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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 24, 1997
REGISTRATION STATEMENT NO. 333-29967
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ACC CONSUMER FINANCE CORPORATION
(SPONSOR OF THE TRUSTS DESCRIBED HEREIN)
DELAWARE 12750 HIGH BLUFF DRIVE 33-0682821
(JURISDICTION) SUITE 320 (I.R.S. EMPLOYER
SAN DIEGO, CALIFORNIA 92130 IDENTIFICATION NO.)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
JACK COHEN, ESQ.
ACC CONSUMER FINANCE CORPORATION
12750 HIGH BLUFF DRIVE
SUITE 320
SAN DIEGO, CALIFORNIA 92130
619-793-6300
(NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
CHRIS DIANGELO, ESQ.
DEWEY BALLANTINE
1301 SIXTH AVENUE
NEW YORK, NEW YORK 10019
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box./ /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box./X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering./ /
If this Form is filed as a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering./ /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
TITLE OF SECURITIES BEING REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(2)
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Auto Receivables Asset Backed Notes and Auto $1,000,000 100% $1,000,000 $303.03
Receivables Asset Backed Certificates (together,
the "Securities)
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Previously filed on June 24,1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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CROSS REFERENCE SHEET
TO FORM S-3
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CAPTION OR LOCATION
ITEM AND CAPTION IN FORM S-3 IN PROSPECTUS
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1. Forepart of the Registration Statement
and Outside Front Cover Page of Forepart of Registration Statement;
Prospectus.......................................................... Outside Front Cover Page**
2. Inside Front and Outside Back Cover Page of Inside Front Cover Page**; Outside
Prospectus.......................................................... Back Cover Page**
3. Summary Information, Risk Factors and Ratio Summary of Prospectus**; Special
of Earnings to Fixed Charges........................................ Considerations**;*
4. Use of Proceeds........................................................ Use of Proceeds
5. Determination of Offering Price........................................ *
6. Dilution............................................................... *
7. Selling Security Holders............................................... *
8. Plan of Distribution................................................... Methods of Distribution**
Outside Front Cover Page**;
Summary of Prospectus**;
Description of the
Securities**;
Certain Federal Income Tax
9. Description of Securities to be Registered............................. Consequences**
10. Interests of Named Experts and Counsel................................. *
11. Material Changes....................................................... *
Inside Front Cover Page**;
Incorporation of Certain
12. Incorporation of Certain Information by Reference...................... Documents by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities...................... See page II-3
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* Not applicable or answer is negative.
** To be completed from time to time
by Prospectus Supplement.
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PROSPECTUS
Auto Receivables Backed Securities Issuable in Series
ACC CONSUMER FINANCE CORPORATION
This Prospectus describes certain Auto Receivables Backed Notes (the
"Notes") and Auto Receivables Backed Certificates (the "Certificates" and,
together with the Notes, the "Securities") that may be sold from time to time in
one or more series, in amounts, at prices and on terms to be determined at the
time of sale and to be set forth in a supplement to this Prospectus (each, a
"Prospectus Supplement"). Each series of Securities may include one or more
classes of Notes and one or more classes of Certificates, which will be issued
either by ACC Consumer Finance Corporation (the "Company" or "ACC"), a
Transferor (as hereinafter defined), or by a trust to be formed by the Company
for the purpose of issuing one or more series of such Securities (each, a
"Trust"). The Company, a Transferor or a Trust, as appropriate, issuing
Securities as described in this Prospectus and the related Prospectus Supplement
shall be referred to herein as the "Issuer."
Capitalized terms used herein are defined terms having specific
meanings. An "Index of Defined Terms" is set forth at page __ hereto, which
indicates the page on which such defined terms defined.
Each class of Securities of any series will evidence beneficial
ownership in a segregated pool of assets (the "Trust Property") (such
Securities, "Certificates") or will represent indebtedness of the Issuer secured
by the Trust Property (such Securities, "Notes"), as described herein and in the
related Prospectus Supplement. The Trust Property may consist of any combination
of retail installment sales contracts between manufacturers, dealers or certain
other originators and retail purchasers secured by new and used automobiles and
light duty trucks financed thereby, or participation interests therein, together
with all monies received relating thereto (the "Contracts"). The Trust Property
may also include a security interest in the underlying new and used automobiles
and light duty trucks and property relating thereto, together with the proceeds
thereof (the "Vehicles" together with the Contracts, the "Receivables"). If and
to the extent specified in the related Prospectus Supplement, credit enhancement
with respect to the Trust Property or any class of Securities may include any
one or more of the following: a financial guaranty insurance policy (a "Policy")
issued by an insurer specified in the related Prospectus Supplement, a reserve
account, letters of credit, credit or liquidity facilities, third party payments
or other support, cash deposits or other arrangements. In addition to or in lieu
of the foregoing, credit enhancement may be provided by means of subordination,
cross-support among the Receivables or over-collateralization. See "Description
of the Trust Agreements -- Credit and Cash Flow Enhancement." The Receivables in
the Trust Property for a series will have been originated by the Company on or
prior to the date of issuance of the related Securities, as described herein and
in the related Prospectus Supplement. The Receivables included in a Trust Fund
will be serviced by a servicer (the "Servicer") described in the related
Prospectus Supplement.
Each series of Securities may include one or more classes (each, a
"Class"). A series may include one or more Classes of Securities entitled to
principal distributions, with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate, nominal or
no principal distributions. The rights of one or more Classes of Securities of
any series may be senior or subordinate to the rights of one or more of the
other Classes of Securities. A series may include two or more Classes of
Securities which differ as to the timing, order or priority of payment, interest
rate or amount of distributions of principal or interest or both. Information
regarding each Class of Securities of a series, together with certain
characteristics of the related Receivables, will be set forth in the related
Prospectus Supplement. The rate of payment in respect of principal of the
Securities of any Class will depend on the priority of payment of such a Class
and the rate and timing of payments (including prepayments, defaults,
liquidations or repurchases of Receivables) on the related Receivables. A rate
of payment lower or higher than that anticipated may affect the weighted average
life of each Class of Securities in the manner described herein and in the
related Prospectus Supplement. See "Description of the Securities."
It is not expected that any Securities described herein will be listed
on any securities exchange. Such lack of exchange listing is likely to result in
a relatively illiquid market for the Securities. It is, however, further
expected that the underwriter(s) of each series of Securities will make a market
for such Securities for so long as they remain outstanding, although such
underwriter(s) will have no obligation to the Company or the related
Securityholders so to make a market.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" ON PAGE 15 HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
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THE NOTES OF A GIVEN SERIES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT
REPRESENT OBLIGATIONS OF THE COMPANY, ANY SERVICER OR ANY OF THEIR RESPECTIVE
AFFILIATES. THE CERTIFICATES OF A GIVEN SERIES REPRESENT BENEFICIAL INTERESTS IN
THE RELATED TRUST ONLY AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE
COMPANY, ANY TRANSFEROR, ANY SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES.
NEITHER THE SECURITIES NOR THE UNDERLYING RECEIVABLES WILL BE GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY THE COMPANY, ANY
SERVICER, ANY TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS SET FORTH
IN THE RELATED PROSPECTUS SUPPLEMENT. SEE ALSO "RISK FACTORS" ON PAGE 15.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Offers of the Securities may be made through one or more
different methods, including offerings through underwriters as more fully
described under "Method of Distribution" herein and in the related Prospectus
Supplement. Prior to issuance, there will have been no market for the Securities
of any series, and there can be no assurance that a secondary market for the
Securities will develop, or if it does develop, it will continue.
RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE. THIS PROSPECTUS
MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS ACCOMPANIED BY A
PROSPECTUS SUPPLEMENT.
The date of this Prospectus is August , 1997.
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PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a series of Securities to be
offered hereunder, among other things, will set forth with respect to such
series of Securities: (i) a description of the Class or Classes of such
Securities, (ii) the rate of interest, the "Pass-Through Rate" or "Interest
Rate" or other applicable rate (or the manner of determining such rate) and
authorized denominations of such Class of such Securities; (iii) certain
information concerning the Receivables and insurance polices, cash accounts,
letters of credit, financial guaranty insurance policies, third party guarantees
or other forms of credit enhancement, if any, relating to one or more pools of
Receivables or all or part of the related Securities; (iv) the specified
interest, if any, of each Class of Securities in, and manner and priority of,
the distributions from the Trust Property; (v) information as to the nature and
extent of subordination with respect to such series of Securities, if any; (vi)
the payment date to Securityholders; (vii) information regarding the Servicer(s)
for the related Receivables; (viii) the circumstances, if any, under which the
Trust Property may be subject to early termination; (ix) information regarding
tax considerations; and (x) additional information with respect to the method of
distribution of such Securities.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices at 500 West Madison, 14th Floor, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of the Registration
Statement may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and information
statements, and other information regarding registrants that file electronically
with the Commission. The address for such Web site is: http://www.sec.gov.
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and any Prospectus
Supplement with respect hereto and, if given or made, such information or
representations must not be relied upon. This Prospectus and any Prospectus
Supplement with respect hereto do not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Securities offered
hereby and thereby, nor an offer of the Securities to any person in any state or
other jurisdiction in which such offer would be unlawful. The delivery of this
Prospectus at any time does not imply that information herein is correct as of
any time subsequent to its date.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents subsequently filed by the Company with respect to the
Registration Statement, either on its own behalf or on behalf of an Issuer,
relating to any series of Securities referred to in the accompanying Prospectus
Supplement, with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the
date of this Prospectus and prior to the termination of any offering of the
Securities issued by the Issuer, shall be deemed to be incorporated by reference
in this Prospectus and to be a part of this Prospectus from the date of the
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein (or in the accompanying Prospectus Supplement) or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein, modifies or replaces such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
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REPORTS TO SECURITYHOLDERS
So long as the Securities are in book-entry form, monthly and annual
reports concerning the related Securities and the related Issuer will be sent by
the Trustee to Cede & Co., as the nominee of DTC and as registered holder of the
Securities pursuant to the related Trust Agreement. DTC will supply such reports
to Securityholders in accordance with its procedures. If such Securities are not
in book-entry form, the Securityholders will receive such reports directly from
the related Trustee, rather than indirectly from DTC. In connection with their
distribution on each Payment Date, the related Securityholders will receive a
statement containing the following information, at a minimum: the amount of such
distribution relating to interest, the amount of such distribution relating to
principal, the Pool Factor, the interest rate (for variable rate Securities) and
delinquency information with respect to the related Receivables. To the extent
required by the Securities Exchange Act of 1934, as amended, the related Issuer
will provide financial information to the Securityholders which has been
examined and reported upon, with an opinion expressed by, an independent public
accountant; to the extent not so required, such financial information will be
unaudited. The Company has determined that the financial statements of no entity
other than the Security Insurer are material to the offering made hereby. Each
Issuer will be formed to own the Receivables, hold and administer the
Pre-Funding Account, to issue the Securities and to acquire the Subsequent
Receivables, if available. Each Issuer will have no assets or obligations prior
to issuance of the Securities and will engage in no activities other than the
holdings of the related trust Property and the issuance of the related
Securities. Accordingly, no financial statements with respect to the related
Issuer will be included in the related Prospectus Supplement. The audited
financial statements of the Security Insurer will be set forth in (or
incorporated by reference in) the related Prospectus Supplement, and the
unaudited interim financial statements of the Security Insurer will be set forth
in (or incorporated by reference in) the related Prospectus Supplement. The
Company intends to discontinue filing periodic reports at the beginning of the
company's next fiscal year, to the extent permitted by Section 15(d) of the
Exchange Act.
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SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in the summary
are defined elsewhere in the Prospectus on the pages indicated in the "Index of
Terms," which appears on page __ hereof.
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Issuer ............................... With respect to each series of Securities, either the Company, a
special-purpose finance subsidiary of the Company which may be
organized and established by the Company with respect to the Trust
Property (each such special-purpose finance subsidiary, a
"Transferor"), ACC Receivables Corp. or a trust (each, a "Trust") to be
formed by the Company. For purposes of this Prospectus, the term
"Company" includes the term "Transferor". The Company, a
Transferor or a Trust issuing Securities pursuant to this Prospectus
and the related Prospectus Supplement shall be referred to herein as
the "Issuer" with respect to the related Securities. See "The Issuers."
Company .............................. ACC Consumer Finance Corporation (the "Company", or "ACC" ), a
Delaware corporation. ACC is the successor corporation to ACC
Consumer Finance Corporation, a California corporation, which was
formerly named American Credit Corporation. American Credit
Corporation was incorporated under the laws of California in July
1993. On October 17, 1995, American Credit Corporation changed its
name to ACC Consumer Finance Corporation, which, on November 9,
1995, merged with and into ACC. The Receivables will be either (i)
originated by various dealers, which may or may not be affiliated with
one or more manufacturers of vehicles ("Dealers", and together with
such manufacturers, "Vendors") or (ii) acquired by the Company from
other originators or owners of Receivables. The Company's
origination business consists of both "indirect" originations (i.e.,
originations through the Company's network of unaffiliated originators)
as well as "direct" originations (in which prospective borrowers, having
decided to purchase a specific Vehicle, approach the Company or its
affiliates directly (or are contacted directly by the Company, as through
a mail solicitation or telemarketing effort) rather than through a dealer
or a broker). The Company is not affiliated with any dealers. The
Company's principal executive offices are located at 12750 High Bluff
Drive, San Diego, California 92130, and its telephone number is (619)
793-6300. See "The Company and the Servicer."
Servicer ............................. ACC Consumer Finance Corporation ("ACC" or, in its capacity as the
servicer, the "Servicer"). See "ACC's Automobile Financing Program -
Servicing and Collections."
Trustee .............................. The Trustee for each series of Securities will be specified in the
related Prospectus Supplement. In addition, a Trust may separately
enter into an Indenture and may issue Notes pursuant to such
Indenture; in any such case the Trust and the Indenture will be
administered by separate, independent trustees as required by the
rules and regulations under the Trust Indenture Act of 1939 and the
Investment Company Act of 1940.
The Securities ....................... Each Class of Securities of any series will either evidence beneficial
ownership in a segregated pool of assets (the "Trust Property") (such
Securities, "Certificates") or will represent indebtedness of the Issuer
secured by the Trust Property (such Securities, "Notes"), as described
under Description of the Securities" herein and in the related
Prospectus Supplement. The Trust Property may consist of any
combination of retail installment sales contracts between
manufacturers, dealers or certain other originators and retail
purchasers secured by new and used automobiles and light duty
trucks financed thereby, together with all monies received relating
thereto (the "Contracts"). The Trust Property also may include a
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security interest in the underlying new and used automobiles and
light duty trucks and property relating thereto, together with
the proceeds thereof (the "Vehicles" and together with the
Contracts, the "Receivables").
The Trust Property will include Receivables with respect to which the
related Contract or the related Vehicles is subject to federal or state
registration or titling requirements.
If and to the extent specified in the related Prospectus Supplement,
credit enhancement with respect to the Trust Property or any class of
Securities may include any one or more of the following: a financial
guaranty insurance policy (a "Policy") issued by an insurer specified
in the related Prospectus Supplement, a reserve account, letters of
credit, credit or liquidity facilities, third party payments or other
support, cash deposits or other arrangements. In addition to or in lieu
of the foregoing, credit enhancement may be provided by means of
subordination, cross-support among the Receivables or over-
collateralization. The Company will originate Receivables or acquire
Receivables from one or more originators on or prior to the date of
issuance of the related Securities, as described herein and in the
related Prospectus Supplement.
With respect to Securities issued by a Trust, each Trust will be
established pursuant to an agreement (each, a "Pooling Agreement")
by and between the Company and the Trustee named therein. Each
Pooling Agreement will describe the related pool of Receivables held
by the Trust.
With respect to Securities that represent debt issued by the Issuer, the
Issuer will enter into an indenture (each, an "Indenture") by and
between the Issuer and the trustee named on such Indenture (the
"Indenture Trustee"). Each Indenture will describe the related pool of
Receivables comprising the Trust Property and securing the debt
issued by the related Issuer.
The Receivables comprising the Trust Property will be serviced by the
Servicer pursuant to a servicing agreement (each, a "Servicing
Agreement") by and between the Servicer and the related Issuer.
In the case of the Trust Property of any class of Securities, the
contractual arrangements relating to the establishment of a Trust, if
any, the servicing of the related Receivables and the issuance of the
related Securities may be contained in a single agreement, or in
several agreements which combine certain aspects of the Pooling
Agreement, the Servicing Agreement and the Indenture described
above (for example, a pooling and servicing agreement, or a servicing
and collateral management agreement). For purposes of this
Prospectus, the term "Trust Agreement" as used with respect to Trust
Property means, collectively, and except as otherwise described in the
related Prospectus Supplement, any and all agreements relating to the
establishment of a Trust, if any, the servicing of the related
Receivables and the issuance of the related Securities. The term
"Trustee" means any and all persons acting as a trustee pursuant to
a Trust Agreement.
Securities Will Be Non-Recourse.
The Securities will not be obligations, either recourse or non-recourse
(except for certain non-recourse debt described under "Certain Tax
Considerations"), of the Company, the related Servicer or any person
other than the related Issuer. The Notes of a given series represent
obligations of the Issuer, and the Certificates of a given series
represent beneficial interests in the related Issuer only and do not
represent interests in or obligations of the Company, the related
Servicer or any of their respective affiliates other than the related
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Issuer. In the case of Securities that represent beneficial ownership
interest in the related Issuer, such Securities will represent the
beneficial ownership interests in such Issuer and the sole source of
payment will be the assets of such Issuer. In the case of Securities
that represent debt issued by the related Issuer, such Securities will
be secured by assets in the related Trust Property. Notwithstanding the
foregoing, and as to be described in the related Prospectus Supplement,
certain types of credit enhancement, such as a letter of credit,
financial guaranty insurance policy or reserve fund may constitute a
full recourse obligation of the issuer of such credit enhancement.
General Nature of the Securities as Investments.
All of the Securities offered pursuant to this Prospectus and the
related Prospectus Supplement will be rated in one of the four highest
rating categories by one or more Rating Agencies (as defined herein).
Additionally, except to the extent provided in the related Prospectus
Supplement, all of the Securities offered pursuant to this Prospectus
and the related Prospectus Supplement will be of the fixed-income
type ("Fixed Income Securities"). Fixed Income Securities will
generally be styled as debt instruments, having a principal balance
and a specified interest rate ("Interest Rate"). Fixed Income Securities
may either represent beneficial ownership interests in the related
Receivables held by the related Trust or debt secured by certain
assets of the related Issuer.
Each series or Class of Fixed Income Securities offered pursuant to
this Prospectus may have a different Interest Rate, which may be a
fixed or adjustable Interest Rate. The related Prospectus Supplement
will specify the Interest Rate for each series or Class of Fixed Income
Securities described therein, or the initial Interest Rate and the method
for determining subsequent changes to the Interest Rate.
A series may include one or more Classes of Fixed Income Securities
("Strip Securities") entitled (i) to principal distributions, with
disproportionate, nominal or no interest distributions, or (ii) to interest
distributions, with disproportionate, nominal or no principal
distributions. In addition, a series of Securities may include two or
more Classes of Fixed Income Securities that differ as to timing,
sequential order, priority of payment, Interest Rate or amount of
distribution of principal or interest or both, or as to which distributions
of principal or interest or both on any Class may be made upon the
occurrence of specified events, in accordance with a schedule or
formula, or on the basis of collections from designated portions of the
related pool of Receivables. Any such series may include one or more
Classes of Fixed Income Securities ("Accrual Securities"), as to which
certain accrued interest will not be distributed but rather will be added
to the principal balance (or nominal balance, in the case of Accrual
Securities which are also Strip Securities) thereof on each Payment
Date, as hereinafter defined, or in the manner described in the related
Prospectus Supplement.
If so provided in the related Prospectus Supplement, a series may
include one or more other Classes of Fixed Income Securities
(collectively, the "Senior Securities") that are senior to one or more
other Classes of Fixed Income Securities (collectively, the
"Subordinate Securities") in respect of certain distributions of principal
and interest and allocations of losses on Receivables.
In addition, certain Classes of Senior (or Subordinate) Securities may
be senior to other Classes of Senior (or Subordinate) Securities in
respect of such distributions or losses.
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General Payment Terms of Securities.
As provided in the related Trust Agreement and as described in the
related Prospectus Supplement, the holders of the Securities
("Securityholders") will be entitled to receive payments on their
Securities on specified dates (each, a "Payment Date"). Payment
Dates with respect to Fixed Income Securities will occur monthly,
quarterly or semi-annually, as described in the related Prospectus
Supplement.
The related Prospectus Supplement will describe a date (the "Record
Date") preceding such Payment Date, as of which the Trustee or its
paying agent will fix the identity of the Securityholders for the purpose
of receiving payments on the next succeeding Payment Date. As
described in the related Prospectus Supplement, the Payment Date
will be a specified day of each month, quarterly or semi-annual period.
Each Trust Agreement will describe a period (each, a "Remittance
Period") preceding each Payment Date (for example, in the case of
monthly-pay Securities, the calendar month preceding the month in
which a Payment Date occurs). As more fully described in the related
Prospectus Supplement, collections received on or with respect to the
related Receivables constituting Trust Property during a Remittance
Period will be required to be remitted by the Servicer to the related
Trustee prior to the related Payment Date and will be used to fund
payments to Securityholders on such Payment Date. As may be
described in the related Prospectus Supplement, the related Trust
Agreement may provide that all or a portion of the payments collected
on or with respect to the related Receivables may be applied by the
related Trustee to the acquisition of additional Receivables during a
specified period (rather than be used to fund payments of principal to
Securityholders during such period), with the result that the related
Securities will possess an interest-only period, also commonly referred
to as a revolving period, which will be followed by an amortization
period. Any such interest only or revolving period may, upon the
occurrence of certain events to be described in the related Prospectus
Supplement, terminate prior to the end of the specified period and
result in the earlier than expected amortization of the related
Securities. Such events which may result in an early amortization
event will generally consist of (i) the Company's inability to deliver
sufficient, additional Receivables to maintain the revolving period, (ii)
an event of default by the Company or the Servicer (i.e., the
Company's or the Servicer's failure to perform their respective duties
under the related Trust Agreement) and (iii) the occurrence of a
bankruptcy event with respect to the Company or the Servicer.
In addition, and as may be described in the related Prospectus
Supplement, the related Trust Agreement may provide that all or a
portion of such collected payments may be retained by the Trustee
(and held in certain temporary investments, including Receivables) for
a specified period prior to being used to fund payments of principal to
Securityholders.
Such retention and temporary investment by the Trustee of such
collected payments may be required by the related Trust Agreement
for the purpose of (a) slowing the amortization rate of the related
Securities relative to the installment payment schedule of the related
Receivables, or (b) attempting to match the amortization rate of the
related Securities to an amortization schedule established at the time
such Securities are issued. Any such feature applicable to any
Securities may terminate upon the occurrence of events to be
described in the related Prospectus Supplement, resulting in
distributions to the specified Securityholders and an acceleration of the
amortization of such Securities.
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As more fully specified in the related Prospectus Supplement, neither
the Securities nor the underlying Receivables will be guaranteed or
insured by any governmental agency or instrumentality or the
Company, the related Servicer, any Trustee, or any of their affiliates.
No Investment Companies .............. Neither the Company nor any Trust will register as an "investment
company" under the Investment Company Act of 1940, as amended
(the "Investment Company Act").
Risk Factors ......................... There are material risks associated with an investment in the
Securities offered hereby; prospective Securityholders should read
"Risk Factors" herein, as well as the "Risk Factors" section of the
related Prospectus Supplement.
Securities will not be
listed on any Exchange ............... It is not expected that any Securities described herein will be listed on
any securities exchange. However, it is expected that the
underwriter(s) of each series of Securities will make a market for such
Securities for so long as they remain outstanding, although such
underwriter(s) will have no obligation to the Company or the related
Securityholders so to make a market.
See "Risk Factors -- Limited Liquidity" herein.
The Residual Interest ................ With respect to each Trust, the "Residual Interest" at any time
represents the rights to the related Trust Property in excess of the
Securityholders' interest of all series then outstanding that were issued
by such Trust. The Residual Interest in any Trust Property will
fluctuate as the aggregate Pool Balance of such Trust Fund changes
from time to time. A portion of the Residual Interest in any Trust may
be sold separately in one or more public or private transactions.
Master Trusts; Issuance of
Additional Series .................... As may be described in the related Prospectus Supplement, the
Company may cause one or more of the Trusts (such a Trust, a
"Master Trust") to issue additional series of Securities from time to
time. Under each Trust Agreement relating to a Master Trust (each,
a "Master Trust Agreement"), the Company may determine the terms
of any such new series. See "Description of the Securities -- Master
Trusts."
The Company may cause the related Trustee to offer any such new
series to the public or other investors, in transactions either registered
under the Securities Act or exempt from registration thereunder,
directly or through one or more underwriters or placement agents, in
fixed-price offerings or in negotiated transactions or otherwise.
A new series to be issued by a Master Trust which has a series
outstanding may, only be issued upon satisfaction of the conditions
described herein under "Description of the Securities -- Master Trusts".
Securities secured by Receivables held by a Master Trust shall be
entitled to moneys received relating to such Receivables on a equal
priority basis with other Securities issued pursuant to the other Trust
Agreements by such Master Trust.
Cross-Collateralization .............. As described in the related Trust Agreement and the related
Prospectus Supplement, the source of payment for Securities of each
series will be the assets of the related Trust Property only.
However, as may be described in the related Prospectus Supplement,
a series or class of Securities may include the right to receive moneys
from a common pool of credit enhancement which may be available
for more than one series of Securities, such as a master reserve
account, master insurance policy or a master collateral pool consisting
of similar Receivables. Notwithstanding the foregoing, and as
described in the related Prospectus Supplement, no payment received
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on any Receivable held by any Trust may be applied to the payment of
Securities issued by any other Trust (except to the limited extent that
certain collections in excess of the amounts needed to pay the related
Securities may be deposited in a common master reserve account or an
overcollateralization account that provides credit enhancement for more
than one series of Securities issued pursuant to the related Trust
Agreement).
Trust Property ....................... As specified in the related Prospectus Supplement, the Trust Property
will consist of the related Contracts, and may include a security
interest in the related Vehicles. If and to the extent specified in the
related Prospectus Supplement, credit enhancement with respect to
Trust Property or any class of Securities may include any one or more
of the following: a Policy issued by a Security insurer specified in the
related Prospectus Supplement, a reserve account, letters of credit,
credit or liquidity facilities, repurchase obligations, third party payments
or other support, cash deposits or other arrangements. In addition to
or in lieu of the foregoing, credit enhancement may be provided by
means of subordination, cross-support among the Receivables or
over-collateralization. See "Description of the Trust Agreement --
Credit and Cash Flow Enhancement." The Contracts are obligations
for the purchase of the Vehicles, or evidence borrowings used to
acquire the Vehicles.
The related Prospectus Supplement will further describe the type and
characteristics of the Contracts included in the Trust Property relating
to the Securities offered pursuant to this Prospectus and the related
Prospectus Supplement.
The Company will either transfer Receivables to a Trust pursuant to
a Pooling Agreement or pledge the Company's right, title and interest
in and to such Receivables to a Trustee on behalf of Securityholders
pursuant to an Indenture. The obligations of the Company, the
Servicer, the related Trustee and the related Indenture Trustee, if any,
under the related Trust Agreement include those specified below and
in the related Prospectus Supplement.
In addition, if so specified in the related Prospectus Supplement, the
Trust Property will include monies on deposit in a Pre-Funding
Account (the "Pre-Funding Account") to be established with the
Trustee, which will be used to acquire Additional Receivables (as
hereinafter defined) from time to time during the "Pre-Funding Period"
specified in the related Prospectus Supplement. The Pre-Funding
Account, if any, will be reduced during the related Pre-Funding Period
by the amount thereof used to purchase Additional Receivables. Any
amount remaining in the Pre-Funding Account at the end of the related
Pre-Funding Period will be distributed to the related Securityholders,
pro rata, on the Payment Date immediately following the end of the
Pre-Funding Period.
If and to the extent provided in the related Prospectus Supplement,
the Company will be obligated [(subject only to the availability thereof)]
to either transfer to a Trust or pledge to a Trustee on behalf of
Securityholders, additional Receivables (the "Additional Receivables")
from time to time during any Pre-Funding Period specified in the
related Prospectus Supplement.
Special Payment
Features ........................... The Receivables may contain the following special payment features:
"Balloon" Payments: In a "balloon" payment Receivable, the final
scheduled payment may be substantially higher than the preceding
scheduled payments. Such balloon payment Receivables may have
a higher risk of loss than Receivables that do not contain such a
feature, as borrowers may have difficulty in paying (or refinancing) the
large final payment.
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Adjustable Rate Receivables: Certain of the Receivables may
calculate interest on an adjustable rate basis (an index such as Prime
or LIBOR) rather than on a fixed rate basis. Such Receivables may
be subject to minimum ("floors") and maximum ("caps") rates of
interest. Such adjustable rate Receivables may have higher risk of
loss than do Receivables with a fixed rate of interest, as borrowers
may have difficulty paying the higher monthly payments which result
from an increase in rates.
"Pay for Performance" Program: The Company may offer loans in
which the interest rate may decrease if the borrower maintains a
steady history of timely payment over a specified period of time. Any
such decrease in rate, although generally indicative of good
performance, may result in decreased cash received by the related
Issuer.
Registration of Securities ........... Securities may be represented by global securities registered in the
name of Cede & Co. ("Cede"), as nominee of The Depository Trust
Company ("DTC"), CEDEL, Euroclear or another nominee. In such
case, Securityholders will not be entitled to receive definitive securities
representing such Securityholders' interests, except in certain
circumstances described in the related Prospectus Supplement. See
"Description of the Securities -- Book Entry Registration" herein.
Credit and Cash Flow
Enhancement .......................... If and to the extent specified in the related Prospectus Supplement,
credit enhancement with respect to Trust Property or any class of
Securities may include any one or more of the following: a Policy
issued by an insurer specified in the related Prospectus Supplement
(a "Security Insurer"), a reserve account, letters of credit, credit or
liquidity facilities, third party payments or other support, cash deposits
or other arrangements. Any form of credit enhancement will have
certain limitations and exclusions from coverage thereunder, which will
be described in the related Prospectus Supplement. See "Description
of the Trust Agreement -- Credit and Cash Flow Enhancement."
Repurchase Obligations and
the Receivables Acquisition
Agreement ............................ As more fully described in the related Prospectus Supplement, the
Company will be obligated to acquire from the related Trust Property
any Receivable which was transferred pursuant to a Pooling
Agreement or pledged pursuant to an Indenture if the interest of the
Securityholders therein is materially adversely affected by a breach of
any representation or warranty made by the Company with respect to
such Receivable, which breach has not been cured. In addition, if so
specified in the related Prospectus Supplement, the Company may
from time to time reacquire certain Receivables of the Trust Property,
subject to specified conditions set forth in the related Trust Agreement.
Servicer's Compensation .............. The Servicer shall be entitled to receive a fee for servicing the Trust
Property equal to a specified percentage of the value of such Trust
Property, as set forth in the related Prospectus Supplement. See
"Description of the Trust Agreements -- Servicing Compensation"
herein and in the related Prospectus Supplement.
