale, transfer, assignment and conveyance made hereunder will not constitute and is not intended
to result in an assumption by the Issuer of any obligation of the Seller or the Originator to the Obligors 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 2.2Custody of Receivable Files.


 


(a)Custody. To assure uniform
quality in servicing the Receivables and to reduce administrative costs, the Issuer, upon the execution and delivery of this Agreement,
hereby revocably appoints the Servicer, and the Servicer hereby accepts such appointment, to act solely on behalf of and for the
benefit of the Indenture Trustee as custodian of the following documents or instruments, but only to the extent held in tangible
paper form or electronic form, 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 with respect to each Receivable (but only to the extent applicable
to such Receivable and only to the extent held in tangible paper form) (the “Receivable Files”):


 


(i)the fully executed original
of the retail motor vehicle installment loan or promissory note and security agreement related to such Receivable (with respect
to tangible chattel paper) or an “authoritative copy” (as such term is used in Section 9-105 of the UCC) of the Receivable
(with respect to electronic chattel paper) or, if no such original executed Receivable or authoritative copy exists, a copy thereof,
including any written amendments or extensions thereto;


 


(ii)the original credit application
or a photocopy thereof to the extent held in paper form;


 


(iii)the original Certificate
of Title or, if not yet received, evidence that an application therefor has been submitted with the appropriate authority or such
other document (electronic or otherwise, as used in the applicable jurisdiction) that the Servicer keeps on file, in accordance
with its Customary Servicing Practices, evidencing the security interest of the Originator in the Financed Vehicle; provided, however,
that in lieu




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of being held in the Receivable File,
the Certificate of Title may be held by a third party service provider engaged by the Servicer to obtain or hold Certificates of
Title; and


 


(iv)any and all other documents
that the Servicer or the Seller keeps on file, in accordance with its Customary Servicing Practices, relating to a Receivable,
an Obligor or a Financed Vehicle (but only to the extent applicable to such Receivable and only to the extent held in tangible
paper form or electronic form).


 


The foregoing appointment of the Servicer is deemed to be made
with due care.


 


(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, and maintain such accurate and complete accounts, records and computer systems pertaining to each Receivable File
as shall enable the Issuer and the Bank to comply with this Agreement. In performing its duties as custodian, the Servicer shall
act in accordance with its Customary Servicing Practices. The Servicer, in accordance with its Customary Servicing Practices: (i)
may maintain all or a portion of the Receivable Files in electronic form and (ii) may 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, which do not unreasonably interfere with
the Servicer’s normal operations, 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 Trustee’s agent or the Indenture Trustee’s designee, as the case may
be, at such place or places as the Indenture Trustee may designate, as soon thereafter as is practicable, to the extent it does
not unreasonably interfere with the Servicer’s normal operations. The Servicer shall not be responsible for any loss occasioned
by the failure of the Indenture Trustee or its agent or designee to return any document or any delay in doing so. Any document
so released will be handled by the Indenture Trustee with due care and returned to the Servicer for safekeeping as soon as the
Indenture Trustee or its agent or designee, as the case may be, has no further need therefor.


 


(e)Instructions; Authority to Act.
All instructions from the Indenture Trustee will be in writing and signed by a Responsible 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.



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(f)Custodian’s Indemnification.
Subject to Section 6.2, the Servicer as custodian will indemnify the Issuer and the Indenture Trustee and their respective
directors, officers, employees, and agents for any and all claims, 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, including, but not limited to, the costs of defending any claim or bringing any claim to enforce its rights,
including the Servicer’s indemnification obligations hereunder; provided, however, that the Servicer will not
be liable (i) to the Indenture Trustee or the Issuer for any portion of any such amount resulting from the willful misconduct,
bad faith or negligence of the Indenture Trustee or the Issuer or (ii) to the Indenture Trustee for any portion of any such amount
resulting from the failure of the Indenture Trustee, the Indenture Trustee’s agent or the Indenture Trustee’s designee
to handle with due care any Certificate of Title or other document released to the Indenture Trustee or the Indenture Trustee’s
agent or designee pursuant to Section 2.2(d).


 


(g)Effective Period and Termination.
The Servicer’s 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 2.2(g). If the Bank resigns as Servicer in accordance with Section 6.6
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 evidencing not less than 662⁄3% 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; provided, however, that with respect to authoritative copies of the Receivables constituting electronic chattel
paper, the Servicer, in its sole discretion, shall either (i) continue to hold any such authoritative copies on behalf of the Issuer
and the Indenture Trustee or the Indenture Trustee’s agent or (ii) deliver copies of such authoritative copies and destroy
the authoritative copies maintained by the Servicer prior to its termination such that such copy delivered to the Indenture Trustee
or the Indenture Trustee’s agent becomes the authoritative copy of the Receivable constituting electronic chattel paper.


 


ARTICLE
III



administration and servicing of

receivables and trust property


 


SECTION 3.1Duties 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 in accordance with its Customary Servicing Practices, using the degree of skill and attention that the Servicer
exercises with respect to all comparable motor vehicle receivables that it services for itself or others. The Servicer’s
duties will include collection and posting of all






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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.
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 are required to be made by the Servicer on behalf of the Obligor.
The Servicer hereby accepts such appointment and authorization and agrees to perform the duties of Servicer with respect to the
Receivables set forth herein.


 


(b)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 Certificateholder, or any of them, any and all instruments of satisfaction or cancellation, or partial or
full release or discharge, and all other comparable instruments, with respect to such Receivables or to the Financed Vehicles securing
such Receivables. The Servicer is hereby authorized to commence, in its own name or in the name of the Issuer, a 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 or a Financed Vehicle. 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 Servicer’s
name any notices, demands, claims, complaints, responses, affidavits or other documents or instruments in connection with any such
Proceeding. If in any enforcement suit or legal Proceeding it is held that the Servicer may not enforce a Receivable or an Insurance
Policy on the ground that it is not a real party in interest or a holder entitled to enforce the Receivable or an Insurance Policy,
the Issuer will, at the Servicer’s expense and direction, take steps to enforce the Receivable or an Insurance Policy, including
bringing suit in its name or the name of the Indenture Trustee. The Issuer will furnish the Servicer with any powers of attorney
and other documents reasonably necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties
hereunder. The Servicer, at its expense, will obtain on behalf of the Issuer all licenses, if any, reasonably requested by the
Seller to be held by the Issuer in connection with ownership of the Receivables, and will make all filings and pay all fees as
may be required in connection therewith during the term hereof.


 


(c)The Servicer hereby agrees that upon
its resignation and the appointment of a successor Servicer hereunder, the Servicer will terminate its activities as Servicer
hereunder in accordance with Section 7.1, and, in any case, in a manner which the Issuer reasonably determines will facilitate
the transition of the performance of such activities to such successor Servicer, and the Servicer shall cooperate with and assist
such successor Servicer.



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SECTION 3.2Collection 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 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 preceding the latest Final Scheduled Payment Date of any Notes issued under the Indenture or (ii) reduces
the Contract Rate or Outstanding Principal Balance with respect to any Receivable after the Cut-off Date other than as required
by applicable law (including, without limitation, by the Servicemembers Civil Relief Act of 2003, as amended) or court order, it
will promptly purchase such Receivable in the manner provided in Section 3.6; provided, further, that the Servicer
shall not make any modification described in the preceding clause (i) or (ii) that would trigger a repurchase pursuant to the above
provisions or pursuant to Section 3.6, in either case for the sole purpose of enabling the Servicer to purchase a Receivable
from the Issuer and provided, further, that any change referred to in this Section 3.2 shall only be made
if either (a) the Obligor is in default or, in the judgment of the Servicer, is reasonably expected to default in the near future,
or (b) the change is to the payment due date of a Receivable, does not exceed 25 days and is made not more than twice during the
term of such Receivable.


 


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. Subject to the
provisos of the second sentence of the first paragraph of this Section 3.2, 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
for the account of the Servicer and/or its Affiliates (but not the Issuer) 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 indirectly result in a decrease in the aggregate amount of payments made (but not any related contractual
obligation) on the Receivables, prepayments or faster or slower timing of the payment of the Receivables. Notwithstanding anything
in this Agreement to the contrary, the Servicer may refinance any Receivable by (a) making a new loan to the Obligor and depositing
the full Outstanding Principal Balance of such refinanced Receivable into the Collection Account or (b) by causing the Issuer to
effect a substantive modification to the Receivable when the request for such modification is the result of a contact from or request
of the related Obligor, in which case the Receivable shall be deemed to be refinanced and the Servicer shall promptly deposit the
full Outstanding Principal Balance of such refinanced Receivable into the Collection Account as soon as practical. The receivable
created by such refinancing shall not be property of the Issuer, in the case of (b) in the prior sentence, upon the Servicer’s
related payment to Issuer. The Servicer and its Affiliates may also sell insurance or debt cancellation products, including products
which result in the repayment of some or all of the amount of a Receivable owned by the Issuer upon the death or disability of
the Obligor or any casualty with respect to the Financed Vehicle.


 


(b)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



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payoffs, made in accordance with the related
documentation for such Receivables, shall be posted to the Servicer’s Obligor records in accordance with the Servicer’s
Customary Servicing Practices. Such payments shall be allocated to principal, interest or other items in accordance with the related
documentation for such Receivables.


 


(c)Records documenting collection efforts
shall be maintained during the period a Receivable is delinquent in accordance with the Servicer’s Customary Servicing Practices.
Such records shall be maintained on at least a periodic basis that is not less frequent than as prescribed by the Servicer’s
Customary Servicing Practices, and describe the entity’s 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 Servicer’s Customary Servicing Practices.


 


SECTION 3.3Realization Upon Receivables.
On behalf of the Issuer, the Servicer will use commercially reasonable efforts, consistent with its Customary Servicing Practices,
to repossess or otherwise convert the ownership of the Financed Vehicle securing any Receivable as to which the Servicer has determined
eventual payment in full is unlikely unless it determines in its sole discretion that repossession will not increase the Liquidation
Proceeds by an amount greater than the expense of such repossession or that the proceeds ultimately recoverable with respect to
such Receivable would be increased by forbearance. The Servicer will follow such Customary Servicing Practices as it deems necessary
or advisable, which may include selling the Financed Vehicle at public or private sale and which shall not, except as provided
below, involve the sale of all, or any portion of, a Receivable. The foregoing shall 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 shall determine in its discretion that such repair and/or repossession will
increase the Liquidation Proceeds by an amount greater than the amount of such expenses. The Servicer, in its sole discretion,
may in accordance with its Customary Servicing Practices purchase from the Issuer any Receivable’s deficiency balance (i.e.,
the remaining balance of a Receivable after deduction of all Liquidation Proceeds with respect to such Receivable) for a purchase
price equal to the fair value of the deficiency balance as determined by the Servicer at the time of purchase by the Servicer,
which purchase price shall not be adjusted by the proceeds the Servicer ultimately realizes from its disposition or collection
efforts related to the deficiency amount. Net proceeds of any such sale to the Servicer will constitute Liquidation Proceeds, and
the sole right of the Issuer and the Indenture Trustee with respect to any such sold Receivables will be to receive such Liquidation
Proceeds. Upon such sale, the Servicer will mark its computer records indicating that any such receivable sold is no longer a Receivable.
The Servicer is authorized to take any and all actions necessary or appropriate on behalf of the Issuer to evidence the sale of
the Financed Vehicle at public or private sale or the sale of the Receivable to the Servicer pursuant to the provisions of this
paragraph free from any Lien or other interest of the Issuer or the Indenture Trustee.


 


SECTION 3.4Maintenance 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 Receivables. It is



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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; provided, however that such steps shall not include retitling the lien of
the Financed Vehicle in the name of the Indenture Trustee.


 


SECTION 3.5Covenants 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 (a) in the event of payment in full by or on behalf of the Obligor
thereunder or payment in full less a deficiency which the Servicer would not attempt to collect in accordance with its Customary
Servicing Practices, (b) in connection with repossession or (c) except as may be required by an insurer in order to receive proceeds
from any Insurance Policy covering such Financed Vehicle.


 


SECTION 3.6Purchase 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, the party discovering
such breach shall give prompt written notice thereof to the other parties hereto; provided, that delivery of the Servicer’s
Certificate, which identifies the Receivables that are being or have been repurchased, shall be deemed to constitute prompt notice
by the Servicer and the Issuer of such breach with respect to such repurchased Receivable; provided, further, that
the failure to give such notice shall not affect any obligation of the Servicer hereunder. If the Servicer does not correct or
cure such breach prior to the end of the Collection Period which includes the 60th day (or, if the Servicer elects, an earlier
date) after the date that the Servicer became aware or was notified of such breach, then the Servicer shall purchase any Receivable
materially and adversely affected by such breach from the Issuer on the Payment Date following the end of such Collection Period.
Any such breach or failure will be deemed to not 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 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 11:00
a.m., New York City time on such Payment Date. Upon payment of such Repurchase Price by the Servicer, the Issuer and the Indenture
Trustee shall release and shall execute and deliver such instruments of release, transfer or assignment, in each case without recourse
or representation, as shall be reasonably necessary to vest in the Servicer or its designee any Receivable repurchased pursuant
hereto. It is understood and agreed that the obligation of the Servicer to purchase any Receivable as described above shall constitute
the sole remedy respecting such breach available to the Issuer and the Indenture Trustee.


 


SECTION 3.7Servicing 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 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



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entitled to receive investment earnings (net
of investment losses and expenses) on funds on deposit in the Collection Account during each Collection Period.


 


SECTION 3.8Servicer’s Certificate.
On or before the Determination Date preceding each Payment Date, the Servicer shall deliver to the Indenture Trustee, and each
Paying Agent, with a copy to the Rating Agencies, a Servicer’s Certificate containing all information necessary to make the
payments, transfers and distributions pursuant to Sections 4.3 and 4.4 of this Agreement and Section 8.2(c)
of the Indenture on such Payment Date. Each Servicer’s Certificate may be delivered in electronic format.


 


SECTION 3.9Annual Officer’s
Certificate; Notice of Servicer Replacement Event.


 


(a)The Servicer will deliver to the Rating
Agencies, the Issuer and the Indenture Trustee, on or before March 30 of each calendar year, beginning on March 30, 2017, an Officer’s
Certificate (with appropriate insertions) providing such information as is required under Item 1123 of Regulation AB.


 


(b)The Servicer will deliver to the Issuer,
the Indenture Trustee and each Rating Agency promptly after having obtained knowledge thereof written notice in an Officer’s
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) and Sections 7.2 and 9.22 of this Agreement and Section
3.12 of the Indenture, the Transaction Documents do not require any policies or procedures to monitor any performance or other
triggers and events of default.


 


(c)The Servicer will deliver to the Issuer,
on or before March 30 of each year, beginning on March 30, 2017, a report regarding the Servicer’s assessment of compliance
with the Servicing Criteria during the immediately preceding calendar year (or since the Closing Date in the case of the first
such report), including disclosure of any material instance of non-compliance identified by the Servicer, as required under paragraph
(b) of Rule 13a-18 and Rule 15d-18 of the Exchange Act and Item 1122 of Regulation AB.


 


SECTION 3.10Annual Registered Public
Accounting Firm Attestation Report. On or before the 90th day following the end of each fiscal year, beginning with the fiscal
year ending December 31, 2016, the Servicer shall cause a firm of independent registered public accountants (who may also render
other services to the Servicer, the Seller or their respective Affiliates) to furnish to the Indenture Trustee, the Servicer, the
Seller and each Rating Agency 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 (or since the Closing Date in the case of the first such report)
delivered by such accountants pursuant to paragraph (c) of Rule 13a-18 or Rule 15d-18 of the Exchange Act and Item 1122 of Regulation
AB. The certification required by this paragraph may be replaced by any similar certification using other procedures or attestation
standards which are now or in the future in use by servicers of comparable assets, or which otherwise comply with any rule, regulation,
“no action” letter or similar guidance promulgated by the Commission.



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SECTION 3.11Servicer Expenses.
The Servicer shall pay all expenses (other than expenses described in the definition of Liquidation Proceeds) incurred by it in
connection with its activities hereunder, independent accountants, taxes imposed on the Servicer and expenses incurred in connection
with distributions and reports to the Noteholders and the Certificateholder. The Servicer shall also pay all fees, expenses, and
indemnities of the Indenture Trustee (as described in, and pursuant to the limitations set forth in Section 6.7 of the Indenture)
and the Owner Trustee (as described in, and pursuant to the limitations set forth in, Sections 8.1 and 8.2 of the
Trust Agreement). The compensation and indemnity obligations of the Servicer to the Indenture Trustee and the Owner Trustee hereunder
and pursuant to Section 6.7 of the Indenture and Sections 8.1 and 8.2 of the Trust Agreement shall survive
the resignation or removal of the Indenture Trustee, the Owner Trustee and the Servicer, the discharge of the Indenture and the
termination or assignment of this Agreement and the Trust Agreement.


 


SECTION 3.12Exchange 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 with respect to the Issuer and/or the Notes required to be filed pursuant to the Exchange Act, and the
rules thereunder.


 


SECTION 3.13Noteholder 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 or the Servicer at any time notifying the Seller or the Servicer 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 Indenture or the other Transaction Documents. Each request must include (i) the name of
the Noteholder or Note Owner, as applicable, making the request and (ii) the method by which the other Noteholders or Note Owners,
as applicable, may contact the Noteholder or Note Owner, as applicable, making the request. Additionally, in the case of such requesting
Note Owner, the Seller or the Servicer, as applicable, 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,
the Seller and the Servicer that its request to communicate with other Noteholders or Note Owners, as applicable, relates solely
to a possible exercise of rights under the Indenture or the other Transaction Documents, and will not be used for other purposes.
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. The Form 10-D shall specify (i) the date the request was received,
(ii) a statement to the effect that the Issuer has received a request from such Noteholder or Note Owner, as applicable, stating
that such Noteholder or Note Owner, as applicable, is interested in communicating with other Noteholders or Note Owners, as applicable,
with regard to the possible exercise of rights under the Indenture or the other Transaction Documents, (iii) the name of the Noteholder
or Note Owner, as applicable, making such request and (iv) a description of the method other Noteholders or Note Owners, as applicable,
may use to contact the requesting Noteholder or Note Owner.



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ARTICLE
IV



DISTRIBUTIONS; ACCOUNTS;

STATEMENTS TO THE certificateholder

AND THE noteHOLDERs


 


SECTION 4.1Establishment of Accounts.
(a) The Servicer shall cause to be established:


 


(i)For the benefit of the Noteholders,
in the name of the Indenture Trustee, an Eligible Account (the “Collection 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 Collection Account.


 


(ii)For the benefit of the Noteholders,
in the name of the Indenture Trustee, an Eligible Account (the “Principal Distribution Account”), which may
be a subaccount of the Collection 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 Principal Distribution Account.


 


(iii)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.


 


(b)Funds on deposit in the Collection
Account and the Reserve Account (collectively, with the Principal Distribution Account, the “Trust Accounts”)
shall be invested by the Indenture Trustee in Permitted Investments selected in writing by the Servicer and of which the Servicer
provides notification (pursuant to standing instructions or otherwise); provided, that it is understood and agreed that
neither the Servicer, the Indenture Trustee nor the Issuer shall be liable for any loss arising from such investment in Permitted
Investments. If U.S. Bank National Association is the Indenture Trustee, in the absence of such written investment direction, all
funds shall be invested in one or more Permitted Investments in accordance with the standing instructions most recently given by
the Servicer or should that for any reason not be possible such funds shall be retained uninvested. All such Permitted Investments
shall be held by or on behalf of the Indenture Trustee as secured party for the benefit of the Noteholders; provided, that
on each Payment Date all interest and other investment income (net of losses and investment expenses) on funds on deposit in the
Collection Account shall be distributed to the Servicer as additional servicing compensation and shall not be available to pay
the distributions provided for in Section 4.4. All investments of funds on deposit in the Trust Accounts shall mature so
that such funds will be available by 10:00 a.m. New York City time on the next Payment Date. No



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Permitted Investment shall be sold or otherwise
disposed of prior to its scheduled maturity unless a default occurs with respect to such Permitted Investment and the Servicer
directs the Indenture Trustee in writing to dispose of such Permitted Investment. For the avoidance of doubt, with respect to each
Payment Date, any interest and other income earned on funds in deposit in the Collection Account from the Business Day prior to
such Payment Date through such Payment Date shall be paid to the Servicer.