Certain Legal Aspects
of the Contracts ..................... With respect to the transfer of the Contracts to the related Trust
pursuant to a Pooling Agreement or the pledge of the related Issuer's
right, title and interest in and to such Contracts on behalf of
Securityholders pursuant to an Indenture, the Company will warrant,
in each case, that such transfer is either a valid transfer and
assignment of the Contracts to the Trust or the grant of a security
interest in the Contracts. Each Prospectus Supplement will specify
what actions will be taken by which parties as will be required to
perfect either the Issuer's or the Securityholders' security interest in
the Contracts. The Company may also warrant that, if the transfer or
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pledge by it to the Trust or to the Securityholders is deemed to be a
grant to the Trust or to the Securityholders of a security interest in
the Contracts, then the related Issuer or the Securityholders will have
a first priority perfected security interest therein, except for
certain liens which have priority over previously perfected security
interests by operation of law, and, with certain exceptions, in the
proceeds thereof. Similar security interest and priority
representations and warranties, as described in the related Prospectus
Supplement, may also be made by the Company with respect to the
Vehicles.
Perfection of security interests in automobiles and light duty trucks is
generally governed by the vehicle registration or titling laws of the
state in which each vehicle is registered or titled. In most states, a
security interest in a vehicle is perfected by notation of the secured
party's lien on the vehicle's certificate of title. Each Prospectus
Supplement will specify whether the Company, the Servicer or the
Trustee, in light of the administrative burden and expense, will amend
any certificate of title to identify the Company or the Trustee as the
new secured party on the certificates of title relating to the Vehicles.
See "Certain Legal Aspects of the Receivables."
Each Prospectus Supplement will specify if the Company has filed or
will be required to file UCC financing statements identifying the
Vehicles as collateral pledged in favor of the related Trust or Trustee
on behalf of the Securityholders. In the absence of such filings any
security interest in the Vehicles will not be perfected in favor of the
related Trust or Trustee. See "Certain Legal Aspects of the
Receivables."
Optional Termination ................. The Servicer, the Company, or, if specified in the related Prospectus
Supplement, certain other entities may, at their respective options,
effect early retirement of a series of Securities under the
circumstances and in the manner set forth herein under "Description
of The Trust Agreement -- Termination" and in the related Prospectus
Supplement. Such termination may occur either at a date certain or
at such time as the Pool Factor has declined to a specified level. The
specific date and/or Pool Factor level at which such termination may
occur with respect to a series of Securities shall be set forth in the
related Prospectus Supplement.
Mandatory Termination ................ The Trustee, the Servicer or certain other entities specified in the
related Prospectus Supplement may be required to effect early
retirement of all or any portion of a series of Securities by soliciting
competitive bids for the purchase of the Trust Property or otherwise,
under other circumstances and in the manner specified in "Description
of The Trust Agreement -- Termination" and in the related Prospectus
Supplement. Such termination may occur either at a date certain or
at such time as the Pool Factor has declined to a specified level. The
specific date and/or Pool Factor level at which such termination may
occur with respect to a series of Securities shall be set forth in the
related Prospectus Supplement.
Tax Considerations ................... Securities of each series offered hereby will, for federal income tax
purposes, constitute either (i) interests in a Trust treated as a grantor
trust under applicable provisions of the Code ("Grantor Trust
Securities"), (ii) debt issued by an Issuer or by the Company ("Debt
Securities"), (iii) interests in a Trust which is treated as a partnership
("Partnership Interests") or (iv) interests in a Trust which elects to be
treated as a "financial asset securitization investment trust" (a
"FASIT"). The tax characterization of any series of Securities will be
described in the related Prospectus Supplement, and the related
Opinion of tax counsel will be filed as part of a Current Report 8-K
filing in connection with each issuance.
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Investors are advised to consult their tax advisors and to review
"Federal Income Tax Consequences" in the related Prospectus
Supplement.
ERISA Considerations ................. The Prospectus Supplement for each series of Securities will
summarize, subject to the limitations discussed therein, considerations
under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), relevant to the purchase of such Securities by
employee benefit plans and individual retirement accounts. See
"ERISA Considerations" in the related Prospectus Supplement.
Ratings .............................. Each Class of Securities offered pursuant to this Prospectus and the
related Prospectus Supplement will be rated in one of the four highest
rating categories by one or more "national statistical rating
organizations", as defined in the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and commonly referred to as "Rating
Agencies". Such ratings will address, in the opinion of such Rating
Agencies, the likelihood that the Issuer will be able to make timely
payment of all amounts due on the related Securities in accordance
with the terms thereof. Such ratings will neither address any
prepayment or yield considerations applicable to any Securities nor
constitute a recommendation to buy, sell or hold any Securities.
The ratings expected to be received with respect to any Securities will
be set forth in the related Prospectus Supplement.
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RISK FACTORS
Prospective Securityholders should consider, among other things, the
following factors in connection with the purchase of the Securities:
NONPRIME LENDING MAY POSE SPECIAL RISKS TO INVESTORS IN THE SECURITIES.
The Company specializes in the indirect financing of Contracts in the
automobile lending industry for "nonprime" borrowers. The nonprime market for
credit consists of making loans which may not be made by traditional sources of
credit, which in the automobile finance business is comprised of insured-deposit
taking institutions such as banks, thrifts and credit unions, and finance
companies which are "captives" (i.e., finance subsidiaries) of automobile
manufacturers.
A loan may be considered "nonprime" primarily for one, or both, of two
reasons: borrower credit considerations, and collateral considerations. It is
also possible that the nonprime automobile finance business is more susceptible
to loss than other segments of the nonprime lending business generally, such as
nonprime mortgage lending, due to the mobility and depreciation of the
collateral.
"NONPRIME" BORROWERS ARE CONSUMERS WITH RELATIVELY WEAK CREDITS WHO MAY
BE UNABLE (OR UNWILLING) TO REPAY THEIR LOANS. A borrower may be considered a
"nonprime" credit due to limited income, past credit problems (e.g., prior
bankruptcy, history of delinquent payments on other types of installment credit)
or limited or no credit histories.
"NONPRIME" LOANS MAY ALSO HAVE LESS VALUABLE COLLATERAL. Collateral
considerations in the nonprime market primarily result from the financing, in
many cases, of used vehicles. Although depreciation also affects new
automobiles, the market value of an automobile which is several years old may be
more difficult to ascertain than for a new vehicle since such value will
depend on mileage and general condition, which may vary substantially for
different vehicles of a similar model year.
"NONPRIME" ASSET-BACKED OFFERINGS ARE FREQUENTLY GUARANTEED BY A SMALL
NUMBER OF CREDIT ENHANCERS, WHOSE OWN CREDIT MAY BE ADVERSELY AFFECTED BY A
DOWNTURN IN THE NONPRIME LENDING BUSINESS. Another consideration with respect to
the nonprime automobile lending business relates to the degree to which the
industry's asset-backed securities (such as the Securities offered hereby) are
guaranteed, in whole or in part, by Credit Enhancers which themselves have
assumed substantial exposure to this industry. See "Security Rating may be
highly dependent on the ratings of an external Credit Enhancer" below. Although
such Credit Enhancers typically have a "AAA" rating, if portfolios of nonprime
automobile receivables generally suffer lower than expected levels of
performance, the ratings of such Credit Enhancers as have concentrated on this
industry may be adversely affected, even if a specific receivables pool (such as
one of the Company's pools) has not suffered such a lower than expected level of
performance.
ACC'S UNDERWRITING PROCESS AND SUBJECTIVE CREDIT STANDARDS. The
underwriting standards applied by the Company may not be as stringent as those
of the finance companies of motor vehicle manufacturers or other financial
institutions since the Company purchases retail automobile installment contracts
which may not meet the credit standards of traditional primary lenders. The ACC
finance program focuses on the non-prime market including obligors with below
average credit profiles who may not be able to receive financing from more
traditional sources. The ACC finance program sets specific limits for the credit
amount extended. The Company's credit decisions are judgmental. See "ACC's
Automobile Financing Program -- Application Processing and Purchasing Criteria."
OWNERSHIP OF CONTRACTS WILL NOT NECESSARILY BE VESTED IN THE RELATED
TRUSTEE, WITH THE RESULT THAT DELAYS AND DISRUPTIONS IN PAYMENTS MAY OCCUR. In
connection with the issuance of any series of Securities, the Company will
originate Contracts. The Company will warrant in a Trust Agreement (i) if the
Company retains title to the Contracts, that the Trustee for the benefit of
Securityholders has a valid security interest in such Contracts, or (ii) if the
Company transfers such Contracts to a Trust, that the transfer of the Contracts
to such Trust is either a valid assignment, transfer and conveyance of the
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Contracts to the Trust or the Trustee on behalf of the Securityholders has a
valid security interest in such Contracts. As will be described in the related
Prospectus Supplement, the related Trust Agreement will provide either that the
Trustee will be required to maintain possession of the original copies of all
Contracts that constitute chattel paper or that the Company or the Servicer will
retain possession of such Contracts; provided that in case the Company retains
possession of the related Contracts, the Servicer may take possession of such
original copies as necessary for the enforcement of any Contract. If any
Contracts remain in the possession of the Company, the related Prospectus
Supplement may describe specific trigger events that will require delivery to
the Trustee. If the Company, the Servicer, the Trustee or other third party,
while in possession of the Contracts, sells or pledges and delivers such
Contracts to another party, in violation of the Receivables Acquisition
Agreement or the Trust Agreement, there is a risk that such other party could
acquire an interest in such Contracts having a priority over the Issuer's
interest. Furthermore, if the Company, the Servicer or a third party, while in
possession of the Contracts, is rendered insolvent, such event of insolvency may
result in competing claims to ownership or security interests in the Contracts.
Such an attempt, even if unsuccessful, could result in delays in payments on the
Securities. If successful, such attempt could result in losses to the
Securityholders or an acceleration of the repayment of the Securities. The
Company will be obligated to repurchase any Contract originated by the Company
and currently in the related Trust Property if there is a breach of the
Company's representations and warranties that materially and adversely affects
the interests of the Trust in such Contract and such breach has not been cured.
SECURITY INTERESTS IN BOTH THE RECEIVABLES AND THE UNDERLYING VEHICLES
MAY NOT BE VALID UNDER CERTAIN CIRCUMSTANCES. The transfer of the Receivables by
the Company to the Trustee pursuant to the related Trust Agreement, Indenture or
Trust Agreement, the perfection of the security interests in the Receivables and
the enforcement of rights to realize on the Vehicles as collateral for the
Receivables are subject to a number of federal and state laws, including the UCC
as in effect in various states. As specified in each Prospectus Supplement, the
Servicer will take such action as is required to perfect the rights of the
Trustee in the Receivables. If, through inadvertence or otherwise, a third party
were to purchase (including the taking of a security interest in) a Receivable
for new value in the ordinary course of its business, without actual knowledge
of the Trustee's interest, and take possession of a Receivable, the purchaser
would acquire an interest in such Receivable superior to the interest of the
Trustee, with the result that such Receivable would no longer be available as
part of the Trust Property for the related series of Securities. As further
specified in each Prospectus Supplement, no action will be taken to perfect the
rights of the Trustee in proceeds of any insurance policies covering individual
Vehicles or Obligors. Therefore, the rights of a third party with an interest in
such proceeds could prevail against the rights of the Trustee prior to the time
such proceeds are deposited by the Servicer into a Trust Account. See "Certain
Legal Aspects of the Receivables".
Except to the extent specified in the related Prospectus Supplement,
each Contract will include a perfected security interest in the related Vehicle
in favor of the Trustee or the Company (and, if perfected in the name of the
Company, assigned pursuant to the related Trust Agreement to the Trustee for the
benefit of the Securityholders). However, to the extent provided in the related
Prospectus Supplement, due to the administrative burden and expense, the
certificates of title of the Vehicles securing certain Contracts which reflect
the security interest of the Company or an unaffiliated originator in such
Vehicles may not be endorsed to reflect the Trustee's interest therein or
delivered to the Trustee. In the absence of such endorsement and delivery, the
Trustee may not have a perfected security interest in such Vehicles. As a
result, a third party buyer of a Vehicle for value from an Obligor may
extinguish the interest of the Trust in the Vehicle, a subsequent perfected
lienholder may obtain a security interest senior in right to that of the Trust,
and a trustee in bankruptcy of the Company may be able to assert successfully
that the Trust did not have a security interest in the Vehicle. In addition,
statutory liens for repairs or unpaid taxes and other liens arising by operation
of law may have priority even over prior perfected security interests in the
name of the Trustee in the Vehicles.
RESTRICTIONS ON RECOVERIES MAY RESULT IN THE RELATED ISSUER RECEIVING
SUBSTANTIALLY LESS THAN THE FACE AMOUNT OF THE RELATED CONTRACT. Unless specific
limitations are described on the related Prospectus Supplement with respect to
specific Contracts, all Contracts will provide that the obligations
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of the Obligors thereunder are absolute and unconditional, regardless of any
defense, set-off or abatement which the Obligor may have against the Company or
any other person or entity whatsoever. The Company will warrant that no claims
or defenses have been asserted or threatened with respect to the Contracts and
that all requirements of applicable law with respect to the Contracts have been
satisfied.
In the event that the Company or the Trustee must rely on repossession
and disposition of Vehicles to recover scheduled payments due on defaulted
contracts, i.e., Contracts which are seriously delinquent (such as 90 or 120
days), or as to which the related Obligor has affirmatively indicated an
inability or unwillingness to make payment ("Defaulted Contracts"), the Issuer
may not realize the full amount due on a Contract (or may not realize the full
amount on a timely basis). Other factors that may affect the ability of the
Issuer to realize the full amount due on a Contract include whether amendments
to certificates of title relating to the Vehicles had been filed, whether
financing statements to perfect the security interest in the Vehicles had been
filed, depreciation, obsolescence, damage or loss of any Vehicle, and the
application of Federal and state bankruptcy and insolvency laws. As a result,
the Securityholders may be subject to delays in receiving payments and suffer
loss of their investment in the Securities.
THE COMPANY IS NOT CORPORATELY LIABLE ON THE SECURITIES, AND THE ONLY
SOURCE OF REPAYMENT WILL BE THE RELATED TRUST PROPERTY. Moreover, the Trust
Property will not have, nor is it permitted or expected to have, any significant
assets or sources of funds other than the related Receivables and, to the extent
provided in the related Prospectus Supplement, the related reserve account and
any other credit enhancement. The Securities represent obligations solely of the
related Issuer or debt secured by the related Trust Property, and will not
represent a recourse obligation to other assets of the Company. No Securities of
any series will be insured or guaranteed by the Company, the Servicer, or the
applicable Trustee. Consequently, holders of the Securities of any series must
rely for repayment primarily upon payments on the Receivables and, if and to the
extent available, the reserve account, if any, and any other credit enhancement,
all as specified in the related Prospectus Supplement.
ALTHOUGH THE TRANSACTIONS WILL BE STRUCTURED SO AS TO MINIMIZE THE
RISKS ASSOCIATED WITH THE COMPANY'S BANKRUPTCY, SUCH SAFEGUARDS MAY NOT
ELIMINATE ALL SUCH RISKS. The Company will take steps in structuring the
transactions contemplated hereby that are intended to ensure that the voluntary
or involuntary application for relief by the Company under the United States
Bankruptcy Code or similar applicable state laws ("Insolvency Laws") will not
result in the Trust Property becoming property of the estate of the Company
within the meaning of such Insolvency Laws. Such steps will generally involve
the creation by the Company of one or more separate, limited-purpose
subsidiaries (each, a "Finance Subsidiary") pursuant to articles of
incorporation containing certain limitations (including restrictions on the
nature of such Finance Subsidiary's business and a restriction on such Finance
Subsidiary's ability to commence a voluntary case or proceeding under any
Insolvency Law without the prior unanimous affirmative vote of all its
directors). However, there can be no assurance that the activities of any
Finance Subsidiary would not result in a court's concluding that the assets and
liabilities of such Finance Subsidiary should be consolidated with those of the
Company in a proceeding under any Insolvency Law.
While an originator is the Servicer, cash collections held by such
originator may, subject to certain conditions, be commingled and used for the
benefit of such originator prior to each Payment Date and, in the event of the
bankruptcy of such originator, the Company, a Trust or Trustee may not have a
perfected interest in such collections.
The Company believes that the transfer of the Receivables by the
Company to a Finance Subsidiary should be treated as a valid assignment,
transfer and conveyance of such Receivables. However, in the event of an
insolvency of the Company, a court, among other remedies, could attempt to
recharacterize the transfer of the Receivables by the Company to the Finance
Subsidiary as a borrowing by the Company from the Finance Subsidiary or the
related Securityholders, secured by a pledge of such Receivables. Such an
attempt, even if unsuccessful, could result in delays in payments on the
Securities. If such an attempt were successful, a court, among other remedies,
could elect to accelerate payment of the Securities and liquidate the
Receivables, with the Securityholders entitled to the then outstanding principal
amount thereof and interest thereon at the applicable Security Interest Rate to
the date of
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payment. Thus, the Securityholders could lose the right to future payments of
interest and might incur reinvestment losses. As more fully described in the
related Prospectus Supplement, in the event the related Issuer is rendered
insolvent, the related Trustee for a Trust, in accordance with the Trust
Agreement, will promptly sell, dispose of or otherwise liquidate the related
Receivables in a commercially reasonable manner on commercially reasonable
terms. The proceeds from any such sale, disposition or liquidation of such
Receivables will be treated as collections on such Receivables. If the proceeds
from the liquidation of the Receivables and any amount available from any credit
enhancement, if any, are not sufficient to pay Securities of the related series
in full, the amount of principal returned to such Securityholders will be
reduced and such Securityholders will incur a loss.
Obligors of the Vehicles may be entitled to assert against the Company,
the Issuer, or the Trust, if any, claims and defenses which they have against
the Company with respect to the Receivables. The Company will warrant that no
such claims or defenses have been asserted or threatened with respect to the
Receivables and that all requirements of applicable law with respect to the
Receivables have been satisfied.
FINANCIAL CONDITION OF ACC MAY NEVERTHELESS AFFECT ON INVESTOR'S
RETURN, EVEN IF THE INTENDED BANKRUPTCY CHARACTERIZATION IS SUSTAINED. The
Company is generally not obligated to make any payments in respect of the
Securities or the Receivables of a specific Trust. If the Company were to cease
acting as Servicer, delays in processing payments on the Receivables and
information in respect thereof could occur and result in delays in payments to
the Securityholders.
In certain circumstances, the Company will be required to acquire
Receivables from the related Trust Property with respect to which such
representations and warranties have been breached. In the event that the Company
is incapable of complying with its reacquire obligations and no other party is
obligated to perform or satisfy such obligations, Securityholders may be subject
to delays in receiving payments and suffer loss of their investment in the
Securities.
The related Prospectus Supplement will set forth certain information
regarding the Company. In addition, the Company is subject to the information
requirements of the Exchange Act and, in accordance therewith, files reports and
other information with the Commission. For further information regarding the
Company reference is made to such reports and other information which are
available as described under "Available Information."
INSURANCE ON VEHICLES WILL GENERALLY BE REQUIRED AT THE TIME OF
ORIGINATION, ALTHOUGH NO ASSURANCE CAN BE GIVEN THAT SUCH INSURANCE WILL BE
MAINTAINED. The Company generally requires that the Obligor insure the related
Vehicle with a physical damage policy naming the Company as loss payee. Although
such insurance on the Vehicle is generally required at the time of the Contract
origination, there can be no assurance that the Obligor will maintain the
appropriate coverage on the Vehicle. The Company does not anticipate force
placing insurance (i.e., obtaining such insurance coverage without the consent
of the related Obligor) on the related Vehicles. The Company will not represent
and warrant to the related Trustee that each Vehicle is in fact covered by a
physical damage policy, although the Company will represent and warrant that the
procedures described above will be followed with respect to each Vehicle. As a
consequence of the foregoing, the Vehicles may not be covered by physical damage
insurance and losses to Securityholders may result from such lack of coverage.
DELINQUENCIES MAY VARY OVER TIME, AND ANY INCREASE IN DELINQUENCIES MAY
RESULT IN AN UNANTICIPATED LEVEL OF LOSS. There can be no assurance that the
historical levels of delinquencies and losses experienced by the Company on its
respective loan and vehicle portfolio will be indicative of the performance of
the Contracts included in the related Trust Property or that such levels will
continue in the future. Delinquencies and losses could increase significantly
for various reasons, including changes in the local, regional or national
economies, the failure to service the Receivables Pool adequately, or the
transfer or relocation of the Servicing from the Company or any Sub-Servicer to
another.
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PROVISIONS APPLICABLE TO A SERIES WILL HAVE ADVERSE CONSEQUENCES FOR
THE SUBORDINATE CLASSES. To the extent specified in the related Prospectus
Supplement, distributions of interest and principal on one Class of Securities
of a series may be subordinated in priority of payment to interest and principal
due on other Classes of Securities of a related series. Consequently, the risk
of loss on the related Receivables pool may be disproportionately allocated to
the holders of the more subordinate classes, making the return on investment on
such classes highly sensitive to the loss and delinquency levels of the related
pool.
MASTER TRUSTS MAY POSE SPREAD RISKS, SINCE ADDITIONAL SERIES MAY BE
ISSUED WITHOUT THE CONSENT OF THE HOLDERS OF PRIOR SERIES. As may be described
in the related Prospectus Supplement, a Master Trust may issue from time to time
more than one series. While the terms of any additional series will be specified
in a supplement to the related Master Trust Agreement, the provisions of such
supplement and, therefore, the terms of any additional series, will not be
subject to prior review by, or consent of, holders of the Securities of any
series previously issued by such Master Trust. Such terms may include methods
for determining applicable investor percentages and allocating collections,
provisions creating different or additional security or credit enhancements and
any other provisions which are made applicable only to such series. The
obligation of the related Trustee to issue any new series is subject to the
condition, among others, that such issuance will not result in any Rating Agency
reducing or withdrawing its rating of the Securities of any outstanding series
(any such reduction or withdrawal is referred to herein as a "Ratings Effect").
There can be no assurance, however, that the terms of any series might not have
an impact on the timing or amount of payments received by a Securityholder of
another series issued by the same Master Trust. See "Description of the
Securities -- Master Trusts."
BOOK-ENTRY REGISTRATION MAY FURTHER REDUCE LIQUIDITY AND MAY LEAD TO
PAYMENT DELAYS. Issuance of the Securities in book-entry form may reduce the
liquidity of such Securities in the secondary trading market since investors may
be unwilling to purchase Securities for which they cannot obtain definitive
physical securities representing such Securityholders' interests, except in
certain circumstances described in the related Prospectus Supplement.
Since transactions in Securities will, in most cases, be able to be
effected only through DTC, direct or indirect participants in DTC's book-entry
system ("Direct Participants" or "Indirect Participants") or CEDEL or Euroclear
or certain banks, the ability of a Securityholder to pledge a Security to
persons or entities that do not participate in the DTC system, or otherwise to
take actions in respect to such Securities, may be limited due to lack of a
physical security representing the Securities.
Securityholders may experience some delay in their receipt of
distributions of interest on and principal of the Securities since distributions
may be required to be forwarded by the Trustee to DTC and, in such case, DTC
will be required to credit such distributions to the accounts of its
Participants which thereafter will be required to credit them to the accounts of
the applicable class of Securityholders either directly or indirectly through
Indirect Participants. See "Description of the Securities -- Book Entry
Registration."
SECURITY RATING MAY BE HIGHLY DEPENDENT ON THE RATINGS OF AN EXTERNAL
CREDIT ENHANCER. The rating of Securities credit enhanced by a letter of credit,
financial guaranty insurance policy, reserve fund, credit or liquidity
facilities, cash deposits or other forms of credit enhancement (collectively
"Credit Enhancement") will depend primarily on the creditworthiness of the
issuer of such external Credit Enhancement device (a "Credit Enhancer"). Any
reduction in the rating assigned to the claims-paying ability of the related
Credit Enhancer to honor its obligations pursuant to any such Credit Enhancement
below the rating initially given to the Securities would likely result in a
reduction in the rating of the Securities.
THE RATE OF PAYMENT ON THE SECURITIES IS UNPREDICTABLE, AND MAY BE
HIGHLY VOLATILE; IF THE ACTUAL PAYMENT RATE DEVIATES FROM AN INVESTOR'S
EXPECTATIONS, SUCH INVESTOR'S YIELD MAY BE REDUCED SUBSTANTIALLY. Because the
rate of payment of principal on the Securities will depend, among other things,
on the rate of payment on the related Contracts, the rate of payment of
principal on the Securities cannot
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be predicted. Payments on the Contracts will include scheduled payments as well
as partial and full prepayments (to the extent not replaced with substitute
Contracts), payments upon the liquidation of Defaulted Contracts, payments upon
acquisitions by the Servicer or the Company of Contracts from the related Trust
Property on account of a breach of certain representations and warranties in the
related Trust Agreement, payments upon an optional acquisition by the Servicer
or the Company of Contracts from the related Trust Property (any such voluntary
or involuntary prepayment or other early payment of a Contract, a "Prepayment"),
and residual payments. The rate of early terminations of Contracts due to
Prepayments and defaults may be influenced by a variety of economic and other
factors, including, among others, obsolescence, then current economic conditions
and tax considerations. The risk of reinvesting distributions of the principal
of the Securities will be borne by the Securityholders. The yield to maturity on
Strip Securities or Securities purchased at premiums or discounts to par will be
extremely sensitive to the rate of Prepayments on the related Receivables. In
addition, the yield to maturity on certain other types of classes of Securities,
including Strip Securities, Accrual Securities or certain other Classes in a
series including more than one Class of Securities, may be relatively more
sensitive to the rate of prepayment of the related Contracts than other Classes
of Securities.
The rate of Prepayments of Contracts cannot be predicted and is
influenced by a wide variety of economic, social, and other factors, including
prevailing interest rates, the availability of alternate financing and local and
regional economic conditions. Therefore, no assurance can be given as to the
level of Prepayments that a Trust will experience.
Securityholders should consider, in the case of Securities purchased at
a discount, the risk that a slower than anticipated rate of Prepayments on the
Receivables could result in an actual yield that is less than the anticipated
yield and, in the case of any Securities purchased at a premium, the risk that a
faster than anticipated rate of Prepayments on the Receivables could result in
an actual yield that is less than the anticipated yield.
LIMITED LIQUIDITY MAY RESULT IN A SECURITYHOLDER BEING UNABLE TO
LIQUIDATE ITS INVESTMENT. There can be no assurance that a secondary market for
the Securities of any series or Class will develop or, if it does develop, that
it will provide Securityholders with liquidity of investment or that it will
continue for the life of such Securities. The Prospectus Supplement for any
series of Securities may indicate that an underwriter specified therein intends
to establish and maintain a secondary market in such Securities; however, no
underwriter will be obligated to do so. The Securities will not be listed on any
securities exchange.
LIMITATIONS ON INTEREST PAYMENTS AND REPOSSESSIONS MAY RESULT IN
REDUCED AND/OR DELAYED PAYMENTS. Generally, under the terms of the Soldiers' and
Sailors' Civil Relief Act of 1940, as amended (the "Relief Act"), or similar
state legislation, an Obligor who enters military service after the origination
of the related Receivable (including an Obligor who is a member of the National
Guard or is in reserve status at the time of the origination of the Receivable
and is later called to active duty) may not be charged interest (including fees
and charges) above an annual rate of 6% during the period of such Obligor's
active duty status, unless a court orders otherwise upon application of the
lender. It is possible that such action could have an effect, for an
indeterminate period of time, on the ability of the Servicer to collect full
amounts of interest on certain of the Receivables. In addition, the Relief Act
imposes limitations that would impair the ability of the Servicer to foreclose
(repossess and sell at auction) on an affected Receivable during the Obligor's
period of active duty status. Thus, in the event that such a Receivable goes
into default, there may be delays and losses occasioned by the inability of the
Servicer to realize upon the Financed Vehicle in a timely fashion.
THE TRUST PROPERTY
The Trust Property will include, as specified in the related Prospectus
Supplement, (i) a pool of Receivables, (ii) all monies (including accrued
interest) due thereunder on or after the applicable Cut-off Date, (iii) such
amounts as from time to time may be held in one or more accounts established and
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maintained by the Servicer pursuant to the related Trust Agreement, as described
below and in the related Prospectus Supplement, (iv) the security interests, if
any, in the Vehicles relating to such pool of Receivables, (v) the right to
proceeds from claims on physical damage policies, if any, covering such Vehicles
or the related Obligors, as the case may be, (vi) the proceeds of any
repossessed Vehicles related to such pool of Receivables, (vii) the rights of
the Company under the related Receivables Acquisition Agreement and (viii)
interest earned on certain short-term investments held in such Trust Property,
unless the related Prospectus Supplement specifies that such earnings may be
paid to the Servicer or the Company. The Trust Property will also include, if so
specified in the related Prospectus Supplement, monies on deposit in a
Pre-Funding Account, which will be used by the Trustee to acquire or receive a
security interest in Additional Receivables from time to time during the
Pre-Funding Period specified in the related Prospectus Supplement. See
"Description of the Securities -- Forward Commitments; Pre-Funding." In
addition, to the extent specified in the related Prospectus Supplement, some
combination of Credit Enhancements may be issued to or held by the Trustee on
behalf of the related Trust for the benefit of the holders of one or more
classes of Securities.
The Receivables comprising the Trust Property will, as specifically
described in the related Prospectus Supplement, be either (i) originated by the
Company, (ii) originated by various manufacturers and acquired by the Company,
(iii) originated by various Dealers and acquired by the Company or (iv) acquired
by the Company from originators or owners of Receivables.
The Trust Property will include Receivables with respect to which the
related Contract or the related Vehicles is subject to federal or state
registration or titling requirements.
The Receivables included in the Trust Property will be selected from
those Receivables held by the Company based on the criteria specified in the
applicable Trust Agreement and described herein under "The Receivables" and
"ACC's Automobile Financing Program" and in the related Prospectus Supplement.
With respect to each series of Securities, on or prior to the Closing
Date on which the Securities are delivered to Securityholders, the Company or a
Finance Subsidiary will form a Trust by either (i) transferring the related
Receivables into a Trust pursuant to a Trust Agreement between the Company or a
Finance Subsidiary and the Trustee or (ii) entering into an Indenture with an
Indenture Trustee, relating to the issuance of such Securities, secured by the
related Receivables.
The Receivables comprising the Trust Property will generally have been
originated by the Company or acquired by the Company from unaffiliated
originators in accordance with the Company's specified underwriting criteria.
The underwriting criteria applicable to the Receivables included in any Trust
Property will be described in all material respects in the related Prospectus
Supplement.
THE ISSUERS
With respect to each series of Securities, the Company will either
establish a separate Trust that will issue such Securities, or the Company will
form a Finance Subsidiary that will issue such Securities, in each case pursuant
to the related Trust Agreement. For purposes of this Prospectus and the related
Prospectus Supplement, the Finance Subsidiary, if the Finance Subsidiary issues
the related Securities, or the related Trust, if a Trust issues the related
Securities, shall be referred to as the "Issuer" with respect to such
Securities.
Upon the issuance of the Securities of a given series, the proceeds
from such issuance will be generally used by the Company to purchase
Receivables. The Servicer will service the related Receivables pursuant to the
applicable Servicing Agreement, and will be compensated for acting as the
Servicer. To facilitate servicing and to minimize administrative burden and
expense, the Servicer may be appointed custodian for the related Receivables by
each Trustee and the Company, as may be set forth in the related Prospectus
Supplement.
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If the protection provided to the Securityholders of a given class by
the subordination of another Class of Securities of such series and by the
availability of the funds in the reserve account, if any, or any other Credit
Enhancement for such series is insufficient, the Issuer must rely solely on the
payments from the Obligors on the related Contracts, and the proceeds from the
sale of Vehicles which secure the Defaulted Contracts. In such event, the
factors described above under "Risk Factors -- Ownership of Contracts will not
necessarily be vested in the related Trustee, with the result that delays and
disruptions in payments may occur", "Risk Factors -- Security Interests in both
the Receivables and the underlying Vehicles may not be valid under certain
circumstances" and "Risk Factors -- Restrictions on Recoveries may result in the
related Issuer receiving substantially less than the face amount of the related
Contract" and described below under "Certain Legal Aspects of the Receivables"
may affect such Issuer's ability to realize on the collateral securing such
Contracts, and thus may reduce the proceeds to be distributed to the
Securityholders of such series.
THE RECEIVABLES
RECEIVABLES POOLS
Information with respect to the Receivables in the related Trust
Property will be set forth in the related Prospectus Supplement, including, to
the extent appropriate, the composition of such Receivables and the distribution
of such Receivables by geographic concentration, payment frequency and current
principal balance as of the applicable Cut-off Date.
THE CONTRACTS
As specified in the related Prospectus Supplement, the Contracts may
consist of any combination of Rule of 78s Contracts, or Simple Interest
Contracts. Generally, "Rule of 78s Contracts" provide for fixed level monthly
payments which will amortize the full amount of the Contract over its term. The
Rule of 78s Contracts provide for allocation of payments according to the "sum
of periodic balances" or "sum of monthly payments" method (the "Rule of 78s").
Each Rule of 78s Contract provides for the payment by the Obligor of a specified
total amount of payments, payable in monthly installments on the related due
date, which total represents the principal amount financed and finance charges
in an amount calculated on the basis of a stated annual percentage rate ("APR")
for the term of such Contract. The rate at which such amount of finance charges
is earned and, correspondingly, the amount of each fixed monthly payment
allocated to reduction of the outstanding principal balance of the related
Contract are calculated in accordance with the Rule of 78s. Under the Rule of
78s, the portion of each payment allocable to interest is higher during the
early months of the term of a Contract and lower during later months than that
under a constant yield method for allocating payments between interest and
principal. Notwithstanding the foregoing, as specified in the related Prospectus
Supplement, all payments received by the Servicer on or in respect of the Rule
of 78s Contracts may be allocated on an actuarial or simple interest basis so
that such payments may be accounted for, and presented on a basis consistent
with, the payments on the Securities, which will in no case be on the Rule 78s'
method.
"Simple Interest Contracts" provide for the amortization of the amount
financed under the receivable over a series of fixed level monthly payments.
However, unlike the monthly payment under Rule of 78s Contracts, each monthly
payment consists of an installment of interest which is calculated on the basis
of the outstanding principal balance of the receivable multiplied by the stated
APR and further multiplied by the period elapsed (as a fraction of a calendar
year) since the preceding payment of interest was made. As payments are received
under a Simple Interest Contract, the amount received is applied first to
interest accrued to the date of payment and the balance is applied to reduce the
unpaid principal balance. Accordingly, if an Obligor pays a fixed monthly
installment before its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be less
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an Obligor pays a fixed monthly
installment after its scheduled due date, the portion of the payment allocable
to
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interest for the period since the preceding payment was made will be greater
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly less. In either case, the Obligor pays a fixed monthly
installment until the final scheduled payment date, at which time the amount of
the final installment is increased or decreased as necessary to repay the then
outstanding principal balance.
If an Obligor elects to prepay a Rule of 78s Contract in full, it is
entitled to a rebate of the portion of the outstanding balance then due and
payable attributable to unearned finance charges. If a Simple Interest Contract
is prepaid, rather than receive a rebate, the Obligor is required to pay
interest only to the date of prepayment. The amount of a rebate under a Rule of
78s Contract calculated in accordance with the Rule of 78s will always be less
than had such rebate been calculated on an actuarial basis and generally will be
less than the remaining scheduled payments of interest that would be due under a
Simple Interest Contract for which all payments were made on schedule.
Distributions to Security holders may not be affected by Rule of 78s rebates
under the Rule of 78s Contract because pursuant to the related Prospectus
Supplement such distributions may be determined using the actuarial or simple
interest method.
DELINQUENCIES, REPOSSESSIONS, AND LOSSES
Certain information relating to the Company's delinquency, repossession
and loss experience with respect to Contracts it has originated or acquired will
be set forth in each Prospectus Supplement. This information may include, among
other things, the experience with respect to all Contracts in the Company's
portfolio during certain specified periods. As of the Cut-Off Date with respect
to any issuance of Securities, the related Trust Property will not contain more
than 5% (by aggregate unpaid principal balance) of Contracts which are 30-59
days delinquent. There can be no assurance that the delinquency, repossession
and loss experience on any Trust Property will be comparable to the Company's
prior experience.
MATURITY AND PREPAYMENT CONSIDERATIONS
As more fully described in the related Prospectus Supplement, if a
Contract permits a Prepayment, such payment, together with accelerated payments
resulting from defaults, will shorten the weighted average life of the related
pool of Receivables and the weighted average life of the related Securities. The
rate of Prepayments on the Receivables may be influenced by a variety of
factors, such as increasing or declining rates of interest, the rate of
inflation, an improvement in the related Obligors' credit standing, and
availability of alternative sources of financing. In addition, under certain
circumstances, the Company will be obligated to acquire Receivables from the
related Trust Property pursuant to the applicable Trust Agreement or Receivables
Acquisition Agreement as a result of breaches of representations and warranties.
Any reinvestment risks resulting from a faster or slower amortization of the
related Securities which results from Prepayments will be borne entirely by the
related Securityholders.
The related Prospectus Supplement will set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to a particular pool of Receivables and the related series of
Securities, together with a description of any applicable prepayment penalties.
ACC'S AUTOMOBILE FINANCING PROGRAM
GENERAL
ACC is an automobile finance company specializing in the indirect
financing of automobile loans to consumers with non-prime credit. The ACC
program provides automobile dealers with an alternative source of financing for
those consumers who typically do not qualify for financing by the dealer's
traditional financing sources.
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BUSINESS STRATEGY
ACC's primary objective is to increase its net income by expanding
market share. ACC believes it has the operational and administrative capacity to
expand its business and attain this objective. ACC strategies for achieving this
objective, which focus on credit quality, efficiency of operations and
expansion, are as follows:
- Enforcing nationwide consistency of underwriting standards and
controls, including verification and document review;
- Increasing the volume of contract purchases from existing dealers;
- Increasing the number of active dealers in ACC's existing geographic
markets;
- Entering selected new markets in metropolitan areas where ACC can
recruit experienced regional sales managers or correspondents;
- Using ACC's contract database to refine underwriting standards,
program pricing and overall credit risk evaluation capabilities;
- Attracting and retaining qualified employees;
- Maintaining reliable funding sources;
- Approving applications and funding contract purchases in a timely
manner; and
- Maintaining and improving ACC's delinquency monitoring and collective
processes.
Overall, ACC's strategy is to purchase contracts with yields, after
discounts, that compensate for the credit risk inherent in the non-prime market,
and to manage this credit risk through ACC's internal credit evaluation and its
proactive collection processes.
PERFECTION OF SECURITY INTEREST
Each retail installment sales contract contains a clause granting the
Company or one of its affiliates a security interest in the financed vehicle. In
each state in which ACC does business, a security interest is perfected by
noting the secured party's interest on the vehicle's Manufacturers Statement of
Origin ("MSO") or, in a majority of states, the vehicle's Certificate of Title.
The originating dealer is required to complete the title work and take all the
steps required to perfect the security interest. The loan is subject to payoff
by the dealer if the title is not received with the security interest perfected.
ACC's quality control procedures include a title tracking system used
to review and track title processing by dealers and state authorities until such
time as the Certificate of Title has been received.
REGIONAL CREDIT CENTERS
ACC serves its dealers on a regional basis through its regional credit
centers. ACC believes that these regional centers provide a sufficient local
market presence to meet the needs of its dealers, without incurring the
reduction in operating controls and economies of scale that can result from
operating a large number of small branches. ACC currently has regional credit
centers in Atlanta, Georgia; Dallas, Texas; Newark, Delaware; Miami, Florida;
and San Diego, California.
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APPLICATION PROCESSING AND PURCHASING CRITERIA
Dealers submit credit applications to one of ACC's regional credit
centers, typically by facsimile. Upon ACC's receipt of a credit application, a
credit processor uses an automated system to obtain credit histories, determine
the wholesale value of the vehicle and calculate the credit score of the
application. ACC's credit officers use the credit score as a guide to evaluate
applications, but the approval/declination decision is not based solely on the
credit score. Individual credit officers have limited approval authority and the
approval of a more senior credit manager is required when the credit score or
the amount financed exceeds the individual credit officer's approval limits.
ACC's regional credit centers then notify dealers by facsimile of a credit
decision, usually within three hours of receipt of the application.
The non-prime borrowers under contracts of the type typically purchased
by ACC generally have credit histories which include past bankruptcies,
significant charged-off accounts and/or multiple collection accounts. Further,
other contracts may be purchased by ACC for borrowers with limited or no credit
histories. In light of the deficiencies in the borrowers' credit histories,
ACC's credit officers evaluate other potential offsetting factors such as the
borrowers' residence stability, employment stability, income level relative to
expenses and past performance on other automobile-related debt. If, in the
credit officers' judgment, there are enough offsetting positive factors, such
contracts may be approved for purchase by ACC.
To be eligible for purchase, a contract must be fully amortizing and
provide for level payments over the term of the contract, must grant a first
priority security interest in the financed vehicle to OFL-A or ACC, must
prohibit the sale or transfer of the financed vehicle without ACC's consent and
must allow for acceleration of the maturity of the contract if the vehicle is
sold or transferred without this consent. The portions of payments on contracts
allocable to principal and interest are, for payoff and deficiency purposes,
determined in accordance with the law of the state in which the contract was
originated.
FUNDING PACKAGE COMPLETION, VERIFICATION AND FUNDING
After receiving an approval from one of ACC's regional credit centers
and compiling a set of documents the dealers believe to be consistent with ACC's
documentation requirements, the dealers send these funding packages to ACC's
central funding group in San Diego. ACC generally requires that funding packages
include proof of the borrower's residency, income, insurance and title.
ACC's funding department reviews each contract and verifies the
application data and contract documentation. The funding department also
confirms or reconfirms the borrower's employment and the insurance on the
vehicle. ACC believes one of the most important verifications is a direct
telephone interview of the borrower to confirm the terms of the contract, the
source of the down payment and the equipment on the vehicle. ACC typically will
not fund a contract without a prior telephone interview of the borrower. ACC
believes this process reduces the risk of misrepresentation by dealers and/or
borrowers and provides a basis for future borrower contact.
A funding package may be returned if it does not comply with the terms
of the initial approval or if ACC discovers facts that were not disclosed during
the approval process. As an additional quality control check, ACC's data
processing systems perform an automated review of the contracts and identify any
characteristics not in compliance with ACC's minimum underwriting standards.
POST-FUNDING QUALITY REVIEWS
ACC uses its automated systems to continue to monitor contracts after
funding. In addition, ACC's quality control manager, who reports directly to the
Chief Executive Officer, completes a full quality control review of a random
sample of 5% of the newly-originated contracts. This review focuses on
compliance with underwriting standards, the quality of the credit decision and
the completeness of contract documentation. On a monthly basis, ACC's quality
control manager issues a report to ACC's senior management summarizing (by
credit processor and credit officer) policy exceptions, processing errors,
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documentation deficiencies and credit decisions which the quality control
manager considered overly aggressive. The bonuses of ACC's credit officers are,
in part, dependent upon results of these quality control reviews.
SERVICING OF CONTRACTS
ACC services all of the contracts it originates, whether owned by ACC
or sold in an asset-backed security. ACC's servicing generally consists of
payment and pay-off processing, collecting, insurance tracking, title tracking,
responding to borrower inquiries, investigating delinquencies, repossessing and
reselling collateral, collection reporting and credit performance monitoring.
BILLING AND COLLECTION PROCESS
ACC sends each borrower a monthly bill, rather than using payment
coupon books. All payments are directed to ACC's lock-box account at a regional
commercial bank. On a daily basis, the lock-box bank retrieves and processes
payments received, and then deposits the entire amount into the lock-box
account. A simultaneous electronic data transfer of borrower payment data is
made to ACC for posting to ACC's computerized records.
ACC's collection process is based on a strategy of closely monitoring
contracts and maintaining frequent contact with borrowers. As part of this
process, ACC makes early, frequent contact with delinquent borrowers and
attempts to identify the underlying causes of a borrower's delinquency and to
make an early collection risk assessment. ACC believes that its proactive
collection process, including the early identification of payment problems,
reduces its repossession rates and loss levels.
In support of its collection efforts, ACC maintains a collection
software package with customized features designed for high-intensity collection
operations, which includes a high-penetration autodialer. With the aid of the
autodialer, ACC initially attempts to contact any borrower whose account becomes
six days past due.
Although ACC emphasizes telephonic contact, ACC also typically sends
past due notices to borrowers when an account becomes ten days past due. In some
cases, ACC uses the Western Union Quick Collection Service to collect borrowers'
payments and to reduce the incidence of bad checks. When necessary, ACC uses a
network of independent agencies to make field visits to borrowers.
REPOSSESSION
ACC repossesses a vehicle when resolution of a delinquency is not
likely or when it believes that its collateral is at risk. ACC makes these
judgments based upon its collectors' discussions with borrowers, the ability or
inability to locate the borrowers and/or the vehicles, the receipt of notices of
liens and other information. ACC uses independent, licensed and bonded
repossession agencies to repossess vehicles as well as the services of an agency
that traces skips (where neither the borrower nor the vehicle can be located) to
supplement its own efforts in locating vehicles. When a vehicle is repossessed,
it generally is sold through a public auction within 60 days of repossession.
ACC generally uses its own staff to pursue recoveries of deficiency balances,
but ACC may also use outside collection agencies which share in any recoveries.
If ACC has reason to believe that a dealer violated any representations or
warranties made to ACC on a defaulted Contract, ACC may pursue its remedies
against the dealer under the Dealer Agreement.
ACC employs the same policies for charging-off contracts on both
contracts it owns and on contracts sold in asset-backed securities. ACC expects
to incur a loss whenever it repossesses a vehicle. When ACC sells a repossessed
vehicle, it records a net loss equal to the outstanding principal balance of the
contract, less the proceeds from the sale of the vehicle.
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If an account becomes 120 days delinquent (other than accounts in
bankruptcy) and ACC has repossessed the vehicle, but not yet received the sale
proceeds, then ACC records a loss equal to the outstanding principal balance of
the contract, less the estimated auction value of the vehicle (which is based
upon wholesale used car values published by nationally recognized firms) and any
expected recoveries under its VSI Insurance. This VSI Insurance protects ACC's
interest in the collateral against uninsured physical damage (including total
loss). If an account becomes 120 days delinquent and ACC has not repossessed the
vehicle, then ACC records a loss equal to the outstanding principal balance of
the contract. Any recoveries received subsequent to the contract being
charged-off, including amounts (i) from the borrower's insurance policies or
service contracts, (ii) from dealers under a breach of the Dealer Agreements or
(iii) from deficiency balances recovered from borrowers, are treated as loss
adjustments in the period when these recoveries are received.
POOL FACTORS
The "Pool Factor" for each Class of Securities will be a seven-digit
decimal, which the Servicer will compute prior to each distribution with respect
to such Class of Securities, indicating the remaining outstanding principal
balance of such Class of Securities as of the applicable Payment Date, as a
fraction of the initial outstanding principal balance of such Class of
Securities. Each Pool Factor will be initially 1.0000000, and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable Class of Securities. A Securityholder's portion of the aggregate
outstanding principal balance of the related Class of Securities is the product
of (i) the original aggregate purchase price of such Securityholder's Securities
and (ii) the applicable Pool Factor.
As more specifically described in the related Prospectus Supplement
with respect to each series of Securities, the related Securityholders of record
will receive reports on or about each Payment Date concerning the payments
received on the Receivables, the Pool Balance (as such term is defined in the
related Prospectus Supplement, the "Pool Balance"), each Pool Factor and various
other items of information. In addition, Securityholders of record during any
calendar year will be furnished information for tax reporting purposes not later
than the latest date permitted by law.
USE OF PROCEEDS
Except as provided in the related Prospectus Supplement, the proceeds
from the sale of the Securities of a given series will be used by the Company
for the acquisition of the related Receivables, for general corporate purposes,
including, but not limited to, the purchase of additional Receivables from
Dealers, repayment of indebtedness and general working capital purposes. The
Company expects that it will make additional transfers of Receivables to the
Trust from time to time, but the timing and amount of any such additional
transfers will be dependent upon a number of factors, including the volume of
Contracts originated or acquired by the Company, prevailing interest rates,
availability of funds and general market conditions.
THE COMPANY AND THE SERVICER
ACC Consumer Finance Corporation ("ACC") is a Delaware
corporation the common shares of which are listed on the NASDAQ National Market.
ACC is the successor corporation to ACC Consumer Finance Corporation, a
California corporation, which was formerly named American Credit Corporation.
American Credit Corporation was incorporated under the laws of California in
July of 1993. On October 17, 1995, American Credit Corporation changed its name
to ACC Consumer Finance Corporation, a California corporation, which, on
November 9, 1995, merged with and into ACC. ACC thereby succeeded to all liens
in favor of, and contracts and agreements of, American Credit Corporation, so
that, unless otherwise noted herein, any such liens in favor of, or contracts
and agreements previously made in the name of or in favor of, American Credit
Corporation are referred to herein as those of ACC.
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The principal executive offices of ACC are located at 12750 High Bluff Drive,
Suite 320, San Diego, California 92130. The telephone number of such office is
(619) 793-6300.
THE TRUSTEE
The Trustee for each series of Securities will be specified in the
related Prospectus Supplement. The Trustee's liability in connection with the
issuance and sale of the related Securities is limited solely to the express
obligations of such Trustee set forth in the related Trust Agreement.
With respect to each series of Securities, the procedures for the
resignation or removal of the Trustee and the appointment of a successor Trustee
shall be specified in the related Prospectus Supplement.
DESCRIPTION OF THE SECURITIES
GENERAL
The Securities will be issued in series. Each series of Securities (or,
in certain instances, two or more series of Securities) will be issued pursuant
to a Trust Agreement. The following summaries (together with additional
summaries under "The Trust Agreement" below) describe all material terms and
provisions relating to the Securities common to each Trust Agreement. The
summaries do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all of the provisions of the Trust Agreement for
the related Securities and the related Prospectus Supplement.
All of the Securities offered pursuant to this Prospectus and the
related Prospectus Supplement will be rated in one of the four highest rating
categories by one or more Rating Agencies.
The Securities will generally be styled as debt instruments, having a
principal balance and a specified Interest Rate. The Securities may either
represent beneficial ownership interests in the related Receivables held by the
related Trust or debt secured by certain assets of the related Issuer.
Each series or Class of Securities offered pursuant to this Prospectus
may have a different Interest Rate, which may be a fixed or adjustable interest
rate. The related Prospectus Supplement will specify the Interest Rate for each
series or Class of Securities described therein, or the initial interest rate
and the method for determining subsequent changes to the Interest Rate.
A series may include one or more Classes of Strip Securities entitled
(i) to principal distributions, with disproportionate, nominal or no interest
distributions, or (ii) to interest distributions, with disproportionate, nominal
or no principal distributions. In addition, a series of Securities may include
two or more Classes of Securities that differ as to timing, sequential order,
priority of payment, Interest Rate or amount of distribution of principal or
interest or both, or as to which distributions of principal or interest or both
on any Class may be made upon the occurrence of specified events, in accordance
with a schedule or formula, or on the basis of collections from designated
portions of the related pool of Receivables. Any such series may include one or
more Classes of Accrual Securities, as to which certain accrued interest will
not be distributed but rather will be added to the principal balance (or nominal
balance, in the case of Accrual Securities which are also Strip Securities)
thereof on each Payment Date, as hereinafter defined, or in the manner described
in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, a series may
include one or more other Classes of Senior Securities that are senior to one or
more other Classes of Subordinate Securities in respect of certain distributions
of principal and interest and allocations of losses on Receivables.
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In addition, certain Classes of Senior (or Subordinate) Securities may
be senior to other Classes of Senior (or Subordinate) Securities in respect of
such distributions or losses.
GENERAL PAYMENT TERMS OF SECURITIES
As provided in the related Trust Agreement and as described in the
related Prospectus Supplement, Securityholders will be entitled to receive
payments on their Securities on the specified Payment Dates. Payment Dates with
respect to the Securities will occur monthly, quarterly or semi--annually, as
described in the related Prospectus Supplement.
The related Prospectus Supplement will describe the Record Date
preceding such Payment Date, as of which the Trustee or its paying agent will
fix the identity of the Securityholders for the purpose of receiving payments on
the next succeeding Payment Date. As more fully described in the related
Prospectus Supplement, the Payment Date, will be a specified date in each month,
e.g., the fifteenth or twenty-fifth day of each month (or, in the case of
quarterly-pay Securities, a specified date in every third month; and in the case
of semi-annual pay Securities, a specified date in every sixth month) and the
Record Date will be either be the close of business as of the last day of the
calendar month that precedes the calendar month in which such Payment Date
occurs, or the close of business on the business day preceding such Payment
Date.
Each Trust Agreement will describe a Remittance Period preceding each
Payment Date (for example, in the case of monthly-pay Securities, the calendar
month preceding the month in which a Payment Date occurs). As more fully
provided in the related Prospectus Supplement, collections received on or with
respect to the related Receivables held by a Trust during a Remittance Period
will be required to be remitted by the Servicer to the related Trustee prior to
the related Payment Date and will be used to fund payments to Securityholders on
such Payment Date. As may be described in the related Prospectus Supplement, the
related Trust Agreement may provide that all or a portion of the payments
collected on or with respect to the related Receivables may be applied by the
related Trustee to the acquisition of additional Receivables during a specified
period (rather than be used to fund payments of principal to Securityholders
during such period) with the result that the related Securities will possess an
interest-only period, also commonly referred to as a revolving period, which
will be followed by an amortization period. Any such interest only or revolving
period may, upon the occurrence of certain events to be described in the related
Prospectus Supplement, terminate prior to the end of the specified period and
result in the earlier than expected amortization of the related Securities.
In addition, and as may be described in the related Prospectus
Supplement, the related Trust Agreement may provide that all or a portion of
such collected payments may be retained by the Trustee (and held in certain
temporary investments, including Receivables) for a specified period prior to
being used to fund payments of principal to Securityholders.
Such retention and temporary investment by the Trustee of such
collected payments may be required by the related Trust Agreement for the
purposes of (a) slowing the amortization rate of the related Securities relative
to the installment payment schedule of the related Receivables, or (b)
attempting to match the amortization rate of the related Securities to an
amortization schedule established at the time such Securities are issued. Any
such feature applicable to any Securities may terminate upon the occurrence of
events to be described in the related Prospectus Supplement, resulting in
distributions to the specified Securityholders and an acceleration of the
amortization of such Securities. Such events which may result in an early
amortization event will generally consist of (i) the Company's inability to
deliver sufficient, additional Receivables to maintain the revolving period,
(ii) an event of default by the Company or the Servicer (i.e., the Company's or
the Servicer's failure to perform their respective duties under the related
Trust Agreement) and (iii) the occurrence of a bankruptcy event with respect to
the Company or the Servicer.
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Neither the Securities nor the underlying Receivables will be
guaranteed or insured by any governmental agency or instrumentality or the
Company, the Servicer, any Trustee or any of their respective affiliates unless
specifically set forth in the related Prospectus Supplement.
As may be described in the related Prospectus Supplement, Securities of
each series covered by a particular Trust Agreement will either evidence
specified beneficial ownership interests in the Trust Property or represent debt
secured by the related Trust Property.
MASTER TRUSTS
As may be described in the related Prospectus Supplement, each Trust
Agreement may provide that, pursuant to any one or more supplements thereto, the
Company may direct the related Trustee to issue from time to time new series
subject to the conditions described below (each such issuance a "Master Trust
New Issuance"). Each Master Trust New Issuance will have the effect of
decreasing the Residual Interest in the related Master Trust. Under each such
Master Trust Agreement, the Company may designate, with respect to any newly
issued series: (i) its name or designation; (ii) its initial principal amount
(or method for calculating such amount); (iii) its Interest Rate (or formula for
the determination thereof); (iv) the Payment Dates and the date or dates from
which interest shall accrue; (v) the method for allocating collections to
Securityholders of such series; (vi) any bank accounts to be used by such series
and the terms governing the operation of any such bank accounts; (vii) the
percentage used to calculate monthly servicing fees; (viii) the provider and
terms of any form of Credit Enhancement with respect thereto; (ix) the terms on
which the Securities of such series may be repurchased or remarketed to other
investors; (x) the number of Classes of Securities of such series, and if such
series consists of more than one Class, the rights and priorities of each such
Class; (xi) the extent to which the Securities of such series will be issuable
in book-entry form; (xii) the priority of such series with respect to any other
series; and (xiii) any other relevant terms. None of the Company, the Servicer,
the related Trustee or any Master Trust is required or intends to obtain the
consent of any Securityholder of any outstanding series to issue any additional
series.
Each Master Trust Agreement provides that the Company may designate
terms such that each Master Trust New Issuance has an amortization period which
may have a different length and begin on a different date than such periods for
any series previously issued by the related Master Trust and then outstanding.
Moreover, each Master Trust New Issuance may have the benefits of Credit
Enhancements issued by enhancement providers different from the providers of the
Credit Enhancement, if any, with respect to any series previously issued by the
related Master Trust and then outstanding. Under each Master Trust Agreement,
the related Trustee shall hold any such Credit Enhancement only on behalf of the
Securityholders to which such Credit Enhancement relates. The Company will have
the option under each Master Trust Agreement to vary among series the terms upon
which a series may be repurchased by the Issuer or remarketed to other
investors. As more fully described in a related Prospectus Supplement, there is
no limit to the number of Master Trust New Issuances that the Company may cause
under a Master Trust Agreement. Each Master Trust will terminate only as
provided in the related Master Trust Agreement. There can be no assurance that
the terms of any Master Trust New Issuance might not have an impact on the
timing and amount of payments received by Securityholders of another series
issued by the same Master Trust.
Under each Master Trust Agreement and pursuant to a related supplement,
a Master Trust New Issuance may only occur upon the satisfaction of certain
conditions provided in each such Master Trust Agreement. The obligation of the
related Trustee to authenticate the Securities of any such Master Trust New
Issuance and to execute and deliver the supplement to the related Master Trust
Agreement is subject to the satisfaction of the following conditions: (a) on or
before the date upon which the Master Trust New Issuance is to occur, the
Company shall have given the related Trustee, the Servicer, the Rating Agency
and certain related providers of Credit Enhancement, if any, written notice of
such Master Trust New Issuance and the date upon which the Master Trust New
Issuance is to occur; (b) the Company shall have delivered to the related
Trustee a supplement to the related Master Trust Agreement, in form satisfactory
to such Trustee, executed by each party to the related Master Trust Agreement
other than such Trustee;
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(c) the Company shall have delivered to the related Trustee any related Credit
Enhancement agreement; (d) the related Trustee shall have received confirmation
from the Rating Agency that such Master Trust New Issuance will not result in
any Rating Agency reducing or withdrawing its rating with respect to any other
series or Class of such Trust (any such reduction or withdrawal is referred to
herein as a "Ratings Effect"); (e) the Company shall have delivered to the
related Trustee, the Rating Agency and certain providers of Credit Enhancement,
if any, an opinion of counsel acceptable to the related Trustee that for federal
income tax purposes (i) following such Master Trust New Issuance the related
Master Trust will not be deemed to be an association (or publicly traded
partnership) taxable as a corporation, (ii) such Master Trust New Issuance will
not affect the tax characterization as debt of Securities of any outstanding
series or Class issued by such Master Trust that were characterized as debt at
the time of their issuance and (iii) such Master Trust New Issuance will not
cause or constitute an event in which gain or loss would be recognized by any
Securityholders or the related Master Trust; and (f) the delivery of officers'
certificates by the Company confirming the satisfaction of such conditions to
such Master Trust New Issuance. Upon satisfaction of the above conditions, the
related Trustee shall execute the supplement to the related Master Trust
Agreement and issue the Securities of such new series.
INDEXED SECURITIES
To the extent so specified in any Prospectus Supplement, any class of Securities
of a given series may consist of Securities ("Indexed Securities") in which the
principal amount payable at the final scheduled Payment Date (the "Indexed
Principal Amount") is determined by reference to a measure (the "Index") which
will be related to (i) the difference in the rate of exchange between United
States dollars and a currency or composite currency (the "Indexed Currency")
specified in the applicable Prospectus Supplement (such Indexed Securities,
"Currency Indexed Securities"); (ii) the difference in the price of a specified
commodity (the "Indexed Commodity") on specified dates (such Indexed Securities,
"Commodity Indexed Securities"); (iii) the difference in the level of a
specified stock index (the "Stock Index"), which may be based on U.S. or foreign
stocks, on specified dates (such Indexed Securities, "Stock Indexed
Securities"); or (iv) such other objective price or economic measures as are
described in the applicable Prospectus Supplement. The manner of determining the
Indexed Principal Amount of an Indexed Security and historical and other
information concerning the Indexed Currency, the Indexed Commodity, the Stock
Index (each, an "Index") or other price or economic measures used in such
determination will be set forth in the applicable Prospectus Supplement,
together with information concerning tax consequences to the holders of such
Indexed Securities. Depending upon the Index used, the yield to maturity of an
Indexed Security may be highly volatile. Such yield will be a function of the
performance of the Index, and no necessarily of the level of interest rates
generally, as will be the case with Securities offered hereby which are not
Indexed Securities. Indexed Securities, to the extent offered, are likely to be
appropriate investments only for sophisticated investors which would purchase
such Securities as part of an overall hedging strategy, even though such
Securities would be secured, as a credit matter, by the related pool of
automobile loan receivables.