 


(c)The Indenture 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 Indenture Trustee for the benefit of the Noteholders. If, at any time, any
Trust Account ceases to be an Eligible Account, the Servicer shall promptly notify the Indenture Trustee in writing (unless such
Trust Account is an account with the Indenture Trustee) 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 Indenture Trustee 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 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 Trustee’s (or its designee’s) 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



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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 Principal Distribution Account, there are no accounts required to be maintained under the Transaction
Documents.


 


SECTION 4.2Remittances. The Servicer
shall deposit an amount equal to all Collections into the Collection Account within two Business Days after identification. Notwithstanding
the foregoing, the Servicer may remit Collections to the Collection Account on any other alternate remittance schedule (but not
later than 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.


 


SECTION 4.3Additional Deposits
and Payments. (a) On each Payment Date, the Servicer and the Seller will deposit into the Collection Account the
aggregate Repurchase Price with respect to Repurchased Receivables purchased by the Servicer pursuant to Section 3.6
or the Bank, as seller, pursuant to Section 3.4 of the Purchase Agreement, respectively, on such Payment Date and the
Servicer will deposit (or will cause the applicable purchaser to deposit) into the Collection Account all amounts, if any, to
be paid under Section 8.1 in connection with the Optional Purchase. All such deposits with respect to a Payment Date
will be made, in immediately available funds by 3:00 p.m., New York City time, on the Business Day prior to such Payment Date
related to such Collection Period.


 


(b)The Servicer will calculate the Reserve
Account Excess Amount for each Payment Date and instruct the Indenture Trustee to, on each Payment Date, withdraw from the Reserve
Account the Reserve Account Excess Amount, if any, for such Payment Date and deposit such amount in the Collection Account.


 


(c)The Servicer will calculate the Reserve
Account Draw Amount for each Payment Date and instruct the Indenture Trustee to, on the Payment Date relating to each Collection
Period, withdraw from the Reserve Account the Reserve Account Draw Amount and deposit such amount in the Collection Account.


 


(d)On the Closing Date the Seller will
deposit (or cause to be deposited) into the Reserve Account an amount equal to the Initial Reserve Account Deposit Amount.


 


SECTION 4.4Distributions.


 


(a)Subject to Article V of the
Indenture, on each Payment Date, the Indenture Trustee (solely based on information contained in, and as directed by, the Servicer’s
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:



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(i)first, to the Servicer,
the Servicing Fee and all unpaid Servicing Fees with respect to prior Collection Periods;


 


(ii)second, pro rata
to the Class A Noteholders, the Accrued Class A Note Interest 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;


 


(iii)third, to the Principal
Distribution Account for distribution to the Noteholders pursuant to Section 8.2(c) of the Indenture, the First Allocation
of Principal, if any;


 


(iv)fourth, to the Class
B Noteholders, the Accrued Class B Note Interest for the related Interest Period;


 


(v)fifth, to the Principal
Distribution Account for distribution to the Noteholders in accordance with Section 8.2(c) of the Indenture, the Second
Allocation of Principal, if any;


 


(vi)sixth, to the
Reserve Account, any additional amounts required to increase the amount in the Reserve Account up to the Specified Reserve
Account Balance;


 


(vii)seventh, to the
Principal Distribution Account for distribution to the Noteholders in accordance with Section 8.2(c) of the Indenture, the
Regular Allocation of Principal, if any;


 


(viii)eighth, to the
Owner Trustee and the Indenture Trustee, accrued and unpaid fees and reasonable expenses (including indemnification amounts) due
and payable under this Agreement, the Trust Agreement, the Asset Representations Review Agreement and the Indenture, as applicable, which have not been previously paid;


 


(ix)ninth, to the Asset
Representations Reviewer, accrued and unpaid fees and reasonable expenses (including indemnification amounts) due and payable under
the Asset Representations Review Agreement which have not been previously paid;


 


(x)tenth, to the Servicer,
legal expenses and costs incurred pursuant to Section 6.4(b); and


 


(xi)eleventh, to or at
the direction of the Certificateholder, any funds remaining.


 


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.


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(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 Certificateholder.


 


SECTION 4.5Net Deposits. 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 Servicer’s Certificate as if the amounts were
deposited and/or distributed separately.


 


SECTION 4.6Statements to Certificateholder
and Noteholders. On or before each Payment Date, the Servicer shall deliver to the Indenture Trustee, each Paying Agent and
the Rating Agencies, and the Indenture Trustee shall make available on its website, as described below, to the Issuer and to each
Noteholder of record as of the most recent Record Date, a statement setting forth for the Collection Period relating to such Payment
Date the following information (to the extent applicable):


 


(a)the applicable Record Date, Determination
Date and Payment Date;


 


(b)the aggregate amount being paid on
such Payment Date in respect of interest on and principal of each Class of Notes;


 


(c)the Class A-1 Note Balance, the Class
A-2 Note Balance, the Class A-3 Note Balance, the Class A-4 Note Balance, the Class B Note Balance and the Principal Factor with
respect to each Class of Notes, in each case after giving effect to payments on such Payment Date;


 


(d)(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 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;


 


(e)the First Allocation of Principal,
the Second Allocation of Principal and the Regular Allocation of Principal for such Payment Date;


 


(f)the number of Receivables and the
Net Pool Balance as of the beginning of business on the first day of the preceding Collection Period and the close of business
of the last day of the preceding Collection Period;


 


(g)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;



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(h)the amount of fees to be paid to each
of 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 each of the Indenture Trustee, the Owner Trustee and the Asset Representations Reviewer and the
change in each such amount from that of the prior Payment Date;


 


(i)the amount of the Class A Noteholders’
Interest Carryover Shortfall and the Class B Noteholders’ Interest Carryover Shortfall, if any, on such Payment Date and
the change in such amounts from the preceding Payment Date;


 


(j)the amount of any shortfall in principal
payments due to the Class A Noteholders and the Class B Noteholders on such Payment Date and the change in such amounts from the
preceding Payment Date;


 


(k)the aggregate Repurchase Price with
respect to Repurchased Receivables with respect to the related Collection Period;


 


(l)any material modifications, extensions
or waivers to the Transferred Assets’ terms, fees, penalties or payments during the related Collection Period;


 


(m)any material breaches of the representations
and warranties made in the Transaction Documents with respect to the Transferred Assets;


 


(n)the Outstanding Principal Balance
of Receivables that are 30-59, 60-89, 90-119 and over 119 days delinquent as of the end of the related Collection Period;


 


(o)the number of Receivables that are
30-59, 60-89, 90-119 and over 119 days delinquent as of the end of the related Collection Period;


 


(p)the percentage of the Net Pool Balance
of Receivables that are 30-59, 60-89, 90-119 and over 119 days delinquent as of the end of the related Collection Period;


 


(q)the amount of Collections for the
related Collection Period and any fees and expenses of the Issuer paid with respect to the Collection Period;


 


(r)the aggregate amount of losses realized
on the Receivables during the related Collection Period;


 


(s)the number of 60-Day Delinquent Receivables
as of the end of the related Collection Period;


 


(t)the Outstanding Principal Balance
of 60-Day Delinquent Receivables as of the end of the related Collection Period;


 


(u)the Delinquency Percentage, and whether
the Delinquency Percentage exceeds the Delinquency Trigger for such Payment Date;



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(v)whether and when the Instituting Noteholders
have elected to initiate a vote to determine whether the Asset Representations Reviewer should conduct an Asset Representations
Review with respect to the Subject Receivables;


 


(w)whether Noteholders representing at
least a majority of the voting Noteholders vote in favor of directing an Asset Representations Review of the Subject Receivables
by the Asset Representations Reviewer;


 


(x)if applicable, a statement that the
Servicer has received a communication request from a Noteholder interested in communicating with other Noteholders regarding the
possibility of exercising rights under the Transaction Documents and the name and contact information for the requesting Noteholder
and the date such request was received;


 


(y)a summary of the findings and conclusions
of any Asset Representations Review of the Subject Receivables by the Asset Representations Reviewer; and


 


(z)if applicable, information with respect
to any change in the Asset Representations Reviewer.


 


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 Indenture Trustee
will make available via the Indenture Trustee’s internet website all reports or notices required to be provided by the Indenture
Trustee under this Section 4.6. 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; provided, however, any such information
that must be delivered to the Rating Agencies under this Section 4.6 shall be sent by the Servicer by electronic mail to
each Rating Agency. The Indenture Trustee will make no representations or warranties as to the accuracy or completeness of such
documents and will assume no responsibility therefor.


 


The Indenture Trustee’s
internet website shall be initially located at www.usbank.com/abs or at such other address as shall be specified by the Indenture
Trustee from time to time in writing to the Noteholders, the Servicer, the Issuer or any Paying Agent. The Indenture Trustee will
forward a hard copy of the reports or notices required to be provided by the Indenture Trustee under this Section 4.6 to
Noteholders promptly upon Noteholder request, if such reports or notices are not accessible on its internet website. In connection
with providing access to the Indenture Trustee’s 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.


 


SECTION 4.7No
Duty to Confirm. The Indenture Trustee shall have no duty or obligation to verify or confirm the accuracy of any of the information
or numbers set forth in the Servicer’s Certificate delivered by the Servicer to the Indenture Trustee, and the Indenture
Trustee shall be fully protected in relying upon such Servicer’s Certificate.



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ARTICLE
V



THE SELLER


 


SECTION 5.1Representations 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 pursuant to this Agreement and the pledge
thereof by the Issuer to the Indenture Trustee pursuant to the Indenture:


 


(a)Existence and Power. The Seller
is a limited liability company validly existing and in good standing under the laws of the State of Delaware and has, in all material
respects, all power and authority required to carry on its business as it is now conducted. The Seller has obtained all necessary
licenses and approvals in each jurisdiction where the failure to do so would materially and adversely affect the ability of the
Seller to perform its obligations under the Transaction Documents or affect the enforceability or collectibility of the Receivables
or any other part of the Transferred Assets.


 


(b)Authorization and No Contravention.
The execution, delivery and performance by the Seller of each Transaction Document to which it is a party (i) have been duly authorized
by all necessary limited liability company action on the part of the Seller and (ii) do not contravene or constitute a default
under (A) any applicable law, rule or regulation, (B) its organizational documents or (C) any material agreement, contract, order
or other instrument to which it is a party or its property is subject (other than violations which do not affect the legality,
validity or enforceability of any of such agreements and which, individually or in the aggregate, would not materially and adversely
affect the transactions contemplated by, or the Seller’s 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 collectibility 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 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.



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(f)No Proceedings. There are no
actions, suits 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 collectibility 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)Assignment. The Receivables
and the other Transferred Assets have been validly assigned by the Seller to the Issuer.


 


(h)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.


 


(i)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 5.2Liability 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, the Paying Agent and the Indenture Trustee and their respective directors, officers,
employees and agents from and against any claim, loss, liability, obligation, compensatory damages, payment, cost, fee or expense
of any kind whatsoever, including but not limited to the costs of defending any claim or bringing any claim to enforce its rights,
including indemnification obligations of the Seller hereunder, incurred by reason of (i) the Seller’s willful misfeasance,
bad faith, or negligence in the performance of its duties under this Agreement, or by reason of reckless disregard of its obligations
and duties under this Agreement and (ii) the Seller’s violation of federal or State securities laws in connection with the
registration or the sale of the Notes.


 


(b)The Seller will pay any and all taxes
levied or assessed upon the Issuer or upon all or any part of the Trust Estate.



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(c)Indemnification under this Section
5.2 will survive the resignation or removal of the Owner Trustee or the Indenture Trustee and the termination or assignment
of this Agreement and will include, without limitation, reasonable fees and expenses of counsel and expenses of litigation. 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.


 


(d)The Seller’s 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 (including by virtue of Section 1111(b) of the Bankruptcy Code or any successor provision having similar
effect under the Bankruptcy Code), then the Issuer, the Servicer, the Indenture Trustee or the Owner Trustee further acknowledges
and agrees that any such interest, claim or benefit in or from Other Assets is and will be expressly subordinated to the indefeasible
payment in full, which, under the terms of the relevant documents relating to the securitization or conveyance of such Other Assets,
are entitled to be paid from, entitled to the benefits of, or otherwise secured by such Other Assets (whether or not any such entitlement
or security interest is legally perfected or otherwise entitled to a priority of distributions or application under applicable
law, including insolvency laws, and whether or not asserted against the Seller), including the payment of post-petition interest
on such other obligations and liabilities. 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(d) and the terms of this Section 5.2(d)
may be enforced by an action for specific performance. The provisions of this Section 5.2(d) will be for the third party
benefit of those entitled to rely thereon and will survive the termination of this Agreement.


 


SECTION 5.3Merger or Consolidation
of, or Assumption of the Obligations of, Seller. Any Person (i) into which the Seller may be merged or consolidated, (ii) resulting
from any merger, conversion, or consolidation to which the Seller is a party, (iii) succeeding to the business of the Seller, or
(iv) more than 50% of the voting stock or voting power and 50% or more of the economic equity of which is owned directly or indirectly
by United Services Automobile Association or which is United Services Automobile Association, which Person in any of the foregoing
cases executes an agreement of assumption to perform every obligation of the Seller under this Agreement, will be the successor
to the Seller under this Agreement without the execution or filing of any document or any further act on the part of any of the
parties to this Agreement. The Seller shall provide notice of any merger, conversion, consolidation, or succession pursuant to
this Section 5.3 to the Rating Agencies.



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SECTION 5.4Limitation 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.


 


SECTION 5.5Seller 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, the Servicer, the Administrator or any of their respective Affiliates, any Notes owned by the Issuer, the Seller,
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 5.6Sarbanes-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 5.7Compliance with Organizational
Documents. The Seller shall comply with its limited liability company agreement and other organizational documents.


 


ARTICLE
VI



THE SERVICER


 


SECTION 6.1Representations 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 pursuant to this Agreement and the pledge thereof by the
Issuer to the Indenture Trustee pursuant to the Indenture:


 


(a)Existence and Power. The Servicer
is a federally chartered savings association validly existing and in good standing under the laws of the United States and has,
in all material respects, all power and authority to carry on its business as it is now conducted. The 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 collectibility 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 Servicer of the Transaction Documents to which it is a party (i) have been duly
authorized by all necessary action on the part of the Servicer and (ii) do not contravene or constitute a default under (A) any
applicable law, rule or regulation, (B) its organizational documents or (C) any material agreement, contract, order or other instrument
to which it is a party or its property is subject (other than violations which do not affect the legality, validity or enforceability
of any of such agreements and which, individually or in the aggregate, would not materially and adversely affect the transactions
contemplated by, or the Servicer’s 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 and (iii) approvals, authorizations or filings which, if not obtained
or made, would not have a material adverse effect on the enforceability or collectibility of the Receivables or 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 federal savings associations from time to time in effect or by general principles of equity.


 


(e)No Proceedings. There are no
actions, suits 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.


 


(f)Fidelity Bond. The Servicer
shall not be required to maintain a fidelity bond or errors and omissions policy.


 


SECTION 6.2Indemnities 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, the Noteholders, the Certificateholder and the Seller and
their respective directors, officers, employees and agents from and against any and all costs, fees,



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expenses, losses, damages, claims, obligations,
payments and liabilities of any kind whatsoever, arising out of or resulting from the use, ownership or operation by the Servicer
or any Affiliate thereof of a Financed Vehicle, including, but not limited to, the costs of defending any claim or bringing any
claim to enforce their rights, including the Servicer’s indemnification obligations hereunder.


 


(b)The Servicer will indemnify, defend
and hold harmless the Issuer, the Owner Trustee and the Indenture Trustee and their respective directors, officers, employees and
agents from and against any taxes that may at any time be asserted against any such Person with respect to the transactions contemplated
herein or in the other Transaction Documents, if any, including, without limitation, any sales, gross receipts, general corporation,
tangible personal property, privilege, or license taxes (but, in the case of the Issuer, not including any taxes asserted with
respect to, and as of the date of, the conveyance of the Receivables to the Issuer or the issuance and original sales of the Notes,
or asserted with respect to ownership of the Receivables, or 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 or of defending any claim or bringing any claim to enforce their rights, including the Servicer’s indemnification
obligations hereunder. For the avoidance of doubt, the Servicer will not indemnify for any costs, fees, expenses, losses, claims,
damages, obligations, payments or liabilities due to the credit risk of the Obligor and for which reimbursement would constitute
recourse for uncollectible Receivables.


 


(c)The Servicer will indemnify, defend
and hold harmless the Issuer, the Owner Trustee and the Indenture Trustee and their respective directors, officers, employees and
agents and the Seller from and against any and all costs, fees, expenses, losses, claims, damages, obligations, payments and liabilities
of any kind whatsoever to the extent that such cost, fee, expense, loss, claim, damage, obligation, payment or liability arose
out of, or was imposed upon any such Person through, the negligence, willful misfeasance, or bad faith 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 or of defending any claim or bringing any claim to enforce their rights, including the Servicer’s indemnification
obligations hereunder; provided, however, that the Servicer will not indemnify for any costs, fees, expenses, losses,
claims, damages, obligations, payments or liabilities arising from its breach of any covenant for which the repurchase of the affected
Receivables is specified as the sole remedy pursuant to Section 3.6.


 


(d)The Servicer will compensate and indemnify
the Owner Trustee to the extent and subject to the conditions set forth in Sections 8.1 and 8.2 of the Trust Agreement.
The Servicer will compensate and indemnify the Indenture Trustee to the extent and subject to the conditions set forth in Section
6.7 of the Indenture, except to the extent that any cost, fee, expense, loss, claim, damage, obligation, payment 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 the Bank (or any successor thereto pursuant to Section 6.6 or Section 7.1) as Servicer, with respect to
the period such Person was the Servicer, will survive the termination of such Person as Servicer or a resignation by such



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Person as Servicer as well as the termination
or assignment of this Agreement and the Trust Agreement or the resignation or removal of the Owner Trustee or the Indenture Trustee
and will include reasonable fees and expenses of counsel and expenses of litigation. 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.


 


(f)Neither the Servicer nor any of the
directors or officers or employees or agents of the Servicer shall be under any liability to the Issuer, the Noteholders or the
Certificateholders, except as provided under this Agreement, for any action taken or for refraining from the taking of any action
pursuant to this Agreement or for errors in judgment; provided, however, that this provision shall not protect the
Servicer or any such Person against any liability that would otherwise be imposed by reason of willful misfeasance or bad faith
in the performance of duties or by reason of reckless disregard of obligations and duties under this Agreement, or by reason of
negligence in the performance of its duties under this Agreement. The Servicer and any director, officer or employee or agent of
the Servicer may rely in good faith on any Opinion of Counsel or on any Officer’s Certificate of the Seller or certificate
of auditors believed to be genuine and to have been signed by the proper party in respect of any matters arising under this Agreement.


 


The provisions of this Section 6.2
shall survive termination or assignment of this Agreement and satisfaction and discharge of the Indenture.


 


SECTION 6.3Merger or Consolidation
of, or Assumption of the Obligations of, Servicer. Any Person (i) into which the Servicer may be merged or consolidated, (ii)
resulting from any merger, conversion, or consolidation to which the Servicer is a party, (iii) succeeding to the business of the
Servicer or (iv) 50% or more of the equity of which is owned, directly or indirectly, by the United Services Automobile Association,
which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Servicer under
this Agreement, will be the successor to the Servicer under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties to this Agreement. The Servicer shall provide prior notice of the effective date
of any merger, conversion, consolidation or succession pursuant to this Section 6.3 to the Rating Agencies, the Indenture
Trustee and the Seller. The Servicer shall provide the Seller in writing such information as reasonably requested by the Seller
to comply with its Exchange Act reporting obligations with respect to a successor Servicer.