If the determination of the Indexed Principal Amount of an Indexed
Security is based on an Index calculated or announced by a third party and such
third party either suspends the calculation or announcement of such Index or
changes the basis upon which such Index is calculated (other than changes
consistent with policies in effect at the time such Indexed Security was issued
and permitted changes described in the applicable Prospectus Supplement), then
such Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the applicable Prospectus Supplement on
the same basis, and subject to the same conditions and controls, as applied to
the original third party. If for any reason such index cannot be calculated on
the same basis and subject to the same conditions and controls as applied to the
original third party, then the Indexed Principal Amount of such Indexed Security
shall be calculated in the manner set forth in the applicable Prospectus
Supplement. Any determination of such independent calculation agent shall in the
absence of manifest error be binding on all parties.
Interest on an Indexed Security will be payable based on the amount
designated in the applicable Prospectus Supplement (the "Face Amount"). The
applicable Prospectus Supplement will describe
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whether the principal amount of the related Indexed Security, if any, that would
be payable upon redemption or repayment prior to the applicable final scheduled
Distribution Date will be the Face Amount of such Indexed Security, the Indexed
Principal Amount of such Indexed Security at the time of redemption or repayment
or another amount described in such Prospectus Supplement.
BOOK-ENTRY REGISTRATION
As may be described in the related Prospectus Supplement,
Securityholders of a given series may hold their Securities through DTC (in the
United States) or CEDEL or Euroclear (in Europe) if they are participants of
such systems, or indirectly through organizations that are participants in such
systems.
Cede, as nominee for DTC, will hold the global Securities in respect of
a given series. CEDEL and Euroclear will hold omnibus positions on behalf of the
CEDEL Participants (as defined below) and the Euroclear Participants (as defined
below) (collectively, the "Participants"), respectively, through customers'
securities accounts in CEDEL's and Euroclear's names on the books of their
respective depositaries (collectively, the "Depositaries") which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entries,
thereby eliminating the need for physical movement of notes or certificates.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations. Indirect access to the DTC system also is available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between CEDEL Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. CEDEL Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant CEDEL
Participant or Euroclear Participant on such business day. Cash received in
CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
CEDEL or Euroclear cash account only as of the business day following settlement
in DTC.
The Securityholders of a given series that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of, or other interests in, Securities of such series may
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do so only through Participants and Indirect Participants. In addition,
Securityholders of a given series will receive all distributions of principal
and interest through the Participants who in turn will receive them from DTC.
Under a book-entry format, Securityholders of a given series may experience some
delay in their receipt of payments, since such payments will be forwarded by the
applicable Trustee to Cede, as nominee for DTC. DTC will forward such payments
to its Participants, which thereafter will forward them to Indirect Participants
or such Securityholders. It is anticipated that the only "Securityholder" in
respect of any series will be Cede, as nominee of DTC. Securityholders of a
given series will not be recognized as Securityholders of such series, and such
Securityholders will be permitted to exercise the rights of Securityholders of
such series only indirectly through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry transfers
of Securities of a given series among Participants on whose behalf it acts with
respect to such Securities and to receive and transmit distributions of
principal of, and interest on, such Securities. Participants and Indirect
Participants with which the Securityholders of a given series have accounts with
respect to such Securities similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective
Securityholders of such series. Accordingly, although such Securityholders will
not possess Securities, the Rules provide a mechanism by which Participants will
receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder of a given series to pledge Securities of such series to persons
or entities that do not participate in the DTC system, or to otherwise act with
respect to such Securities, may be limited due to the lack of a physical
certificate for such Securities.
DTC will advise the Trustee in respect of each series that it will take
any action permitted to be taken by a Securityholder of the related series only
at the direction of one or more Participants to whose accounts with DTC the
Securities of such series are credited. DTC may take conflicting actions with
respect to other undivided interests to the extent that such actions are taken
on behalf of Participants whose holdings include such undivided interests.
CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participating organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes in
accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to its CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depository, CEDEL is subject to regulation by the
Luxembourg Monetary Institute. CEDEL Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to CEDEL is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a CEDEL Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of
the Euroclear System ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 28 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. Euroclear is operated by Morgan
Guaranty Trust Company of New York, Brussels, Belgium office, under contract
with Euroclear Clearance System, S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the "Euroclear Operator" (as
defined below), and all Euroclear securities clearance accounts and Euroclear
cash accounts are accounts with the Euroclear
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Operator, not the Cooperative. The Cooperative establishes policy for the
Euroclear System on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the Underwriters.
Indirect access to the Euroclear System is also available to other firms that
clear through or maintain a custodial relationship with a Euroclear Participant,
either directly or indirectly.
The "Euroclear Operator" is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of relationship with persons holding through Euroclear Participants.
Except as required by law, the Trustee in respect of a series will not
have any liability for any aspect of the records relating to or payments made or
account of beneficial ownership interests of the related Securities held by
Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
DEFINITIVE NOTES
As may be described in the related Prospectus Supplement, the
Securities will be issued in fully registered, certificated form ("Definitive
Securities") to the Securityholders of a given series or their nominees, rather
than to DTC or its nominee, only if (i) the Trustee in respect of the related
series advises in writing that DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to such Securities and
such Trustee is unable to locate a qualified successor, (ii) such Trustee, at
its option, elects to terminate the book-entry-system through DTC or (iii) after
the occurrence of an "Event of Default" under the related Indenture or a default
by the Servicer under the related Trust Agreements, Securityholders representing
at least a majority of the outstanding principal amount of such Securities
advise the applicable Trustee through DTC in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in such
Securityholders' best interest.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee will be required to notify all such
Securityholders through Participants of the availability of Definitive
Securities. Upon surrender by DTC of the definitive certificates representing
such Securities and receipt of instructions for re-registration, the applicable
Trustee will reissue such Securities as Definitive Securities to such
Securityholders.
Distributions of principal of, and interest on, such Securities will
thereafter be made by the applicable Trustee in accordance with the procedures
set forth in the related Indenture or Trust Agreement directly to holders of
Definitive Securities in whose names the Definitive Securities were registered
at the close of business on the applicable Record Date specified for such
Securities in the related Prospectus Supplement. Such distributions will be made
by check mailed to the address of such holder as it appears on the register
maintained by the applicable Trustee. The final payment on any such Security,
however, will be made only upon presentation and surrender of such Security at
the office or agency specified in the notice of final distribution to the
applicable Securityholders.
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Definitive Securities in respect of a given series of Securities will
be transferable and exchangeable at the offices of the applicable Trustee or of
a certificate registrar named in a notice delivered to holders of such
Definitive Securities. No service charge will be imposed for any registration of
transfer or exchange, but the applicable Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities, on or prior to each Payment
Date for such series, the Servicer or the related Trustee will forward or cause
to be forwarded to each holder of record of such class of Securities a statement
or statements with respect to the related Trust Property setting forth the
information specifically described in the related Trust Agreement which
generally will include the following information:
(i) the amount of the distribution with respect to each class
of Securities;
(ii) the amount of such distribution allocable to principal;
(iii) the amount of such distribution allocable to interest;
(iv) the Pool Balance, if applicable, as of the close of
business on the last day of the related Remittance Period;
(v) the aggregate outstanding principal balance and the Pool
Factor for each Class of Securities after giving effect to all payments
reported under (ii) above on such Payment Date;
(vi) the amount paid to the Servicer, if any, with respect to
the related Remittance Period;
(vii) the amount of the aggregate purchase amounts for
Receivables that have been reacquired, if any, for such Remittance
Period; and
(viii) the amount of coverage under any letter of credit,
financial guaranty insurance policy, reserve account or other form of
credit enhancement covering default risk as of the close of business on
the applicable Payment Date and a description of any Credit Enhancement
substituted therefor.
Each amount set forth pursuant to subclauses (i), (ii), (iii) and (v)
with respect to the Securities of any series will be expressed as a dollar
amount per $1,000 of the initial principal balance of such Securities, as
applicable. The actual information to be set forth in statements to
Securityholders of a series will be described in the related Prospectus
Supplement.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year, the applicable Trustee will provide to the
Securityholders a statement containing the amounts described in (ii) and (iii)
above for that calendar year and any other information required by applicable
tax laws, for the purpose of the Securityholders' preparation of federal income
tax returns.
FORWARD COMMITMENTS; PRE-FUNDING
An Issuer may enter into an agreement (each, a "Forward Purchase
Agreement") with the Company whereby the Company will agree to transfer
additional Receivables to such Issuer following the date on which such Issuer is
established and the related Certificates are issued. The Issuer may enter into
Forward Purchase Agreements to permit the acquisition of additional Receivables
that could not be delivered by the Company or have not formally completed the
origination process, in each case prior to the date on which the Securities are
delivered to the Securityholders (the "Closing Date"). Any Forward
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Purchase Agreement will require that any Receivables so transferred to the
Issuer conform to the requirements specified in such Forward Purchase Agreement.
If a Forward Purchase Agreement is to be utilized, and unless otherwise
specified in the related Prospectus Supplement, the related Trustee will be
required to deposit in a segregated account (each, a "Pre-Funding Account") up
to 100% of the net proceeds received by the Trustee in connection with the sale
of one or more classes of Securities of the related Series; the additional
Receivables will be transferred to the related Issuer in exchange for money
released to the Company from the related Pre-Funding Account. Each Forward
Purchase Agreement will set a specified period (the "Funding Period") during
which any such transfers must occur; a Funding Period will generally not exceed
three months, and in no event will exceed nine months. The Forward Purchase
Agreement or the related Trust Agreement will require that, if all moneys
originally deposited to such Pre-Funding Account are not so used by the end of
the related Funding Period, then any remaining moneys will be applied as a
mandatory prepayment of the related class or classes of Securities as specified
in the related Prospectus Supplement.
During the Funding Period the moneys deposited to the Pre-Funding
Account will either (i) be held uninvested or (ii) will be invested in
cash-equivalent investments rated in one of the four highest rating categories
by at least one nationally recognized statistical rating organization and which
will either mature prior to the end of the Funding Period, or will be drawable
on demand and in any event, will not constitute the type of investment which
would require registration of the related Issuer as an "investment company"
under the Investment Company Act of 1940, as amended.
The related Forward Purchase Agreement and/or Trust Agreement will set
forth the standards and required characteristics for pre-funded Receivables;
such standards and required characteristics will require that the principal
statistical measurements of the final pool do not vary materially from the final
pool as it is required to appear, as disclosed in the related Prospectus
Supplement. In most cases this will also mean that the final pool will not vary
materially, in terms of its principal statistical characteristics, from the
original pool (i.e., the pool before the addition of the pre-funded
Receivables). For purposes of the foregoing, the "principal statistical
characteristics" will be the weighted average Coupon Rate, weighted average
remaining term to maturity and geographic distribution of Obligors.
The related Prospectus Supplement will present the disclosure
concerning the effect on the related Trust of the pre-funded Receivables on an
aggregate basis; i.e., the related Prospectus Supplement will describe the
characteristics of the entire pool of Receivables (on an aggregate basis)
following the addition of the pre-funded Receivables.
In the event that the Company is unable to deliver sufficient
additional, qualifying Receivables to utilize fully the Pre-Funding Account
moneys, the remaining moneys will be applied as a mandatory prepayment of the
related class or classes of Securities as specified in the related Prospectus
Supplement. It is expected that such moneys will be so applied at par, i.e.,
with the payment of any prepayment or other "make-whole" type premium. Depending
upon the movement of interest rates from the pricing date of the related
Securities to the date of such prepayment, holders of the prepaid class(es) may
be unable to reinvest such prepaid amounts at a yield equal to (or in excess of)
the yield that they were expecting to receive on their Securities. Furthermore,
if an investor purchased such Securities at a premium prior to such prepayment,
such investor could suffer a loss due to the prepayment being made at par,
rather than at a premium.
The Company expects to disclose, in its periodic reports to be filed
with respect to each issuance of Securities, as required by the Exchange Act,
the status of any Pre-Funding Account as of each Payment Date occurring during
the related Funding Period. Following the end of any Funding Period the Company
will file, in a Current Report on Form 8-K, statistical information regarding
the additional Receivables added to the related Trust Property during such
Funding Period. Such information will be presented in a similar fashion as the
information on the original pool in the related Prospectus Supplement, and will
be presented for the pool of additional Receivables in isolation, as well as for
the entire pool of Receivables (on an aggregate basis) following the addition of
the pre-funded Receivables.
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DESCRIPTION OF THE TRUST AGREEMENTS
The following summary describes certain terms of each Trust Agreement
pursuant to which a Trust Property will be created and the related Securities in
respect of such Trust Property will be issued. For purposes of this Prospectus,
the term "Trust Agreement" as used with respect to a Trust means, collectively,
and except as otherwise specified, any and all agreements relating to the
establishment of the related Trust, the servicing of the related Receivables and
the issuance of the related Securities, including without limitation the
Indenture, (i.e. pursuant to which any Notes shall be issued). Forms of the
Trust Agreement have been filed as exhibits to the Registration Statement of
which the Prospectus forms a part. The summary does not purport to be complete.
It is qualified in its entirety by reference to the provisions of the Trust
Agreements.
ORIGINATION OF THE RECEIVABLES BY THE COMPANY AND ACQUISITION OF THE RECEIVABLES
PURSUANT TO A RECEIVABLES ACQUISITION AGREEMENT
On the closing date specified with respect to any given series of
Securities (the "Closing Date"), the Company or a Finance Subsidiary will
transfer Receivables originated by the Company either to a Trust pursuant to a
Pooling Agreement, or will pledge the Company's, or the Finance Subsidiary's
right, title and interests in and to such Receivables to a Trustee on behalf of
the Securityholders pursuant to an Indenture. The Company or a Finance
Subsidiary will either transfer the Receivables to a Trust pursuant to a Pooling
Agreement, or will pledge the Company's right, title and interest in and to such
Receivables to a Trustee on behalf of Securityholders pursuant to an Indenture.
The obligations of the Company or a Finance Subsidiary and the Servicer under
the related Trust Agreement include those specified below and in the related
Prospectus Supplement.
As more fully described in the related Prospectus Supplement, the
Company will be obligated to acquire from the related Trust Property its
interest in any Receivable transferred to a Trust or pledged to a Trustee on
behalf of Securityholders if the interest of the Securityholders therein is
materially adversely affected by a breach of any representation or warranty made
by the Company with respect to such Receivable, which breach has not been cured
following the discovery by or notice to the Company of the breach. In addition,
if so specified in the related Prospectus Supplement, the Company may from time
to time reacquire certain Receivables or substitute other Receivables for such
Receivable subject to specified conditions set forth in the related Trust
Agreement.
ACCOUNTS
With respect to each series of Securities issued by a Trust, the
Servicer will establish and maintain with the applicable Trustee one or more
accounts, in the name of such Trustee on behalf of the related Securityholders,
into which all payments made on or with respect to the related Receivables will
be deposited (the "Collection Account"). The Servicer will also establish and
maintain with such Trustee separate accounts, in the name of such Trustee on
behalf of such Securityholders, in which amounts released from the Collection
Account and the reserve account or other Credit Enhancement, if any, for
distribution to such Securityholders will be deposited and from which
distributions to such Securityholders will be made (the "Distribution Account").
Any other accounts to be established with respect to a Trust, including
any reserve account, will be described in the related Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the
Distribution Account, any reserve account and other accounts identified as such
in the related Prospectus Supplement (collectively, the "Trust Accounts") shall
be invested as provided in the related Trust Agreement in Eligible Investments.
"Eligible Investments" are generally limited to investments acceptable to the
Rating Agencies as being consistent with the rating of such Securities. Subject
to the approval of the Rating Agencies and the related Credit Enhancer, if any,
Eligible Investments may include securities issued by the Company, the
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Servicer or their respective affiliates or other trusts created by the Company
or its affiliates (any such Eligible Investments described in this sentence,
"Company Investment Contracts"). A Company Investment Contract will be a funding
agreement designed to allow the Company or the related Servicer access to the
money held in the related Trust Account prior to the date on which such money is
required to make distributions to the Securityholders. In effect, the money in
the Trust Accounts will be invested in a note issued by the Company or the
related Servicer. Any such Company Investment Contract would be employed to
lessen the effects of "negative carry" or "negative arbitrage" on the structure
of the Securities, i.e., to permit the reinvestment of the Trust Account moneys
at a higher rate than would be obtainable through investment of other types of
Eligible Investments. The terms of any Company Investment Contract will be
described in the related Prospectus Supplement, and a copy thereof will be filed
with the Commission on a Current Report in connection with the issuance of the
related Securities. Except as described below or in the related Prospectus
Supplement, Eligible Investments are limited to obligations or securities that
mature not later than the business day immediately preceding the related Payment
Date. However, subject to certain conditions, funds in the reserve account may
be invested in securities that will not mature prior to the date of the next
distribution and will not be sold to meet any shortfalls. Thus, the amount of
cash in any reserve account at any time may be less than the balance of such
reserve account. If the amount required to be withdrawn from any reserve account
to cover shortfalls in collections on the related Receivables exceeds the amount
of cash in such reserve account a temporary shortfall in the amounts distributed
to the related Securityholders could result, which could, in turn, increase the
average life of the Securities of such series. Except as otherwise specified in
the related Prospectus Supplement, investment earnings on funds deposited in the
applicable Trust Accounts, net of losses and investment expenses (collectively,
"Investment Earnings"), shall be deposited in the applicable Collection Account
on each Payment Date and shall be treated as collections of interest on the
related Receivables.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution has a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"Eligible Institution" means, with respect to a Trust, (a) the corporate trust
department of the related Indenture Trustee or the related Trustee, as
applicable, or (b) a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), which (i) (A) has either
(w) a long-term unsecured debt rating acceptable to the Rating Agencies or (x) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies or (B) the parent corporation of which has either (y) a
long-term unsecured debt rating acceptable to the Rating Agencies or (z) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies and (ii) whose deposits are insured by the FDIC.
THE SERVICER
The Servicer under each Trust Agreement will be named in the related
Prospectus Supplement. The entity serving as Servicer may be the Company, its
designee, or an affiliate of the Company and may have other business
relationships with the Company or the Company's affiliates. The Servicer with
respect to each series will service the Receivables contained in the Trust Fund
for such series. Any Servicer may delegate its servicing responsibilities to one
or more sub-servicers, but will not be relieved of its liabilities with respect
thereto.
The Servicer will make certain representations and warranties regarding
its authority to enter into, and its ability to perform its obligations under,
the related Trust Agreement. An uncured breach of such a representation or
warranty that in any respect materially and adversely affects the interests of
the Securityholders will constitute a Servicer Default by the Servicer under the
related Trust Agreement.
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SERVICING PROCEDURES
Each Trust Agreement will provide that the Servicer will make
reasonable efforts to collect all payments due with respect to the Receivables
which are part of the Trust Fund and, in a manner consistent with the related
Trust Agreement, will continue such collection procedures as the Servicer
follows with respect to the particular type of Receivable in the particular pool
it services for itself and others. Consistent with its normal procedures, the
Servicer may, in its discretion and on a case-by-case basis, arrange with the
Obligor on a Receivable to extend or modify the payment schedule. Some of such
arrangements (including, without limitation any extension of the payment
schedule beyond the final scheduled Payment Date for the related Securities) may
result in the Servicer acquiring such Receivable if such Contract becomes a
Defaulted Contract. The Servicer may sell the Vehicle securing the respective
Defaulted Contract, if any, at a public or private sale, or take any other
action permitted by applicable law. See "Certain Legal Aspects of the
Receivables".
PAYMENTS ON RECEIVABLES
With respect to each series of Securities, unless otherwise specified
in the related Prospectus Supplement, the Servicer will deposit into the
Collection Account all payments on the related Receivables (from whatever
source) and all proceeds of such Receivables collected within three (3) business
days of receipt thereof in the related collection facility, such as a lock-box
account or collection account. Moneys deposited in such collection facility for
Trust Property may be commingled with funds from other sources.
SERVICING COMPENSATION
As may be described in the related Prospectus Supplement with respect
to any series of securities issued by a Trust, the Servicer will be entitled to
receive a servicing fee for each Collection Period (the "Servicing Fee") in an
amount equal to a specified percentage per annum (as set forth in the related
Prospectus Supplement, the "Servicing Fee Rate") of the value of the assets of
the Trust Property, generally as of the first day of such Collection Period.
Each Prospectus Supplement and Servicing Agreement will specify the priority of
distributions with respect to the Servicing Fee (together with any portion of
the Servicing Fee that remains unpaid from prior Payment Dates). Generally, the
Servicing Fee will be paid prior to any distribution to the related
Securityholders.
The Servicer will also collect and retain any late fees, late charges
with respect to interest paid on past due amounts and other administrative fees
or similar charges allowed by applicable law with respect to the Receivables,
and will be entitled to reimbursement from each Trust for certain liabilities.
Payments by or on behalf of Obligors will be allocated to scheduled payments and
late fees and other charges in accordance with the Servicer's normal practices
and procedures.
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of similar types of receivables as an agent
for their beneficial owner, including collecting and posting all payments,
responding to inquiries of Obligors on the related Receivables, investigating
delinquencies, sending billing statements to Obligors, reporting tax information
to Obligors, paying costs of collection and disposition of defaults, and
policing the collateral. The Servicing Fee also will compensate the Servicer for
administering the related Receivables, accounting for collections and furnishing
statements to the applicable Trustee and the applicable Indenture Trustee, if
any, with respect to distributions. The Servicing Fee also will reimburse the
Servicer for certain taxes, accounting fees, outside auditor fees, data
processing costs and other costs incurred in connection with administering the
Receivables.
DISTRIBUTIONS
With respect to each series of Securities, beginning on the Payment
Date specified in the related Prospectus Supplement, distributions of principal
and interest (or, where applicable, of principal or interest only) on each Class
of such Securities entitled thereto will be made by the applicable Indenture
Trustee
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to the holders of Notes (the "Noteholders") and by the applicable Trustee to the
holders of Certificates (the "Certificateholders") of such series. The timing,
calculation, allocation, order, source, priorities of and requirements for each
class of Noteholders and all distributions to each class of Certificateholders
of such series will be set forth in the related Prospectus Supplement.
With respect to each series of Securities, on each Payment Date
collections on the related Receivables will be transferred from the Collection
Account to the Distribution Account for distribution to Securityholders,
respectively, to the extent provided in the related Prospectus Supplement.
Credit Enhancement, such as a reserve account, may be available to cover any
shortfalls in the amount available for distribution on such date, to the extent
specified in the related Prospectus Supplement. As more fully described in the
related Prospectus Supplement, and unless otherwise specified therein,
distributions in respect of principal of a Class of Securities of a given series
will be subordinate to distributions in respect of interest on such Class, and
distributions in respect of the Certificates of such series may be subordinate
to payments in respect of the Notes of such series.
CREDIT AND CASH FLOW ENHANCEMENTS
The amounts and types of Credit Enhancement arrangements, if any, and
the provider thereof, if applicable, with respect to each class of Securities of
a given series will be set forth in the related Prospectus Supplement. If and to
the extent provided in the related Prospectus Supplement, credit enhancement may
be in the form of a Policy, subordination of one or more Classes of Securities,
reserve accounts, overcollateralization, letters of credit, credit or liquidity
facilities, third party payments or other support, surety bonds, guaranteed cash
deposits or such other arrangements as may be described in the related
Prospectus Supplement or any combination of two or more of the foregoing. If
specified in the applicable Prospectus Supplement, Credit Enhancement for a
Class of Securities may cover one or more other Classes of Securities of the
same series, and Credit Enhancement for a series of Securities may cover one or
more other series of Securities.
The presence of Credit Enhancement for the benefit of any Class or
series of Securities is intended to enhance the likelihood of receipt by the
Securityholders or such Class or series of the full amount of principal and
interest due thereon and to decrease the likelihood that such Securityholders
will experience losses. As more specifically provided in the related Prospectus
Supplement, the credit enhancement for a Class or series of Securities will not
provide protection against all risks of loss and will not guarantee repayment of
the entire principal balance and interest thereon. If losses occur which exceed
the amount covered by any Credit Enhancement or which are not covered by any
Credit Enhancement, Securityholders of any Class or series will bear their
allocable share of deficiencies, as described in the related Prospectus
Supplement. In addition, if a form of Credit Enhancement covers more than one
series of Securities, Securityholders of any such series will be subject to the
risk that such Credit Enhancement will be exhausted by the claims of
Securityholders of other series.
STATEMENTS TO INDENTURE TRUSTEES AND TRUSTEES
Prior to each Payment Date with respect to each series of Securities,
the Servicer will provide to the applicable Indenture Trustee and/or the
applicable Trustee and Credit Enhancer as of the close of business on the last
day of the preceding related Collection Period a statement setting forth
substantially the same information as is required to be provided in the periodic
reports provided to Securityholders of such series described under "Description
of the Securities--Reports to Securityholders".
EVIDENCE AS TO COMPLIANCE
Each Trust Agreement will provide that a firm of independent public
accountants will furnish to the related Trust and/or the applicable Indenture
Trustee and Credit Enhancer, annually, a statement as to compliance by the
Servicer during the preceding twelve months (or, in the case of the first such
certificate, the period from the applicable Closing Date) with certain standards
relating to the servicing of the Receivables.
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Each Trust Agreement will also provide for delivery to the related
Trust and/or the applicable Indenture Trustee of a certificate signed by an
officer of the Servicer stating that the Servicer either has fulfilled its
obligations under such Trust Agreement in all material respects throughout the
preceding 12 months (or, in the case of the first such certificate, the period
from the applicable Closing Date) or, if there has been a default in the
fulfillment of any such obligation in any material respect, describing each such
default. The Servicer also will agree to give each Indenture Trustee and each
Trustee notice of certain Servicer Defaults (as hereinafter defined) under the
related Trust Agreement.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the applicable Indenture
Trustee or the applicable Trustee.
CERTAIN MATTERS REGARDING THE SERVICERS
Each Trust Agreement will provide that the Servicer may not resign from
its obligations and duties as Servicer thereunder, except upon determination
that the performance by the Servicer of such duties is no longer permissible
under applicable law. No such resignation will become effective until the
related Trustee or a successor servicer has assumed the Servicer's servicing
obligations and duties under the Trust Agreement.
Except as otherwise provided in the related Prospectus Supplement, each
Trust Agreement will further provide that neither the Servicer nor any of its
respective directors, officers, employees, or agents shall be under any
liability to the related Issuer or the related Securityholders for taking any
action or for refraining from taking any action pursuant to such Trust
Agreement, or for errors in judgment; provided, however, that neither the
Servicer nor any such person will be protected against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties thereunder. In addition, such Trust Agreement will
provide that the Servicer is under no obligation to appear in, prosecute, or
defend any legal action that is not incidental to its servicing responsibilities
under such Trust Agreement and that, in its opinion, may cause it to incur any
expense or liability.
Under the circumstances specified in any such Trust Agreement, any
entity into which the Servicer may be merged or consolidated, or any entity
resulting from any merger or consolidation to which the Servicer is a party, or
any entity succeeding to the business of the Servicer or, with respect to its
obligations as Servicer, which corporation or other entity in each of the
foregoing cases assumes the obligations of the Servicer, will be the successor
to the Servicer under such Trust Agreement.
SERVICER DEFAULT
Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under a Trust Agreement will include (i) any failure by the
Servicer to deliver to the applicable Trustee for deposit in any of the related
Trust Accounts any required payment or to direct such Trustee to make any
required distributions therefrom, which failure continues unremedied for more
than three (3) Business Days after written notice from such Trustee is received
by the Servicer or after discovery by the Servicer; (ii) any failure by the
Servicer duly to observe or perform in any material respect any other covenant
or agreement in such Trust Agreement, which failure materially and adversely
affects the rights of the related Securityholders and which continues unremedied
for more than thirty (30) days after the giving of written notice of such
failure (1) to the Servicer by the applicable Trustee or (2) to the Servicer,
and to the applicable Trustee by holders of the related Securities, as
applicable, evidencing not less than 50% of the voting rights of such
outstanding Securities; (iii) any Insolvency Event; and (iv) any claim being
made on a Policy issued as Credit Enhancement. An "Insolvency Event" shall mean
financial insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings with respect to the Servicer and certain
actions by the Servicer indicating its insolvency, reorganization pursuant to
bankruptcy proceedings, or inability to pay its obligations.
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RIGHTS UPON SERVICER DEFAULT
As more fully described in the related Prospectus Supplement, as long
as a Servicer Default under a Trust Agreement remains unremedied, the applicable
Trustee, Credit Enhancer or holders of Securities of the related series
evidencing not less than 50% of the voting rights of such then outstanding
Securities may terminate all the rights and obligations of the Servicer, if any,
under such Trust Agreement, whereupon a successor servicer appointed by such
Trustee or such Trustee will succeed to all the responsibilities, duties and
liabilities of the Servicer under such Trust Agreement and will be entitled to
similar compensation arrangements. If, however, a bankruptcy trustee or similar
official has been appointed for the Servicer, and no Servicer Default other than
such appointment has occurred, such bankruptcy trustee or official may have the
power to prevent the applicable Trustee or such Securityholders from effecting a
transfer of servicing. In the event that the Trustee is unwilling or unable to
so act, it may appoint, or petition a court of competent jurisdiction for the
appointment of, a successor with a net worth of at least $25,000,000 and whose
regular business includes the servicing of a similar type of receivables. Such
Trustee may make such arrangements for compensation to be paid, which in no
event may be greater than the servicing compensation payable to the Servicer
under the related Trust Agreement.
WAIVER OF PAST DEFAULTS
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement and subject to the approval of any Credit Enhancer, the
holders of Notes evidencing at least a majority of the voting rights of such
then outstanding Securities may, on behalf of all Securityholders of the related
Securities, waive any default by the Servicer in the performance of its
obligations under the related Trust Agreement and its consequences, except a
default in making any required deposits to or payments from any of the Trust
Accounts in accordance with such Trust Agreement. No such waiver shall impair
the Securityholders' rights with respect to subsequent defaults.
AMENDMENT
As more fully described in the related Prospectus Supplement, each of
the Trust Agreements may be amended by the parties thereto, without the consent
of the related Securityholders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Trust
Agreements or of modifying in any manner the rights of such Securityholders;
provided that such action will not, in the opinion of counsel satisfactory to
the applicable Trustee, materially and adversely affect the interests of any
such Securityholder and subject to the approval of any Credit Enhancer. As may
be described in the related Prospectus Supplement, the Trust Agreements may also
be amended by the Company, the Servicer, and the applicable Trustee with the
consent of the holders of Securities evidencing at least a majority of the
voting rights of such then outstanding Securities for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
such Trust Agreements or of modifying in any manner the rights of such
Securityholders; provided, however, that no such amendment may (i) increase or
reduce in any manner the amount or priority of, or accelerate or delay the
timing of, collections of payments on the related Receivables or distributions
that are required to be made for the benefit of such Securityholders or (ii)
reduce the aforesaid percentage of the Securities of such series which are
required to consent to any such amendment, without the consent of the
Securityholders of such series.
INSOLVENCY EVENT
As described in the related Prospectus Supplement, if an Insolvency
Event occurs with respect to a Debtor relating to the applicable Trust Property,
the related Trust will terminate, and the Receivables of the related Trust
Property will be liquidated and each such Trust will be terminated 90 days after
the date of such Insolvency Event, unless, before the end of such 90-day period,
the Trustee of such Trust shall have received written instructions from each of
the related Securityholders (other than the Company) and/or Credit Enhancer to
the effect that such party disapproves of the liquidation of such Receivables.
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Promptly after the occurrence of any Insolvency Event with respect to an
Obligor, notice thereof is required to be given to such Securityholders and/or
Credit Enhancer; provided, however, that any failure to give such required
notice will not prevent or delay termination of any Trust. Upon termination of
any Trust, the applicable Trustee shall direct that the assets of such Trust be
promptly sold (other than the related Trust Accounts) in a commercially
reasonable manner and on commercially reasonable terms. The proceeds from any
such sale, disposition or liquidation of such Receivables will be treated as
collections on such Receivables and deposited in the related Collection Account.
If the proceeds from the liquidation of such Receivables and any amounts on
deposit in the Reserve Account, if any, and the related Distribution Account are
not sufficient to pay the Securities of the related series in full, and no
additional Credit Enhancement is available, the amount of principal returned to
Securityholders will be reduced and some or all of such Securityholders will
incur a loss.
Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect to
any related Trust without the unanimous prior approval of all Certificateholders
(including the Company, if applicable) of such Trust and the delivery to such
Trustee by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that such Trust is insolvent.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the
Company and the applicable Trustee pursuant to the related Trust Agreement will
terminate upon the earlier to occur of (i) the maturity or other liquidation of
the last related Receivable and the disposition of any amounts received upon
liquidation of any such remaining Receivables and (ii) the payment to
Securityholders of the related series of all amounts required to be paid to them
pursuant to such Trust Agreement. As more fully described in the related
Prospectus Supplement, in order to avoid excessive administrative expense, the
Servicer will be permitted in respect of the applicable Trust Property, unless
otherwise specified in the related Prospectus Supplement, at its option to
purchase from such Trust Property, as of the end of any Collection Period
immediately preceding a Payment Date, if the Pool Balance of the related
Contracts is less than a specified percentage (set forth in the related
Prospectus Supplement) of the initial Pool Balance in respect of such Trust
Property, all such remaining Receivables at a price equal to the aggregate of
the loan balances thereof as of the end of such Collection Period. The related
Securities will be redeemed following such purchase.
If and to the extent provided in the related Prospectus Supplement with
respect to the Trust Property, the applicable Trustee will, within ten days
following a Payment Date as of which the Pool Balance is equal to or less than
the percentage of the initial Pool Balance specified in the related Prospectus
Supplement, solicit bids for the purchase of the Receivables remaining in such
Trust, in the manner and subject to the terms and conditions set forth in such
Prospectus Supplement. If such Trustee receives satisfactory bids as described
in such Prospectus Supplement, then the Receivables remaining in such Trust
Property will be sold to the highest bidder.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement may effect the prepayment of the
Certificates of such series.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
GENERAL
The transfer of Receivables by the Company or its Finance Subsidiary to
the Trust pursuant to the related Trust Agreement, the perfection of the
security interests in the Receivables and the enforcement of rights to realize
on the Vehicles as collateral for the Receivables are subject to a number of
federal and
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state laws, including the UCC as in effect in various states. As specified in
each Prospectus Supplement, the Servicer will take such action as is required to
perfect the rights of the Trustee in the Receivables. If, through inadvertence
or otherwise, a third party were to purchase (including the taking of a security
interest in) a Receivable for new value in the ordinary course of its business,
without actual knowledge of the Trust's interest, and take possession of a
Receivable, the purchaser would acquire an interest in such Receivable superior
to the interest of the Trust. As further specified in each Prospectus
Supplement, no action will be taken to perfect the rights of the Trustee in
proceeds of any insurance policies covering individual Vehicles or Obligors.
Therefore, the rights of a third party with an interest in such proceeds could
prevail against the rights of the Trust prior to the time such proceeds are
deposited by the Servicer into a Trust Account.
SECURITY INTERESTS IN THE FINANCED VEHICLES
General
Retail installment sale contracts such as the Receivables evidence the
credit sale of automobiles and light duty trucks by dealers to consumers. The
contracts also constitute personal property security agreements and include
grants of security interests in the related automobiles and light duty trucks
under the UCC. Perfection of security interests in automobiles and light duty
trucks is generally governed by the vehicle registration or titling laws of the
state in which each vehicle is registered or titled. In most states a security
interest in a vehicle is perfected by notation of the secured party's lien on
the vehicle's certificate of title.
Perfection
Pursuant to the Trust Agreement, the Company will sell and assign the
Receivables it has originated or acquired and its security interests in the
Vehicles to the Trustee. Alternatively, the Company may sell and assign the
Receivables and its interest in the Vehicles to a Finance Subsidiary which will,
in turn, sell and assign such Receivables and related security interests to the
Trustee. Each of the related Prospectus Supplements will specify whether,
because of the administrative burden and expense, the Company, the Servicer or
the Trustee will amend any certificate of title to identify the Trustee as the
new secured party on the certificates of title relating to the Vehicles. Each of
the related Prospectus Supplements will specify the UCC financing statements to
be filed in order to perfect the transfer to the Finance Subsidiary of
Receivables and the transfer by the Finance Subsidiary to the Trustee of the
Receivables. Further, although the Trustee will not rely on possession of the
Receivables as the legal basis for the perfection of its interest therein or in
the security interests in the Vehicles, the Servicer, as specified in the
related Prospectus Supplement, will continue to hold the Receivables and any
certificates of title relating to the Vehicles in its possession as custodian
for the Trustee pursuant to the related Trust Agreement which, as a practical
matter, should preclude any other party from claiming a competing security
interest in the Receivables on the basis that the security interest is perfected
by possession.
A security interest in a motor vehicle registered in most states may be
perfected against creditors and subsequent purchasers without notice for
valuable consideration only by one or more of the following: depositing with the
related Department of Motor Vehicles or analogous state office a properly
endorsed certificate of title for the vehicle showing the secured party as legal
owner or lienholder thereon, or filing a sworn notice of lien with the related
Department of Motor Vehicles or analogous state office and noting such lien on
the certificate of title, or, if the vehicle has not been previously registered,
filing an application in usual form for an original registration together with
an application for registration of the secured party as legal owner or
lienholder, as the case may be. However, under the laws of most states, a
transferee of a security interest in a motor vehicle is not required to reapply
to the related Department of Motor Vehicles or analogous state office for a
transfer of registration when the security interest is sold or when the interest
of the transferee arises from the transfer of a security interest by the
lienholder to secure payment or performance of an obligation. Accordingly, under
the laws of such states, the assignment by the Company of its interest in the
Receivables to the Trustee under the related Trust Agreement is an effective
conveyance of the security interest of the Company in the Receivables, and
specifically, the
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Vehicles, without such re-registration and without amendment of any lien noted
on the related certificate of title, and (subject to the immediately succeeding
paragraphs) the Trustee will succeed to the Company's rights as secured party.
Although re-registration of a Vehicle is not necessary to convey a
perfected security interest in the Vehicles to the Trustee, the Trustee's
security interest could be defeated through fraud, negligence, forgery or
administrative error since it may not be listed as legal owner or lienholder on
the certificates of title to the Vehicles. However, in the absence of fraud,
negligence, forgery or administrative error, the notation of the Company's or
the unaffiliated originator's lien on the certificates of title will be
sufficient to protect the Trust against the rights of subsequent purchasers of a
Vehicle or subsequent creditors who take a security interest in a Vehicle. In
the related Trust Agreement, the Company or its Finance Subsidiary will
represent and warrant that it has, or has taken all action necessary to obtain,
a perfected security interest in each Vehicle. If there are any Vehicles as to
which the Company failed to obtain a first priority perfected security interest,
the Company's security interest would be subordinate to, among others,
subsequent purchasers of such Vehicles and holders of first priority perfected
security interests therein. Such a failure, however, would constitute a breach
of the Company's or the Finance Subsidiary's representations and warranties
under the related Trust Agreement. Accordingly, pursuant to the related Trust
Agreement, the Company or Finance Subsidiary would be required to repurchase the
related Receivables from the Trustee unless the breach were cured.
Continuity of Perfection
Under the laws of most states, a perfected security interest in a motor
vehicle continues for four months after the vehicle is moved to a new state from
the one in which it is initially registered and thereafter until the owner
re-registers such motor vehicle in the new state. A majority of states generally
require surrender of a certificate of title to re-register a vehicle. In those
states that require a secured party to hold possession of the certificate of
title to maintain perfection of the security interest, the secured party would
learn of the re-registration through the request from the Obligor under the
related installment sale contract to surrender possession of the certificate of
title to assist in such re-registration. In the case of vehicles registered in
states providing for the notation of a lien on the certificate of title but not
requiring possession by the secured party, the secured party would receive
notice of surrender from the state of re-registration if the security interest
is noted on the certificate of title. Thus, the secured party would have the
opportunity to reperfect its security interest in the vehicle in the state of
relocation. However, these procedural safeguards will not protect the secured
party if, through fraud, forgery or administrative error, the debtor somehow
procures a new certificate of title that does not list the secured party's lien.
Additionally, in states that do not require surrender of a certificate of title
for re-registration of a vehicle, re-registration could defeat perfection. In
each of the Trust Agreements, the Servicer will be required to take steps to
effect re-perfection upon receipt of notice of re-registration or information
from the Obligor as to relocation. Similarly, when an Obligor sells a Vehicle,
the Servicer will have an opportunity to require satisfaction of the related
Receivable before release of the lien, either because the Servicer will be
required to surrender possession of the certificate of title in connection with
the sale, or because the Servicer will receive notice as a result of its lien
noted thereon. Pursuant to the related Trust Agreement, the related Servicer
will hold the certificates of title for the related Vehicles as custodian for
the Trustee. Under the related Trust Agreement, the Servicer will be obligated
to take appropriate steps, at its own expense, to maintain perfected security
interests in the Vehicles.
Priority of Certain Liens Arising by Operation of Law
Under the laws of most states, certain statutory liens such as
mechanics', repairmen's and garagemen's liens for repairs performed on a motor
vehicle, motor vehicle accident liens, towing and storage liens, liens arising
under various state and federal criminal statutes and liens for unpaid taxes
take priority over even a first priority perfected security interest in such
vehicle by operation of law. The UCC also grants priority to certain federal tax
liens over the lien of a secured party. The laws of most states and federal law
permit the confiscation of motor vehicles by governmental authorities under
certain circumstances if used in or acquired with the proceeds of unlawful
activities, which may result in the loss
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of a secured party's perfected security interest in a confiscated vehicle. The
Company will represent and warrant to the Trustee in the related Trust Agreement
that, as of the related Closing Date, each security interest in a Vehicle shall
be a valid, subsisting and enforceable first priority security interest in such
Vehicle. However, liens for repairs or taxes superior to the security interest
of the Trustee in any such Vehicle, or the confiscation of such Vehicle, could
arise at any time during the term of a Receivable. No notice will be given to
the Trustee or any Securityholder in the event such a lien or confiscation
arises and any such lien or confiscation arising after the related Closing Date
would not give rise to the Company's repurchase obligation under the related
Trust Agreement.
REPOSSESSION
In the event of default by an Obligor, the holder of the related retail
installment sale contract has all the remedies of a secured party under the UCC,
except where specifically limited by other state laws. The UCC remedies of a
secured party include the right to repossession by self-help means, unless such
means would constitute a breach of the peace. Unless a vehicle is voluntarily
surrendered, self-help repossession is accomplished simply by taking possession
of the related financed vehicle. In cases where the Obligor objects or raises a
defense to repossession, or if otherwise required by applicable state law, a
court order is obtained from the appropriate state court, and the vehicle must
then be recovered in accordance with that order. In some jurisdictions, the
secured party is required to notify the debtor of the default and the intent to
repossess the collateral and give the debtor a time period within which to cure
the default prior to repossession. Generally, this right of cure may only be
exercised on a limited number of occasions during the term of the related
contract. Other jurisdictions permit repossession without prior notice if it can
be accomplished without a breach of the peace (although in some states, a course
of conduct in which the creditor has accepted late payments has been held to
create a right by the Obligor to receive prior notice).
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require a secured party to provide the
Obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. In
addition, some states also impose substantive timing requirements on the sale of
repossessed vehicles in certain circumstances and/or various substantive timing
and content requirements on such notices. In some states, under certain
circumstances after a financed vehicle has been repossessed, the Obligor may
redeem the collateral by paying the delinquent installments and other amounts
due. The Obligor has the right to redeem the collateral prior to actual sale or
entry by the secured party into a contract for sale of the collateral by paying
the secured party the unpaid principal balance of the obligation, accrued
interest thereon, reasonable expenses for repossessing, holding, and preparing
the collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees and legal expenses or in some other
states, by payment of delinquent installments on the unpaid principal balance of
the related obligation.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the Vehicles generally will be applied first
to the expenses of resale and repossession and then to the satisfaction of the
indebtedness. In many instances, the remaining principal amount of such
indebtedness will exceed such proceeds. Under the UCC and laws applicable in
some states, a creditor is entitled to bring an action to obtain a deficiency
judgment from a debtor for any deficiency on repossession and resale of a motor
vehicle securing such debtor's loan; however, in some states, a creditor may not
seek a deficiency judgment from a debtor whose financed vehicle had an initial
cash sales price less than a specified amount, usually $3,000. Some states,
impose prohibitions or limitations or notice requirements on actions for
deficiency judgments. In addition to the notice requirement described above, the
UCC requires that every aspect of the sale or other disposition, including the
method, manner, time, place and terms, be "commercially reasonable". Generally,
courts have held that when a sale is not "commercially reasonable", the secured
party loses its right to a deficiency judgment. In addition, the UCC permits the
debtor or other interested party to recover for any loss caused
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by noncompliance with the provisions of the UCC. Also, prior to a sale, the UCC
permits the debtor or other interested person to obtain an order mandating that
the secured party refrain from disposing of the collateral if it is established
that the secured party is not proceeding in accordance with the "default"
provisions under the UCC. However, the deficiency judgment would be a personal
judgment against the Obligor for the shortfall, and a defaulting Obligor can be
expected to have very little capital or sources of income available following
repossession. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount or be uncollectible.
Occasionally, after resale of a vehicle and payment of all expenses and
indebtedness, there is a surplus of funds. In that case, the UCC requires the
creditor to remit the surplus to any holder of a subordinate lien with respect
to the vehicle or if no such lienholder exists or if there are remaining funds,
the UCC requires the creditor to remit the surplus to the Obligor under the
contract.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon creditors and servicers
involved in consumer finance. These laws include the Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss
Warranty Act, the Federal Reserve Board's Regulations B and Z, state adaptations
of the Uniform Consumer Credit Code, state motor vehicle retail installment sale
acts, state "lemon" laws and other similar laws. In addition, the laws of
certain states impose finance charge ceilings and other restrictions on consumer
transactions and require contract disclosures in addition to those required
under federal law. These requirements impose specific statutory liabilities upon
creditors who fail to comply with their provisions. In some cases, this
liability could affect the ability of an assignee such as the Trustee to enforce
consumer finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course Rule" of the Federal Trade
Commission (the "FTC Rule") has the effect of subjecting any assignee of the
seller in a consumer credit transaction (and certain related creditors and their
assignees) to all claims and defenses which the Obligor in the transaction could
assert against the seller. Liability under the FTC Rule is limited to the
amounts paid by the Obligor under the contract, and the holder of the contract
may also be unable to collect any balance remaining due thereunder from the
Obligor. The FTC Rule is generally duplicated by the Uniform Consumer Credit
Code, other state statutes or the common law in certain states. To the extent
that the Receivables will be subject to the requirements of the FTC Rule, the
Trustee, as holder of the Receivables, will be subject to any claims or defenses
that the purchaser of the related Vehicle may assert against the seller of such
Vehicle. Such claims will be limited to a maximum liability equal to the amounts
paid by the Obligor under the related Receivable.
Under most state vehicle dealer licensing laws, sellers of automobiles
and light duty trucks are required to be licensed to sell vehicles at retail
sale. In addition, with respect to used vehicles, the Federal Trade Commission's
Rule on Sale of Used Vehicles requires that all sellers of used vehicles
prepare, complete and display a "Buyer's Guide" which explains the warranty
coverage for such vehicles. Furthermore, Federal Odometer Regulations
promulgated under the Motor Vehicle Information and Cost Savings Act and the
motor vehicle title laws of most states require that all sellers of used
vehicles furnish a written statement signed by the seller certifying the
accuracy of the odometer reading. If a seller is not properly licensed or if
either a Buyer's Guide or Odometer Disclosure Statement was not provided to the
purchaser of a Vehicle, the Obligor may be able to assert a defense against the
seller of the Vehicle. If an Obligor on a Receivable were successful in
asserting any such claim or defense, the Servicer would pursue on behalf of the
Trust any reasonable remedies against the seller or manufacturer of the vehicle,
subject to certain limitations as to the expense of any such action to be
specified in the related Trust Agreement.
Any such loss, to the extent not covered by credit support (as
specified in the Related Prospectus Supplement), could result in losses to the
Securityholders. As specified in the related Prospectus
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Supplement, if an Obligor were successful in asserting any such claim or defense
as described in this paragraph or the two immediately preceding paragraphs, such
claim or defense may constitute a breach of a representation and warranty under
the related Trust Agreement and may create an obligation of the Company to
repurchase such Receivable unless the breach were cured.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an Obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections of the 14th Amendment to the Constitution of the United States.
Courts have generally either upheld the notice provisions of the UCC and related
laws as reasonable or have found that the creditor's repossession and resale do
not involve sufficient state action to afford constitutional protection to
consumers.
As specified in the related Prospectus Supplement, the Company (or its
Finance Subsidiary, if any) will represent and warrant under the related Trust
Agreement that each Receivable complies with all requirements of law in all
material respects. Accordingly, if an Obligor has a claim against the Trustee
for violation of any law and such claim materially and adversely affects the
Trustee's interest in a Receivable, such violation would constitute a breach of
representation and warranty under the related Trust Agreement and would create
an obligation of the Company (or its Finance Subsidiary, if any) to repurchase
such Receivable unless the breach were cured.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended (the "Relief Act"), an Obligor who enters military service after the
origination of such Obligor's Receivable (including an Obligor who was in
reserve status and is called to active duty after origination of the
Receivable), may not be charged interest (including fees and charges) above an
annual rate of 6% during the period of such Obligor's active duty status, unless
a court orders otherwise upon application of the lender. The Relief Act applies
to Obligors who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard, and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to Obligors
who enter military service (including reservists who are called to active duty)
after origination of the related Receivable, no information can be provided as
to the number of loans that may be effected by the Relief Act. Application of
the Relief Act would adversely affect, for an indeterminate period of time, the
ability of the Servicer to collect full amounts of interest on certain of the
Receivables. Any shortfall in interest collections resulting from the
application of the Relief Act or similar legislation or regulations, which would
not be recoverable from the related Receivables, would result in a reduction of
the amounts distributable to the holders of the related Securities, and would
not be covered by advances, any form of Credit Enhancement provided in
connection with the related series of Securities. In addition, the Relief Act
imposes limitations that would impair the ability of the Servicer to foreclose
on an affected Receivable during the Mortgagor's period of active duty status,
and, under certain circumstances, during an additional three month period
thereafter. Thus, in the event that the Relief Act or similar legislation or
regulations applies to any Receivable which goes into default, there may be
delays in payment and losses on the related Securities in connection therewith.
Any other interest shortfalls, deferrals or forgiveness of payments on the
Receivables resulting from similar legislation or regulations may result in
delays in payments or losses to Securityholders of the related series.
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a creditor to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a motor vehicle, and, as part of the rehabilitation
plan, reduce the amount of the secured indebtedness to the
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market value of the motor vehicle at the time of bankruptcy (as determined by
the court), leaving the party providing financing as a general unsecured
creditor for the remainder of the indebtedness. A bankruptcy court may also
reduce the monthly payments due under a contract or change the rate of interest
and time of repayment of the indebtedness. Any such shortfall, to the extent not
covered by credit support (as specified in each Prospectus Supplement), could
result in losses to the Securityholders.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material federal income tax
consequences of the purchase, ownership and disposition of the Notes and the
Certificates. Dewey Ballantine, special federal tax counsel for the Company
("Federal Tax Counsel"), is of the opinion that the discussion hereunder fully
and fairly discloses all material federal tax risks associated with the
purchase, ownership and disposition of the Notes and Certificates. The summary
does not purport to deal with federal income tax consequences or special rules
that are applicable to certain categories of holders. Moreover, there are no
cases or Internal Revenue Service ("IRS") rulings on all of the issues discussed
below. As a result, the IRS may disagree with all or a part of the discussion
below. Prospective investors are urged to consult their own tax advisors in
determining the federal, state, local, foreign and any other tax consequences to
them of the purchase, ownership and disposition of the Notes and the
Certificates.
Federal Tax Counsel will, in addition to delivering its opinion with
respect to the discussion set forth herein, deliver separate opinions in
connection with each issuance of Securities. Such opinions will be delivered at
pricing, and will be filed on a Current Report within two business days of
pricing (and in any event prior to the issuance of the related Securities).
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. The opinion of Federal Tax
Counsel, however, is not binding on the IRS or the courts. No ruling on any of
the issues discussed below will be sought from the IRS. For purposes of the
following summary, references to the Trust, the Notes, the Certificates and
related terms, parties and documents shall be deemed to refer, unless otherwise
specified herein, to each Trust and the Notes, Certificates and related terms,
parties and documents applicable to such Trust.
The federal income tax consequences to Certificateholders will vary
depending on whether the Trust will be treated as a partnership under the Code,
whether the Trust will be treated as a grantor trust, or whether it is intended
that the Trust serve as a security device for the issuance of Certificates that
are to be treated as indebtedness for federal income tax purposes. The
Prospectus Supplement for each series of Certificates will specify whether the
Trust will be treated as a partnership, a grantor trust, or is intended to serve
as a security device as just described. In addition, if the related Prospectus
Supplement so provides, the Transaction Documents for a Trust may provide that
an election will be made on or after September 1, 1997 to qualify such Trust as
a Financial Asset Securitization Investment Trust pursuant to new provisions of
the Code which will be effective as of such date.
TRUSTS TREATED AS PARTNERSHIPS
TAX CHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
Federal Tax Counsel will deliver its opinion that a Trust which is
intended to be a partnership, as specified in the related Prospectus Supplement,
will not be an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes. This opinion will be based on the
assumption that the terms of the Trust Agreement and related documents will be
complied with, and on counsel's conclusions that (1) the Trust will not have
certain characteristics necessary for a business trust to be
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classified as an association taxable as a corporation and (2) the nature of the
income of the Trust will exempt it from the rule that certain publicly traded
partnerships are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax
purposes, the Trust would be subject to corporate income tax on its taxable
income. The Trust's taxable income would include all its income on the
Receivables, possibly reduced by its interest expense on the Notes. Any such
corporate income tax could materially reduce cash available to make payments on
the Notes and distributions on the Certificates, and Certificateholders could be
liable for any such tax that is unpaid by the Trust.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES ISSUED BY A PARTNERSHIP
Treatment of the Notes as Indebtedness. The Transferor will agree, and
the Noteholders will agree by their purchase of Notes, to treat the Notes as
debt for federal income tax purposes. Federal Tax Counsel will, except as
otherwise provided in the related Prospectus Supplement, advise the Trust that
in its opinion the Notes will be classified as debt for federal income tax
purposes. The discussion below assumes this characterization of the Notes is
correct.
Treatment of Original Issue Discount ("OID"). The discussion below
assumes that all payments on the Notes are denominated in U.S. dollars, and that
the Notes are not Indexed Securities or Strip Notes. Moreover, the discussion
assumes that the interest formula for the Notes meets the requirements for
"qualified stated interest" under Treasury regulations (the "OID regulations")
relating to original issue discount ("OID"), and that any OID on the Notes
(i.e., any excess of the principal amount of the Notes over their issue price)
does not exceed a de minimis amount (i.e., generally 1/4% of their principal
amount multiplied by the number of full years included in their term), all
within the meaning of the OID regulations. If these conditions are not satisfied
with respect to any given series of Notes, additional tax considerations with
respect to such Notes will be disclosed in the applicable Prospectus Supplement.
OID as Interest Income. Based on the above assumptions the Notes
generally will not be considered issued with OID. The stated interest thereon
will be taxable to a Noteholder as ordinary interest income when received or
accrued in accordance with such Noteholder's method of tax accounting. Under the
OID regulations, a holder of a Note issued with a de minimis amount of OID
generally must include such OID in income, on a pro rata basis, as principal
payments are made on the Note. However, a holder may elect to accrue de minimis
OID under a constant yield method in connection with an election to accrue all
interest, discount, and premium on the Note using the constant yield method. See
"Trusts Treated as Grantor Trusts--Taxation of Holders if Stripped Bond Rules Do
Not Apply--Election to Treat All Interest as OID" for a discussion of such
election. A purchaser who buys a Note for more or less than its principal amount
will generally be subject, respectively, to the premium amortization or market
discount rules of the Code.
A holder of a Note that has a fixed maturity date of not more than one
year from the issue date of such Note (a "Short-Term Note") may be subject to
special rules. An accrual basis holder of a Short-Term Note (and certain cash
method holders, including regulated investment companies, as set forth in
Section 1281 of the Code) generally would be required to report interest income
as interest accrues on a straight-line basis over the term of each interest
period. Other cash basis holders of a Short-Term Note would, in general, be
required to report interest income as interest is paid (or, if earlier, upon the
taxable disposition of the Short-Term Note). However, a cash basis holder of a
Short-Term Note reporting interest income as it is paid may be required to defer
a portion of any interest expense otherwise deductible on indebtedness incurred
to purchase or carry the Short-Term Note until the taxable disposition of the
Short-Term Note. A cash basis taxpayer may elect under Section 1281 of the Code
to accrue interest income on all nongovernment debt obligations with a term of
one year or less, in which case the taxpayer would include interest on the
Short-Term Note in income as it accrues, but would not be subject to the
interest expense deferral rule referred to in the preceding sentence. Certain
special rules apply if a Short-Term Note is purchased for more or less than its
principal amount.
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OID Treatment Upon Sale or Other Disposition. If a Noteholder sells a
Note, the holder will recognize gain or loss in an amount equal to the
difference between the amount realized on the sale and the holder's adjusted tax
basis in the Note. The adjusted tax basis of a Note to a particular Noteholder
will equal the holder's cost for the Note, increased by any market discount,
acquisition discount, OID, if any, and gain previously included by such
Noteholder in income with respect to the Note and decreased by the amount of
bond premium (if any) previously amortized and by the amount of principal
payments previously received by such Noteholder with respect to such Note. Any
such gain or loss generally will be capital gain or loss if the Note was held as
a capital asset, except for gain representing accrued interest and accrued
market discount not previously included in income. Capital losses generally may
be used only to offset capital gains.
Foreign Holders. Interest payments made (or accrued) to a Noteholder
who is a Foreign Investor, as defined below, generally will be considered
"portfolio interest," and generally will not be subject to United States federal
income tax and withholding tax, if the interest is not effectively connected
with the conduct of a trade or business within the United States by the Foreign
Investor and the Foreign Investor (i) is not actually or constructively a "10
percent shareholder" of the Trust or the Transferor (including a holder of 10%
of the outstanding Certificates) or a "controlled foreign corporation" with
respect to which the Trust or the Transferor is a "related person" within the
meaning of the Code and (ii) provides the Owner Trustee or other person who is
otherwise required to withhold U.S. tax with respect to the Notes with an
appropriate statement (on Form W-8 or a similar form), signed under penalties of
perjury, certifying that the beneficial owner of the Note is a Foreign Investor
and providing the Foreign Investor's name and address. If a Note is held through
a securities clearing organization or certain other financial institutions, the
organization or institution may provide the relevant signed statement to the
withholding agent; in that case, however, the signed statement must be
accompanied by a Form W-8 or substitute form provided by the Foreign Investor
that owns the Note. If such interest is not portfolio interest, then it will be
subject to United States federal income and withholding tax at a rate of 30
percent, unless reduced or eliminated pursuant to an applicable tax treaty.
Any gain realized on the sale, redemption, retirement or other taxable
disposition of a Note by a foreign person will be exempt from United States
federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the Foreign Investor, (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year, and (iii) in the case of gain representing accrued
interest or OID, the conditions described in the immediately preceding paragraph
are satisfied.
If the interest, gain or income on a Note held by a Foreign Investor is
effectively connected with the conduct of a trade or business in the United
States by the Foreign Investor (although exempt from the withholding tax
previously discussed if the holder provides an appropriate and timely statement
on Form 4224), the holder generally will be subject to United States federal
income tax on the interest, gain or income at regular federal income tax rates.
In addition, if the Foreign Investor is a foreign corporation, it may be subject
to a branch profits tax equal to 30% of its "effectively connected earnings and
profits" within the meaning of the Code for the taxable year, as adjusted for
certain items, unless it qualifies for a lower rate under an applicable tax
treaty (as modified by the branch profits tax rules).
Proposed Treasury regulations which would be effective for payments
made after December 31, 1997 if adopted in their current form would provide
alternative certification requirements and means by which a Foreign Investor
could claim the exemptions from federal income and withholding taxes.
For purposes of this tax discussion, a Foreign Person or Foreign
Investor is any person other than (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States or any political subdivision thereof,
(iii) an estate whose income is includible in gross income for United States
federal income taxation regardless of source, or (iv) a trust other than a
"Foreign Trust," as such term is defined in Section 7701(a)(31) of the Code.
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Backup Withholding. Each holder of a Note (other than an exempt holder
such as a corporation, tax-exempt organization, qualified pension and
profit-sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate containing, among other
things, the holder's name, address, correct federal taxpayer identification
number and a statement that the holder is not subject to backup withholding.
Should a nonexempt Noteholder fail to provide the required certification, the
Trust will be required to withhold 31 percent of the amount otherwise payable to
the holder, and remit the withheld amount to the IRS as a credit against the
holder's federal income tax liability.
Possible Alternative Treatments of the Notes. If, contrary to the
opinion of Federal Tax Counsel, the IRS successfully asserted that one or more
of the Notes did not represent debt for federal income tax purposes, the Notes
might be treated as equity interests in the Trust. If so treated, the Trust
might be taxable as a corporation with the adverse consequences described above
(and the taxable corporation would not be able to reduce its taxable income by
deductions for interest expense on Notes recharacterized as equity).
Alternatively, the Trust might be treated as a publicly traded partnership that
would not be taxable as a corporation if it met certain qualifying income tests.
Nonetheless, treatment of the Notes as equity interests in such a publicly
traded partnership could have adverse tax consequences to certain holders. For
example, income to Foreign Investors generally would be subject to U.S. tax and
U.S. tax return filing and withholding requirements, and individual holders
might be subject to certain limitations on their ability to deduct their share
of Trust expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES ISSUED BY A PARTNERSHIP
Treatment of the Trust as a Partnership. The Transferor and the Company
will agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in part
by income, with the assets of the partnership being the assets held by the
Trust, the partners of the partnership being the Certificateholders, and the
Notes being debt of the partnership. However, the proper characterization of the
arrangement involving the Trust, the Certificates, the Notes, the Transferor and
the Company is not clear because there is no authority on transactions closely
comparable to that contemplated herein.