 


SECTION 6.4Limitation on Liability
of Servicer and Others. (a) Neither the Servicer nor any of the directors or officers or employees or agents of the Servicer
will be under any liability to the Issuer, the Indenture Trustee, the Owner Trustee, the Noteholders or the Certificateholder,
except as provided under this Agreement, for any action taken or for refraining from the taking of any action pursuant to this
Agreement or for errors in judgment; provided, however, that this provision will not protect the Servicer or any
such Person against any liability that would otherwise be imposed by reason of willful misfeasance or bad faith in the performance
of duties or by reason of its failure to perform its obligations or of reckless disregard of obligations and duties under this
Agreement, or by reason of negligence in the performance of its duties under this Agreement (except for errors in judgment). The
Servicer



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and any director, officer or employee or agent
of the Servicer may rely in good faith on any Opinion of Counsel or on any Officer’s Certificate of the Seller or certificate
of auditors believed to be genuine and to have been signed by the proper party in respect of any matters arising under this Agreement.


 


(b)Except as provided in this Agreement,
the Servicer will not be under any obligation to appear in, prosecute, or defend any legal action that is not incidental to its
duties to service the Receivables in accordance with this Agreement, and that in its opinion may involve it in any expense or liability;
provided, however, that the Servicer may undertake any reasonable action that it may deem necessary or desirable
in respect of this Agreement and the rights and duties of the parties to this Agreement and the interests of the Noteholders and
the Certificateholder under this Agreement. In such event, the legal expenses and costs of such action and any liability resulting
therefrom will be expenses, costs and liabilities of the Issuer, and the Servicer shall be entitled to be reimbursed therefor.
Any amounts due the Servicer pursuant to this subsection shall be payable on a Payment Date in accordance with Section 4.4(a).


 


SECTION 6.5Delegation of Duties.
The Servicer may, at any time without notice or consent, delegate (a) any or all of its duties (including, without limitation,
its duties as custodian) under the Transaction Documents to any of its Affiliates or (b) specific duties (including, without limitation,
its duties as custodian) to sub-contractors who are in the business of performing such duties; provided, that no such delegation
shall relieve the Servicer of its responsibility with respect to such duties and the Servicer shall remain obligated and liable
to the Issuer and the Indenture Trustee for its duties hereunder as if the Servicer alone were performing such duties. For any
servicing activities delegated to third parties in accordance with this Section 6.5, the Servicer shall follow such policies
and procedures to monitor the performance of such third parties and compliance with such servicing activities as the Servicer follows
with respect to comparable motor vehicle receivables serviced by the Servicer for its own account.


 


SECTION 6.6The Bank Not to Resign
as Servicer. Subject to the provisions of Sections 6.3 and 6.5, the Bank will not resign from the obligations
and duties hereby imposed on it as Servicer under this Agreement except upon determination that the performance of its duties under
this Agreement is no longer permissible under applicable law. Notice of any such determination permitting the resignation of the
Bank will be communicated to the Issuer and the Indenture Trustee at the earliest practicable time (and, if such communication
is not in writing, will be confirmed in writing at the earliest practicable time) and any such determination will be evidenced
by an Opinion of Counsel to such effect delivered to the Issuer and the Indenture Trustee concurrently with or promptly after such
notice. No such resignation will become effective until a successor Servicer has (i) assumed the responsibilities and obligations
of the Bank as Servicer and (ii) provided in writing the information reasonably requested by the Seller to comply with its reporting
obligations under the Exchange Act with respect to a replacement Servicer.


 


SECTION 6.7Servicer May Own Notes.
The Servicer, and any Affiliate of the Servicer, 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 Servicer or an Affiliate thereof, except as otherwise expressly provided
herein or in the other Transaction Documents. Except as set forth



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herein or in the other Transaction Documents,
Notes so owned by or pledged to the Servicer or such Affiliate will have an equal and proportionate benefit under the provisions
of this Agreement, without preference, priority or distinction as among all of the Notes.


 


ARTICLE
VII



REPLACEMENT OF SERVICER


 


SECTION 7.1Replacement of Servicer.


 


(a)If a Servicer Replacement Event shall
have occurred and be continuing, the Indenture Trustee may or, at the direction of 662⁄3% of the Note Balance of the Controlling
Class shall, by notice given to the Servicer, the Owner Trustee, the Issuer, the Administrator and the Noteholders, terminate the
rights and obligations of the Servicer under this Agreement with respect to the Receivables. In the event the Servicer is terminated
pursuant to this Section 7.1 or resigns as Servicer pursuant to Section 6.6 with respect to servicing the Receivables,
the Indenture Trustee, acting at the direction of 662⁄3% of the Note Balance of the Controlling Class, shall appoint a successor
Servicer. Upon the Servicer’s receipt of notice of termination the predecessor Servicer will continue to perform its functions
as Servicer under this Agreement only until the date specified in such termination notice or, if no such date is specified in such
termination notice, until receipt of such notice. If a successor Servicer has not been appointed at the time when the predecessor
Servicer ceases to act as Servicer in accordance with this Section 7.1, the Indenture Trustee without further action will
automatically be appointed the successor Servicer. Notwithstanding the above, the Indenture Trustee, if it is legally unable or
is unwilling to so act, will appoint, or petition a court of competent jurisdiction to appoint a successor Servicer. Any successor
Servicer shall be an established institution having a net worth of not less than $100,000,000 and whose regular business includes
the servicing of comparable motor vehicle receivables having an aggregate outstanding principal amount of not less than $50,000,000.
If the Indenture Trustee shall become successor Servicer hereunder, the Indenture Trustee shall be entitled to appoint a subservicer;
provided that the Indenture Trustee, in its capacity as successor Servicer, shall be fully liable for the acts or omissions of
such subservicer under the Transaction Documents to which it is a party. If the Indenture Trustee shall become succesor Servicer
hereunder, it shall not be liable for the acts or omissions by the predecessor Servicer.


 


(b)Noteholders holding not less than
a majority of the Note Balance of the Controlling Class may waive any Servicer Replacement Event. Upon any such waiver, such Servicer
Replacement Event shall cease to exist and be deemed to have been cured and not to have occurred for every purpose of this Agreement,
but no such waiver shall extend to any prior, subsequent or other Servicer Replacement Event or impair any right consequent thereto.


 


(c)If replaced, the Servicer agrees that
it will use commercially reasonable efforts to effect the orderly and efficient transfer of the servicing of the Receivables to
a successor Servicer. The Servicer agrees to cooperate with the Successor Servicer in effecting the termination of the responsibilities
and rights of the Servicer hereunder, including, without limitation, the transfer to the Successor Servicer for administration
by it of all cash amounts which shall at the time be held by the Servicer for deposit, or have been deposited by the



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Servicer, in the Collection Account, or for
its own account in connection with its services hereafter or thereafter received with respect to the Collateral. The Servicer shall
transfer to the Successor Servicer all records held by the Servicer relating to the Collateral in such electronic form as the Successor
Servicer may reasonably request and (ii) any Receivable Files in the Servicer’s possession. 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
Successor Servicer direct, but only upon reasonable notice and during normal business hours, which do not unreasonably interfere
with the Servicer’s normal operations, at the respective offices of the Servicer. All reasonable costs and expenses incurred
in connection with transferring the Receivable Files to the successor Servicer and all other reasonable costs and expenses incurred
in connection with the transfer to the successor Servicer related to the performance by the Servicer hereunder will be paid by
the predecessor Servicer upon presentation of reasonable documentation of such costs and expenses.


 


(d)Upon the effectiveness of the assumption
by the successor Servicer of its duties pursuant to this Section 7.1, the successor Servicer shall be the successor in all
respects to the Servicer in its capacity as Servicer under this Agreement with respect to the Receivables, and shall be subject
to all the responsibilities, duties and liabilities relating thereto, except with respect to the obligations of the predecessor
Servicer that survive its termination as Servicer, including indemnification obligations as set forth in Section 6.2(e).
In such event, the Indenture Trustee and the Owner Trustee are hereby authorized and empowered to execute and deliver, on behalf
of the predecessor Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such termination and replacement of the Servicer, whether
to complete the transfer and endorsement of the Receivables and related documents, or otherwise. No Servicer shall resign or be
relieved of its duties under this Agreement, as Servicer of the Receivables, until a newly appointed Servicer for the Receivables
shall have assumed the responsibilities and obligations of the resigning or terminated Servicer under this Agreement.


 


(e)In connection with such appointment,
the Indenture Trustee may make such arrangements for the compensation of the successor Servicer out of Available Funds as it and
such successor Servicer will agree; provided, however, that no such compensation will be in excess of the amount
paid to the predecessor Servicer under this Agreement.


 


SECTION 7.2Notification to Noteholders.
Upon any termination of, or appointment of a successor to, the Servicer pursuant to this Article VII, the Indenture Trustee
will give prompt (but in any event, within (5) Business Days of such termination or appointment) written notice thereof to the
Owner Trustee, the Issuer, the Administrator and to the Noteholders at their respective addresses of record.


 


ARTICLE
VIII



OPTIONAL PURCHASE


 


SECTION 8.1Optional Purchase of Trust
Estate. The Servicer shall have the right at its option (the “Optional Purchase”) to purchase (and/or to
designate one or more other persons to purchase) some or all of the Receivables from the Issuer on any Payment Date if both of
the



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following conditions are satisfied: (a) the
Net Pool Balance as of the last day of the related Collection Period has declined to 10% or less of the Net Pool Balance as of
the Cut-Off Date and (b) the sum of the Optional Purchase Price and Available Funds for such Payment Date would be sufficient to
pay (x) the amounts required to be paid under clauses first through fifth of Section 4.4(a) and (y) the Outstanding
Note Balance (after giving effect to the payments described in the preceding clause (x)). The aggregate purchase price for the
Receivables (the “Optional Purchase Price”) shall equal the aggregate principal amounts of the Receivables (assuming
that Receivables that were more than 30 days past due as of the last day of the related Collection Period have a principal balance
of zero). If the Servicer exercises the Optional Purchase, the Notes shall be redeemed and in each case in whole but not in part
on the related Payment Date for the Redemption Price. Upon any such Optional Purchase, any funds remaining in the Reserve Account
will be distributed to or at the direction of the Certificateholder.


 


ARTICLE
IX



MISCELLANEOUS PROVISIONS


 


SECTION 9.1Amendment.


 


(a)Any term or provision of this Agreement
may be amended by the Seller and the Servicer without the consent of the Indenture Trustee, any Noteholder, the Issuer, the Owner
Trustee or any other Person subject to the satisfaction of one of the following conditions:


 


(i)the Seller or the Servicer
delivers to the Indenture Trustee (a) an Opinion of Counsel to the effect that such amendment will not materially and adversely
affect the interests of the Noteholders and (b) Officer’s Certificate of the Seller or Servicer, respectively, to the effect
that such amendment will not materially and adversely affect the interests of the Noteholders; or


 


(ii)the Rating Agency Condition
is satisfied with respect to such amendment and the Seller or the Servicer notifies the Indenture Trustee in writing that the Rating
Agency Condition is satisfied with respect to such amendment.


 


(b)This Agreement (including Appendix
A) may also be amended from time to time by the Seller, the Servicer and the Indenture Trustee, with the consent of the Noteholders
evidencing not less than a majority of the Outstanding Note Balance of the Controlling Class, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of
the Noteholders; provided, that no such amendment shall (i) reduce the interest rate or principal amount of any Note or
change or delay the Final Scheduled Payment Date of any Note without the consent of the Holder of such Note, or (ii) reduce the
percentage of the Note Balance, the Holders of which are required to consent to any matter without the consent of the Holders of
at least the percentage of the Note Balance which were required to consent to such matter before giving effect to such amendment;
provided, further, that in the case of any amendment pursuant to this Section 9.1(b), the Indenture Trustee
may not agree to any such amendment if such amendment failed to comply with the requirements of Section 9.2 of the Indenture.
It will not be necessary for the consent of



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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 Note Depository Agreement.


 


(c)Prior to the execution of any amendment
pursuant to this Section 9.1, the Servicer shall provide written notification of the substance of such amendment to each
Rating Agency; and promptly after the execution of any such amendment or consent, the Servicer shall furnish a copy of such amendment
or consent to each Rating Agency and the Indenture Trustee; provided, that no amendment pursuant to this Section 9.1
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 (which consent shall not be unreasonably withheld or delayed).


 


(d)Prior to the execution of any amendment
to this Section 9.1, 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 or execute on behalf of the Issuer any such amendment which adversely affects the Owner
Trustee’s or the Indenture Trustee’s, as applicable, own rights, privileges, indemnities, duties or obligations under
this Agreement.


 


SECTION 9.2Protection of Title.


 


(a)The Seller 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 Issuer and the Indenture Trustee
under this Agreement in the Receivables. The Seller shall deliver (or cause to be delivered) to the Issuer and the Indenture Trustee
file-stamped copies of, or filing receipts for, any document filed as provided above.


 


(b)The Seller shall notify the Issuer
and the Indenture Trustee in writing within ten (10) days following the occurrence of (i) any change in the Seller’s organizational
structure as a limited liability company, (ii) any change in the Seller’s “location” (within the meaning of Section
9-307 of the UCC of all applicable jurisdictions) and (iii) any change in the Seller’s name and 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 to amend all previously filed financing
statements or continuation statements described in paragraph (a) above.


 


(c)The Servicer shall maintain (or shall
cause its Sub-Servicer to maintain) in accordance with its Customary Servicing Practices accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at any time the status of such Receivable, including
payments and recoveries made and payments owing (and the nature



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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)The Servicer shall maintain (or shall
cause its Sub-Servicer to maintain) its computer systems so that, from time to time after the conveyance under this Agreement of
the Receivables, the master computer records (including any backup archives, it being understood that any such backup archives
may not reflect such interest until thirty-five (35) days after the applicable changes are made to such master computer records)
that refer to a Receivable shall indicate clearly the interest of the Issuer in such Receivable and that such Receivable is owned
by the Issuer and has been pledged to the Indenture Trustee pursuant to the Indenture. Indication of the Issuer’s interest
in a Receivable shall not be deleted from or modified on such computer systems until, and only until, the related Receivable shall
have been paid in full, repurchased by the Bank pursuant to Section 3.4 of the Purchase Agreement or purchased by the Servicer
in accordance with Section 3.6 hereof.


 


(e)If at any time the Servicer shall
propose to sell, grant a security interest in or otherwise transfer any interest in motor vehicle receivables to any prospective
purchaser, lender or other transferee, the Servicer shall give to such prospective purchaser, lender or other transferee computer
tapes, records or printouts (including any restored from backup archives) that, if they shall refer in any manner whatsoever to
any Receivable, shall indicate clearly that such Receivable has been sold and is owned by the Issuer and has been pledged to the
Indenture Trustee.


 


(f)The Servicer, upon receipt of reasonable
prior notice, shall permit the Indenture Trustee, the Owner Trustee and their respective agents at any time during normal business
hours, to the extent it does not unreasonably interfere with the Servicer’s normal operations, to inspect, audit and, to
the extent permitted by applicable law, make copies of and abstracts from Servicer’s (or any Sub-Servicer’s) records
regarding any Receivable.


 


(g)Upon request, the Servicer shall furnish
to the Issuer or to the Indenture Trustee, within five Business Days, a list of all Receivables (by contract number and name of
Obligor) then owned by the Issuer, together with a reconciliation of such list to each of the Servicer’s Certificates furnished
before such request indicating removal of Receivables from the Issuer.


 


SECTION 9.3Other Liens or Interests.
Except for the conveyances and grants of security interests pursuant to this Agreement and the other Transaction Documents, the
Seller shall not sell, pledge, assign or transfer the Receivables or other property transferred to the Issuer to any other Person,
or grant, create, incur, assume or suffer to exist any Lien (other than Permitted Liens) on any interest therein, and the Seller
shall defend the right, title and interest of the Issuer in, to and under such Receivables and other property transferred to the
Issuer against all claims of third parties claiming through or under the Seller.


 


SECTION 9.4Transfers 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,



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assignments and conveyances rather than pledges
or assignments of only a security interest and shall be given effect as such for all purposes. It is further the intention of the
parties hereto that the Receivables and related Transferred Assets shall not be part of the Seller’s estate in the event
of a bankruptcy or insolvency of the Seller. The sales and transfers by the Seller of Receivables and related Transferred Assets
hereunder are and shall be without recourse to, or representation or warranty (express or implied) by, the Seller, except as otherwise
specifically provided herein. The limited rights of recourse specified herein against the Seller are intended to provide a remedy
for breach of representations and warranties relating to the condition of the property sold, rather than to the collectability
of the Receivables.


 


(b)Notwithstanding the foregoing, in
the event that the Receivables and other Transferred Assets are held to be property of the Seller, or if for any reason this Agreement
is held or deemed to create indebtedness or a security interest in the Receivables and other Transferred Assets, then it is intended
that:


 


(i)This Agreement shall be deemed
to be a security agreement within the meaning of Articles 8 and 9 of the New York UCC and the UCC of any other applicable jurisdiction;


 


(ii)The conveyance provided
for in Section 2.1 shall be deemed to be a grant by the Seller, and the Seller hereby grants, to the Issuer a security interest
in all of its right (including the power to convey title thereto), title and interest, whether now owned or hereafter acquired,
in and to the Receivables and other Transferred Assets, to secure such indebtedness and the performance of the obligations of
the Seller hereunder;


 


(iii)The possession by the Issuer,
or the Servicer as the Issuer’s 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 Issuer for the purpose
of perfecting such security interest under applicable law.


 


SECTION 9.5Notices, 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, by facsimile or, if so provided on Schedule I
to the Sale and Servicing Agreement, 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. Delivery will be deemed to have been given and made: (i) upon delivery or, in the case of a
letter mailed by registered or certified first-class United States mail, postage prepaid, three days after deposit in the mail,
(ii) in the case of a facsimile, when receipt is



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confirmed by telephone, reply email or reply
facsimile from the recipient, (iii) in the case of electronic transmission, when receipt is confirmed by telephone or reply email
from the recipient and (iv) in the case of an electronic posting to a password-protected website to which the recipient has been
provided access, upon delivery (without the requirement of confirmation of receipt) and notice (including email) to such recipient
stating that such electronic posting has occurred.


 


SECTION
9.6Choice 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
9.7Headings. The section headings hereof have been inserted for convenience of reference only and shall not
be construed to affect the meaning, construction or effect of this Agreement.


 


SECTION 9.8Counterparts. This
Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of
such counterparts shall together constitute but one and the same instrument.


 


SECTION 9.9Waivers. No failure
or delay on the part of the Servicer, the Seller, the Issuer or the Indenture Trustee in exercising any power or right hereunder
(to the extent such Person has any power or right hereunder) shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right.
No notice to or demand on any party hereto in any case shall entitle it to any notice or demand in similar or other circumstances.
No waiver or approval by any party hereto under this Agreement shall, except as may otherwise be stated in such waiver or approval,
be applicable to subsequent transactions. No waiver or approval under this Agreement shall require any similar or dissimilar waiver
or approval thereafter to be granted hereunder.


 


SECTION 9.10Entire 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 9.11Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held
invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this
Agreement.



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SECTION 9.12Binding Effect. This
Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall
remain in full force and effect until such time as the parties hereto shall agree.


 


SECTION 9.13Acknowledgment and Agreement.
By execution below, the Seller expressly acknowledges and consents to the pledge, assignment and Grant of a security interest in
the Receivables and the other Transferred Assets by the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit
of the Noteholders. In addition, the Seller hereby acknowledges and agrees that for so long as the Notes are outstanding, the Indenture
Trustee will have the right to exercise all powers, privileges and claims of the Issuer under this Agreement in the event the Issuer
shall fail to exercise the same.


 


SECTION 9.14Cumulative Remedies.
The remedies herein provided are cumulative and not exclusive of any remedies provided by law.