For example, because the Certificates may have certain features
characteristic of debt, the Certificates might be considered debt of the
Transferor or the Trust. Generally, provided such Certificates are issued at or
close to face value, any characterization would not result in materially adverse
tax consequences to Certificateholders as compared to the consequences from
treatment of the Certificates as equity in a partnership, described below. If
Certificates are issued at a substantial discount, a discussion of the relevant
tax consequences will be set forth in the related Prospectus Supplement. The
following discussion assumes that the Certificates represent equity interests in
a partnership.
Indexed Securities, etc. The following discussion assumes that all
payments on the Certificates are denominated in U.S. dollars, none of the
Certificates are Indexed Securities or Strip Certificates, and that a series of
Securities includes a single class of Certificates. If these conditions are not
satisfied with respect to any given series of Certificates, additional tax
considerations with respect to such Certificates will be disclosed in the
applicable Prospectus Supplement.
Partnership Taxation. As a partnership, the Trust will not be subject
to federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust. In certain instances, however, the
Trust could have an obligation to make payments of withholding tax on behalf of
a Certificateholder. See "Backup Withholding" and "Tax Consequences to Foreign
Certificateholders" below. The Trust's income will consist primarily of interest
and finance charges earned on the Receivables (including appropriate adjustments
for market discount, OID and bond premium) and any gain upon collection or
disposition of Receivables. The Trust's deductions will consist primarily of
interest accruing with respect to the Notes, servicing and other fees, and
losses or deductions upon collection or disposition of Receivables.
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The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership agreement
(here, the Trust Agreement and related documents). The Trust Agreement will
provide, in general, that the Certificateholders will be allocated taxable
income of the Trust for each month equal to the sum of (i) the interest that
accrues on the Certificates in accordance with their terms for such month,
including interest accruing at the Pass Through Rate for such month and interest
on amounts previously due on the Certificates but not yet distributed; (ii) any
Trust income attributable to discount on the Receivables that corresponds to any
excess of the principal amount of the Certificates over their initial issue
price; (iii) prepayment premium payable to the Certificateholders for such
month; and (iv) any other amounts of income payable to the Certificateholders
for such month. Such allocation will be reduced by any amortization by the Trust
of premium on Receivables that corresponds to any excess of the issue price of
Certificates over their principal amount. Based on the economic arrangement of
the parties, this approach for allocating Trust income should be permissible
under applicable Treasury regulations, although. Federal Tax Counsel is unable
to opine that the IRS would not require a greater amount of income to be
allocated to Certificateholders. Moreover, even under the foregoing method of
allocation, Certificateholders may be allocated income equal to the entire
Pass-Through Rate plus the other items described above even though the Trust
might not have sufficient cash to make current cash distributions of such
amount. Thus, cash basis holders will in effect be required to report income
from the Certificates on the accrual basis and Certificateholders may become
liable for taxes on Trust income even if they have not received cash from the
Trust to pay such taxes. In addition, because tax allocations and tax reporting
will be done on a uniform basis for all Certificateholders but
Certificateholders may be purchasing Certificates at different times and at
different prices, Certificateholders may be required to report on their tax
returns taxable income that is greater or less than the amount reported to them
by the Trust.
All of some of the taxable income allocated to a Certificateholder that
is a pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) may constitute "unrelated business
taxable income" generally taxable to such a holder under the Code.
An individual taxpayer's share of expenses of the Trust (including fees
to the Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or in
part and might result in such holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to such holder over the life of
the Trust. Such deductions may also be subject to reduction under Section 68 of
the Code if the individual's adjusted gross income exceeds certain limits.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the Trust
might be required to incur additional expense but it is believed that there
would not be a material adverse effect on Certificateholders.
Discount and Premium. It is believed that the Receivables will not be
issued with OID, and, therefore, the Trust should not have OID income. However,
the purchase price paid by the Trust for the Receivables may be greater or less
than the remaining principal balance of the Receivables at the time of purchase.
If so, the Receivables will have been acquired at a premium or discount, as the
case may be. (As indicated above, the Trust will make this calculation on an
aggregate basis, but might be required to recompute it on a
Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium,
the Trust will elect to include any such discount in income currently as it
accrues over the life of the Receivables or to offset any such premium against
interest income on the Receivables. As indicated above, a portion of such market
discount income or premium deduction will be allocated to Certificateholders if
the related Trust Agreement so provides. Any such allocation will be disclosed
in the related Prospectus Supplement.
Section 708 Termination. Under Section 708 of the Code, the Trust will
be deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or
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exchanged within a 12-month period. If such a termination occurs, the Trust will
be considered to distribute its assets to the partners, who would then be
treated as recontributing those assets to the Trust, as a new partnership.
Proposed regulations would provide that if a termination occurs the partnership
will be considered to transfer its assets and liabilities to a new partnership
in exchange for interests in that new partnership which it would then be treated
as transferring to its partners. The Trust will not comply with certain
technical requirements that might apply when such a constructive termination
occurs. As a result, the Trust may be subject to certain tax penalties and may
incur additional expenses if it is required to comply with those requirements.
Furthermore, the Trust might not be able to comply due to lack of data.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
A Certificateholder's tax basis in a Certificate will generally equal the
holder's cost increased by the holder's share of Trust income (includible in
income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the amount
realized on a sale of a Certificate would include the holder's share of the
Notes and other liabilities of the Trust. A holder acquiring Certificates at
different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a portion of such aggregate tax basis to the Certificates
sold (rather than maintaining a separate tax basis in each Certificate for
purposes of computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's
share of unrecognized accrued market discount on the Receivables would generally
be treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets that
would give rise to such special reporting requirements. Thus, to avoid those
special reporting requirements, the Trust will elect to include market discount
in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise to
a capital loss upon the retirement of the Certificates.
Allocations Between Transferors and Transferees. In general, the
Trust's taxable income and losses will be determined monthly and the tax items
for a particular calendar month will be apportioned among the Certificateholders
in proportion to the principal amount of Certificates owned by them as of the
close of the last day of such month. As a result, a holder purchasing
Certificates may be allocated tax items (which will affect its tax liability and
tax basis) attributable to periods before the actual purchase takes place.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificateholders. The Affiliated
Purchaser is authorized to revise the Trust's method of allocation between
transferors and transferees to conform to a method permitted by future
regulations.
Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (or loss), the purchasing Certificateholder will have a
higher (or lower) basis in the Certificates than the selling Certificateholder
had. The tax basis of the Trust's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust were to file an election under Section
754 of the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make such election. As a
result, Certificateholders might be allocated a greater or lesser amount of
Trust income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Owner Trustee is required to keep or have
kept complete and accurate books of the Trust. Such books will be maintained for
financial reporting and tax purposes on
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an accrual basis and the fiscal year of the Trust will be the calendar year. The
Owner Trustee will file a partnership information return (IRS Form 1065) with
the IRS for each taxable year of the Trust and will report each
Certificateholder's allocable share of items of Trust income and expense to
holders and the IRS on Schedule K-l. The Trust will provide the Schedule K-l
information to nominees that fail to provide the Trust with the information
statement described below and such nominees will be required to forward such
information to the beneficial owners of the Certificates. Generally, holders
must file tax returns that are consistent with the information return filed by
the Trust or be subject to penalties unless the holder notifies the IRS of all
such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust with
a statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (x) the name, address and taxpayer identification number of such person,
(y) whether such person is a United States person, a tax-exempt entity or a
foreign government, an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust information as
to themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for any
calendar year must be furnished to the Trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the Trust
with the information described above may be subject to penalties.
The Transferor will be designated as the tax matters partner in the
related Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS with respect to partnership
items. The Code provides for administrative examination of a partnership as if
the partnership were a separate and distinct taxpayer. Generally, the statute of
limitations for partnership items does not expire before three years after the
date on which the partnership information return is filed. Any adverse
determination following an audit of the return of the Trust by the appropriate
taxing authorities could result in an adjustment of the returns of the
Certificateholders, and a Certificateholder may be precluded from separately
litigating a proposed adjustment to the items of the Trust. An adjustment could
also result in an audit of a Certificateholder's returns and adjustments of
items not related to the income and losses of the Trust.
Tax Consequences to Foreign Certificateholders. As discussed below, an
investment in a Certificate is not suitable for any Foreign Person, as defined
above, which is not eligible for a complete exemption from U.S. withholding tax
on interest under a tax treaty with the United States. Accordingly, no interest
in a Certificate should be acquired by or on behalf of any such Foreign Person.
No regulations, published rulings or judicial decisions exist that
would discuss the characterization for Federal withholding tax purposes with
respect to a Foreign Person of a partnership with activities substantially the
same as the Trust. Depending upon the particular terms of the related Trust
Agreement and Sale and Servicing Agreement, a trust may be considered to be
engaged in a trade or business in the United States for purposes of Federal
withholding taxes with respect to non-U.S. persons. If the Trust is considered
to be engaged in a trade or business in the United States for such purposes, the
income of the Trust distributable to a non-U.S. person would be subject to
Federal withholding tax at a rate of 35% for persons taxable as a corporation
and 39.6% for all other Foreign Persons. Also, in such cases, a Foreign Person
that is a corporation may be subject to the branch profits tax. If the Trust is
notified that a Certificateholder is a Foreign Person, the Trust may withhold as
if it were engaged in a trade or business in the United States in order to
protect the Trust from possible adverse consequences of a failure to withhold.
Subsequent adoption of Treasury regulations or the issuance of other
administrative pronouncements may require the Trust to change its withholding
procedures.
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If a Trust is engaged in a trade or business, each foreign
Certificateholder will be required to file a United States federal individual or
corporate income tax return (including in the case of a corporation, the branch
profits tax) on its share of the Trust's income. A foreign holder generally
would be entitled to file with the IRS a claim for refund with respect to
withheld taxes, taking the position that no taxes were due because the Trust was
not engaged in a United States trade or business. However, interest payments
made to (or accrued by) a Certificateholder who is a Foreign Person may be
considered guaranteed payments to the extent such payments are determined
without regard to the income of the Trust and for that reason or because of the
nature of the Receivables, the interest will likely not be considered "portfolio
interest." See "--Tax Consequences to Holders of the Notes Issued by a
Partnership-Foreign Holders" for a discussion of portfolio interests. As a
result, even if the Trust is not considered to be engaged in a U.S. trade or
business, Certificateholders would be subject to United States Federal income
tax which must be withheld at a rate of 30% on their share of the Trust's income
(without reduction for interest expense), unless reduced or eliminated pursuant
to an applicable income tax treaty. If the Trust is notified that a
Certificateholder is a Foreign Person, the Trust may be required to withhold and
pay over such tax, which can exceed the amounts otherwise available for
distribution to such a Certificateholder. A Foreign Person would generally be
entitled to file with the IRS a refund claim for such withheld taxes, taking the
position that the interest was portfolio interest and therefore not subject to
U.S. tax. However, the IRS may disagree and no assurance can be given as to the
appropriate amount of tax liability. As a result, each potential foreign
Certificateholder should consult its tax advisor as to whether the tax
consequences of holding an interest in a Certificate make it an unsuitable
investment.
Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup" withholding tax
of 31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
TRUSTS TREATED AS GRANTOR TRUSTS
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
As specified in the related Prospectus Supplement, if a partnership
election is not made and the Certificates are not treated as debt for federal
income tax purposes as discussed below, Federal Tax Counsel will deliver its
opinion that the Trust will not be classified as an association taxable as a
corporation and that such Trust will be classified as a grantor trust under
subpart E, Part I of subchapter J of the Code. In this case, owners of
Certificates (referred to herein as "Grantor Trust Certificateholders") will be
treated for federal income tax purposes as owners of a portion of the Trust's
assets as described below. The Certificates issued by a Trust that is treated as
a grantor trust are referred to herein as "Grantor Trust Certificates."
Characterization. Each Grantor Trust Certificateholder will be treated
as the owner of a pro rata undivided interest in the interest and principal
portions of the Trust represented by the Grantor Trust Certificates and will be
considered the equitable owner of a pro rata undivided interest in each of the
Receivables in the Trust. Any amounts received by a Grantor Trust
Certificateholder in lieu of amounts due with respect to any Receivable because
of a default or delinquency in payment will be treated for federal income tax
purposes as having the same character as the payments they replace.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire income
from the Receivables in the Trust represented by Grantor Trust Certificates,
including interest, OID, if any, prepayment fees, assumption fees, any gain
recognized upon an assumption and late payment charges received by the Servicer.
Under Sections 162 or 212 each Grantor Trust Certificateholder will be entitled
to deduct its pro rata share of servicing fees, prepayment fees, assumption
fees, any loss recognized upon an assumption and late payment charges retained
by the Servicer, provided that such amounts are reasonable compensation for
services rendered to the Trust. Grantor Trust Certificateholders
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that are individuals, estates or trusts will be entitled to deduct their share
of expenses only to the extent such expenses plus such holder's other
miscellaneous itemized deductions exceed two percent of such holder's adjusted
gross income. Such deductions may also be limited by Code Section 68 for an
individual whose adjusted gross income exceeds certain limits. A Grantor Trust
Certificateholder using the cash method of accounting must take into account its
pro rata share of income and deductions as and when collected by or paid to the
Servicer. A Grantor Trust Certificateholder using an accrual method of
accounting must take into account its pro rata share of income and deductions as
they become due or are paid to the Servicer, whichever is earlier. If the
servicing fees or other amounts paid to the Servicer exceed reasonable servicing
compensation, the amount of such excess would be considered as an ownership
interest retained by the Servicer (or any person to whom the Servicer assigned
all or a portion of the servicing fees) in a portion of the interest payments on
the Receivables. The Receivables would then be subject to the stripped bond
rules of the Code discussed below.
TAXATION OF HOLDERS IF STRIPPED BOND RULES APPLY
In the absence of comprehensive regulations, Federal Tax Counsel is
unable to opine as to the tax treatment of stripped bonds. The preamble to
certain stripped bond regulations suggests that each purchaser of a Grantor
Trust Certificate will be treated with respect to each Receivable as the
purchaser of a single stripped bond consisting of all of the stripped portions
of the applicable Receivable (such portions with respect to a Receivable are
referred to herein as a "Stripped Bond") which generally should be treated as a
single debt instrument issued on the day it is purchased for purposes of
calculating any original issue discount. Generally, under Treasury regulations
relating to Stripped Bonds (the "Section 1286 Treasury Regulations"), if the
discount on a Stripped Bond is larger than a de minimis amount (as calculated
for purposes of the OID rules of the Code) such Stripped Bond will be considered
to have been issued with OID. See "--Original Issue Discount" herein. Based on
the preamble to the Section 1286 Treasury regulations, although the matter is
not entirely clear, the interest income on the Certificates at the sum of the
Pass-Through Rate and the portion of the Servicing Fee Rate that does not
constitute excess servicing should be treated as "qualified stated interest"
within the meaning of the Section 1286 Treasury regulations, assuming all other
requirements for treatment as qualified stated interest are satisfied, and such
income will be so treated in the Trustee's tax information reporting.
Original Issue Discount. When Stripped Bonds have more than a de
minimis amount of OID, the special rules of the Code relating to "original issue
discount" (currently Sections 1271 through 1275) will be applicable to a Grantor
Trust Certificateholder's interest in those Stripped Bonds. Generally, a Grantor
Trust Certificateholder that acquires an interest in a Stripped Bond issued or
acquired with OID must include in gross income the sum of the "daily portions,"
as defined below, of the OID on such Stripped Bond for each day on which it owns
a Certificate, including the date of purchase but excluding the date of
disposition. Although the proper method is not entirely clear, the Trust intends
to calculate the daily portions of OID with respect to a Stripped Bond generally
as follows. A calculation will be made of the portion of OID that accrues on the
Stripped Bond during each successive monthly accrual period (or shorter period
in respect of the date of original issue or the final Distribution Date). This
will be done, in the case of each full monthly accrual period, by adding (i) the
present value of all remaining payments to be received on the Stripped Bond
under the prepayment assumption, if any, used in respect of the Stripped Bonds
and (ii) any payments received during such accrual period, and subtracting from
that total the "adjusted issue price" of the Stripped Bond at the beginning of
such accrual period. No representation is made that the Stripped Bonds will
prepay at any prepayment assumption. The "adjusted issue price" of a Stripped
Bond at the beginning of the first accrual period is its issue price (as
determined for purposes of the OID rules of the Code) and the "adjusted issue
price" of a Stripped Bond at the beginning of a subsequent accrual period is the
"adjusted issue price" at the beginning of the immediately preceding accrual
period plus the amount of OID allocable to that accrual period and reduced by
the amount of any payment (other than "qualified stated interest") made at the
end of or during that accrual period. The OID accruing during such accrual
period will then be divided by the number of days in the period to determine the
daily portion of OID for each day in the period. With respect to an initial
accrual period shorter than a full monthly accrual period, the daily portions of
OID must be determined according to an appropriate allocation under either an
exact or approximate method set forth in the OID Regulations, or some other
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reasonable method, provided that such method is consistent with the method used
to determine the yield to maturity of the Receivables.
With respect to the Stripped Bonds, the method of calculating OID as
described above will cause the accrual of OID to either increase or decrease
(but never below zero) in any given accrual period to reflect the fact that
prepayments are occurring at a faster or slower rate than the prepayment
assumption used in respect of the Stripped Bonds.
TAXATION OF HOLDERS IF STRIPPED BOND RULES DO NOT APPLY
Premium. The price paid for a Grantor Trust Certificate by a holder
will be allocated to such holder's undivided interest in each Receivable based
on each Receivable's relative fair market value, so that such holder's undivided
interest in each Receivable will have its own tax basis. A Grantor Trust
Certificateholder that acquires an interest in Receivables at a premium may
elect to amortize such premium under a constant interest method. Amortizable
bond premium will be treated as an offset to interest income on such Grantor
Trust Certificate. The basis for such Grantor Trust Certificate will be reduced
to the extent that amortizable premium is applied to offset interest payments.
It is unclear whether a reasonable prepayment assumption should be used in
computing amortization of premium allowable under Section 171. A Grantor Trust
Certificateholder that makes this election for Receivables that are construed to
be acquired at a premium will be deemed to have made an election to amortize
bond premium with respect to all debt instruments having amortizable bond
premium that such Grantor Trust Certificateholder acquires during the year of
the election or thereafter.
If a premium is not subject to amortization using a reasonable
prepayment assumption or it prepays faster than the prepayment assumption, the
holder of a Grantor Trust Certificate acquired at a premium should recognize a
loss if a Receivable prepays in full, equal to the difference between the
portion of the prepaid principal amount of such Receivable that is allocable to
the Grantor Trust Certificate and the portion of the adjusted basis of the
Grantor Trust Certificate that is allocable to such Receivable.
Market Discount. A Grantor Trust Certificateholder that acquires an
undivided interest in Receivables may be subject to the market discount rules of
Sections 1276 through 1278 to the extent an undivided interest in a Receivable
is considered to have been purchased at a "market discount." Generally, the
amount of market discount is equal to the excess of the portion of the principal
amount of such Receivable allocable to such holder's undivided interest over
such holder's tax basis in such interest. Market discount with respect to a
Receivable will be considered to be zero if the amount allocable to the
Receivable is less than 0.25% of the Receivable's stated redemption price at
maturity multiplied by the weighted average maturity remaining after the date of
purchase. Treasury regulations implementing the market discount rules have not
yet been issued; therefore, investors should consult their own tax advisors
regarding the application of these rules and the advisability of making any of
the elections allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain on disposition of a market discount bond
shall be treated as ordinary income to the extent that it does not exceed the
accrued market discount at the time of such payment. The amount of accrued
market discount for purposes of determining the tax treatment of subsequent
principal payments or dispositions of the market discount bond is to be reduced
by the amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
Because the regulations described above have not been issued, Federal Tax
Counsel is unable to opine as to what effect those regulations might have on the
tax treatment of a Grantor Trust Certificate purchased at a discount.
A holder who acquired a Grantor Trust Certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or
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continued to purchase or carry such Grantor Trust Certificate purchased with
market discount. For these purposes, the de minimis rule referred to above
applies. Any such deferred interest expense would not exceed the market discount
that accrues during such taxable year and is, in general, allowed as a deduction
not later than the year in which such market discount is includible in income.
If such holder elects to include market discount in income currently as it
accrues on all market discount instruments acquired by such holder in that
taxable year or thereafter, the interest deferral rule described above will not
apply.
Election to Treat All Interest as OID. The OID regulations permit a
Grantor Trust Certificateholder to elect to accrue all interest, discount
(including de minimis market or original issue discount) and premium in income
as interest, based on a constant yield method. If such an election were to be
made with respect to a Grantor Trust Certificate with market discount, the
Certificateholder would be deemed to have made an election to include in income
currently market discount with respect to all other debt instruments having
market discount that such Grantor Trust Certificateholder acquires during the
year of the election or thereafter. Similarly, a Grantor Trust Certificateholder
that makes this election for a Grantor Trust Certificate that is acquired at a
premium will be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
Grantor Trust Certificateholder owns or acquires. See "--Premium" herein. The
election to accrue interest, discount and premium on a constant yield method
with respect to a Grantor Trust Certificate is irrevocable.
TAXATION OF HOLDERS REGARDLESS OF WHETHER STRIPPED BOND RULES APPLY
Sale or Exchange of a Grantor Trust Certificate. Sale or exchange of a
Grantor Trust Certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the Grantor Trust Certificate. Such adjusted basis generally
will equal the seller's purchase price for the Grantor Trust Certificate,
increased by the OID included in the seller's gross income with respect to the
Grantor Trust Certificate, and reduced by principal payments on the Grantor
Trust Certificate previously received by the seller. Subject to the discussion
of market discount above, such gain or loss generally will be capital gain or
loss to an owner for which a Grantor Trust Certificate is a "capital asset"
within the meaning of Section 1221, and will be long-term or short-term
depending on whether the Grantor Trust Certificate has been owned for the
long-term capital gain holding period (currently more than one year).
Grantor Trust Certificates will be "evidences of indebtedness" within
the meaning of Section 582(c)(1), so that gain or loss recognized from the sale
of a Grantor Trust Certificate by a bank or a thrift institution to which such
section applies will be treated as ordinary income or loss.
Non-U.S. Persons. To the extent that a Grantor Trust Certificate
evidences ownership in underlying Receivables that were issued on or before July
18, 1984, interest or OID paid by the person required to withhold tax under
Section 1441 or 1442 to (i) an owner that is a Foreign Person or (ii) a Grantor
Trust Certificateholder holding on behalf of an owner that is a Foreign Person
will be subject to federal income tax, collected by withholding, at a rate of
30% or such lower rate as may be provided for interest by an applicable tax
treaty. Accrued OID recognized by the owner on the sale or exchange of such a
Grantor Trust Certificate also will be subject to federal income tax at the same
rate. Generally, such payments would be considered portfolio interest and would
not be subject to withholding to the extent that a Grantor Trust Certificate
evidences ownership in Receivables issued after July 18, 1984, if such Grantor
Trust Certificateholder complies with certain identification requirements
(including delivery of a statement, signed by the Grantor Trust
Certificateholder under penalties of perjury, certifying that such Grantor Trust
Certificateholder is the beneficial owner, is not a U.S. Person and providing
the name and address of such Grantor Trust Certificateholder). Additional
restrictions apply to Receivables where the Obligor is not a natural person in
order to qualify for the exemption from withholding. See "--Tax Consequences to
Holders of the Notes Issued by a Partnership--Foreign Holders" for a discussion
of when interest will constitute portfolio interest.
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Information Reporting and Backup Withholding. The Servicer will furnish
or make available, within a reasonable time after the end of each calendar year,
to each person who was a Grantor Trust Certificateholder at any time during such
year, such information as may be deemed necessary or desirable to assist Grantor
Trust Certificateholders in preparing their federal income tax returns, or to
enable holders to make such information available to beneficial owners or
financial intermediaries that hold Grantor Trust Certificates as nominees on
behalf of beneficial owners. If a holder, beneficial owner, financial
intermediary or other recipient of a payment on behalf of a beneficial owner
fails to supply a certified taxpayer identification number or if the Secretary
of the Treasury determines that such person has not reported all interest and
dividend income required to be shown on its federal income tax return, 31%
backup withholding may be required with respect to any payments. Any amounts
deducted and withheld from a distribution to a recipient would be allowed as a
credit against such recipient's federal income tax liability.
CERTAIN CERTIFICATES TREATED AS INDEBTEDNESS
Upon the issuance of Certificates that are intended to be treated as
indebtedness for federal income tax purposes, Federal Tax Counsel will opine
that based upon its analysis of the factors discussed below and certain
assumptions and qualifications the Certificates will be treated as indebtedness
for federal income tax purposes. However, opinions of counsel are not binding on
the IRS and there can be no assurance that the IRS could not successfully
challenge this conclusion. Such Certificates that are intended to be treated as
indebtedness are herein referred to as "Debt Certificates" and holders of such
Certificates are herein referred to as "Debt Certificateholders."
The Transferor will express in the Trust Documents its intent that for
federal, state and local income and franchise tax purposes, the Debt
Certificates will be indebtedness secured by the Receivables. The Transferor
agrees and each Debt Certificateholder, by acquiring an interest in a Debt
Certificate, agrees or will be deemed to agree to treat the Debt Certificates as
indebtedness for federal state and local income or franchise tax purposes.
However, because different criteria are used to determine the non-tax accounting
characterization of the transactions contemplated by the Trust Documents, the
Transferor expects to treat such transactions, for regulatory and financial
accounting purposes, as a sale of ownership interests in the Receivables and not
as debt obligations.
In general, whether for federal income tax purposes a transaction
constitutes a sale of property or a loan the repayment of which is secured by
the property, is a question of fact, the resolution of which is based upon the
economic substance of the transaction. The form of a transaction, while a
relevant factor, is not conclusive evidence of its economic substance. In
appropriate circumstances, the courts have allowed taxpayers, as well as the IRS
to treat a transaction in accordance with its economic substance, as determined
under federal income tax laws, notwithstanding that the participants
characterize the transaction differently for non-tax purposes. In some
instances, however, courts have held that a taxpayer is bound by a particular
form it has chosen for a transaction, even if the substance of the transaction
does not accord with its form. It is expected that Federal Tax Counsel will
advise that the rationale of those cases will not apply to the transactions
evidenced by a series of Debt Certificates.
While the IRS and the courts have set forth several factors to be taken
into account in determining whether the substance of a transaction is a sale of
property or a secured indebtedness for federal income tax purposes, the primary
factor in making this determination is whether the transferee has assumed the
risk of loss or other economic burdens relating to the property and has obtained
the economic benefits of ownership thereof. Federal Tax Counsel will analyze and
rely on several factors in reaching its opinion that the weight of the benefits
and burdens of ownership of the Receivables has not been transferred to the Debt
Certificateholders and that the Debt Certificates are properly characterized as
indebtedness for federal income tax purposes. Contrary characterizations that
could be asserted by the IRS are described below under "--Possible
Characterization of the Transaction as a Partnership or as an Association
Taxable as a Corporation."
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TAXATION OF INCOME OF DEBT CERTIFICATEHOLDERS
As set forth above, it is expected that Federal Tax Counsel will advise
the Transferor that the Debt Certificates will constitute indebtedness for
Federal income tax purposes, and accordingly, holders of Debt Certificates
generally will be taxed in the manner described above in "Trusts Treated as
Partnerships--Tax Consequences to Holders of Notes Issued by a Partnership."
If the Debt Certificates are issued with OID that is more than a de
minimis amount as defined in the Code and Treasury regulations (see "Trusts
Treated as Partnerships--Tax Consequences to Holders of Notes Issued by a
Partnership") a United States holder of a Debt Certificate (including a cash
basis holder) generally would be required to accrue the OID on its interest in a
Certificate in income for federal income tax purposes on a constant yield basis,
resulting in the inclusion of OID in income in advance of the receipt of cash
attributable to that income. Under section 1272(a)(6) of the Code, special
provisions apply to debt instruments on which payments may be accelerated due to
prepayments of other obligations securing those debt instruments. However, no
regulations have been issued interpreting those provisions, and the manner in
which those provisions would apply to the Debt Certificates is unclear.
Additionally, the IRS could take the position based on Treasury regulations that
none of the interest payable on a Debt Certificate is "unconditionally payable"
and hence that all of such interest should be included in the Debt Certificate's
stated redemption price at maturity. Accordingly, Federal Tax Counsel is unable
to opine as to whether interest payable on a Debt Certificate constitutes
"qualified stated interest" that is not included in a Certificate's stated
redemption price at maturity. Consequently, prospective investors in Debt
Certificates should consult their own tax advisors concerning the impact to them
in their particular circumstances. The Prospectus Supplement will indicate
whether the Trust intends to treat the interest on the Certificates as
"qualified stated interest".
TAX CHARACTERIZATION OF TRUST
Consistent with the treatment of the Debt Certificates as indebtedness,
the Trust will be treated as a security device to hold Receivables securing the
repayment of the Debt Certificates. In connection with the issuance of Debt
Certificates of any series, Federal Tax Counsel will render an opinion that,
based on the assumptions and qualifications set forth therein, under then
current law, the issuance of the Debt Certificates of such series will not cause
the applicable Trust to be characterized for Federal income tax purposes as an
association (or publicly traded partnership) taxable as a corporation.
POSSIBLE CLASSIFICATION OF THE TRANSACTION AS A PARTNERSHIP OR AS AN ASSOCIATION
TAXABLE AS A CORPORATION
The opinion of Federal Tax Counsel with respect to Debt Certificates
will not be binding on the courts or the IRS. It is possible that the IRS could
assert that, for federal income tax purposes, the transactions contemplated
constitute a sale of the Receivables (or an interest therein) to the Debt
Certificateholders and that the proper classification of the legal relationship
between the Transferor and some or all of the Debt Certificateholders resulting
from the transactions is that of a partnership (including a publicly traded
partnership), a publicly traded partnership taxable as a corporation, or an
association taxable as a corporation. The Transferor currently does not intend
to comply with the federal income tax reporting requirements that would apply if
any Classes of Debt Certificates were treated as interests in a partnership or
corporation.
If a transaction were treated as creating a partnership between the
Transferor and the Debt Certificateholders, the partnership itself would not be
subject to federal income tax (unless it were characterized as a publicly traded
partnership taxable as a corporation); rather, the partners of such partnership,
including the Debt Certificateholders, would be taxed individually on their
respective distributive shares of the partnership's income, gain, loss,
deductions and credits. The amount and timing of items of income and deductions
of a Debt Certificate could differ if the Debt Certificates were held to
constitute partnership interests, rather than indebtedness. Moreover, unless the
partnership were treated as engaged in a trade or business, an individual's
share of expenses of the partnership would be
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miscellaneous itemized deductions that, in the aggregate, are allowed as
deductions only to the extent they exceed two percent of the individual's
adjusted gross income, and would be subject to reduction under Section 68 of the
Code if the individual's adjusted gross income exceeded certain limits. As a
result, the individual might be taxed on a greater amount of income than the
stated rate on the Debt Certificates. Finally, all or a portion of any taxable
income allocated to a Debt Certificateholder that is a pension, profit-sharing
or employee benefit plan or other tax-exempt entity (including an individual
retirement account) may, under certain circumstances, constitute "unrelated
business taxable income" which generally would be taxable to the holder under
the Code.
If it were determined that a transaction created an entity classified
as an association or as a publicly traded partnership taxable as a corporation,
the Trust would be subject to federal income tax at corporate income tax rates
on the income it derives from the Receivables, which would reduce the amounts
available for distribution to the Debt Certificateholders. Such classification
may also have adverse state and local tax consequences that would reduce amounts
available for distribution to Debt Certificateholders. Moreover, distributions
on Debt Certificates that are recharacterized as equity in an entity taxable as
a corporation would not be deductible in computing the entity's taxable income,
and cash distributions on such Debt Certificates generally would be treated as
dividends for tax purposes to the extent of such deemed corporation's earnings
and profits.
FOREIGN INVESTORS
If the IRS were to contend successfully that the Debt Certificates are
interest in a partnership and if such partnership were considered to be engaged
in a trade or business in the United States, the partnership would be subject to
a withholding tax on income of the Trust that is allocable to a Foreign Investor
and such Foreign Investor would be credited for his or her share of the
withholding tax paid by the partnership. In such case, the holder generally
would be subject to United States federal income tax at regular income tax
rates, and possibly a branch profits tax in the case of a corporate holder.
Alternatively, although there may be arguments to the contrary, if such
partnership is not considered to be engaged in a trade or business within the
United States and if income with respect to the Debt Certificates is not
otherwise effectively connected with the conduct of a trade or business in the
United States by the Foreign Investor, the Foreign Investor would be subject to
United States income tax and withholding at a rate of 30% (unless reduced by an
applicable tax treaty) on the holder's distributive share of the partnership's
interest income. See "Trusts Treated as Partnerships--Tax Consequences to
Holders of the Certificates Issued by the Partnership--Tax Consequences to
Foreign Certificateholders" for a more detailed discussion of the consequences
of an equity investment by a Foreign Investor in an entity characterized as a
partnership.
If the Trust were taxable as a corporation, distribution to foreign
investors, to the extent treated as dividends, would generally be subject to
withholding at the rate of 30% unless such rate were reduced or eliminated by an
applicable income tax treaty.
STATE AND LOCAL TAXATION
The discussion above does not address the tax treatment of a Trust, the
Certificates, the Notes or the holders of Certificates or Notes of any series
under state and local tax laws. Prospective investors are urged to consult their
own tax advisors regarding state and local tax treatment of the Trust, the
Certificates, the Notes and the consequences of purchase, ownership or
disposition of the Certificates and Notes under any state or local tax law.
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ERISA CONSIDERATIONS
The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations discussed therein, considerations under ERISA
relevant to the purchase of such Securities by employee benefit plans and
individual retirement accounts.
METHODS OF DISTRIBUTION
The Securities offered hereby and by the related Prospectus Supplement
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the public offering or
purchase price of such series and the net proceeds to the Company from such
sale.
The Company intends that Securities will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of a particular
series of Securities may be made through a combination of two or more of these
methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting
and public re-offering by underwriters;
2. By placements by the Company with institutional investors
through dealers;
3. By direct placements by the Company with institutional
investors; and
4. By competitive bid.
If underwriters are used in a sale of any Securities (other than in
connection with an underwriting on a best efforts basis), such Securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices to be determined at the time
of sale or at the time of commitment therefor. The Securities will be set forth
on the cover of the Prospectus Supplement relating to such series and the
members of the underwriting syndicate, if any, will be named in such Prospectus
Supplement.
In connection with the sale of the Securities, underwriters may receive
compensation from the Company or from purchasers of the Securities in the form
of discounts, concessions or commissions. Underwriters and dealers participating
in the distribution of the Securities may be deemed to be underwriters in
connection with such Securities, and any discounts or commissions received by
them from the Company and any profit on the resale of Securities by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Prospectus Supplement will describe any such compensation paid by the
Company.
It is anticipated that the underwriting agreement pertaining to the
sale of any series of Securities will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Securities if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Company will indemnify the
several underwriters and the underwriters will indemnify the Company against
certain civil liabilities, including liabilities under the Securities Act or
will contribute to payments required to be made in respect thereof. The
Commission is of the opinion that indemnification for securities law violations
is contrary to the public policy expressed in the federal securities laws, and,
consequently, that such indemnification provisions are unenforceable.
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The Prospectus Supplement with respect to any series offered by
placements through dealers will contain information regarding the nature of such
offering and any agreements to be entered into between the Company and
purchasers of Securities of such series.
Purchasers of Securities, including dealers, may, depending on the
facts and circumstances of such purchases, be deemed to be "underwriters" within
the meaning of the Securities Act in connection with reoffers and sales by them
of Securities. Holders of Securities should consult with their legal advisors in
this regard prior to any such reoffer or sale.
LEGAL OPINIONS
Certain legal matters relating to the issuance of the Securities of any
series, including certain federal and state income tax consequences with respect
thereto, will be passed upon by Dewey Ballantine, New York, New York, or other
counsel specified in the related Prospectus Supplement.
FINANCIAL INFORMATION
Certain specified Trust Property will secure each series of Securities,
no Trust will engage in any business activities or have any assets or
obligations prior to the issuance of the related series of Securities, except
for serial issuances by a Master Trust. Accordingly, no financial statements
with respect to any Trust Property will be included in this Prospectus or in the
related Prospectus Supplement.
A Prospectus Supplement may contain the financial statements of the
related Credit Enhancer, if any.
ADDITIONAL INFORMATION
This Prospectus, together with the Prospectus Supplement for each
series of Securities, contains a summary of the material terms of the applicable
exhibits to the Registration Statement and the documents referred to herein and
therein. Copies of such exhibits are on file at the offices of the Securities
and Exchange Commission in Washington, D.C., and may be obtained at rates
prescribed by the Commission upon request to the Commission and may be
inspected, without charge, at the Commission's offices.
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered
Securities (the "Global Securities") will be available only in book-entry form.
Investors in the Global Securities may hold such Global Securities through any
of DTC, CEDEL or Euroclear. The Global Securities will be tradeable as home
market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors through CEDEL and Euroclear
will be conducted in the ordinary way in accordance with the normal rules and
operating procedures of CEDEL and Euroclear and in accordance with conventional
eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors through DTC will be
conducted according to DTC's rules and procedures applicable to U.S. corporate
debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of CEDEL and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect Participants in DTC. As a result, CEDEL and
Euroclear will hold positions on behalf of their participants through their
Relevant Depository which in turn will hold such positions in their accounts as
DTC Participants.
Investors electing to hold their Global Securities through DTC will
follow DTC settlement practices. Investor securities custody accounts will be
credited with their holdings against payment in same-day funds on the settlement
date.
Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior home
equity loan asset-backed certificates issues in same-day funds.
Trading between CEDEL and/or Euroclear Participants. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
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Trading between DTC, Seller and CEDEL or Euroclear Participants. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a CEDEL Participant or a Euroclear Participant, the purchaser
will send instructions to CEDEL or Euroclear through a CEDEL Participant or
Euroclear Participant at least one business day prior to settlement. CEDEL or
Euroclear will instruct the Relevant Depository, as the case may be, to receive
the Global Securities against payment. Payment will include interest accrued on
the Global Securities from and including the last coupon payment date to and
excluding the settlement date, on the basis of the actual number of days in such
accrual period and a year assumed to consist of 360 days. For transactions
settling on the 31st of the month, payment will include interest accrued to and
excluding the first day of the following month. Payment will then be made by the
Relevant Depository to the DTC Participant's account against delivery of the
Global Securities. After settlement has been completed, the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the CEDEL Participant's or Euroclear
Participant's account. The securities credit will appear the next day (European
time) and the cash debt will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the CEDEL or Euroclear cash debt
will be valued instead as of the actual settlement date.
CEDEL Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within CEDEL or Euroclear. Under this
approach, they may take on credit exposure to CEDEL or Euroclear until the
Global Securities are credited to their account one day later.
As an alternative, if CEDEL or Euroclear has extended a line of credit
to them, CEDEL Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, CEDEL Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day, assuming
they cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the value
date. Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although the result will depend on each CEDEL
Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for crediting Global
Securities to the respective European Depository for the benefit of CEDEL
Participants or Euroclear Participants. The sale proceeds will be available to
the DTC seller on the settlement date. Thus, to the DTC Participants a
cross-market transaction will settle no differently than a trade between two DTC
Participants.
Trading between CEDEL or Euroclear Seller and DTC Purchaser. Due to
time zone differences in their favor, CEDEL Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depository, to a DTC Participant. The seller will send
instructions to CEDEL or Euroclear through a CEDEL Participant or Euroclear
Participant at least one business day prior to settlement. In these cases CEDEL
or Euroclear will instruct the respective Depository, as appropriate, to credit
the Global Securities to the DTC Participant's account against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment to and excluding the settlement date on the basis of the
actual number of days in such accrual period and a year assumed to consist to
360 days. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following month.
The payment will then be reflected in the account of CEDEL Participant or
Euroclear Participant the following day, and receipt of the cash proceeds in the
CEDEL Participant's or Euroclear Participant's account would be back-valued to
the value date (which would be the preceding day, when settlement occurred in
New York). In the event that the CEDEL Participant or Euroclear Participant have
a line of credit with its respective clearing system and elect to be in debt in
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anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft incurred over that one-day period. If settlement
is not completed on the intended value date (i.e., the trade fails), receipt of
the cash proceeds in the CEDEL Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date.
Finally, day traders that use CEDEL or Euroclear and that purchase
Global Securities from DTC Participants for delivery to CEDEL Participants or
Euroclear Participants should note that these trades would automatically fail on
the sale side unless affirmative action is taken. At least three techniques
should be readily available to eliminate this potential problem:
(a) borrowing through CEDEL or Euroclear for one day (until the
purchase side of the trade is reflected in their CEDEL or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their CEDEL or Euroclear account
in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at least one
day prior to the value date for the sale to the CEDEL Participant or Euroclear
Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through
CEDEL or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons (as defined below), unless (i) each clearing system, bank
or other financial institution that holds customers' securities in the ordinary
course of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes one
of the following steps to obtain an exemption or reduced tax rate:
Exemption for Non-U.S. Persons (Form W-8). Beneficial Owners of Global
Securities that are Non-U.S. Persons (as defined below) can obtain a complete
exemption from the withholding tax by filing a signed Form W-8 (Certificate of
Foreign Status). If the information shown on Form W-8 changes, a new Form W-8
must be filed within 30 days of such change.
Exemption for Non-U.S. Persons with effectively connected income (Form
4224). A Non-U.S. Person (as defined below), including a non-U.S. corporation or
bank with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons residing in a country that has a tax
treaty with the United States can obtain an exemption or reduced tax rate
(depending on the treaty terms) by filing Form 1001 (Ownership, Exemption or
Reduced Rate Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer alternatively
files Form W-8. Form 1001 may be filed by Certificate Owners or their agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).
66
<PAGE> 69
U.S. Federal Income Tax Reporting Procedure. The Owner of a Global
Security or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
On April 22, 1996, the IRS proposed regulations relating to
withholding, backup withholding and information reporting that, if adopted in
their current form would, among other things, unify current certification
procedures and forms and clarify certain reliance standards. The regulations are
proposed to be effective for payments made after December 31, 1997 but provide
that certificates issued on or before the date that is 60 days after the
proposed regulations are made final will continue to be valid until they expire.
Proposed regulations, however, are subject to change prior to their adoption in
final form.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision thereof, (iii) an
estate that is subject to U.S. federal income tax regardless of the source of
its income or (iv) a trust if a court within the United States can exercise
primary supervision over its administration and at least one United States
fiduciary has the authority to control all substantial decisions of the trust.
The term "Non-U.S. Person" means any person who is not a U.S. Person. This
summary does not deal with all aspects of U.S. Federal income tax withholding
that may be relevant to foreign holders of the Global Securities. Investors are
advised to consult their own tax advisors for specific tax advice concerning
their holding and disposing of the Global Securities.
67
<PAGE> 70
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus
and the pages on which the definitions of such terms may be found herein.
<TABLE>
<CAPTION>
<S> <C>
ACC ...............................................................26
Accrual Securities ................................................ 7
Additional Receivables ............................................10
Adjustable Rate Receivables .......................................11
APR ...............................................................21
Balloon Payments ..................................................10
caps ..............................................................11
Cede ..............................................................11
CEDEL Participants ................................................32
Certificateholders ................................................39
Certificates ....................................................1, 5
Class ..............................................................1
Closing Date ..................................................34, 36
Collection Account ................................................36
Commission .........................................................3
Commodity Indexed Securities.......................................30
Company.............................................................5
Company Investment Contracts.......................................37
Contracts........................................................1, 5
Cooperative........................................................32
Credit Enhancement.................................................18
Credit Enhancer....................................................18
Currency Indexed Securities........................................30
Dealers.............................................................5
Debt Securities....................................................12
Definitive Securities..............................................33
Depositaries.......................................................31
Direct Participants................................................18
Distribution Account...............................................36
DTC................................................................11
Eligible Deposit Account...........................................37
Eligible Institution...............................................37
Eligible Investments...............................................36
ERISA..............................................................13
Euroclear Operator.............................................32, 33
Euroclear Participants.............................................32
Event of Default...................................................33
Exchange Act....................................................3, 13
Face Amount........................................................30
FASIT..............................................................12
Finance Subsidiary.................................................16
Fixed Income Securities.............................................7
floors.............................................................11
Forward Purchase Agreement.........................................34
FTC Rule...........................................................46
Funding Period.....................................................35
Global Securities..................................................64
Grantor Trust Securities...........................................12
Holder-in-Due-Course Rule..........................................46
Indenture...........................................................6
</TABLE>
68
<PAGE> 71
<TABLE>
<CAPTION>
<S> <C>
Indenture Trustee...................................................6
Index..............................................................30
Indexed Commodity..................................................30
Indexed Currency...................................................30
Indexed Principal Amount...........................................30
Indexed Securities.................................................30
Indirect Participants..........................................18, 31
Insolvency Event...................................................40
Insolvency Laws....................................................16
Interest Rate....................................................3, 7
Investment Company Act..............................................9
Investment Earnings................................................37
Issuer.......................................................1, 5, 20
Market discount....................................................57
Master Trust........................................................9
Master Trust Agreement..............................................9
Master Trust New Issuance..........................................29
MSO................................................................23
Negative arbitrage.................................................37
Negative carry.....................................................37
Non-U.S. Person....................................................67
Noteholders........................................................39
Notes............................................................1, 5
Participants.......................................................31
Partnership Interests..............................................12
Pass-Through Rate ..................................................3
Pay for Performance Program........................................11
Payment Date........................................................8
Policy...........................................................1, 6
Pool Balance.......................................................26
Pool Factor........................................................26
Pooling Agreement...................................................6
Pre-Funding Account............................................10, 35
Pre-Funding Period.................................................10
Prepayment.........................................................19
Principal statistical characteristics..............................35
Prospectus Supplement...............................................1
Rating Agencies....................................................13
Ratings Effect.................................................18, 30
Receivables......................................................1, 6
Record Date.........................................................8
Registration Statement..............................................3
Relief Act.....................................................19, 47
Remittance Period...................................................8
Residual Interest...................................................9
Rule of 78s........................................................21
Rule of 78s Contracts..............................................21
Rules..............................................................32
Section 1286 Treasury Regulations..................................56
Securities..........................................................1
Securities Act......................................................3
Securityholder.....................................................32
Securityholders.....................................................8
Senior Securities...................................................7
Servicer.........................................................1, 5
</TABLE>
69
<PAGE> 72
<TABLE>
<CAPTION>
<S> <C>
Servicer Default...................................................40
Servicing Agreement.................................................6
Servicing Fee......................................................38
Servicing Fee Rate.................................................38
Short-Term Note....................................................49
Simple Interest Contracts..........................................21
Stock Index........................................................30
Stock Indexed Securities...........................................30
Strip Securities....................................................7
Stripped Bond......................................................56
Subordinate Securities..............................................7
Terms and Conditions...............................................33
Transferor..........................................................5
Trust............................................................1, 5
Trust Accounts.....................................................36
Trust Agreement.................................................6, 36
Trust Property...................................................1, 5
Trustee.............................................................6
U.S. Person........................................................67
Vehicles.........................................................1, 6
Vendors.............................................................5
</TABLE>
70
<PAGE> 73
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the amount of fees and expenses
(other than underwriting discounts and commissions) to be incurred in connection
with the issuance and distribution of the Offered Certificates.
<TABLE>
<CAPTION>
<S> <C> <C>
SEC Filing Fee................................... $ 303.03
Trustee's Fees and Expenses...................... 15,000
Legal Fees and Expenses.......................... 200,000
Accounting Fees and Expenses..................... 30,000
Printing and Engraving Expenses.................. 35,000
Blue Sky Qualification and Legal
Investment Fees and Expenses................... 10,000
Rating Agency Fees............................... 40,000
Security Insurer's Fee........................... 40,000
Miscellaneous.................................... 200,000
-----------
TOTAL ...................................... $570,303.03
===========
</TABLE>
- ----------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Indemnification. Under the laws which govern the organization
of the registrant, the registrant has the power and in some instances may be
required to provide an agent, including an officer or director, who was or is a
party or is threatened to be made a party to certain proceedings, with
indemnification against certain expenses, judgments, fines, settlements and
other amounts under certain circumstances.
Section [8] of the Certificate of Incorporation of ACC
Consumer Finance Corporation provides that all officers and directors of the
corporation shall be indemnified by the corporation from and against all
expenses, liabilities or other matters arising out of their status as an officer
or director for their acts, omissions or services rendered in such capacities.
ACC Consumer Finance Corporation, maintains certain policies of liability
insurance coverage for its officers and directors of ACC Consumer Finance
Corporation.
The forms of the Underwriting Agreement, filed as Exhibits 1.1
and 1.2 to this Registration Statement, provide that ACC Consumer Finance
Corporation will indemnify and reimburse the underwriter(s) and each controlling
person of the underwriter(s) with respect to certain expenses and liabilities,
including liabilities under the 1933 Act or other federal or state regulations
or under the common law, which arise out of or are based on certain material
misstatements or omissions in the Registration Statement. In addition, the
Underwriting Agreements provide that the underwriter(s) will similarly indemnify
and reimburse ACC Consumer Finance Corporation with respect to certain material
misstatements or omissions in the Registration Statement which are based on
certain written information furnished by the underwriter(s) for use in
connection with the preparation of the Registration Statement.
Insurance. As permitted under the laws which govern the
organization of the registrant, the registrant's By-laws permit the board of
directors to purchase and maintain insurance on behalf of the registrant's
agents, including its officers and directors, against any liability asserted
against them in such capacity or arising out of such agents' status as such,
whether or not such registrant would have the power to indemnify them against
such liability under applicable law.
II-1
<PAGE> 74
ITEM 16. EXHIBITS (FILED HEREWITH).
<TABLE>
<CAPTION>
<S> <C> <C>
1.1 -- Form of Underwriting Agreement - Notes.
1.2 -- Form of Underwriting Agreement - Certificates.
3.1 -- Certificate of Incorporation of ACC Consumer Finance Corporation.
3.2 -- By-Laws of ACC Consumer Finance Corporation.
4.1 -- Form of Indenture between the Trust and the Indenture Trustee.
4.2 -- Form of Indenture between the Sponsor and the Indenture Trustee.
4.3 -- Form of Pooling and Servicing Agreement.
4.4 -- Form of Trust Agreement.
5.1 -- Opinion of Dewey Ballantine with respect to validity.
8.1 -- Opinion of Dewey Ballantine with respect to tax matters.
10.1 -- Form of Receivables Acquisition Agreement.
23.1 -- Consents of Dewey Ballantine are included in its opinions filed
as Exhibits 5.1 and 8.1 hereto.
99.1 -- Form of Prospectus Supplement - Certificates and Notes.
99.2 -- Form of Prospectus Supplement - Notes.
99.3 -- Form of Prospectus Supplement - Certificates.
99.4 -- Form of Prospectus Supplement - Master Trust.
</TABLE>
Item 17. Undertakings.
A. Undertaking in respect of indemnification
Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described above in Item 15, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by them is against public policy as expressed in the 1933
Act and will be governed by the final adjudication of such issue.
B. Undertaking pursuant to Rule 415.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement;
(iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change of such information in the Registration
Statement; provided, however, that paragraphs (i) and (ii) do not apply if the
information required to be included in the post-effective amendment is contained
in periodic reports filed by the Issuer pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
II-2
<PAGE> 75
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
C. Undertaking pursuant to Rule 430A.
The Registrant hereby undertakes:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of a registration statement in Reliance upon Rule 430A and
contained in the form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) With respect to Securities styled as Notes, the Registrant
hereby undertakes to file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of section 310 of the
Trust Indenture Act ("Act") in accordance with the rules and regulations
prescribed by the Commission under section 305(b)(2) of the Act."
II-3
<PAGE> 76
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Amendment No.1 to the Registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form S-3
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the County of San Diego, State of
California, on July 24, 1997.
ACC CONSUMER FINANCE CORPORATION
By /s/ Rocco J. Fabiano
------------------------------------------
Rocco J. Fabiano, Chairman of the Board
and Chief Executive Officer
By /s/ Rellen M. Stewart
------------------------------------------
Rellen M. Stewart, Chief Operating Officer,
Chief Financial Officer and Treasurer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Rocco J. Fabiano, Gary S. Burdick and Rellen M.
Stewart, and each or any one of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place, and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments, exhibits thereto and other
documents in connection therewith) to this Registration Statement and any
subsequent registration statement filed by the registrant pursuant to Rule
462(b) of the Securities Act of 1933, as amended, which relates to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ Rocco J. Fabiano* Chairman of the Board and Chief July 24, 1997
- ------------------------------------- Executive Officer
Rocco J. Fabiano
/s/ Gary S. Burdick* President July 24, 1997
- -------------------------------------
Gary S. Burdick
/s/ Rellen M. Stewart* Chief Operating Officer, Chief July 24, 1997
- ------------------------------------- Financial Officer and Treasurer
Rellen M. Stewart
/s/ Shaemus A. Garland* Vice President--Controller
- -------------------------------------
Shaemus A. Garland July 24, 1997
/s/ Ethan J. Falk* Director July 24, 1997
- -------------------------------------
Ethan J. Falk
/s/ Jeffrey S. Lambert* Director July 24, 1997
- -------------------------------------
Jeffrey S. Lambert
/s/ Jeffrey E. Susskind* Director July 24, 1997
- -------------------------------------
Jeffrey E. Susskind
/s/ Rocco J. Fabiano/Gary S. Burdick/Rellen H. Stewart
- ------------------------------------------------------
* Rocco J. Fabiano
Gary S. Burdick
Rellen H. Stewart
</TABLE>
II-4
<PAGE> 77
EXHIBIT INDEX
(filed herewith)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Exhibit Description of Documents
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement - Notes.
- ------------------------------------------------------------------------------------------------------------------
1.2 Form of Underwriting Agreement - Certificates.
- ------------------------------------------------------------------------------------------------------------------
3.1 Certificate of Incorporation of ACC Consumer Finance Corporation.
- ------------------------------------------------------------------------------------------------------------------
3.2 By-Laws of ACC Consumer Finance Corporation.
- ------------------------------------------------------------------------------------------------------------------
4.1 Form of Indenture between the Trust and the Indenture Trustee.
- ------------------------------------------------------------------------------------------------------------------
4.2 Form of Indenture between the Sponsor and the Indenture Trustee.
- ------------------------------------------------------------------------------------------------------------------
4.3 Form of Pooling and Servicing Agreement.
- ------------------------------------------------------------------------------------------------------------------
4.4 Form of Trust Agreement.
- ------------------------------------------------------------------------------------------------------------------
5.1 Opinion of Dewey Ballantine with respect to validity.
- ------------------------------------------------------------------------------------------------------------------
8.1 Opinion of Dewey Ballantine with respect to tax matters.
- ------------------------------------------------------------------------------------------------------------------
10.1 Form of Receivables Acquisition Agreement.
- ------------------------------------------------------------------------------------------------------------------
23.1 Consents of Dewey Ballantine are included in its opinions filed as Exhibits 5.1 and 8.1
hereto.
- ------------------------------------------------------------------------------------------------------------------
99.1 Form of Prospectus Supplement - Certificates and Notes.
- ------------------------------------------------------------------------------------------------------------------
99.2 Form of Prospectus Supplement - Notes.
- ------------------------------------------------------------------------------------------------------------------
99.3 Form of Prospectus Supplement - Certificates.
- ------------------------------------------------------------------------------------------------------------------
99.4 Form of Prospectus Supplement - Master Trust.
==================================================================================================================
</TABLE>
II-5
<PAGE> 1
EXHIBIT 1.1
$_____________________
ACC CONSUMER FINANCE CORPORATION
% Automobile Receivables Backed Notes
UNDERWRITING AGREEMENT
__________ ___, 199__
[NAME AND ADDRESS OF UNDERWRITER]
Dear Sirs:
1. Introduction. ACC Consumer Finance Corporation, a Delaware
corporation ("ACC"), has authorized the issuance and sale of % Automobile
Receivables Backed Notes (the "Notes"), evidencing interests in a trust (the
"Trust") consisting of a combination of retail installment sales contracts (the
"Receivables") secured by new and used automobiles and light duty trucks (the
"Vehicles") financed thereby, amounts due or received thereunder on or after
___ __, 199_, (the "Cut-Off Date"), and security interests in the Vehicles
financed thereby. The Notes will be issued under a Pooling and Servicing
Agreement dated as of __________, 199_ (the "Pooling Agreement") between
____________, as seller, _________________________, as issuer, ACC Consumer
Finance Corporation, in its individual capacity,
______________________________________ as Back-up Servicer and
_______________________________________________ , as trustee (the "Trustee").
The Notes will evidence fractional undivided interests in the
Trust. [The Trustee, on behalf of the holders of the Notes (the "Noteholders"),
will have the benefit of a cash collateral account (the "Cash Collateral
Account")]. The Notes will be issued in an aggregate principal amount of $ ____,
which is equal to the original pool balance of the Receivables, exclusive of
accrued interest, as of the opening of business on the Cut-Off Date. The forms
of the Pooling Agreement and the Cash Collateral Trust Agreement (as such term
is hereinafter defined) have been timely filed as exhibits to the Registration
Statement (as such term is hereinafter defined). Capitalized terms used
<PAGE> 2
but not defined herein shall have the meanings given to them
in the Pooling Agreement.
The Trustee,__________, as cash collateral trustee (the "Cash
Collateral Trustee"),_____________ , and a financial institution as cash
collateral depositor (the "Cash Collateral Depositor"), will enter into a cash
collateral trust agreement to be dated as of _____ __, 199_ (the "Cash
Collateral Trust Agreement") pursuant to which the Cash Collateral Account will
be established for the benefit of the Trustee and the Cash Collateral Depositor,
as secured parties. In addition, _______ , the Cash Collateral Trustee, the
lenders named therein and the Cash Collateral Depositor will enter into a loan
agreement to be dated as of the Closing Date (the "Loan Agreement"), pursuant to
which the Cash Collateral Depositor and the Bank will deposit the Initial Cash
Collateral Amount (as defined in the Cash Collateral Trust Agreement) into the
Cash Collateral Account.
ACC hereby agrees with the Underwriter named in Schedule 1
hereto (the "Underwriter") as follows:
2. Representations and Warranties of ACC. ACC represents and
warrants to, and agrees with, each of the Underwriters that:
(a) A Registration Statement on Form S-3 (No. 33- _____)
relating to the Certificates, including a form of Prospectus, has been filed
with the Securities and Exchange Commission (the "Commission") and either (i)
has been declared effective under the Act of 1933 (the "Act") and is not
proposed to be amended or (ii) is proposed to be amended by amendment or
post-effective amendment. If ACC does not propose to amend such Registration
Statement or if any post-effective amendment to such Registration Statement has
been filed with the Commission prior to the execution and delivery of this
Agreement, such Registration Statement or such post-effective amendment, as the
case may be, has been declared effective by the Commission. For purposes of this
Agreement, "Effective Time" means (i) if ACC has advised the Underwriter that it
does not propose to amend such Registration Statement, the date and time as of
which such Registration Statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this Agreement,
was declared effective by the Commission, or (ii) if ACC has advised the
Underwriter that it proposes to file an amendment or post-effective amendment to
such Registration Statement, the date and time as of which such Registration
Statement, as amended by such amendment or post-effective amendment, as the case
may be, is declared effective by the Commission. "Effective Date" means the date
of the Effective Time. Such Registration Statement, as amended at the Effective
Time, including all material incorporated by reference therein and
2
<PAGE> 3
including all information, if any, deemed to be a part of such Registration
Statement as of the Effective Time pursuant to Rule 430A(b) under the Act, is
referred to herein as the "Registration Statement", and the form of prospectus
relating to the Certificates, as first filed with the Commission pursuant to and
in accordance with Rule 424(b) under the Act or, if no such filing is required,
as included in the Registration Statement, including all material incorporated
by reference in such prospectus, is hereinafter referred to as the "Prospectus".
(b) If the Effective Time is prior to the execution and
delivery of this Agreement: (i) on the Effective Date, the Registration
Statement conformed, and on the date of this Agreement the Registration
Statement conforms, in all material respects with the requirements of the Act
and the rules and regulations of the Commission ("Rules and Regulations") and
did not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) on the date of this Agreement, the Prospectus
conforms, and at the time of filing of the Prospectus pursuant to Rule 424(b)
and at the Closing Date, the Prospectus will conform, in all material respects
to the requirements of the Act and the Rules and Regulations, and the Prospectus
does not include and does not omit, and will not include, any untrue statement
of a material fact, and does not omit, to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. If the Effective Time is subsequent to the
execution and delivery of this Agreement: on the Effective Date, the
Registration Statement and the Prospectus will conform in all material respects
to the requirements of the Act and the Rules and Regulations, and (i) the
Registration Statement will not include any untrue statement of a material fact
or will not omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (ii) the Prospectus
will not include an untrue statement of a material fact or will not omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The two
preceding sentences do not apply to statements in or omissions from the
Registration Statement or Prospectus based upon written information furnished to
ACC by the Underwriter specifically for use therein, it being understood the
only such information is that described as such in Section 8(b). The conditions
to the use by ACC of a Registration Statement on Form S-3 under the Act, as set
forth in the General Instructions to Form S-3, have been satisfied with respect
to the Registration Statement and the Prospectus. There are no contracts or
documents which are required to be filed as exhibits to the Registration
Statement pursuant to the Act or
3
<PAGE> 4
the Rules and Regulations which have not been so filed on or prior to the
Effective Date.
(c) Since the respective dates as of which information is
given in the Prospectus, or the Prospectus as amended and supplemented, there
has not been any material adverse change in the general affairs, management, or
results of operations of ACC or of its subsidiaries otherwise than as set forth
or contemplated in the Prospectus or the Prospectus as amended and supplemented,
nor has there been any adverse change in the general affairs, management, or
results of operations of any other affiliate of ACC which could have a material
adverse effect on the general affairs, management or results of operations of
ACC or its subsidiaries, otherwise than as set forth or contemplated in the
Prospectus or the Prospectus as amended and supplemented.