 


SECTION 9.15Nonpetition Covenant.
Each party hereto agrees that, prior to the date which is one year and one day after payment in full of all obligations of each
Bankruptcy Remote Party in respect of all securities issued by any Bankruptcy Remote Party (i) such party shall not authorize any
Bankruptcy Remote Party to commence a voluntary winding-up or other voluntary case or other Proceeding seeking liquidation, reorganization
or other relief with respect to such Bankruptcy Remote Party or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect in any jurisdiction or seeking the appointment of an administrator, a trustee, receiver, liquidator,
custodian or other similar official with respect to such Bankruptcy Remote Party or any substantial part of its property or to
consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other Proceeding
commenced against such Bankruptcy Remote Party, or to make a general assignment for the benefit of, its creditors generally, any
party hereto or any other creditor of such Bankruptcy Remote Party, and (ii) such party shall not commence or join with any other
Person in commencing 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 9.15
shall survive the termination of this Agreement; provided that the foregoing shall in no way limit the rights of the parties
hereto to pursue any other creditor rights or remedies that such Persons may have against the Issuer under applicable law.


 


SECTION 9.16Submission 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;



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(b)consents that any such action or Proceeding
may be brought in such courts and waives any objection that it may now or hereafter have to the venue of such action or Proceeding
in any such court or that such action or Proceeding was brought in an inconvenient court and agrees not to plead or claim the same;


 


(c)agrees that service of process in
any such action or Proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to such Person at its address determined in accordance with Section 9.5;


 


(d)agrees that nothing herein shall affect
the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction;
and


 


(e)to the extent permitted by applicable
law, each party hereto irrevocably waives all right of trial by jury in any action, Proceeding or counterclaim based on, or arising
out of, under or in connection with this Agreement, any other Transaction Document, or any matter arising hereunder or thereunder.


 


SECTION 9.17Limitation of Liability.


 


(a)Notwithstanding anything contained
herein to the contrary, this Agreement has been executed and delivered by Wells Fargo Delaware Trust Company, National Association,
not in its individual capacity but solely as Owner Trustee, and in no event shall it have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder or under the Notes or any of the other Transaction
Documents or in any of the certificates, notices or agreements delivered pursuant thereto, as to all of which recourse shall be
had solely to the assets of the Issuer. Under no circumstances shall the Owner Trustee be personally liable for the payment of
any indebtedness or expense of the Issuer or be liable for the breach or failure of any obligations, representation, warranty or
covenant made or undertaken by the Issuer under the Transaction Documents. For the purposes of this Agreement, in the performance
of its duties or obligations hereunder, the Owner Trustee shall be subject to, and entitled to the benefits of, the terms and provisions
of Articles VI, VII and VIII of the Trust Agreement.


 


(b)Notwithstanding anything contained
herein to the contrary, this Agreement has been executed and delivered by U.S. Bank National Association, not in its individual
capacity but solely as Indenture Trustee, and in no event shall it have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer under the Notes or any of the other Transaction Documents or in any of the certificates,
notices or agreements delivered pursuant thereto, as to all of which recourse shall be had solely to the assets of the Issuer.
Under no circumstances shall the Indenture Trustee be personally liable for the payment of any indebtedness or expense of the Issuer
or be liable for the breach or failure of any obligations, representation, warranty or covenant made or undertaken by the Issuer
under the Transaction Documents. For the purposes of this Agreement, in the performance of its duties or obligations hereunder,
the Indenture Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Article VI of the
Indenture provided, that the obligations under Section 6.1(a) of the Indenture shall only be applicable to the performance
of the Indenture Trustee’s duties and



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obligations under the Indenture and shall
not be applicable to the Indenture Trustee’s performance hereunder.


 


SECTION 9.18Third-Party Beneficiaries.
This Agreement shall inure to the benefit of and be binding upon the parties hereto, the Noteholders and the Certificateholder
and their respective successors and permitted assigns and the Owner 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 9.18, no
other Person will have any right hereunder.


 


SECTION 9.19Information Requests.
The parties hereto shall provide any information reasonably requested by the Servicer, the Issuer, the Seller or any of their Affiliates,
in order to comply with or obtain more favorable treatment under any current or future law, rule, regulation, accounting rule or
principle.


 


SECTION 9.20Regulation AB. The
Servicer shall cooperate fully with the Seller and the Issuer to deliver to the Seller and the Issuer (including any of its assignees
or designees) any and all statements, reports, certifications, records and any other information necessary in the good faith determination
of the Seller or the Issuer to permit the Seller to comply with the provisions of Regulation AB and its reporting obligations under
the Exchange Act, together with such disclosures relating to the Servicer and the Receivables, or the servicing of the Receivables,
reasonably believed by the Seller to be necessary in order to effect such compliance.


 


SECTION 9.21Information to Be Provided
by the Indenture Trustee.


 


(a)The Indenture Trustee shall (i) on
or before the fifth Business Day of each month, notify the Seller, in writing, of any Form 10-D Disclosure Item with respect to
the Indenture Trustee, together with a description of any such Form 10-D Disclosure Item in form and substance reasonably satisfactory
to the Seller; provided, however, that subject to clauses (b)(iv) and (b)(v), the Indenture Trustee
shall not be required to provide such information in the event that there has been no change to the information previously provided
by the Indenture Trustee to Seller, and (ii) as promptly as practicable following notice to or discovery by a Responsible Officer
of the Indenture Trustee of any changes to such information, provide to the Seller, in writing, such updated information.


 


(b)As soon as available but no later
than March 15 of each calendar year, commencing on March 15, 2017, the Indenture Trustee shall:


 


(i)deliver to the Seller and
Servicer a report regarding the Indenture Trustee’s assessment of compliance with the Servicing Criteria during the immediately
preceding calendar year, (or since the Closing Date in the case of the first such report) as required under paragraph (b) of Rule
13a-18, Rule 15d-18 of the Exchange Act and Item 1122 of Regulation AB. Such report shall be signed by a Responsible Officer of
the Indenture Trustee, and shall address each of the Servicing Criteria specified in Exhibit C or such other criteria as
mutually agreed upon by the Seller and the Indenture Trustee;


 


(ii)cause a firm of registered
public accountants that is qualified and independent within the meaning of Rule 2-01 of Regulation S-X under the Securities Act
to deliver to the Seller a report for inclusion in the Seller’s filing of Exchange Act Form



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10-K with respect to the Issuer that
attests to, and reports on, the assessment of compliance made by the Indenture Trustee and delivered to the Seller pursuant to
the preceding paragraph. Such attestation shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the
Securities Act and the Exchange Act;


 


(iii)deliver to the Seller and
any other Person that will be responsible for signing the certification (a “Sarbanes Certification”) required
by Rules 13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to Section 302 of the Sarbanes-Oxley Act) on behalf of the Issuer
or the Seller, a back-up certification substantially in the form attached hereto as Exhibit D or such form as mutually agreed
upon by the Seller and the Indenture Trustee; and


 


(iv)deliver to the Seller the
certification substantially in the form attached hereto as Exhibit E, or such other form as is mutually agreed upon by the
Seller and the Indenture Trustee regarding any affiliations or relationships (as described in Item 1119 of Regulation AB) between
the Indenture Trustee and any Item 1119 Party and any Form 10-D Disclosure Item.


 


The Indenture Trustee acknowledges that the parties identified
in clause (iii) above may rely on the certification provided by the Indenture Trustee pursuant to such clause in signing
a Sarbanes Certification and filing such with the Commission.


 


(c)The Indenture Trustee shall provide
the Seller and the Bank (each, a “Reporting Party” and, collectively, the “Reporting Parties”)
with (i) notification as soon as practicable of all demands communicated to a Responsible Officer of the Indenture Trustee for
the repurchase or replacement of any Receivable for breach of the representations and warranties concerning such Receivable and
(ii) promptly upon written request by a Reporting Party, any other information reasonably requested by a Reporting Party that is
in the Indenture Trustee’s possession and reasonably accessible to it to facilitate compliance by the Reporting Parties with
Rule 15Ga-1 under the Exchange Act, and Items 1104(e) and 1121(c) of Regulation AB (the “Repurchase Rules and Regulations”)
but in no event more than once monthly or such other quantity of requests as may be mutually agreed to by the Indenture Trustee
and the applicable Reporting Party. In no event shall the Indenture Trustee be deemed to be a “securitizer” as defined
in Section 15G(a)(1) of the Exchange Act with respect to the transactions contemplated by the Transaction Documents, nor shall
it have (A) any responsibility for making any filing required to be made by a securitizer under the Exchange Act or Regulation
AB, or (B) any duty or obligation to undertake any investigation or inquiry related to repurchase activity or otherwise to assume
any additional duties or responsibilities in respect to the transactions contemplated by the Transaction Documents. For purposes
of this section, a “demand” is limited to a demand for enforcement of a repurchase remedy received by the Indenture
Trustee. A demand does not include general inquiries, including investor inquiries, regarding asset performance or possible breaches
of representations or warranties.


 


SECTION 9.22Form 8-K Filings.
The Indenture Trustee shall promptly notify the Seller of any Reportable Event set forth in clauses (a), (d) or (f) of the definition
thereof (other than any such Reportable Event as to which the Seller or the Servicer has actual knowledge), but in no event later
than two (2) Business Days after a Responsible Officer of the Indenture Trustee



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has actual knowledge of such Reportable Event
and has determined, or should have reasonably determined, that such an event constitutes a Reportable Event.


 


SECTION 9.23Further Assurances.
The Seller and the Servicer agree to do and perform, from time to time, any and all acts and to execute any and all further instruments
required or reasonably requested by the Owner Trustee or the Indenture Trustee more fully to effect the purposes of this Agreement.


 


SECTION 9.24Cooperation. The parties
hereto acknowledge and agree that the purpose of Sections 9.21 and 9.22 is to facilitate compliance by the Seller
and Servicer with the provisions of Regulation AB and related rules and regulations of the Commission. Neither the Seller nor the
Servicer shall exercise its right to request delivery of information or other performance under these provisions other than in
good faith in order to comply with the Securities Act, the Exchange Act, the rules and regulations of the Commission under the
Securities Act and the Exchange Act and any comments or requests of the Commission. The Indenture Trustee acknowledges that interpretations
of the requirements of Regulation AB may change over time, whether due to interpretive guidance provided by the Commission or its
staff, consensus among participants in the asset-backed securities markets or consensus among counsel to the parties hereto, and
agrees to reasonably cooperate with the Seller to deliver to the Seller and Servicer such information necessary in the good faith
determination of the Seller and Servicer to permit the Seller or such Servicer to comply with the provisions of Regulation AB.


 


SECTION 9.25Rights of the Certificateholder.
Notwithstanding anything contained herein or in any Transaction Document to the contrary, after the Notes are no longer Outstanding
following payment in full of the principal and interest on the Notes, (i) the Certificateholder will succeed to the rights of the
Noteholders under this Agreement, (ii) the Owner Trustee will succeed to the rights of, but not, without its express consent, the
obligations of the Indenture Trustee pursuant to this Agreement and (iii) the Collection Account will continue to be maintained
as set forth in Section 4.4; provided, however, the Certificateholder shall not be entitled to any payments
pursuant to Section 4.4 other than pursuant to clause eleventh thereof.


 


SECTION 9.26Dispute Resolution.


 


(a)If any Requesting Investor (each,
a “Requesting Party”) requests that the Bank repurchase any Receivable pursuant to Section 3.4 of the
Purchase Agreement and the Repurchase Request has not been fulfilled or otherwise resolved to the reasonable satisfaction of the
Requesting Party within 180 days of the receipt of notice of the request by the Bank, the Requesting Party will have the right
to refer the matter, at its discretion, to either mediation (including non-binding arbitration) or binding arbitration pursuant
to this Section 9.26. Dispute resolution to resolve any Repurchase Request will be available regardless of whether the Noteholders
vote to direct an Asset Representations Review. The Bank will inform the Requesting Party in writing upon a determination by the
Bank that a Receivable subject to a demand to repurchase will be repurchased and the monthly distribution report filed by the Seller
on Form 10-D for the Collection Period in which such Receivables were repurchased will include disclosure of such repurchase. A
failure of the Bank to inform the Requesting Party that a Receivable subject to a demand will be repurchased within 180 days of
the receipt of notice of the request shall be deemed to be a determination by the Bank that no repurchase of that



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Receivable due to a breach of Section 3.4
of the Purchase Agreement is required. The Indenture Trustee shall not be deemed to have knowledge that any Repurchase Request
remained unresolved for 180 days unless a Responsible Officer of the Indenture Trustee has actual knowledge that such Repurchase
Request remained unresolved for 180 days or has received written notice that such Repurchase Request remained unresolved for 180
days. Other than the Indenture Trustee’s obligation to notify the Seller and the Bank of any demands communicated to a Responsible
Officer of the Indenture Trustee for the repurchase or replacement of any Receivable for breach of the representations and warranties
concerning such Receivable pursuant to Section 9.21(c) of the Sale and Servicing Agreement, the Indenture Trustee shall
have no obligation under the Indenture or any other Transaction Document to monitor and/or report the status of repurchase requests.


 


(b)The Requesting Party will provide
notice in accordance with the provisions of Section 9.5 of its intention to refer the matter to mediation (including non-binding
arbitration) or binding arbitration, as applicable, to the Bank, with a copy to the Issuer, the Seller, the Owner Trustee and the
Indenture Trustee. The Bank agrees that it will participate in the resolution method selected by the Requesting Party. Any settlement
agreement reached in a mediation and any decision by an arbitrator in a binding arbitration shall be binding upon the Requesting
Party, the Issuer, the Owner Trustee, and the Indenture Trustee with respect to the Receivable that is the subject matter of the
Repurchase Request, and, in that situation, issues relating to that Receivable may not be re-litigated by the Requesting Party
or the Seller or become the subject of a subsequent Repurchase Request by the Requesting Party in mediation (including non-binding
arbitration), binding arbitration, court, or otherwise.


 


(c)If the Requesting Party selects mediation
(including non-binding arbitration) as the resolution method, the following provisions will apply:


 


(i)The mediation will be administered
by a nationally recognized arbitration and mediation association selected by the Requesting Party pursuant to such association’s
mediation procedures in effect at such time.


 


(ii)The fees and expenses of
the mediation will be allocated as mutually agreed by the Requesting Party and the Bank as part of the mediation.


 


(iii)The mediator will be impartial,
knowledgeable about and experienced with the laws of the State of New York that are relevant to the repurchase dispute and will
be appointed from a list of neutrals maintained by the American Arbitration Association (the “AAA”).


 


(d)If the Requesting Party selects binding
arbitration as the resolution method, the following provisions will apply:


 


(i)The arbitration will be administered
by a nationally recognized arbitration and mediation association jointly selected by the Requesting Party and the Bank, and, if
the Requesting Party and the Bank are unable to agree on an association, by the AAA, and conducted pursuant to such association’s
arbitration procedures in effect at such time.



    	 	38	Sale and Servicing Agreement
(USAA 2016-1)



    	



    


(ii)The arbitrator will be impartial,
knowledgeable about and experienced with the laws of the State of New York that are relevant to the dispute hereunder and, if appointed
by the AAA, will be selected from a list of neutrals maintained by the AAA.


 


(iii)The arbitrator will make
its final determination no later than 90 days after appointment or as soon as practicable thereafter. The arbitrator will resolve
the dispute in accordance with the terms of this Agreement, and may not modify or change this Agreement in any way. The arbitrator
will not have the power to award punitive damages or consequential damages in any arbitration conducted by it, and the Bank shall
not be required to pay more than the applicable Repurchase Price with respect to any receivable which the Bank is required to repurchase
under the terms of the Purchase Agreement. In its final determination, the arbitrator will determine and award the costs of the
arbitration (including the fees of the arbitrator, cost of any record or transcript of the arbitration, and administrative fees)
and reasonable attorneys’ fees to the Requesting Party and the Bank as determined by the arbitrator in its reasonable discretion.
The determination of the arbitrator will be in writing and counterpart copies will be promptly delivered to the Requesting Party
and the Bank. For binding arbitration, the determination of the arbitrator will be final and non-appealable (absent manifest error),
except for actions to confirm or vacate the determination permitted under federal or state law, and may be entered and enforced
in any court with jurisdiction over the Requesting Party and the Bank and the matter. The determination may be enforced in any
court of competent jurisdiction.


 


(iv)No person may bring a putative
or certified class action to arbitration.


 


(v)By selecting binding arbitration,
the Requesting Party waives the right to sue in court, including the right to a trial by jury.


 


(e)The following provisions will apply
to both mediations (including non-binding arbitrations) and binding arbitrations:


 


(i)Any mediation or arbitration
will be held in New York, New York or such other location mutually agreed to by the Requesting Party and the Bank;


 


(ii)Notwithstanding this dispute
resolution provision, the Requesting Party and the Bank will have the right to seek provisional relief from a competent court of
law, including a temporary restraining order, preliminary injunction or attachment order, provided such relief would otherwise
be available by law;


 


(iii)Other than as publicly
available with the Commission or otherwise publicly disclosed, the details and/or existence of any unfulfilled Repurchase Request,
any meetings or discussions regarding any unfulfilled Repurchase Request, mediations or arbitration proceedings conducted under
this Section 9.26, including all offers, promises, conduct and statements, whether oral or written, made in the course of
the Requesting Party and the Bank’s attempt to resolve an unfulfilled Repurchase Request, any information exchanged in connection
with any mediation, and any discovery taken in connection with any arbitration (collectively, “Confidential Information”),
shall be and



    	 	39	Sale and Servicing Agreement
(USAA 2016-1)



    	



    


remain confidential and inadmissible
for any purpose, including impeachment, in any mediation, arbitration or litigation, or other proceeding (including any proceeding
under this Section 9.26) other than as required to be disclosed in accordance with applicable law, regulatory requirements,
or court order or to the extent that the Bank, in its sole discretion, elects to disclose such information. Such information will
be kept strictly confidential and will not be disclosed or discussed with any third party, except that a party may disclose such
information to its own attorneys, experts, accountants and other agents and representatives (collectively “Representatives”),
as reasonably required in connection with any resolution procedure under this Section 9.26, and the Asset Representations
Reviewer, if an Asset Representations Review has been conducted), if the disclosing party (a) directs such Representatives to keep
the information confidential, (b) is responsible for any disclosure by its Representatives of such information and (c) takes at
its sole expense all reasonable measures to restrain such Representatives from disclosing such information. If any party receives
a subpoena or other request for information from a third party (other than a governmental regulatory body) for Confidential Information,
the recipient will promptly notify the other party and will provide the other party with the opportunity to object to the production
of its Confidential Information or seek other appropriate protective remedies, consistent with the applicable requirements of law
and regulation. If, in the absence of a protective order, such party or any of its representatives are compelled as a matter of
law, regulation, legal process or by regulatory authority to disclose any portion of the Confidential Information, such party may
disclose to the party compelling disclosure only the part of such Confidential Information that is required to be disclosed.


 


(f)Neither the Indenture Trustee or the
Owner Trustee shall be liable for any expenses allocated to the Requesting Party in any dispute resolution proceeding.


 


[SIGNATURES FOLLOW]



    	 	40	Sale and Servicing Agreement
(USAA 2016-1)



    	



    


IN WITNESS WHEREOF, the parties have caused
this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.


 


	 	USAA ACCEPTANCE, LLC, as Seller	 
	 	 	 
	 	By:	 /s/ Martha Leiper	 
	 	 	Name: Martha Leiper	 
	 	 	Title:    President, Principal Executive
           Officer, Treasurer, Principal

               Financial Officer and
           Comptroller	 
	 	 	 	 
	 	USAA FEDERAL SAVINGS BANK, as Servicer	 
	 	 	 
	 	By:	 /s/ Martha Leiper	 
	 	 	Name: Martha Leiper	 
	 	 	Title:    Senior Vice President, Treasurer	 




    	 	S-1	Sale and Servicing Agreement
(USAA 2016-1)



    	



    


	 	USAA AUTO OWNER TRUST 2016-1, as Issuer	 
	 	 	 
	 	By:   	Wells Fargo Delaware Trust Company, National ASSOCIATION, not in its individual capacity but solely as Owner Trustee	 
	 	 	 	 
	 	By:	 /s/ Rosemary Kennard	 
	 	 	Name: Rosemary Kennard	 
	 	 	Title:    Vice President	 




    	 	S-2	Sale and Servicing Agreement
(USAA 2016-1)



    	



    


	 	U.S. Bank National Association, not in its individual capacity but solely as Indenture Trustee	 
	 	 	 
	 	By:	 /s/ Jessica J. Elliott	 
	 	 	Name: Jessica J. Elliott	 
	 	 	Title:    Vice President	 




    	 	S-3	Sale and Servicing Agreement
(USAA 2016-1)



    	



    


APPENDIX A


 


[Attached]



    	 



    	



    


APPENDIX A



DEFINITIONS


 


The following terms
have the meanings set forth, or referred to, below:


 


“60-Day Delinquent
Receivables” means, as of any Determination Date, all Receivables (other than Repurchased Receivables and Defaulted Receivables)
that are sixty (60) or more days delinquent as of such date (or, if such date is not the last day of a Collection Period, as of
the last day of the Collection Period immediately preceding such date), as determined in accordance with the Servicer’s Customary
Servicing Practices.


 


“AAA”
has the meaning set forth in Section 9.26(c)(iii) of the Sale and Servicing Agreement.


 


“Accrued Class
A Note Interest” means, with respect to any Payment Date, the sum of the Class A Noteholders’ Monthly Accrued Interest
for such Payment Date and the Class A Noteholders’ Interest Carryover Shortfall for such Payment Date.


 


“Accrued Class
B Note Interest” means, with respect to any Payment Date, the sum of the Class B Noteholders’ Monthly Accrued Interest
for such Payment Date and the Class B Noteholders’ Interest Carryover Shortfall for such Payment Date.


 


“Act”
has the meaning set forth in Section 11.3(a) of the Indenture.


 


“Administration
Agreement” means the Administration Agreement, dated as of the Closing Date, between the Administrator and the Issuer
and acknowledged by the Indenture Trustee, as the same may be amended and supplemented from time to time.


 


“Administrator”
means the Bank, or any successor Administrator under the Administration Agreement.


 


“Affiliate”
means, for any specified Person, any other Person which, directly or indirectly, controls, is controlled by or is under common
control with such specified Person and “affiliated” has a meaning correlative to the foregoing. For purposes of this
definition, “control” means the power, directly or indirectly, to cause the direction of the management and policies
of a Person.


 


“Applicable
Tax State” means, as of any date, each State as to which any of the following is then applicable: (a) a State
in which the Owner Trustee maintains its Corporate Trust Office, (b) a State in which the Owner Trustee maintains its principal
executive offices, and (c) the State of Texas.


 


“Asset Representations
Review Agreement” means the Asset Representations Review Agreement, dated as of the Closing Date, between the Issuer,
the Sponsor, the Servicer and the Asset Representations Reviewer.


 


Appendix A to the Sale and Servicing

Agreement (USAA 2016-1)



    	 



    	



    



“Asset Representations
Reviewer” means Clayton Fixed Income Services LLC, a Delaware limited liability company, or any successor Asset Representations
Reviewer under the Asset Representations Review Agreement.


 


“Asset Representations
Review” shall have the meaning assigned to such term in the Asset Representations Review Agreement.


 


“Authenticating
Agent” means any Person authorized by the Indenture Trustee to act on behalf of the Indenture Trustee to authenticate
and deliver the Notes.


 


“Authorized
Newspaper” means a newspaper of general circulation in The City of New York, printed in the English language and customarily
published on each Business Day, whether or not published on Saturdays, Sundays and holidays.


 


“Authorized
Officer” means (a) with respect to the Issuer, (i) any officer of the Owner Trustee who is authorized to act for the
Owner Trustee in matters relating to the Issuer and who is identified on the list of Authorized Officers delivered by the Owner
Trustee to the Indenture Trustee on the Closing Date or (ii) so long as the Administration Agreement is in effect, any officer
of the Administrator who is authorized to act for the Administrator in matters relating to the Issuer pursuant to the Administration
Agreement and who is identified on the list of Authorized Officers delivered by the Administrator to the Owner Trustee and the
Indenture Trustee on the Closing Date (as such list may be modified or supplemented from time to time thereafter) and (b) with
respect to the Owner Trustee, the Note Registrar (if other than the Indenture Trustee) and the Servicer, any officer of the Owner
Trustee, the Note Registrar (if other than the Indenture Trustee) or the Servicer, as applicable, who is authorized to act for
the Owner Trustee, the Note Registrar (if other than the Indenture Trustee) or the Servicer, as applicable, in matters relating
to the Owner Trustee, the Note Registrar (if other than the Indenture Trustee) or the Servicer and who is identified on the list
of Authorized Officers delivered by each of the Owner Trustee and the Servicer to the Indenture Trustee on the Closing Date or
by the Note Registrar on the date of its appointment as such (as such list may be modified or supplemented from time to time thereafter).


 


“Available
Funds” means, for any Payment Date and the related Collection Period, an amount equal to the sum of the following amounts:
(i) all Collections received by the Servicer during such Collection Period, (ii) the sum of the Repurchase Prices deposited into
the Collection Account with respect to each Receivable that is to become a Repurchased Receivable on such Payment Date and (iii)
the Reserve Account Excess Amount for such Payment Date; provided, however, that the term “Available Funds”
shall also include the Optional Purchase Price on any Redemption Date.


 


“Available
Funds Shortfall Amount” means, as of any Payment Date, the amount by which the amounts required to be paid pursuant to
clauses first through fifth of Section 4.4(a) of the Sale and Servicing Agreement exceeds the Available Funds
for such Payment Date.


 


“Bank”
means USAA Federal Savings Bank, a federally chartered savings association.


 


“Bankruptcy
Code” means the United States Bankruptcy Code, 11 U.S.C. 101 et seq., as amended.



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“Bankruptcy
Remote Party” means each of the Seller, the Issuer, any other trust created by the Seller or any limited liability company
or corporation wholly-owned by the Seller.


 


“Benefit Plan”
means (i) any “employee benefit plan” as defined in Section 3(3) of ERISA which is subject to Title I of ERISA, (ii)
a “plan” described by Section 4975(e)(1) of the Code, which is subject to Section 4975 of the Code or (iii) any entity
deemed to hold the plan assets of any of the foregoing by reason of an employee benefit plan’s or other plan’s investment
in such entity.


 


“Book-Entry
Notes” means a beneficial interest in the Notes, ownership and transfers of which shall be made through book entries
by a Clearing Agency as described in Section 2.10 of the Indenture.


 


“Business
Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in the states of Delaware,
Texas, Illinois, Minnesota or New York, or in the state in which the Corporate Trust Office of the Indenture Trustee is located,
are authorized or obligated by law, executive order or government decree to be closed.


 


“Certificate”
means a certificate evidencing the beneficial interest of the Certificateholder in the Issuer, substantially in the form of Exhibit
A to the Trust Agreement. For the avoidance of doubt, the references in the Transaction Documents to a “Certificate”
or a “Certificateholder”, unless the context otherwise requires, shall be deemed to be references to “Certificates”
or “Certificateholders” if more than one Certificate has been issued.


 


“Certificate
of Title” means, with respect to any Financed Vehicle, the certificate of title or other documentary evidence of ownership
of such Financed Vehicle as issued by the department, agency or official of the jurisdiction (whether in paper or electronic form)
in which such Financed Vehicle is titled responsible for accepting applications for, and maintaining records regarding, certificates
of title and liens thereon.


 


“Certificate
of Trust” means the certificate of trust for the Issuer filed by the Owner Trustee pursuant to the Statutory Trust Statute.


 


“Certificateholder”
means the Holder of a Certificate.


 


“Class”
means a group of Notes whose form is identical except for variation in denomination, principal amount or owner, and references
to “each Class” thus mean each of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes
and the Class B Notes.


 


“Class A Noteholders”
means, collectively, the Class A-1 Noteholders, the Class A-2 Noteholders, the Class A-3 Noteholders and the Class A-4 Noteholders.


 


“Class A Noteholders’
Interest Carryover Shortfall” means, with respect to any Payment Date, the excess of the Class A Noteholders’ Monthly
Accrued Interest for the preceding Payment Date and any outstanding Class A Noteholders’ Interest Carryover Shortfall on
such preceding Payment Date, over the amount in respect of interest that is actually paid to Noteholders of Class A Notes on such
preceding Payment Date, plus interest on the amount of



    	3



    	



    


interest due but not paid to Noteholders
of Class A Notes on the preceding Payment Date, to the extent permitted by law, at the respective Interest Rates borne by such
Class A Notes for the related Interest Period.


 


“Class A Noteholders’
Monthly Accrued Interest” means, with respect to any Payment Date, the aggregate interest accrued for the related Interest
Period on the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes at the respective Interest Rate
for such Class on the Note Balance of the Notes of each such Class on the immediately preceding Payment Date or the Closing Date,
as the case may be, after giving effect to all payments of principal to the Noteholders of the Notes of such Class on or prior
to such preceding Payment Date.


 


“Class A Notes”
means, collectively, the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes.


 


“Class A-1
Final Scheduled Payment Date” means the Payment Date occurring in September 2017.


 


“Class A-1
Interest Rate” means 0.68000% per annum (computed on the basis of the actual number of days elapsed during the applicable
Interest Period, but assuming a 360-day year).


 


“Class A-1
Note Balance” means, at any time, the Initial Class A-1 Note Balance reduced by all payments of principal made prior
to such time on the Class A-1 Notes.


 


“Class A-1
Noteholder” means the Person in whose name a Class A-1 Note is registered on the Note Register.


 


“Class A-1
Notes” means the Class of auto loan asset backed notes designated as Class A-1 Notes, issued in accordance with the Indenture.


 


“Class A-2
Final Scheduled Payment Date” means the Payment Date occurring in March 2019.


 


“Class A-2
Interest Rate” means 1.07% per annum (computed on the basis of a 360-day year of twelve 30-day months).


 


“Class A-2
Note Balance” means, at any time, the Initial Class A-2 Note Balance reduced by all payments of principal made prior
to such time on the Class A-2 Notes.


 


“Class A-2
Noteholder” means the Person in whose name a Class A-2 Note is registered on the Note Register.


 


“Class A-2
Notes” means the Class of auto loan asset backed notes designated as Class A-2 Notes, issued in accordance with the Indenture.


 


“Class A-3
Final Scheduled Payment Date” means the Payment Date occurring in June 2020.



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“Class A-3
Interest Rate” means 1.20% per annum (computed on the basis of a 360-day year of twelve 30-day months).


 


“Class A-3
Note Balance” means, at any time, the Initial Class A-3 Note Balance reduced by all payments of principal made prior
to such time on the Class A-3 Notes.


 


“Class A-3
Noteholder” means the Person in whose name a Class A-3 Note is registered on the Note Register.


 


“Class A-3
Notes” means the Class of auto loan asset backed notes designated as Class A-3 Notes, issued in accordance with the Indenture.


 


“Class A-4
Final Scheduled Payment Date” means the Payment Date occurring in November 2021.


 


“Class A-4
Interest Rate” means 1.39% per annum (computed on the basis of a 360-day year of twelve 30-day months).


 


“Class A-4
Note Balance” means, at any time, the Initial Class A-4 Note Balance reduced by all payments of principal made prior
to such time on the Class A-4 Notes.


 


“Class A-4
Noteholder” means the Person in whose name a Class A-4 Note is registered on the Note Register.


 


“Class A-4
Notes” means the Class of auto loan asset backed notes designated as Class A-4 Notes, issued in accordance with the Indenture.


 


“Class B Final
Scheduled Payment Date” means the Payment Date occurring in October 2023.


 


“Class B Interest
Rate” means 1.82% per annum (computed on the basis of a 360-day year of twelve 30-day months).


 


“Class B Note
Balance” means, at any time, the Initial Class B Note Balance reduced by all payments of principal made prior to such
time on the Class B Notes.


 


“Class B Noteholder”
means the Person in whose name a Class B Note is registered on the Note Register.


 


“Class B Noteholders’
Interest Carryover Shortfall” means, with respect to any Payment Date, the excess of the Class B Noteholders’ Monthly
Accrued Interest for the preceding Payment Date and any outstanding Class B Noteholders’ Interest Carryover Shortfall on
such preceding Payment Date, over the amount in respect of interest that is actually paid to Noteholders of Class B Notes on such
preceding Payment Date, plus interest on the amount of interest due but not paid to Noteholders of Class B Notes on the preceding
Payment Date, to the extent permitted by law, at the Class B Interest Rate for the related Interest Period.



    	5



    	



    


“Class B Noteholders’
Monthly Accrued Interest” means, with respect to any Payment Date, the aggregate interest accrued for the related Interest
Period on the Class B Notes at the Class B Interest Rate on the Class B Note Balance on the immediately preceding Payment Date
or the Closing Date, as the case may be, after giving effect to all payments of principal to the Class B Noteholders on or prior
to such preceding Payment Date.


 


“Class B Notes”
means the Class of auto loan asset backed notes designated as Class B Notes, issued in accordance with the Indenture.


 


“Clearing
Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act
and shall initially be DTC.


 


“Clearing
Agency Participant” means a broker, dealer, bank or other financial institution or other Person for which from time to
time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.


 


“Closing Date”
means September 21, 2016.


 


“Code”
means the Internal Revenue Code of 1986, as amended, modified or supplemented from time to time, and any successor law thereto,
and the regulations promulgated and the rulings issued thereunder.


 


“Collateral”
has the meaning set forth in the Granting Clause of the Indenture.


 


“Collection
Account” means the trust account established and maintained pursuant to Section 4.1 of the Sale and Servicing
Agreement.


 


“Collection
Period” means the period commencing on the first day of each calendar month and ending on the last day of such calendar
month (or, in the case of the initial Collection Period, the period from the Cut-Off Date to and including September 30, 2016).
As used herein, the “related” Collection Period with respect to a Payment Date shall be deemed to be the Collection
Period which precedes such Payment Date.


 


“Collections”
means, with respect to any Receivable and to the extent received by the Servicer after the Cut-Off Date, (i) any monthly payment
by or on behalf of the Obligor thereunder, (ii) any full or partial prepayment of such Receivable, (iii) all Liquidation Proceeds
and (iv) any other amounts received by the Servicer which, in accordance with the Customary Servicing Practices, would customarily
be applied to the payment of accrued interest or to reduce the Outstanding Principal Balance of such Receivable; provided,
however, that the term “Collections” in no event will include (1) for any Payment Date, any amounts
in respect of any Receivable the Repurchase Price of which has been included in the Available Funds on such Payment Date or a prior
Payment Date, (2) any Supplemental Servicing Fees or (3) rebates of premiums with respect to the cancellation or termination of
any Insurance Policy, extended warranty or service contract.


 


“Commission”
means the U.S. Securities and Exchange Commission.



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“Confidential
Information” has the meaning set forth in Section 9.26(e)(iii) of the Sale and Servicing Agreement.


 


“Contract
Rate” means, with respect to a Receivable, the rate per annum at which interest accrues under the retail motor vehicle
installment loan evidencing such Receivable. Such rate may be less than the “Annual Percentage Rate” disclosed in the
Receivable.


 


“Controlling
Class” shall mean, subject to the proviso contained in the last paragraph of the definition of “Outstanding”,
with respect to any Notes Outstanding, the Class A Notes (voting together as a single Class) as long as any Class A Notes are Outstanding,
and thereafter the Class B Notes as long as any Class B Notes are Outstanding (excluding, in each case, Notes held by the Seller
or any of its Affiliates unless all of the Notes are then owned by the Seller or its Affiliates).


 


“Controlling
Person” shall mean a Person, other than a Benefit Plan, that has discretionary authority or control with respect to the
assets of the Issuer or who provides investment advice for a direct or indirect fee with respect to those assets, or any affiliate
of such Person.


 


“Corporate
Trust Office” means:


 


(a) as used with respect to the Indenture Trustee, (i) for purposes of surrendering the Notes for registration of transfer or
exchange or serving notice or demands to or upon the Issuer pursuant to the Indenture, 111 East Fillmore Avenue, St. Paul, Minnesota
55107-1402, Attention: Bondholder Services and (ii) for all other purposes, the principal office of the Indenture Trustee at which
at any particular time its corporate trust business shall be administered which office at date of the execution of the Indenture
is located at 190 South LaSalle Street, 7th Floor, Chicago, Illinois 60603, Attention: Global Structured Finance—USAA
Auto Owner Trust 2016-1, or at such other address as the Indenture Trustee may designate from time to time by notice to the Noteholders,
the Administrator, the Servicer and the Issuer, or the principal corporate trust office of any successor Indenture Trustee (the
address of which the successor Indenture Trustee will notify the Noteholders, the Administrator, the Servicer and the Owner Trustee);
and


 


(b) as used with respect to the Owner Trustee, the corporate trust office of the Owner Trustee, 919 North Market Street, Suite
1600, Wilmington, Delaware 19801 or at such other address as the Owner Trustee may designate by notice to the Certificateholder
and the Seller, or the principal corporate trust office of any successor Owner Trustee (the address of which the successor Owner
Trustee will notify the Certificateholder and the Seller).


 


“Customary
Servicing Practices” means the customary servicing practices of the Servicer or any Sub-Servicer with respect to all
comparable motor vehicle receivables that the Servicer or such Sub-Servicer, as applicable, services for itself or others, as such
practices may be changed from time to time, it being understood that the Servicer and the Sub-Servicers may not have the same “Customary
Servicing Practices”.


 


“Cut-Off Date”
means the close of business on July 31, 2016.



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“Default”
means any occurrence that is, or with notice or lapse of time or both would become, an Event of Default.


 


“Defaulted
Receivable” means, with respect to any Collection Period, any Receivable (i) that the Servicer determines is unlikely
to be paid in full or (ii) with respect to which at least 5% of a scheduled payment is 120 or more days delinquent at any time
during such Collection Period. The Outstanding Principal Balance of any Receivable that becomes a “Defaulted Receivable”
will be deemed to be zero as of the date it becomes a “Defaulted Receivable”.


 


“Definitive
Note” means a definitive fully registered Note issued pursuant to Section 2.12 of the Indenture.


 


“Delinquency
Percentage” means, for any Payment Date and the related Collection Period, an amount equal to the ratio (expressed as
a percentage) of (i) the aggregate Outstanding Principal Balance of all 60-Day Delinquent Receivables as of the last day of such
Collection Period to (ii) the Net Pool Balance as of the last day of such Collection Period.


 


“Delinquency Trigger”
means, for any Payment Date and the related Collection Period, 6.72%.


 


“Delivery” when used
with respect to Trust Account Property means:


 


(a) with respect to (I) bankers’ acceptances, commercial paper, negotiable certificates of deposit and other obligations
that constitute “instruments” (as defined in Section 9-102(a)(47) of the UCC) and are susceptible of physical delivery,
transfer of actual possession thereof to the Indenture Trustee or its nominee or custodian by physical delivery to the Indenture
Trustee or its nominee or custodian endorsed to, or registered in the name of, the Indenture Trustee or its nominee or custodian
or endorsed in blank, and (II) with respect to a “certificated security” (as defined in Section 8-102(a)(4) of the
UCC) transfer of actual possession thereof (i) by physical delivery of such certificated security to the Indenture Trustee or its
nominee or custodian endorsed to the Indenture Trustee or its nominee or custodian or endorsed in blank, or to another person,
other than a “securities intermediary” (as defined in Section 8-102(a)(14) of the UCC), who acquires possession of
the certificated security on behalf of the Indenture Trustee or its nominee or custodian or, having previously acquired possession
of the certificate, acknowledges that it holds for the Indenture Trustee or its nominee or custodian or (ii) if such certificated
security is in registered form by delivery thereof to a “securities intermediary”, endorsed to or registered in the
name of the Indenture Trustee or its nominee or custodian and the making by such “securities intermediary” of entries
on its books and records identifying such certificated securities as belonging to the Indenture Trustee or its nominee or custodian
and the sending by such “securities intermediary” of a confirmation of the purchase of such certificated security by
the Indenture Trustee or its nominee or custodian (all of the foregoing, “Physical Property”), and, in any event,
any such Physical Property in registered form shall be in the name of the Indenture Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become appropriate to effect the complete transfer of ownership of any such
Trust Account Property to the Indenture Trustee or its nominee or custodian, consistent with changes in applicable law or regulations
or the interpretation thereof;



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(b) with respect to any securities issued by the U.S. Treasury, the Federal Home Loan Mortgage Corporation, the Federal National
Mortgage Association or the other government agencies, instrumentalities and establishments of the United States identified in
Appendix A to Federal Reserve Bank Operating Circular No. 7 as in effect from time to time that is a “book-entry security”
(as such term is defined in Federal Reserve Bank Operating Circular No. 7) held in a securities account and eligible for transfer
through the Fedwire® Securities Service operated by the Federal Reserve System pursuant to Federal book-entry regulations,
the following procedures, all in accordance with applicable law, including applicable Federal regulations and Articles 8 and 9
of the UCC: book-entry registration of such Trust Account Property to an appropriate securities account maintained with a Federal
Reserve Bank by a “participant” (as such term is defined in Federal Reserve Bank Operating Circular No. 7) that is
a “depository institution” (as defined in Section 19(B)(1)(A) of the Federal Reserve Act) pursuant to applicable Federal
regulations, and issuance by such depository institution of a deposit advice or other written confirmation of such book-entry registration
to the Indenture Trustee or its nominee or custodian of the purchase by the Indenture Trustee or its nominee or custodian of such
book-entry securities; the making by such depository institution of entries in its books and records identifying such book entry
security held through the Federal Reserve System pursuant to Federal book-entry regulations or a security entitlement thereto as
belonging to the Indenture Trustee or its nominee or custodian and indicating that such depository institution holds such Trust
Account Property solely as agent for the Indenture Trustee or its nominee or custodian; and such additional or alternative procedures
as may hereafter become appropriate to effect complete transfer of ownership of any such Trust Account Property to the Indenture
Trustee or its nominee or custodian, consistent with changes in applicable law or regulations or the interpretation thereof; and


 


(c) with respect to any item of Trust Account Property that is an “uncertificated security” (as defined in Section
8-102(a)(18) of the UCC) and that is not governed by clause (b) above, (i) registration on the books and records of the
issuer thereof in the name of the Indenture Trustee or its nominee or custodian, or (ii) registration on the books and records
of the issuer thereof in the name of another person, other than a securities intermediary, who acknowledges that it holds such
uncertificated security for the benefit of the Indenture Trustee or its nominee or custodian.


 


“Depositor”
means the Seller in its capacity as Depositor under the Trust Agreement.


 


“Determination
Date” means the second Business Day preceding the related Payment Date, beginning October 13, 2016.


 


“Dollar”
and “$” mean lawful currency of the United States of America.


 


“DTC”
means The Depository Trust Company, and its successors.


 


“Eligible
Account” means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution acting in its fiduciary capacity organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia (or any domestic branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in such account, so long



    	9



    	



    


as the long-term unsecured debt of such
depository institution shall have a credit rating from Moody’s of at least “A2” and from Standard & Poor’s
of at least “BBB.” Any such trust account may be maintained with the Owner Trustee, the Indenture Trustee or any of
their respective Affiliates, if such accounts meet the requirements described in clause (b) of the preceding sentence.


 


“Eligible
Institution” means a depository institution or trust company (which may be the Owner Trustee, the Indenture Trustee or
any of their respective Affiliates) organized under the laws of the United States of America or any one of the states thereof or
the District of Columbia (or any domestic branch of a foreign bank) (a) which at all times has either (i) a long-term senior unsecured
debt rating of “Aa2” or better by Moody’s and “AA-” or better by Standard & Poor’s or such
other rating that is acceptable to each Rating Agency, as evidenced by a letter from such Rating Agency to the Issuer or the Indenture
Trustee, (ii) a certificate of deposit rating of “P-1” by Moody’s and “A-1+” by Standard & Poor’s
or (iii) such other rating that is acceptable to each Rating Agency, as evidenced by a letter from such Rating Agency to the Issuer
or the Indenture Trustee and (b) whose deposits are insured by the Federal Deposit Insurance Corporation; provided, that a foreign
financial institution shall be deemed to satisfy clause (b) if such foreign financial institution meets the requirements
of Rule 13k-1(b)(1) under the Exchange Act (17 CFR §240.13k-1(b)(1)).


 


“Eligible
Receivable” means a Receivable meeting all of the criteria set forth on Schedule II of the Purchase Agreement
as of the Closing Date.


 


“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended and any successor law thereto, and the regulations promulgated
and rulings issued thereunder.


 


“Event of
Default” has the meaning set forth in Section 5.1 of the Indenture.


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended.


 


“Exchange
Act Reports” means any reports on Form 10-D, Form 8-K and Form 10-K filed or to be filed by the Seller with respect
to the Issuer under the Exchange Act.


 


“FATCA”
means Sections 1471 through 1474 of the Code, as of the date hereof, (or any amended or successor provisions), any current or future
regulations or official interpretations thereunder or official interpretations thereof and any agreements entered into pursuant
to Section 1471(b)(1) of the Code, any published intergovernmental agreement entered into in connection with the implementation
of such sections of the Code and any fiscal or regulatory legislation, rules or official practices adopted pursuant to such published
intergovernmental agreement.


 


“FATCA Withholding
Tax” means any withholding or deduction imposed under FATCA.


 


“FDIC”
means the Federal Deposit Insurance Corporation or any successor agency.


 


“Final Scheduled
Payment Date” means, with respect to (i) the Class A-1 Notes, the Class A-1 Final Scheduled Payment Date, (ii) the Class
A-2 Notes, the Class A-2 Final Scheduled Payment Date, (iii) the Class A-3 Notes, the Class A-3 Final Scheduled Payment



    	10



    	



    


Date, (iv) the Class A-4 Notes, the Class
A-4 Final Scheduled Payment Date and (v) the Class B Notes, the Class B Final Scheduled Payment Date.


 


“Financed
Vehicle” means an automobile or light-duty truck, together with all accessions thereto, securing an Obligor’s indebtedness
under the applicable Receivable.


 


“First Allocation
of Principal” means, with respect to any Payment Date, an amount equal to the excess, if any, of (a) the Note Balance
of the Class A Notes as of such Payment Date (before giving effect to any principal payments made on the Class A Notes on such
Payment Date) over (b) the Net Pool Balance as of the end of the related Collection Period; provided, however, that
the “First Allocation of Principal” shall not exceed the Note Balance of the Class A Notes; provided, further,
that the “First Allocation of Principal” for any Payment Date on and after the Final Scheduled Payment Date for any
Class of Class A Notes shall not be less than the amount that is necessary to reduce the Note Balance of that Class of Class A
Notes to zero.


 


“Form 10-D
Disclosure Item” means, with respect to any Person, (a) any legal proceedings pending against such Person or of which
any property of such Person is then subject, or (b) any proceedings known to be contemplated by governmental authorities against
such Person or of which any property of such Person would be subject, in each case that would be material to the Noteholders.


 


“GAAP”
means generally accepted accounting principles in the USA, applied on a materially consistent basis.


 


“Governmental
Authority” means any (a) Federal, state, municipal, foreign or other governmental entity, board, bureau, agency or instrumentality,
(b) administrative or regulatory authority (including any central bank or similar authority) or (c) court or judicial authority.


 


“Grant”
means mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, create, grant a lien upon
and a security interest in and right of set-off against, deposit, set over and confirm pursuant to the Indenture. A Grant of the
Collateral or of any other agreement or instrument shall include all rights, powers and options (but none of the obligations) of
the Granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other moneys payable thereunder, to give and receive notices
and other communications, to make waivers or other agreements, to exercise all rights and options, to bring proceedings in the
name of the Granting party or otherwise and generally to do and receive anything that the Granting party is or may be entitled
to do or receive thereunder or with respect thereto. Other forms of the verb “to Grant” shall have correlative meanings.


 


“Holder”
means, as the context may require, the Certificateholder or a Noteholder or both.


 


“Indenture”
means the Indenture, dated as of the Closing Date, between the Issuer and Indenture Trustee, as the same may be amended and supplemented
from time to time.



    	11



    	



    


“Indenture
Trustee” means U.S. Bank National Association, a national banking association, not in its individual capacity but as
indenture trustee under the Indenture, or any successor indenture trustee under the Indenture.


 


“Independent”
means, when used with respect to any specified Person, that such Person (i) is in fact independent of the Issuer, any other obligor
upon the Notes, the Administrator and any Affiliate of any of the foregoing Persons, (ii) does not have any direct financial interest
or any material indirect financial interest in the Issuer, any such other obligor upon the Notes, the Administrator or any Affiliate
of any of the foregoing Persons and (iii) is not connected with the Issuer, any such other obligor upon the Notes, the Administrator
or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions.


 


“Independent
Certificate” means a certificate or opinion to be delivered to the Indenture Trustee under the circumstances described
in, and otherwise complying with, the applicable requirements of Section 11.1 of the Indenture, made by an independent appraiser
or other expert appointed by an Issuer Order, and such opinion or certificate shall state that the signer has read the definition
of “Independent” in this Appendix A and that the signer is Independent within the meaning thereof.


 


“Initial Class
A-1 Note Balance” means $152,000,000.


 


“Initial Class
A-2 Note Balance” means $135,000,000.


 


“Initial Class
A-3 Note Balance” means 135,000,000.


 


“Initial Class
A-4 Note Balance” means $69,180,000.


 


“Initial Class
B Note Balance” means $8,820,000.


 


“Initial Note
Balance” means, for any Class, the Initial Class A-1 Note Balance, the Initial Class A-2 Note Balance, the Initial Class
A-3 Note Balance, the Initial Class A-4 Note Balance or the Initial Class B Note Balance, as applicable, or with respect to the
Notes generally, the sum of the foregoing.


 


“Initial Reserve
Account Deposit Amount” means an amount equal to $1,259,446.66.


 


“Insolvency
Event” means, with respect to any Person, (i) the filing of a decree or order for relief by a court having jurisdiction
in the premises in respect of such Person in an involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official of such Person, or ordering the winding-up or liquidation of such Person’s affairs, and such decree or
order shall remain unstayed and in effect for a period of 90 consecutive days or (ii) the commencement by such Person of a voluntary
case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent
by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to
the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official
of such Person, or the



    	12



    	



    


making by such Person of any general assignment
for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking
of action by such Person in furtherance of any of the foregoing.


 


“Instituting
Noteholders” has the meaning set forth in Section 7.5(a) of the Indenture.


 


“Insurance
Policy” means (i) any theft and physical damage insurance policy maintained by the Obligor under a Receivable, providing
coverage against loss or damage to or theft of the related Financed Vehicle, and (ii) any credit life or credit disability insurance
maintained by an Obligor in connection with any Receivable.


 


“Interest
Period” means, with respect to any Payment Date, (a) with respect to the Class A-1 Notes from and including the Closing
Date (in the case of the first Payment Date) or from and including the most recent Payment Date to but excluding that Payment Date
(for example, for a Payment Date in February, the Interest Period is from and including the Payment Date in January to but excluding
the Payment Date in February) based upon actual days elapsed and a 360-day year and (b) for each other Class of Notes, from and
including the 15th day of the calendar month preceding each Payment Date (or from and including the Closing Date in the case of
the first Payment Date) to but excluding the 15th day of the following month based upon a 360-day year of twelve 30-day months.


 


“Interest
Rate” means (a) with respect to the Class A-1 Notes, the Class A-1 Interest Rate, (b) with respect to the Class A-2 Notes,
the Class A-2 Interest Rate, (c) with respect to the Class A-3 Notes, the Class A-3 Interest Rate, (d) with respect to the Class
A-4 Notes, the Class A-4 Interest Rate or (e) with respect to the Class B Notes, the Class B Interest Rate.


 


“Issuer”
means USAA Auto Owner Trust 2016-1, a Delaware statutory trust established pursuant to the Trust Agreement and the filing of the
Certificate of Trust, until a successor replaces it and, thereafter, means such successor.


 


“Issuer Order”
and “Issuer Request” means a written order or request of the Issuer signed in the name of the Issuer by any
one of its Authorized Officers and delivered to the Indenture Trustee.


 


“Item 1119
Party” means the Seller, the Bank, the Servicer, the Indenture Trustee, the Owner Trustee, any underwriter of the Notes
and any other material transaction party identified by the Seller or the Bank to the Indenture Trustee and the Owner Trustee in
writing.


 


“Lien”
means, for any asset or property of a Person, a lien, security interest, mortgage, pledge or encumbrance in, of or on such asset
or property in favor of any other Person, except any Permitted Lien.


 


“Liquidation
Proceeds” means, with respect to any Receivable, (a) insurance proceeds received by the Servicer with respect to the
Insurance Policies, (b) amounts received by the Servicer in connection with such Receivable pursuant to the exercise of rights
under such Receivable and (c) the monies collected by the Servicer (from whatever source, including proceeds of a sale of a Financed
Vehicle or a deficiency balance recovered from the Obligor after the charge-off of such Receivable) on such Receivable, in the
case of each of the foregoing



    	13



    	



    


clauses (a) through (c),
net of any expenses (including, without limitation, any auction, painting, repair or refurbishment expenses in respect of the related
Financed Vehicle) incurred by the Servicer in connection therewith and any payments required by law to be remitted to the Obligor;
provided, however, that the Repurchase Price for any Receivable shall not constitute “Liquidation Proceeds”.


 


“Moody’s”
means Moody’s Investors Service, Inc., or any successor that is a nationally recognized statistical rating organization.


 


“Net Pool
Balance” means, as of any date, the aggregate Outstanding Principal Balance of all Receivables of the Issuer on such
date.


 


“Note”
means a Class A-1 Note, Class A-2 Note, Class A-3 Note, Class A-4 Note or Class B Note, in each case substantially in the form
of Exhibit A to the Indenture.


 


“Note Balance”
means, with respect to any date of determination, for any Class, the Class A-1 Note Balance, the Class A-2 Note Balance, the Class
A-3 Note Balance, the Class A-4 Note Balance or the Class B Note Balance, as applicable, or with respect to the Notes generally,
the sum of all of the foregoing.


 


“Note Depository
Agreement” means the agreement, dated as of the Closing Date, executed by the Issuer and addressed to DTC, as the initial
Clearing Agency relating to the Notes, as the same may be amended or supplemented from time to time.


 


“Note Owner”
means, with respect to a Book-Entry Note, the Person who is the beneficial owner of such Book-Entry Note, as reflected on the books
of the Clearing Agency or a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant
or as an indirect participant, in each case in accordance with the rules of such Clearing Agency).


 


“Note Register”
and “Note Registrar” have the respective meanings set forth in Section 2.4 of the Indenture.


 


“Noteholder”
means, as the context requires, all of the Class A-1 Noteholders, the Class A-2 Noteholders, the Class A-3 Noteholders, the Class
A-4 Noteholders and the Class B Noteholders, or any of the Class A-1 Noteholders, the Class A-2 Noteholders, the Class A-3 Noteholders,
the Class A-4 Noteholders or the Class B Noteholders, or any of the foregoing.


 


“Obligor”
means, for any Receivable, each Person obligated to pay such Receivable.


 


“Officer’s
Certificate” means (i) with respect to the Issuer, a certificate signed by any Authorized Officer of the Issuer and (ii)
with respect to the Seller or the Servicer, a certificate signed by the chairman of the board, the president, any executive vice
president, any vice president, the treasurer, any assistant treasurer or the controller of the Seller or the Servicer, as applicable.


 


“Opinion of
Counsel” means one or more written opinions of counsel who may, except as otherwise expressly provided in the Indenture
or any other applicable Transaction Document, be



    	14



    	



    


employees of the Issuer, the Servicer,
the Seller or the Administrator, which counsel shall be acceptable to the Indenture Trustee, the Owner Trustee or the Rating Agencies,
as the case may be, and which opinion or opinions comply with any applicable requirements of the Transaction Documents and are
in form and substance reasonably satisfactory to the recipient(s). Opinions of Counsel need address matters of law only and may
be based upon stated assumptions as to relevant matters of fact.


 


“Optional
Purchase” has the meaning set forth in Section 8.1 of the Sale and Servicing Agreement.


 


“Optional
Purchase Price” has the meaning set forth in Section 8.1 of the Sale and Servicing Agreement.


 


“Originator”
means, with respect to any Receivable, the Bank.


 


“Other Assets”
means any assets (or interests therein) (other than the Trust Estate) conveyed or purported to be conveyed by the Seller to
another Person or Persons other than the Issuer, whether by way of a sale, capital contribution or by virtue of the granting of
a lien.


 


“Outstanding”
means, as of any date, all Notes (or all Notes of an applicable Class) theretofore authenticated and delivered under the Indenture
except:


 


(i) Notes (or Notes
of an applicable Class) theretofore cancelled by the Note Registrar or delivered to the Note Registrar for cancellation;


 


(ii) Notes (or Notes
of an applicable Class) or portions thereof the payment for which money in the necessary amount has been theretofore deposited
with the Indenture Trustee or any Paying Agent in trust for the related Noteholders (provided, however, that if such
Notes are to be redeemed, notice of such redemption has been duly given pursuant to the Indenture or provision therefor, satisfactory
to the Indenture Trustee, has been made); and


 


(iii) Notes (or
Notes of an applicable Class) in exchange for or in lieu of other Notes (or Notes of such Class) that have been authenticated and
delivered pursuant to the Indenture unless proof satisfactory to the Indenture Trustee is presented that any such Notes are held
by a bona fide purchaser;


 


provided, that in determining whether
Noteholders holding the requisite aggregate principal amount of Outstanding Notes have given any request, demand, authorization,
direction, notice, consent, vote or waiver hereunder or under any Transaction Document, Notes owned by the Issuer, Certificateholder
or any of their respective Affiliates shall be disregarded and deemed not to be Outstanding unless all of the Notes are then owned
by the Issuer, Certificateholder or any of their respective Affiliates, except that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, vote or waiver, only Notes
that a Responsible Officer of the Indenture Trustee knows to be so owned shall be so disregarded. Notes so owned that have been
pledged in good faith may be regarded as Outstanding if the pledgee thereof establishes to the satisfaction of the Indenture Trustee
such pledgee’s right so to act with respect to such Notes and that such pledgee is not the Issuer, Certificateholder or any
of their respective Affiliates.



    	15



    	



    


“Outstanding
Principal Balance” means, with respect to any Receivable as of any date, the outstanding principal balance of such Receivable
calculated in accordance with the Customary Servicing Practices; provided, however, that the Outstanding Principal
Balance of any Receivable that became a Defaulted Receivable will be deemed to be zero as of the date it becomes a Defaulted Receivable.


 


“Owner Trustee”
means Wells Fargo Delaware Trust Company, National Association, a national banking association, not in its individual capacity
but solely as owner trustee under the Trust Agreement, and any successor Owner Trustee thereunder.


 


“Paying Agent”
means the Indenture Trustee or any other Person that meets the eligibility standards for the Indenture Trustee set forth in Section
6.11 of the Indenture and is authorized by the Issuer to make the payments to and distributions from the Collection Account
and the Principal Distribution Account, including the payment of principal of or interest on the Notes on behalf of the Issuer.


 


“Payment Date”
means the 15th day of each calendar month beginning October 17, 2016 provided, however, whenever a Payment
Date would otherwise be a day that is not a Business Day, the Payment Date shall be the next Business Day. As used herein, the
“related” Payment Date with respect to a Collection Period shall be deemed to be the Payment Date which immediately
follows such Collection Period.


 


“Payment Default”
has the meaning set forth in Section 5.4(a) of the Indenture.


 


“Permitted
Investments” means (a) evidences of indebtedness, maturing within thirty (30) days after the date of loan thereof, issued
by, or guaranteed by the full faith and credit of, the federal government of the USA, (b) repurchase agreements with banking institutions
or broker-dealers registered under the Exchange Act which are fully secured by obligations of the kind specified in clause (a)
and which are accounted for as borrowings (and not sales), (c) money market funds (i) rated not lower than the highest rating category
from Moody’s and “AAAm” or “AAAm-g” from Standard & Poor’s or (ii) which are otherwise
acceptable to each Rating Agency, as evidenced by a letter from such Rating Agency to the Issuer or the Indenture Trustee, in each
case including money market funds for which the Indenture Trustee acts as issuer, sponsor, administrator, agent or in a similar
capacity and for which the Indenture Trustee in such capacity also receives a fee, or (d) commercial paper (including commercial
paper of any Affiliate of the Seller, the Servicer, the Indenture Trustee or the Owner Trustee) rated, at the time of the investment
or contractual commitment to invest therein, at least “A-1+” (or the equivalent) by Standard & Poor’s and
at least “P-1” (or the equivalent) by Moody’s.


 


“Permitted
Liens” means (a) the interest of the parties under the Transaction Documents, (b) any liens for taxes not due and payable
or the amount of which is being contested in good faith by appropriate proceedings and (c) any liens of mechanics, suppliers, vendors,
materialmen, laborers, employees, repairmen and other like liens securing obligations which are not due and payable or the amount
or validity of which is being contested in good faith by appropriate proceedings.



    	16



    	



    


“Person”
means any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company,
trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.


 


“Physical
Property” has the meaning specified in the definition of “Delivery” above.


 


“Plan”
means a Benefit Plan, or a governmental or church plan subject to Similar Law.


 


“Principal
Distribution Account” means the account by that name established and maintained pursuant to Section 4.1 of the
Sale and Servicing Agreement.


 


“Principal
Factor” means, with respect to the Notes or any Class of Notes on any Payment Date, a nine-digit decimal figure equal
to the Note Balance of the Notes or such Class of Notes, as applicable, as of the end of the preceding Collection Period divided
by the Note Balance of the Notes or such Class of Notes, as applicable, as of the Closing Date. The Principal Factor will be 1.000000000
as of the Closing Date; thereafter, the Principal Factor will decline to reflect reductions in the Note Balance of the Notes or
such Class of Notes, as applicable.


 


“Proceeding”
means any suit in equity, action at law or other judicial or administrative proceeding.


 


“Prospectus”
means the prospectus dated as of September 12, 2016.


 


“Purchase
Agreement” means the Purchase Agreement, dated as of the Closing Date, between the Bank and the Seller, as amended, modified
or supplemented from time to time.


 


“Purchased
Assets” has the meaning set forth in Section 2.1 of the Purchase Agreement.


 


“Qualified
Institutional Buyer” means a “qualified institutional buyer” as defined in Rule 144A under the Securities
Act.


 


“Rating Agency”
means either or each of Moody’s and Standard & Poor’s, as indicated by the context.


 


“Rating Agency
Condition” means, with respect to any event or circumstance and each Rating Agency, either (a) written confirmation (which
may be in the form of a letter, press release or other publication, or a change in such Rating Agency’s published ratings
criteria to this effect) by such Rating Agency that the occurrence of such event or circumstance will not cause it to downgrade,
qualify or withdraw its rating assigned to any of the Notes or (b) that such Rating Agency shall have been given notice of such
event or circumstance at least ten days prior to the occurrence of such event or circumstance (or, if ten days’ advance notice
is impracticable, as much advance notice as is practicable) and such Rating Agency shall not have issued any written notice that
the occurrence of such event or circumstance will itself cause it to downgrade, qualify or withdraw its rating assigned to the
Notes. Notwithstanding the foregoing, no Rating Agency has any duty to review any notice given with respect to any event, and it
is understood that such Rating Agency may not actually review notices received by it prior to or after the expiration of the ten
(10) day period described in (b) above. Further, each Rating Agency retains



    	17



    	



    


the right to downgrade, qualify or withdraw
its rating assigned to all or any of the Notes at any time in its sole judgment even if the Rating Agency Condition with respect
to an event had been previously satisfied pursuant to clause (a) or clause (b) above.


 


“Realized
Losses” shall mean, for any Collection Period and for each Receivable that became a Defaulted Receivable during such
Collection Period, the excess of the Outstanding Principal Balance of each such Receivable over Liquidation Proceeds received with
respect to such Receivable during such Collection Period, to the extent allocable to principal.


 


“Receivable”
means any retail motor vehicle installment loan with respect to a new or used automobile or light-duty truck which shall appear
on the Schedule of Receivables and all Related Security in connection therewith which has not been released from the lien of the
Indenture.


 


“Receivable
Files” has the meaning set forth in Section 2.2(a) of the Sale and Servicing Agreement.


 


“Record Date”
means, unless otherwise specified in any Transaction Document, with respect to any Payment Date or Redemption Date, (i) for any
Definitive Notes and for the Certificates, the close of business on the last Business Day of the calendar month immediately preceding
the calendar month in which such Payment Date or Redemption Date occurs and (ii) for any Book-Entry Notes, the close of business
on the Business Day immediately preceding such Payment Date or Redemption Date.


 


“Records”
means, for any Receivable, all contracts, books, records and other documents or information (including computer programs, tapes,
disks, software and related property and rights, to the extent legally transferable) relating to such Receivable or the related
Obligor.


 


“Recoveries”
shall mean, with respect to any Collection Period, all amounts received by the Servicer with respect to any Defaulted Receivable
during any Collection Period following the Collection Period in which such Receivable became a Defaulted Receivable, net of any
fees, costs and expenses incurred by the Servicer in connection with the collection of such Receivable and any payments required
by law to be remitted to the Obligor.


 


“Redemption
Date” means, in the case of a redemption of the Notes pursuant to Section 10.1 of the Indenture, the Payment
Date specified by the Administrator or the Issuer pursuant to Section 10.1 of the Indenture.


 


“Redemption
Price” means an amount equal to the sum of (a) unpaid principal amount of the Notes redeemed plus (b) accrued
and unpaid interest thereon at the applicable Interest Rate for the Notes being so redeemed, up to but excluding the Redemption
Date.


 


“Registered
Holder” means the Person in whose name a Note is registered on the Note Register on the related Record Date.


 


“Regular Allocation
of Principal” means, with respect to any Payment Date, an amount equal to the lesser of (i) the Note Balance of the Notes
as of such Payment Date (before giving effect to any principal payments made on the Notes on such Payment Date) and (ii) an amount



    	18



    	



    


equal to the excess of: (A) (x) the Note
Balance of the Notes as of such Payment Date (before giving effect to any payments made on the Notes as of such Payment Date);
minus (y) the sum of the First Allocation of Principal and the Second Allocation of Principal, if any, in each case for such Payment
Date; over (B) the Net Pool Balance as of the end of the related Collection Period less the Targeted Overcollateralization Amount.


 


“Regulation
AB” means Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1125,
as such regulation may be amended from time to time and subject to such clarification and interpretation as have been provided
by the Commission in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518. 70 Fed. Reg. 1,506, 1,531
(January 7, 2005)) or by the staff of the Commission, or as may be, provided in writing by the Commission or its staff from time
to time.


 


“Related Security”
means, for any Receivable, (i) the security interest in the related Financed Vehicle, (ii) any proceeds from claims on any Insurance
Policy (if such Receivable became a Defaulted Receivable after the Cut-Off Date), (iii) any other property securing the Receivables
and (iv) all proceeds of the foregoing.


 


“Reportable
Event” means any event required to be reported on Form 8-K, and in any event, the following:


 


(a) entry into a
material definitive agreement related to the Issuer, the Notes or the Receivables or an amendment to a Transaction Document, even
if the Seller is not a party to such agreement (e.g., a servicing agreement with a servicer contemplated by Item 1108(a)(3) of
Regulation AB);


 


(b) termination
of a Transaction Document (other than by expiration of the agreement on its stated termination date or as a result of all parties
completing their obligations under such agreement), even if the Seller is not a party to such agreement (e.g., a servicing agreement
with a servicer contemplated by Item 1108(a)(3) of Regulation AB);


 


(c) with respect
to the Servicer only, the occurrence of a Servicer Replacement Event;


 


(d) an Event of
Default;


 


(e) the resignation,
removal, replacement or substitution of the Indenture Trustee or the Owner Trustee; and


 


(f) with respect
to the Indenture Trustee only, a required distribution to Holders of the Notes is not made as of the required Payment Date under
the Indenture.


 


“Representatives”
has the meaning set forth in Section 9.26(e)(iii) of the Sale and Servicing Agreement.


 


“Repurchase
Price” means, with respect to any Repurchased Receivable, a price equal to the Outstanding Principal Balance of such
Receivable plus any unpaid accrued interest related to such Receivable accrued to and including the end of the Collection Period
preceding the date that



    	19



    	



    


such Repurchased Receivable was purchased
by the Bank, as seller, or the Servicer, as applicable.


 


“Repurchase
Request” means a written request from a Requesting Party that the Bank repurchase a Receivable due to an alleged breach
of a representation and warranty in Schedule II to the Purchase Agreement. A Repurchase Request from a Requesting Party
shall set forth (i) each Receivable that is subject to such Repurchase Request, (ii) the specific representation or warranty contained
in Schedule II to the Purchase Agreement that it alleges was breached and (iii) the material adverse effect of such breach
on the interests of the Issuer or the Noteholders that triggers the Repurchase Request.


 


“Repurchased
Receivable” means a Receivable purchased by the Bank pursuant to Section 3.4 of the Purchase Agreement or by the
Servicer pursuant to Sections 3.6 or 8.1 of the Sale and Servicing Agreement.


 


“Requesting
Investor” has the meaning set forth in Section 7.4(a) of the Indenture.


 


“Reserve Account”
means the account designated as such, established and maintained pursuant to Section 4.1 of the Sale and Servicing Agreement.


 


“Reserve Account
Draw Amount” means, for any Payment Date, the amount withdrawn from the Reserve Account, equal to the lesser of (a) the
Available Funds Shortfall Amount, if any, and (b) the amount on deposit in the Reserve Account on such Payment Date.


 


“Reserve Account
Excess Amount” means, with respect to any Payment Date, an amount equal to the excess, if any, of (a) the amount of cash
or other immediately available funds in the Reserve Account on that Payment Date, after giving effect to all deposits to and withdrawals
from the Reserve Account relating to that Payment Date, over (b) the Specified Reserve Account Balance with respect to that Payment
Date.


 


“Responsible
Officer” means, (a) with respect to the Indenture Trustee, any officer within the corporate trust department of the Indenture
Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any
other officer of the Indenture Trustee who customarily performs functions similar to those performed by the persons who at the
time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge
of and familiarity with the particular subject, and who, in each case, shall have direct responsibility for the administration
of the Indenture, (b) with respect to the Owner Trustee, any officer within the Corporate Trust Office of the Owner Trustee and
having direct responsibility for the administration of the Issuer, including any Managing Director, Director, Vice President, Assistant
Vice President, Assistant Treasurer, Assistant Secretary or Associate, or any other officer customarily performing functions similar
to those performed by any of the above designated officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject and (c) with
respect to the Servicer, the Seller or the Administrator, any officer of such Person having direct responsibility for the transactions
contemplated by the Transaction Documents, including the President, Treasurer or Secretary or any Vice President, Controller, Assistant
Vice President, Assistant Treasurer, Assistant



    	20



    	



    


Secretary, or any other officer customarily
performing functions similar to those performed by any of the above designated officers and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the
particular subject.


 


“Review Notice”
shall have the meaning assigned to such term in Section 7.5(b) of the Indenture.


 


“Review Report”
shall have the meaning assigned to such term in the Asset Representations Review Agreement.


 


“Review Satisfaction
Date” means, with respect to any Asset Representations Review, the first date on which (a) the Delinquency Percentage
for any Payment Date exceeds the Delinquency Trigger and (b) a Noteholder Direction with respect to such Asset Representations
Review has occurred.


 


“Sale and
Servicing Agreement” means the Sale and Servicing Agreement, dated as of the Closing Date, among the Seller, the Issuer,
the Servicer and the Indenture Trustee, as the same may be amended, modified or supplemented from time to time.


 


“Sarbanes
Certification” has the meaning set forth in Section 9.21(b)(iii) of the Sale and Servicing Agreement.


 


“Sarbanes-Oxley
Act” means the Sarbanes-Oxley Act of 2002, as amended, modified or supplemented from time to time, and any successor
law thereto.


 


“Schedule
of Receivables” means the schedule of Receivables transferred to the Issuer on the Closing Date.


 


“Second Allocation
of Principal” means, with respect to any Payment Date, an amount equal to the excess, if any, of (a) the sum of the Note
Balance of the Class A Notes and the Class B Notes (before giving effect to any principal payments made on the Notes on such Payment
Date) minus the First Allocation of Principal for such Payment Date, over (b) the Net Pool Balance as of the end of the related
Collection Period; provided, however, that the Second Allocation of Principal for any Payment Date on and after the
Final Scheduled Payment Date for the Class A Notes or the Class B Notes shall not be less than the amount that is necessary to
reduce the Class A Note Balance or the Class B Note Balance, as applicable, to zero (after the application of the First Allocation
of Principal).


 


“Securities
Act” means the Securities Act of 1933, as amended.


 


“Seller”
means USAA Acceptance, LLC, a Delaware limited liability company.


 


“Servicer”
means the Bank, initially, and any replacement Servicer appointed pursuant to the Sale and Servicing Agreement.


 


“Servicer
Replacement Event” means any one or more of the following that shall have occurred and be continuing:



    	21



    	



    


(a) any failure
by the Servicer to deliver or cause to be delivered any required payment to the Indenture Trustee for distribution to the Noteholders,
which failure continues unremedied for five Business Days after discovery thereof by a Responsible Officer of the Servicer or receipt
by the Servicer of written notice thereof from the Indenture Trustee or Noteholders evidencing a majority of the aggregate principal
amount of the Outstanding Notes, voting together as a single Class;


 


(b) any failure
by the Servicer to duly observe or perform in any material respect any other of its covenants or agreements in the Sale and Servicing
Agreement, which failure materially and adversely affects the rights of the Issuer or the Noteholders, and which continues unremedied
for 90 days after discovery thereof by a Responsible Officer of the Servicer or receipt by the Servicer of written notice thereof
from the Indenture Trustee or Noteholders evidencing a majority of the aggregate principal amount of the Outstanding Notes, voting
together as a single Class (it being understood that no Servicer Replacement Event will result from a breach by the Servicer of
any covenant for which the repurchase of the affected Receivable is specified as the sole remedy pursuant to Section 3.6
of the Sale and Servicing Agreement);


 


(c) any representation
or warranty of the Servicer made in any Transaction Document to which the Servicer is a party or by which it is bound or any certificate
delivered pursuant to the Sale and Servicing Agreement proves to have been incorrect in any material respect when made, which failure
materially and adversely affects the rights of the Issuer or the Noteholders, and which failure continues unremedied for 90 days
after discovery thereof by a Responsible Officer of the Servicer or receipt by the Servicer of written notice thereof from the
Indenture Trustee or Noteholders evidencing a majority of the aggregate principal amount of the Outstanding Notes, voting together
as a single Class (it being understood that any repurchase of a Receivable by the Bank pursuant to Section 3.4 of the Purchase
Agreement, by the Servicer pursuant to Section 3.6 of the Sale and Servicing Agreement shall be deemed to remedy any incorrect
representation or warranty with respect to such Receivable); or


 


(d) the Servicer
suffers a Insolvency Event;


 


provided, however, that a
delay or failure of performance referred to under clause (a) above for a period of 90 days will not constitute a Servicer
Replacement Event if such delay or failure was caused by force majeure or other similar occurrence as certified by the Servicer
in an Officer’s Certificate of the Servicer delivered to the Indenture Trustee.


 


The existence or occurrence
of any “material instance of noncompliance” (within the meaning of Item 1122 of Regulation AB) shall not create any
presumption that any event in clauses (a), (b) or (c) above has occurred.


 


“Servicer’s
Certificate” means the certificate delivered pursuant to Section 3.8 of the Sale and Servicing Agreement.


 


“Servicing
Criteria” means the “servicing criteria” set forth in Item 1122(d) of Regulation AB.



    	22



    	



    


“Servicing
Fee” means, for any Payment Date, the product of (A) one-twelfth, (B) the Servicing Fee Rate and (C) the Net Pool Balance
as of the first day of the related Collection Period (or, in the case of the first Payment Date, as of the Cut-Off Date).


 


“Servicing
Fee Rate” means 1.00% per annum.


 


“Similar Law”
means any federal, state, local or other law that is substantially similar to Section 406 of ERISA or Section 4975 of the Code.


 


“Simple Interest
Method” means the method of calculating interest due on a motor vehicle receivable on a daily basis based on the actual
outstanding principal balance of the receivable on that date.


 


“Simple Interest
Receivable” means any motor vehicle receivable pursuant to which the payments due from the Obligors during any month
are allocated between interest, principal and other charges based on the actual date on which a payment is received and for which
interest is calculated using the Simple Interest Method. For the avoidance of doubt, a TrueCar Receivable shall be deemed to be
a Simple Interest Receivable.


 


“Specified
Reserve Account Balance” shall mean 0.25% of the Net Pool Balance as of the Cut-Off Date; provided, however, on
any Payment Date after the Notes are no longer Outstanding following payment in full of the principal and interest on the Notes,
the “Specified Reserve Account Balance” shall be $0.


 


“Standard
& Poor’s” means S&P Global Ratings, a division of S&P Global, or any successor that is a nationally
recognized statistical rating organization.


 


“Statutory
Trust Statute” means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code § 3801 et seq.


 


“Subject Receivables”
has the meaning set forth in the Asset Representations Review Agreement.


 


“Sub-Servicer”
means any Affiliate of the Servicer or any sub-contractor to whom any or all duties of the Servicer (including, without limitation,
its duties as custodian) under the Transaction Documents have been delegated in accordance with Section 6.5 of the Sale
and Servicing Agreement.


 


“Supplemental
Servicing Fees” means any and all (i) late fees, (ii) extension fees, (iii) non-sufficient funds charges and (iv) any
and all other administrative fees or similar charges allowed by applicable law with respect to any Receivable.


 


“TIA”
or “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended and as in force on the date hereof,
unless otherwise specifically provided.


 


“Targeted
Overcollateralization Amount” means, with respect to any Payment Date, the greater of (a) the result of (i) 1.50% of
the Net Pool Balance on such Payment Date minus (ii) the Specified Reserve Account Balance and (b) 0.75% of the Net Pool Balance
as of the Cut-Off



    	23



    	



    


Date.  Notwithstanding the foregoing,
the Targeted Overcollateralization Amount shall not exceed the Net Pool Balance on such Payment Date.


 


“Tax Identification
Information” means properly completed and signed tax certifications (generally with respect to U.S. Federal Income Tax,
IRS Form W-9 (or applicable successor form) in the case of a person that is a “United States Person” within the meaning
of Section 7701(a)(30) of the Code or the appropriate IRS Form W-8 (or applicable successor form) in the case of a person that
is not a “United States Person” within the meaning of Section 7701(a)(30) of the Code), and, if applicable, any other
information sufficient to eliminate the imposition of, or determine the amount of FATCA Withholding Tax.


 


“Test Fail”
has the meaning set forth in Section 3.4(a) of the Asset Representations Review Agreement.


 


“Transaction
Documents” means the Indenture, the Notes, the Note Depository Agreement, the Sale and Servicing Agreement, the Purchase
Agreement, the Administration Agreement, the Asset Representations Review Agreement and the Trust Agreement, as the same may be
amended or modified from time to time.


 


“Transferred
Assets” means (a) the Purchased Assets, (b) all of the Seller’s rights under the Purchase Agreement and (c) all
proceeds of the foregoing.


 


“True Car
Receivable” means a Receivable pursuant to which the interest rate is reduced through the TrueCar program in accordance
with the Servicer’s Customary Servicing Practices.


 


“Trust Account
Property” means the Trust Accounts, all amounts and investments held from time to time in any Trust Account (whether
in the form of deposit accounts, Physical Property, book-entry securities, uncertificated securities or otherwise), and all proceeds
of the foregoing.


 


“Trust Accounts”
has the meaning set forth in Section 4.1 of the Sale and Servicing Agreement.


 


“Trust Agreement”
means the Trust Agreement, dated as of August 24, 2016, as amended and restated by the Amended and Restated Trust Agreement, dated
as of the Closing Date, between the Seller and the Owner Trustee, as the same may be amended and supplemented from time to time.


 


“Trust Estate”
means all money, accounts, chattel paper, general intangibles, goods, instruments, investment property and other property of the
Issuer, including without limitation (i) the Receivables acquired by the Issuer under the Sale and Servicing Agreement, the Related
Security relating thereto and Collections thereon after the Cut-Off Date, (ii) the Receivable Files, (iii) the rights of the Issuer
to the funds on deposit from time to time in the Trust Accounts and any other account or accounts established pursuant to the Indenture
or Sale and Servicing Agreement and all cash, investment property and other property from time to time credited thereto and all
proceeds thereof (including investment earnings, net of losses and investment expenses, on amounts on deposit therein), (iv) the
rights of the Seller, as buyer, under the Purchase Agreement, (v) the rights of the Issuer under the Sale and Servicing Agreement
and the



    	24



    	



    


Administration Agreement and (vi) all proceeds
(as defined in 9-102(64) of the UCC) of the foregoing.


 


“UCC”
means, unless the context otherwise requires, the Uniform Commercial Code as in effect in the relevant jurisdiction, as amended
from time to time.


 


“United States”
or “USA” means the United States of America (including all states, the District of Columbia and political subdivisions
thereof).


 


“USAA Parties”
means, collectively, the Bank, the Depositor and the Issuer.


 


“Verification
Documents” means, with respect to any Note Owner, a certification from such Note Owner certifying that such Person is
in fact, a Note Owner, as well as an additional piece of documentation reasonably satisfactory to the recipient, such as a trade
confirmation, account statement, letter from a broker or dealer or other similar document.



    	25



    	



    
SCHEDULE I


 


NOTICE ADDRESSES


 


If to the Issuer:


 


c/o Wells Fargo Delaware Trust Company, National
Association


919 North Market Street, Suite 1600


Wilmington, Delaware 19801


Attention: Corporate Trust Services

Telephone: (302) 575-2004

Facsimile: (302) 575-2006



with copies to the Administrator, USAA Federal Savings Bank and the Indenture Trustee


 


If to the Owner Trustee:


 


Wells Fargo Delaware Trust Company, National
Association


919 North Market Street, Suite 1600


Wilmington, Delaware 19801


Telecopier No.: (302) 575-2006


Attention: Sandra Battaglia


 


If to the Indenture Trustee:


 


U.S. Bank National Association


190 S. LaSalle Street, 7th Floor


Chicago, Illinois 60603


Attention: Global Structured Finance –
USAA 2016-1


 


If to the Bank, the Servicer or the Administrator:


 


USAA Federal Savings Bank

10750 McDermott Freeway

San Antonio, Texas 78288

Attention: Michael Broker


 


If to the Seller:



USAA Acceptance, LLC

1105 North Market Street, Suite 1300

Wilmington, Delaware 19801

Attention: USAA 2016-1


 


	 	I-1	Schedule I to the

Sale and Servicing Agreement




    	 



    	



    

If to the Asset Representations Reviewer:


 


Clayton Fixed Income Services LLC

1700 Lincoln Street, Denver, CO 80203

Attention: SVP, Surveillance



with a copy to:



Clayton Fixed Income Services LLC

100 Beard Sawmill Road, Ste. 200

Shelton, CT 06484

Attention: General Counsel


 


If to Moody’s:



Moody’s Investors Service, Inc.

7 World Trade Center

250 Greenwich Street

New York, New York 10007

Telecopier No.: (212) 298-7139

Attention: ABS Monitoring Group


 


If to Standard & Poor’s:



S&P Global Ratings

55 Water Street

New York, New York 10041

Telecopier No.: (212) 438-2664

Attention: Asset Backed Surveillance Group



 


	 	II-2	Schedule I to the

Sale and Servicing Agreement







    	 



    	



    

EXHIBIT A


 


FORM OF ASSIGNMENT PURSUANT TO

SALE AND SERVICING AGREEMENT



[     ], 20[  ]


 


For value received,
in accordance with the Sale and Servicing Agreement (the “Agreement”), dated as of September 21, 2016 between
USAA Auto Owner Trust 2016-1, a Delaware statutory trust (the “Issuer”), USAA Acceptance, LLC, a Delaware limited
liability company (the “Seller”), USAA Federal Savings Bank, a federally chartered savings association (the
“Bank”), and U.S. Bank National Association, a national banking association, as indenture trustee, on the terms
and subject to the conditions set forth in the Agreement, the Seller does hereby transfer, assign, set over, sell and otherwise
convey to the Issuer without recourse (subject to the obligations in the Agreement) on the Closing Date, all of its right, title
and interest in, to and under the Receivables set forth on the schedule of Receivables delivered by the Seller to the Issuer on
the date hereof, the Collections after the Cut-Off Date, the Receivable Files and the Related Security relating thereto, together
with all of Seller’s rights under the Purchase Agreement and all proceeds of the foregoing; which sale shall be effective
as of the Cut-Off Date.


 


The foregoing sale does
not constitute and is not intended to result in any assumption by the Issuer of any obligation of the undersigned or the Originator
to the Obligors or any other Person in connection with the Receivables, or the other assets and properties conveyed hereunder or
any agreement, document or instrument related thereto.


 


This assignment is made
pursuant to and upon the representations, warranties and agreements on the part of the undersigned contained in the Agreement and
is governed by the Agreement.


 


Capitalized terms used
herein and not otherwise defined shall have the meaning assigned to them in the Agreement.


 


[Remainder of page intentionally left blank]


 





	 	A-1	Exhibit A to the

Sale and Servicing Agreement




    	 



    	



    

IN WITNESS HEREOF, the
undersigned has caused this assignment to be duly executed as of the date first above written.


 


	 	USAA ACCEPTANCE, LLC
	 	 




	 	By:	 	 




	 	Name:
	 	Title:



 





	 	A-2	Exhibit A to the

Sale and Servicing Agreement




    	 



    	



    

EXHIBIT B


 


PERFECTION REPRESENTATIONS, WARRANTIES
AND COVENANTS


 


In addition to the representations, warranties and covenants
contained in the Agreement, the Seller hereby represents, warrants and covenants to the Issuer and the Indenture Trustee as follows
on the Closing Date:


 


General


 


1. The Sale and Servicing Agreement creates a valid and
continuing security interest (as defined in the applicable UCC) in the Receivables and the other Transferred Assets in favor
of the Issuer, which security interest is prior to all other Liens, and is enforceable as such against creditors of and
purchasers from the Seller.


 


2. The Receivables constitute “chattel paper”
(including “electronic chattel paper” and “tangible chattel paper”) within the meaning of the applicable
UCC.


 


3. Each Receivable is secured by a first priority validly
perfected security interest in the related Financed Vehicle in favor of the Originator (or its assignee), as secured party, or
all necessary actions with respect to such Receivable have been taken or will be taken to perfect a first priority security interest
in the related Financed Vehicle in favor of the Originator (or its assignee), as secured party.


 


Creation


 


4. Immediately prior to the sale, transfer, assignment
and conveyance of a Receivable by the Seller to the Issuer, the Seller owned and had good and marketable title to such
Receivable free and clear of any Lien and immediately after the sale, transfer, assignment and conveyance of such Receivable
to the Issuer, the Issuer will have good and marketable title to such Receivable free and clear of any Lien.


 


Perfection


 


5. The Seller has caused or will have caused, within ten
days after the effective date of the Sale and Servicing 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 security interest in the Receivables
granted to the Issuer hereunder; and the Servicer, in its capacity as custodian, has in its possession the original copies 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”.


 


	 	B-1	Exhibit B to the

Sale and Servicing Agreement







    	 



    	



    

6. With respect to Receivables that constitute tangible
chattel paper, either:


 


(i) all original executed copies of each such tangible chattel
paper have been delivered to the Indenture Trustee; or


 


(ii) such tangible chattel paper is 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 tangible chattel paper solely on behalf and for the benefit of the Indenture Trustee; or


 


(iii) the Servicer received possession of such 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, not in its individual capacity but solely as Indenture Trustee.


 


Priority


 


7. Neither the Seller nor the Bank has authorized the
filing of, and is not aware of, any financing statements against either the Seller or the Bank that include a description of
collateral covering the Receivables other than any financing statement (i) relating to the conveyance of the Receivables by
the Bank to the Seller under the Purchase Agreement, (ii) relating to the conveyance of the Receivables by the Seller to the
Issuer under the Sale and Servicing Agreement, (iii) relating to the security interest granted to the Indenture Trustee under
the Indenture or (iv) that has been terminated.


 


8. Neither the Seller nor the Bank is aware of any
material judgment, ERISA or tax lien filings against either the Seller or the Bank.


 


9. Neither the Seller nor a custodian or vaulting agent
thereof holding any Receivable that is electronic chattel paper has communicated an “authoritative copy” (as such
term is used in Section 9-105 of the UCC) of any loan agreement that constitutes or evidences such Receivable to any Person
other than the Servicer.


 


10. None of the 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 Seller, the Issuer or the Indenture Trustee.


 


Survival of Perfection Representations


 


11. Notwithstanding any other provision of the Sale and
Servicing Agreement or any other Transaction Document, the perfection representations, warranties and covenants contained in
this Exhibit B 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


 


12. The Servicer shall provide the Rating Agencies with
prompt written notice of any material breach of the perfection representations, warranties and covenants contained in
this


 





	 	B-2	Exhibit B to the

Sale and Servicing Agreement




    	 



    	



    

Exhibit B, and shall not, without satisfying the Rating
Agency Condition, waive a breach of any of such perfection representations, warranties or covenants.


 


Servicer to Maintain Perfection and
Priority


 


13. The Servicer covenants that, in order to evidence the
interests of the Seller and Issuer under the Sale and Servicing Agreement and the Indenture Trustee under the Indenture, the Servicer
shall take such action, or execute and deliver such instruments as may be necessary or advisable (including, without limitation,
such actions as are requested by the Indenture Trustee) to maintain and perfect, as a first priority perfected security interest,
the Indenture Trustee’s security interest in the Receivables. The Servicer shall, from time to time and within the time limits
established by law, prepare and file, all financing statements, amendments, continuations, initial financing statements in lieu
of a continuation statement, terminations, partial terminations, releases or partial releases, or any other filings necessary or
advisable to continue, maintain and perfect the Indenture Trustee’s security interest in the Receivables as a first-priority
perfected security interest.


 


	 	B-3	Exhibit B to the

Sale and Servicing Agreement







    	 



    	



    

EXHIBIT C


 


SERVICING CRITERIA TO BE ADDRESSED IN


INDENTURE TRUSTEE’S ASSESSMENT
OF COMPLIANCE


 


The assessment of compliance to be delivered
by the Indenture Trustee shall address, at a minimum, the criteria identified below as “Applicable Servicing Criteria”1:


 


	Servicing Criteria 	Applicable 

Servicing Criteria
	Reference	Criteria	 
	 	General Servicing Considerations	 
	1122(d)(1)(i)	Policies and procedures are instituted to monitor any performance or other triggers and events of default in accordance with the transaction agreements.	 
	1122(d)(1)(ii)	If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third party’s performance and compliance with such servicing activities.	 
	1122(d)(1)(iii)	Any requirements in the transaction agreements to maintain a back-up servicer for the pool assets are maintained.	 
	1122(d)(1)(iv)	A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements.	 
	1122(d)(1)(v)	Aggregation of information, as applicable, is mathematically accurate and the information conveyed accurately reflects the information.	 
	 	Cash Collection and Administration	 
	1122(d)(2)(i)	Payments on pool assets are deposited into the appropriate custodial bank accounts and related bank clearing accounts no more than two business days following receipt, or such other number of days specified in the transaction agreements.	 
	1122(d)(2)(ii)	Disbursements made via wire transfer on behalf of an obligor or to an investor are made only by authorized personnel.	X
	1122(d)(2)(iii)	Advances of funds or guarantees regarding collections, cash flows or distributions, and any interest or other fees charged for such advances, are made, reviewed and approved as specified in the transaction agreements.	 
	1122(d)(2)(iv)	The related accounts for the transaction, such as cash reserve accounts or accounts established as a form of overcollateralization, are separately maintained (e.g., with respect to commingling of cash) as set forth in the transaction agreements.	X
	1122(d)(2)(v)	Each custodial account is maintained at a federally insured depository institution as set forth in the transaction agreements. For purposes of this criterion, “federally insured depository institution” with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.	X2
	1122(d)(2)(vi)	Unissued checks are safeguarded so as to prevent unauthorized access.	 


 


 






1 Each assessment of compliance delivered by the
Indenture Trustee shall be made only toward such portion(s) of the servicing criteria applicable to the Indenture Trustee and not
such other portion(s) applicable to other persons.


2 Assessment of compliance to be given by Indenture
Trustee shall be only with respect to trust accounts maintained by the Indenture Trustee under the Sale and Servicing Agreement
and the Indenture.


 





	 	C-1	Exhibit C to the

Sale and Servicing Agreement




    	 



    	



    

	Servicing Criteria 	Applicable 

Servicing Criteria
	Reference	Criteria	 
	1122(d)(2)(vii)	Reconciliations are prepared on a monthly basis for all asset-backed securities related bank accounts, including custodial accounts and related bank clearing accounts. These reconciliations are (A) mathematically accurate; (B) prepared within 30 calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements; (C) reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items. These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the transaction agreements.	 
	 	Investor Remittances and Reporting	 
	1122(d)(3)(i)	Reports to investors, including those to be filed with the Commission, are maintained in accordance with the transaction agreements and applicable Commission requirements. Specifically, such reports (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements; (B) provide information calculated in accordance with the terms specified in the transaction agreements; (C) are filed with the Commission as required by its rules and regulations; and (D) agree with investors’ or the trustee’s records as to the total unpaid principal balance and number of pool assets serviced by the Servicer.	 
	1122(d)(3)(ii)	Amounts due to investors are allocated and remitted in accordance with timeframes, distribution priority and other terms set forth in the transaction agreements.	X 

(solely with respect to remittances)
	1122(d)(3)(iii)	Disbursements made to an investor are posted within two business days to the Servicer’s investor records, or such other number of days specified in the transaction agreements.	X
	1122(d)(3)(iv)	Amounts remitted to investors per the investor reports agree with cancelled checks, or other form of payment, or custodial bank statements.	X
	 	Pool Asset Administration	 
	1122(d)(4)(i)	Collateral or security on pool assets is maintained as required by the transaction agreements or related asset pool documents.	 
	1122(d)(4)(ii)	Pool assets and related documents are safeguarded as required by the transaction agreements	 
	1122(d)(4)(iii)	Any additions, removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or requirements in the transaction agreements.	 
	1122(d)(4)(iv)	Payments on pool assets, including any payoffs, made in accordance with the related pool asset documents are posted to the Servicer’s obligor records maintained no more than two business days after receipt, or such other number of days specified in the transaction agreements, and allocated to principal, interest or other items (e.g., escrow) in accordance with the related asset pool documents.	 
	1122(d)(4)(v)	The Servicer’s records regarding the accounts and the accounts agree with the Servicer’s records with respect to an obligor’s unpaid principal balance.	 
	1122(d)(4)(vi)	Changes with respect to the terms or status of an obligor’s account  (e.g., loan modifications or re-agings) are made, reviewed and approved by authorized personnel in accordance with the transaction agreements and related pool asset documents.	 
	1122(d)(4)(vii)	Loss mitigation or recovery actions (e.g., forbearance plans, modifications and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are initiated, conducted and concluded in accordance with the timeframes or other requirements established by the transaction agreements.	 






 


	 	C-2	Exhibit C to the

Sale and Servicing Agreement






    	 



    	



    

	Servicing Criteria 	Applicable 

Servicing Criteria
	Reference	Criteria	 
	1122(d)(4)(viii)	Records documenting collection efforts are maintained during the period a pool asset is delinquent in accordance with the transaction agreements. Such records are maintained on at least a monthly basis, or such other period specified in the transaction agreements, and describe the entity’s activities in monitoring delinquent pool assets including, for example, phone calls, letters and payment rescheduling plans in cases where delinquency is deemed temporary (e.g., illness or unemployment).	 
	1122(d)(4)(ix)	Adjustments to interest rates or rates of return for pool assets with variable rates are computed based on the related pool asset documents.	 
	1122(d)(4)(x)	Regarding any funds held in trust for an obligor (such as escrow accounts): (A) such funds are analyzed, in accordance with the obligor’s Account documents, on at least an annual basis, or such other period specified in the transaction agreements; (B) interest on such funds is paid, or credited, to obligors in accordance with applicable Account documents and state laws; and (C) such funds are returned to the obligor within 30 calendar days of full repayment of the related Accounts, or such other number of days specified in the transaction agreements.	 
	1122(d)(4)(xi)	Payments made on behalf of an obligor (such as tax or insurance payments) are made on or before the related penalty or expiration dates, as indicated on the appropriate bills or notices for such payments, provided that such support has been received by the servicer at least 30 calendar days prior to these dates, or such other number of days specified in the transaction agreements.	 
	1122(d)(4)(xii)	Any late payment penalties in connection with any payment to be made on behalf of an obligor are paid from the servicer’s funds and not charged to the obligor, unless the late payment was due to the obligor’s error or omission.	 
	1122(d)(4)(xiii)	Disbursements made on behalf of an obligor are posted within two business days to the obligor’s records maintained by the servicer, or such other number of days specified in the transaction agreements.	 
	1122(d)(4)(xiv)	 Delinquencies, charge-offs and uncollectible accounts are recognized and recorded in accordance with the transaction agreements.	 
	1122(d)(4)(xv)	Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction agreements.	 



 





	 	C-3	Exhibit C to the

Sale and Servicing Agreement




    	 



    	



    

EXHIBIT D


 


FORM OF INDENTURE TRUSTEE’S ANNUAL
CERTIFICATION


 


		Re:	USAA AUTO OWNER TRUST 2016-1



 


U.S. Bank National Association,
not in its individual capacity but solely as indenture trustee (the “Indenture Trustee”), certifies to USAA
Acceptance, LLC (the “Seller”), and its officers, with the knowledge and intent that they will rely upon this
certification, that:


 


(1) It
has reviewed the report on assessment of the Indenture Trustee’s compliance provided in accordance with Rules 13a-18
and 15d-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Item 1122 of
Regulation AB (the “Servicing Assessment”) (collectively, the “Indenture Trustee
Information”);


 


(2) To
the best of its knowledge, the Indenture Trustee Information, taken as a whole, does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in the light of the circumstances under
which such statements were made, not misleading with respect to the period of time covered by the Indenture Trustee
Information; and


 


(3) To
the best of its knowledge, all of the information required to be provided by the Indenture Trustee pursuant to Sections
9.21 and 9.22 of the Agreement has been provided to the Seller.


 


	 	U.S. Bank National Association, not in its individual capacity but solely as Indenture
Trustee
	 	 



	 	By:	 	 




	 	Name:
	 	Title:
	 	 



	 	Date: 	 	 



 





	 	D-1	Exhibit D to the

Sale and Servicing Agreement




    	 



    	



    

EXHIBIT E


 


FORM OF INDENTURE TRUSTEE’S
ANNUAL CERTIFICATION

REGARDING ITEM 1117 AND ITEM 1119 OF REGULATION AB


 


Reference is made to
the Form 10-K of USAA Acceptance, LLC with respect to USAA Auto Owner Trust 2016-1 (the “Form 10-K”) for the
fiscal year ended December 31, 20[]. Capitalized terms used but not otherwise defined herein shall have the respective meanings
given to them in the Form 10-K.


 


U.S. Bank National Association, a national
banking association (“U.S. Bank”), does hereby certify to the Sponsor, the Seller and the Issuing Entity that:


 


1. As of the date
of the Form 10-K, there are no pending legal proceedings against U.S. Bank or proceedings known to be contemplated by governmental
authorities against U.S. Bank that would be material to the investors in the Notes.


 


2. As of the date
of the Form 10-K, there are no affiliations, as contemplated by Item 1119 of Regulation AB, between U.S. Bank and any of USAA Federal
Savings Bank (in its capacity as Sponsor, Originator, Servicer and Administrator), USAA Acceptance, LLC, the Indenture Trustee,
the Owner Trustee and the Issuing Entity, or any affiliates of such parties.


 


IN WITNESS WHEREOF,
U.S. Bank has caused this certificate to be executed in its corporate name by an officer thereunto duly authorized.


 


Dated: ____________,
20[    ]


 


	 	U.S. Bank National Association, as Indenture Trustee
	 	 



	 	By:	 	 




	 	Name:
	 	Title:




 





	 	E-1	Exhibit E to the

Sale and Servicing Agreement