(d) ACC is a corporation duly organized and validly existing
under the laws of the State of Delaware, and has full corporate power, authority
and legal right to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement, the Pooling
Agreement, the Cash Collateral Trust Agreement, and the Loan Agreement, and to
cause the Certificates to be issued. ACC has conducted and is conducting its
business so as to comply in all material respects with all applicable statutes
and regulations. ACC is duly qualified to do business as a foreign corporation
in good standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification.
(e) (i) There are no legal, governmental or regulatory
proceedings pending to which ACC is a party or to which any of its property is
the subject, which, if determined adversely to ACC, would individually or in the
aggregate have a material adverse effect on the performance by ACC of this
Agreement, the Pooling Agreement, the Loan Agreement or the Cash Collateral
Trust Agreement or the consummation of the transactions contemplated hereunder
or thereunder and (ii) to the best of its knowledge, no such proceedings are
threatened or contemplated by governmental or regulatory authorities or
threatened by others.
(f) This Agreement has been duly authorized and validly
executed and delivered by ACC and constitutes a valid and binding agreement of
ACC, enforceable against ACC in accordance with its terms, except to the extent
that (i) the enforceability hereof may be subject to insolvency, reorganization,
moratorium, receivership, conservatorship, or other similar laws, regulations or
procedures of general applicability now or hereafter in effect, (ii) the remedy
of specific performance and injunctive and other forms of
4
<PAGE> 5
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought and (iii) rights
to indemnification and contribution under this Agreement may be limited by state
or federal securities laws or the policies underlying such laws.
(g) The Pooling Agreement, the Loan Agreement and the Cash
Collateral Trust Agreement have been duly authorized by ACC and, when executed
and delivered by ACC and assuming the due authorization, execution and delivery
of the Pooling Agreement, the Loan Agreement and the Cash Collateral Trust
Agreement by the other parties thereto, will constitute valid and binding
obligations of ACC enforceable against ACC in accordance with their respective
terms, except to the extent that (i) the enforceability thereof may be subject
to insolvency, reorganization, moratorium, receivership, conservatorship, or
other similar laws, regulations or procedures of general applicability now or
hereafter in effect, and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
(h) The issuance and delivery of the Certificates, the
consummation of any other of the transactions contemplated herein, in the
Pooling Agreement, the Loan Agreement, or in the Cash Collateral Trust
Agreement, or the fulfillment of the terms of this Agreement, the Pooling
Agreement, the Loan Agreement or the Cash Collateral Trust Agreement, do not and
will not conflict with or violate any term or provision of the Certificate of
Incorporation By-Laws of ACC, any statute, order or regulation applicable to ACC
of any court, regulatory body, administrative agency or governmental body having
jurisdiction over ACC and do not and will not conflict with, result in a breach
or violation or the acceleration of or constitute a default under or result in
the creation or imposition of any lien, charge or encumbrance upon any of the
property or assets of ACC pursuant to the terms of, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which ACC is a
party or by which ACC may be bound or to which any of the property or assets of
ACC may be subject except for conflicts, violations, breaches, accelerations and
defaults which would not, individually or in the aggregate, be materially
adverse to ACC or materially adverse to the transactions contemplated by this
Agreement.
(i) _____________________________________________ is an
independent public accountant with respect to ACC as required by the Act and the
Rules and Regulations.
(j) The direction by ACC to the Trustee to execute,
countersign, issue and deliver the Notes has been duly
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authorized by ACC, and, assuming the Trustee has been duly authorized to do so,
when executed, countersigned, issued and delivered by the Trustee in accordance
with the Pooling Agreement, the Notes will be validly issued and outstanding and
will be entitled to the benefits of the Pooling Agreement.
(k) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body of the
United States is required for the issuance and sale of the Notes, or the
consummation by ACC of the other transactions contemplated by this Agreement,
the Pooling Agreement, the Loan Agreement or the Cash Collateral Trust
Agreement, except the registration under the Act of the Notes and such consents,
approvals, authorizations, registrations or qualifications as may have been
obtained or effected or as may be required under securities or Blue Sky laws in
connection with the purchase and distribution of the Notes by the Underwriter.
(l) ACC possesses all material licenses, certificates,
authorizations or permits issued by the appropriate state, Federal or foreign
regulatory agencies or bodies necessary to conduct the business now conducted by
it and as described in the Prospectus and ACC has not received notice of
proceedings relating to the revocation or modification of any such license,
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the conduct of its business, operations, financial condition or
income.
(m) At the time of execution and delivery of the Pooling
Agreement, ACC (i) will not have assigned to any person any of its right, title
or interest in the Receivables or in the Pooling Agreement or the Notes and (ii)
will have the power and authority to sell the Receivables to the Trustee and to
sell the Notes to the Underwriter, and upon execution and delivery of the
Pooling Agreement by the Trustee, the Trustee will have acquired beneficial
ownership of all of ACC's right, title and interest in and to the Receivables,
and upon delivery to the Underwriter of the Notes the Underwriter will have good
and marketable title to the Notes.
(n) As of the Cut-Off Date, the Receivables will meet the
eligibility criteria described in the Prospectus.
(o) The Trust created by the Pooling Agreement is not, and
immediately following the issuance and sale of the Notes will not be, required
to be registered as an "investment company" under the Investment Company Act of
1940, as amended (the "1940 Act"), as in effect on the date hereof.
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<PAGE> 7
(p) ACC has authorized the conveyance of the Receivables to
the Trust, and ACC has authorized the Trust to issue the Notes.
(q) Each of the Notes, the Pooling Agreement and the Cash
Collateral Account conforms in all material respects to the descriptions thereof
contained in the Prospectus.
(r) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of this Agreement, the
Pooling Agreement, the Cash Collateral Trust Agreement, the Loan Agreement, the
Cash Collateral Account and the Notes that are required to be paid by ACC at or
prior to the Closing Date have been paid or will be paid at or prior to the
Closing Date.
(s) ACC will not apply the proceeds of the sale of the Notes
pursuant to this Agreement to purchase securities (which term does not include
the Receivables) within the meaning of Regulation T promulgated by the Federal
Reserve Board.
(t) As of the Closing Date, the representations and warranties
of ACC in the Pooling Agreement will be true and correct.
Any certificate signed by an officer of ACC and delivered to
the Underwriter or the Underwriter's counsel in connection with an offering of
the Notes shall be deemed, and shall state that it is, a representation and
warranty as to the matters covered thereby to each person to whom the
representations and warranties in this Section 2 are made.
3. Purchase, Sale, Delivery and Payments. The Underwriter's
commitment to purchase the Notes pursuant to this Agreement shall be deemed to
have been made on the basis of the representations and warranties herein
contained and shall be subject to the terms and conditions herein set forth. ACC
agrees to instruct the Trustee to issue and agrees to sell to the Underwriter,
and the Underwriter, severally and not jointly, agree, to purchase from ACC at
the purchase price for the Notes set forth opposite the names of the Underwriter
on Schedule 1 hereto, the respective principal amount of Notes set forth on
Schedule 1 hereto. Payment of the purchase price for, and delivery of, any Notes
to be purchased by the Underwriter shall be made at the office of Dewey
Ballantine, 1301 Avenue of the Americas, New York, New York, or at such other
place as shall be agreed upon by the Underwriter and ACC, at 10:00 a.m. New York
City time on ________ __ , 199__ (the "Closing Date"), or at such other time or
date or time as shall be agreed upon in writing by the Underwriter and ACC. On
the Closing Date, payment shall be made to ACC by wire transfer of same day
funds payable to the account of ACC
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against delivery to the Trustee as custodian for The Depository Trust Company
("DTC") of the Notes in the form of one or more global securities in definitive
form (the "Global Certificates") and registered in the name of Cede & Co., as
nominee for DTC. The Global Certificates will be made available for checking at
Dewey Ballantine at least 24 hours prior to the Closing Date.
4. Offering by Underwriters. It is understood that the
Underwriter propose to offer the Notes for sale to the public (which may include
selected dealers) as set forth in the Prospectus.
5. Covenants of ACC. ACC covenants with the Underwriter as
follows:
(a) To prepare a Prospectus setting forth any price related
information previously omitted from the effective Registration Statement
pursuant to Rule 430A under the Act within the time period prescribed by Rule
430A, and to transmit such Prospectus to the Commission for filing pursuant to
Rule 424(b) under the Act within the prescribed time period, and prior to the
Closing Date to provide evidence satisfactory to the Underwriter of such timely
filing, or to prepare and timely file a post-effective amendment to the
Registration Statement providing such information, which post-effective
amendment shall have been declared effective in accordance with the requirements
of Rule 430A under the Act and to provide evidence satisfactory to the
Underwriter of the effectiveness thereof.
(b) If at any time when the Prospectus as amended or
supplemented is required by the Act to be delivered in connection with sales of
the Notes by the Underwriter, any event shall occur or condition exist as a
result of which it is necessary, in the opinion of the Underwriter's counsel or
counsel for ACC, further to amend or supplement the Prospectus as then amended
or supplemented in order that the Prospectus as amended or supplemented will not
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of circumstances
existing at the time it is delivered to a purchaser, not misleading or if it
shall be necessary, in the opinion of any such counsel, at any such time to
amend or supplement the Registration Statement or the Prospectus as then amended
or supplemented in order to comply with the requirements of the Act or the Rules
and Regulations, or if required by such Rules and Regulations, including Rule
430A thereunder, to file a post-effective amendment to such Registration
Statement (including an amended Prospectus), ACC will promptly notify the
Underwriter of such event and will prepare and file with the Commission (subject
to the Underwriter's prior review), at its own expense, such
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<PAGE> 9
amendment or supplement as may be necessary to correct such untrue statement or
omission or to make the Registration Statement comply with such requirements,
and within two Business Days will furnish to the Underwriter as many copies of
the Prospectus, as amended or supplemented, as the Underwriter shall reasonably
request. Neither the Underwriter's consent to, nor the Underwriter's delivery
of, any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6 of this Agreement.
(c) ACC will give the Underwriter reasonable notice of its
intention to file any amendment to the Registration Statement, the Prospectus or
the Prospectus as amended or supplemented, pursuant to the Act, and will furnish
the Underwriter with copies of any such amendment or supplement proposed to be
filed a reasonable time in advance of filing, and will not file any such
amendment or supplement to which the Underwriter or the Underwriter's counsel
shall object.
(d) ACC will notify the Underwriter immediately, and confirm
the notice in writing, (i) of the effectiveness of any amendment to the
Registration Statement, (ii) of the mailing or the delivery to the Commission
for filing of any supplement to the Prospectus or the Prospectus as amended or
supplemented, (iii) of the receipt and contents of any comments from the
Commission with respect to the Registration Statement or the Prospectus or the
Prospectus as amended or supplemented, (iv) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information and (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose. ACC will make
every reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(e) ACC will deliver to the Underwriter as many signed and as
many conformed copies of the Registration Statement (as originally filed) and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference in the Prospectus),
each related preliminary prospectus, and so long as delivery of a Prospectus
relating to the Notes is required to be delivered under the Act in connection
with sales by the Underwriter or dealer, the Prospectus and all amendments and
supplements to such documents, in each case as soon as available and in such
quantities as the Underwriter may reasonably request. ACC will also furnish to
the Underwriter copies of any report on Form SR required by Rule 463 under the
Act.
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(f) ACC will make generally available to holders of the Notes
as soon as practicable, but in any event not later than the Availability Date
(as defined below), earning statements of the Trust (which need not be audited)
complying with Section 11(a) of the Act and the Rules and Regulations (including
Rule 158) and covering a period of at least twelve consecutive months beginning
after the Effective Date which will satisfy the provisions of Section 11(a) of
the Act. For the purposes of the preceding sentence, the "Availability Date"
means the 45th day after the end of the Trust's fourth fiscal quarter following
the fiscal quarter that includes the Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Trust's fiscal year, "Availability
Date" means the 90th day after the end of such fourth fiscal quarter.
(g) ACC will endeavor, in cooperation with the Underwriter, to
qualify the Notes for sale and the determination of their eligibility for
investment under the applicable securities laws of such states and other
jurisdictions of the United States as the Underwriter may designate, and will
maintain or cause to be maintained such qualifications in effect for as long as
may be required for the distribution of the Notes. ACC will file or cause the
filing of such statements and reports as may be required by the laws of each
jurisdiction in which the Certificates have been qualified as above provided.
(h) ACC will not, directly or indirectly, without the
Underwriter's prior consent, publicly offer or sell or contract to sell or
attempt to offer, sell or dispose of any certificates or other similar
securities representing interests in or secured by the Receivables for a period
of 30 days following the commencement of the offering of the Notes to the
public.
(i) For a period from the date of this agreement until the
retirement of the Notes, ACC Consumer Finance Corporation, as Servicer, will
deliver to the Underwriter, as soon as practicable, copies of each certificate,
report or notice and the annual statements of compliance delivered by ACC
Consumer Finance Corporation, as Servicer, to the Trustee pursuant to Section of
the Pooling Agreement, the annual statement of a firm of independent public
accountants furnished to the Trustee pursuant to Section of the Pooling
Agreement; and such other information concerning the Receivables, ACC Consumer
Finance Corporation or the Notes, as the Underwriter may from time to time
reasonably request.
(j) On or before the Closing Date, ACC shall furnish or make
available to the Underwriter or its counsel such additional documents and
information regarding ACC and its affairs as the Underwriter may from time to
time
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reasonably request, including any and all documentation reasonably requested in
connection with their due diligence efforts regarding information in the
Prospectus and in order to evidence the accuracy or completeness of any of the
conditions contained in this Agreement.
(k) So long as any Note is outstanding, ACC shall furnish to
the Underwriter by first-class mail as soon as practicable, all documents (A)
distributed, or caused to be distributed, by ACC to Noteholders, (B) filed, or
caused to be filed, by ACC with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (C) any order of the
Commission under the Exchange Act or pursuant to a "no-action" letter from the
staff of the Commission and (D) from time to time, such other information in the
possession of ACC concerning the Trust as the Underwriter may reasonably
request.
(l) ACC shall apply the net proceeds from the sale of the
Notes in the manner set forth in the Prospectus.
(m) If, between the date hereof or, if earlier, the dates as
of which information is given in the Prospectus and the Closing Date, to the
knowledge of ACC there shall have been any material change, or any development
involving a prospective material change in or affecting the general affairs,
management, financial position, shareholders' equity or results of operations of
ACC, ACC will give prompt written notice thereof to the Underwriter.
(n) To the extent, if any, that any rating provided with
respect to the Notes set forth in Section 6(j) hereof is conditional upon the
furnishing of documents reasonably available to ACC or the taking of any other
reasonable actions by ACC, ACC shall furnish such documents or take any such
other actions.
6. Conditions of the Obligations of the Underwriter. The
obligations of the Underwriter to purchase the Notes pursuant to this Agreement
are subject to the accuracy on and as of the Closing Date of the representations
and warranties on the part of ACC herein contained, to the accuracy of the
statements of officers of ACC made pursuant hereto, to the performance by ACC of
all of its obligations hereunder and to the following conditions at the Closing
Date:
(a) The Underwriter shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time is prior to the execution
and delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and delivery
of this Agreement, shall be prior to the filing of the amendment or
post-effective amendment to the Registration Statement to
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be filed shortly prior to the Effective Time), from ___________________________
______________________ , in form and substance satisfactory to the Underwriter
and counsel for the Underwriter, confirming that they are independent public
accountants within the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating in effect that (i) they have performed
certain specified procedures as a result of which they have determined that
certain information of an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information derived from the
general accounting records of the Trust and ACC set forth in the Registration
Statement and the Prospectus), agrees with the accounting records of the Trust
and ACC, excluding any questions of legal interpretation, and (ii) they have
performed certain specified procedures with respect to the computer programs
used to select the Receivables and to generate information with respect to the
Receivables set forth in the Registration Statement and the Prospectus.
For purposes of this subsection (a), if the Effective Time is
subsequent to the execution and delivery of this Agreement, "Registration
Statement" shall mean the registration statement as proposed to be amended by
the amendment or post-effective amendment to be filed shortly prior to the
Effective Time, and "Prospectus" shall mean the prospectus included in such
Registration Statement. All financial statements included in material
incorporated by reference into the Prospectus shall be deemed included in the
Registration Statement for purposes of this subsection (a).
(b) If the Effective Time is not prior to the execution and
delivery of this Agreement, the Effective Time shall have occurred not later
than 10:00 p.m., New York time, on the date of this Agreement or such later date
as shall have been consented to by the Underwriter. If the Effective Time is
prior to the execution and delivery of this Agreement, the Prospectus shall have
been filed with the Commission in accordance with the Rules and Regulations and
Section 5(a) of this Agreement.
(c) The Registration Statement shall have been declared
effective by the Commission and no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the Act or proceedings
therefor initiated or threatened by the Commission, any price-related
information previously omitted from the effective Registration Statement
pursuant to Rule 430A under the Act shall have been included in the Prospectus
and transmitted to the Commission for filing pursuant to Rule 424 under the Act
within the prescribed time period, and ACC shall have provided evidence
satisfactory to the Underwriter of such timely filing, or a post-effective
amendment to the Registration Statement providing such information shall have
been promptly filed with
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the Commission and declared effective in accordance with the requirements of
Rule 430A under the Act, and prior to the Closing Date, ACC shall have provided
evidence satisfactory to the Underwriter of such effectiveness and there shall
not have come to the attention of the Underwriter facts that would cause the
Underwriter to believe that the Prospectus, at the time it was required to be
delivered to a purchaser of the Notes, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at such time, not
misleading.
(d) The Underwriter shall have received the favorable opinion,
dated the Closing Date, of , counsel to ACC, or other counsel to ACC, acceptable
to the Underwriter and its counsel, addressed to the Underwriter and in form and
scope satisfactory to the Underwriter's counsel, to the effect that:
i) ACC has been duly incorporated and is
validly existing as a corporation under the laws of the State of
Delaware and has full corporate power and authority to own its
properties and conduct its business as described in the Prospectus; ACC
has full corporate power and authority to execute, deliver, and perform
its obligations under this Agreement, the Pooling Agreement, the Loan
Agreement, and the Cash Collateral Trust Agreement and to cause the
Notes to be issued and to consummate the transactions contemplated
hereby and thereby.
ii) ACC has duly authorized and executed
this Agreement, the Pooling Agreement, the Loan Agreement and the Cash
Collateral Trust Agreement and each such agreement constitutes the
valid, legal and binding obligation of ACC enforceable against ACC in
accordance with its terms.
iii) The execution and delivery, and
performance of the Pooling Agreement, the Cash Collateral Trust
Agreement, this Agreement, the transfer of the Receivables to the
Trust, the issuance and sale of the Notes and consummation of any other
of the transactions contemplated herein or in the Pooling Agreement do
not conflict with or result in a violation of (a) any law or regulation
of the United States of America or the State of New York or Delaware,
(b) the Certificate of Incorporation or By-laws of ACC, (c) any order,
writ, judgment or decree known to such counsel to which ACC is a party
or is subject, or (d) result in any lien, charge or encumbrance upon
any of the properties or assets of ACC.
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iv) The Notes have been duly authorized and,
when executed and authenticated in accordance with the terms of the
Pooling Agreement and delivered to and paid for by the Underwriter
pursuant to this Agreement, will be duly and validly issued and
outstanding and will be entitled to the benefits of the Pooling
Agreement.
v) No consent, approval or authorization
of, or registration, declaration or filing with, any court or
governmental agency or body of the United States of America is required
for the issuance of the Notes and the sale of the Notes to the
Underwriter or the consummation of the other transactions contemplated
by this Agreement, the Pooling Agreement, the Loan Agreement, or the
Cash Collateral Trust Agreement except for (x) the filing of a Uniform
Commercial Code financing statement in the State of _____ with respect
to the transfer of the Receivables to the Trust, (y) such as have been
obtained and made under the Act and (z) such as may be required under
state securities laws.
vi) The Registration Statement was declared
effective under the Act as of the date and time specified in such
opinion, the Prospectus either was filed with the Commission pursuant
to the subparagraph of Rule 424(b) specified in such opinion on the
date specified therein or was included in the Registration Statement
(as the case may be), and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been instituted or is pending or
contemplated under the Act, and the Registration Statement and the
Prospectus, and each amendment or supplement thereof, as of their
respective effective or issue dates, complies as to form in all
material respects with the requirements of the Act and the Rules and
Regulations; such counsel have no reason to believe that the
Registration Statement or any amendment thereto, as of its Effective
Date, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Registration
Statement as of the Closing Date, or the Prospectus, as of its issue
date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; it being understood that such
counsel need express no opinion as to the financial statements or other
financial data contained in the Registration Statement or the
Prospectus.
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vii) The conditions to the use by ACC of a
registration statement on Form S-3 under the Act, as set forth in the
General Instructions to Form S-3, have been satisfied with respect to
the Registration Statement and the Prospectus. There are no contracts
or documents of ACC which are required to be filed as exhibits to the
Registration Statement pursuant to the Act or the Rules and Regulations
thereunder which have not been so filed.
viii) There are no actions, proceedings or
investigations pending or threatened before any court, administrative
agency or other tribunal to which ACC is a named party or to which its
assets are subject (A) asserting the invalidity of the Pooling
Agreement, the Loan Agreement, the Cash Collateral Trust Agreement,
this Agreement or the Notes, (B) seeking to prevent the issuance of the
Notes or the consummation by ACC of any of the transactions
contemplated by the Pooling Agreement, the Loan Agreement, the Cash
Collateral Trust Agreement or this Agreement, (C) that might adversely
affect the validity or enforceability of the Pooling Agreement, the
Loan Agreement, the Cash Collateral Trust Agreement, this Agreement or
the Notes, or (D) seeking to adversely affect the federal income tax
attributes of the Notes as described in the Prospectus under the
heading "Certain Federal Income Tax Consequences."
ix) The Registration Statement at the time
it became effective, and any amendment thereto at the time such
amendment became effective, complied as to form in all material
respects with the applicable requirements of the Act and the Rules and
Regulations.
x) The Pooling Agreement is not required to
be qualified under the Trust Indenture Act of 1939, as
amended.
xi) The Trust is not required to be
registered under the 1940 Act, and immediately following the issuance
and sale of the Notes in the manner contemplated by the Pooling
Agreement and this Agreement, the Trust will not be required to be so
registered.
xii) The Notes, this Agreement, the Pooling
Agreement and the Cash Collateral Account conform in all material
respects to the respective descriptions thereof in the Registration
Statement and the Prospectus.
xiii) The statements in the Prospectus under
the heading "Certain Legal Aspects of the Receivables," "SUMMARY OF
TERMS -- Certain Legal Aspects of the Receivables," "SUMMARY OF TERMS
-- Certain Federal Tax Considerations," "Certain Federal Income Tax
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Consequences," "ERISA Considerations," and "SPECIAL CONSIDERATIONS --
Certain Legal Aspects," to the extent that they constitute matters of
law or legal conclusions with respect thereto, have been prepared or
reviewed by such counsel and are correct in all material respects.
xiv) No filing or other action, except the
filing of a Uniform Commercial Code financing statement on Form UCC-1
with the ________________[State Department of Assessments and Taxation]
naming ACC as "debtor" and the Trustee as "secured party," is necessary
to perfect the transfer of the Receivables and proceeds (as defined in
Section 9-306 of the ________Uniform Commercial Code) thereof against
the claims of creditors of, and transferees from, ACC.
xv) The Receivables constitute "chattel
paper" as defined in Section 9-105 of the Uniform
Commercial Code as in effect in the State of _______________.
In addition, such counsel shall state that nothing has come to
their attention that would lead them to believe that the Registration Statement,
at the time it became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Prospectus,
as of its date and as of the Closing Date, contains an untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(e) The Underwriter shall have received the favorable opinion
of counsel to the Trustee, dated the Closing Date, addressed to the Underwriter
and in form and scope satisfactory to the Underwriter's counsel, to the effect
that:
i) The Trustee has duly authorized, executed
and delivered the Pooling Agreement and the Cash
Collateral Trust Agreement.
ii) The Trustee has been duly organized and is validly
existing as a ____________________________________________________ in
good standing under the laws of _______ of _________ and has full power
and authority to execute and deliver the Pooling Agreement and the Cash
Collateral Trust Agreement and to perform its obligations thereunder
and each such Agreement constitutes the valid, legal and binding
obligation of the Trustee, enforceable against the Trustee in
accordance with its terms.
iii) The Notes have been duly executed and
countersigned by the Trustee.
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iv) The execution and delivery by the Trustee of the
Pooling Agreement and the Cash Collateral Trust Agreement and the
performance by the Trustee of its duties thereunder do not conflict
with or result in a violation of (a) any law or regulation of the
United States of America or the State of _______, (b) the charter or
by-laws of the Trustee, (c) any order, writ, judgment or decree or (d)
any agreement, instrument, order, writ, judgment or decree known to
such counsel to which the Trustee is a party or is subject.
v) No consent, approval or authorization of, or
registration, declaration or filing with, any court or governmental
agency or body of the United States of America or any state thereof is
required for the execution, delivery or performance by the Trustee of
the Pooling Agreement and the Cash Collateral Trust Agreement.
(f) The Underwriters shall have received the favorable opinion
or opinions, dated the Closing Date, of the Underwriter's counsel, ____________,
with respect to the issuance and sale of the Notes, the Registration Statement,
this Agreement, the Prospectus and such other related matters as the Underwriter
may require.
(g) The Underwriter shall have received an opinion, dated the
Closing Date, of Dewey Ballantine, special counsel to ACC, addressed to, and
satisfactory to, Standard & Poor's Corporation ("S&P"), Moody's Investors
Service, Inc. ("Moody's") and the Underwriter's counsel, relating to the sale of
the Receivables to the Trustee, and such counsel to ACC shall have consented to
reliance by the Underwriter on such opinion as though such opinion had been
addressed to the Underwriter.
(h) ACC shall have furnished to the Underwriter a certificate
signed on behalf of ACC by any two of the chairman of the board, the president,
any vice-chairman of the board, any executive vice president, any senior vice
president, any vice president, the treasurer, or the controller of the Seller or
the Servicer, as appropriate, dated the Closing Date, as to (i) the accuracy of
the representations and warranties of ACC herein and in the Pooling Agreement at
and as of the Closing Date, (ii) the performance by ACC of all of its
obligations hereunder to be performed at or prior to the Closing Date and (iii)
such other matters as the Underwriter may reasonably request.
(i) The Trustee shall have furnished to the Underwriter a
certificate of the Trustee, signed by one or more duly authorized officers of
the Trustee, dated the Closing Date, as to the due acceptance of the Pooling
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Agreement by the Trustee and the due execution and delivery of the Notes by the
Trustee thereunder and such other matters as the Underwriter shall reasonably
request.
(j) The Notes shall have been rated "___" by S&P and "___" by
Moody's, and such ratings shall not have been rescinded.
(k) The Underwriter shall have received from _________________
_______________________________________, or other independent certified public
accountants acceptable to the Underwriter, a letter, dated as of the date of the
Closing Date, delivered at such time in form satisfactory to the Underwriter.
(l) Prior to the Closing Date the Underwriter's counsel,
__________________, shall have been furnished with such documents and opinions
as they may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Notes as herein contemplated and related proceedings or
in order to evidence the accuracy and completeness of any of the representations
and warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by ACC in connection with the issuance and sale of the
Notes as herein contemplated shall be satisfactory in form and substance to the
Underwriter and _______________________.
(m) Since the respective dates as of which information is
given in the Prospectus, there shall not have been any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of operations of
ACC otherwise than as set forth in the Prospectus, the effect of which is in the
Underwriter's judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Notes on
the terms and in the manner contemplated in the Prospectus or which, in the
judgment of the Underwriter, materially impairs the investment quality of the
Notes or the ability of the Servicer to service the Receivables.
(n) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, development or event
involving a prospective change, in the condition (financial or other), business,
properties or results of operations of ACC or its automobile loan business or
the Cash Collateral Depositor which, in the judgment of the Underwriter, is
material and adverse and makes it impracticable or inadvisable to proceed with
the completion of the public offering or the sale of and payment for the Notes
or (ii) any downgrading in the rating of any securities of ACC or the Cash
Collateral Depositor by any nationally recognized statistical rating
organization (as defined for purposes of
18
<PAGE> 19
Rule 436(g) under the Act) or any public announcement that any such organization
has under surveillance or review its rating of any securities of ACC or the Cash
Collateral Depositor (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating); or (iv) any suspension or limitation of trading in securities generally
on the New York Stock Exchange, or any setting of minimum prices for trading on
such exchange; or (v) any outbreak or escalation of major hostilities in which
the United States is involved, any declaration of war by Congress or any other
substantial national or international calamity, emergency or change in financial
markets if, in the Representative's judgment, the effect of any such outbreak,
escalation, declaration, calamity, emergency or change makes it impractical or
inadvisable to proceed with completion of the sale of and payment for the Notes.
(o) The Cash Collateral Trust Agreement and the Loan Agreement
shall have been duly authorized, executed and delivered by each party thereto;
on or prior to the Closing Date, the Cash Collateral Trustee shall have
established the Cash Collateral Account pursuant to the Cash Collateral Trust
Agreement and the Cash Collateral Depositor and ACC shall have deposited the
Initial Cash Collateral Amount in the Cash Collateral Account pursuant to the
Loan Agreement; and all fees due and payable to the Cash Collateral Depositor as
of the Closing Date shall have been paid in full by ACC on or prior to the
Closing Date.
(p) The Underwriter shall have received evidence satisfactory
to the Underwriter and its counsel that (i) on or before the Closing Date, UCC-1
financing statements have been filed in the offices of the ________________
[State Department of Assessments and Taxation], reflecting the interest of the
Trust in the Receivables and the proceeds thereof and (ii) the Trust will have a
first priority perfected security interest in the amounts on deposit from time
to time in the Cash Collateral Account.
(q) The Underwriter shall have received an opinion from
________________ counsel for the Cash Collateral Depositor, addressed to the
Underwriter, dated the Closing Date and reasonably satisfactory in form and
substance to the Underwriter and its counsel, to the effect that:
i) the Cash Collateral Depositor is a corporation duly
organized and validly existing under the laws of _____ and has the
corporate power and authority under the laws of ____________ to
execute, deliver and perform its obligations under the Cash Collateral
Trust Agreement and the Loan Agreement through its New York branch (the
"Branch"), including the
19
<PAGE> 20
obligation of the Cash Collateral Depositor to deposit the Initial Cash
Collateral Amount in the Cash Collateral Account in accordance with the
terms of the Loan
Agreement;
ii) each of the Cash Collateral Trust Agreement and the
Loan Agreement have been duly authorized and, when executed and
delivered by the Cash Collateral Depositor through the Branch, each as
the Cash Collateral Trust Agreement and the Loan Agreement, including
the obligation of the Cash Collateral Depositor, acting through the
Branch, to deposit the Initial Cash Collateral Amount in the Cash
Collateral Account in accordance with the terms of the Loan Agreement,
will constitute the valid and legally binding obligation of the Cash
Collateral Depositor enforceable against the Branch in accordance with
its terms subject, as to enforcement, to (A) bankruptcy, insolvency,
reorganization, liquidation, readjustment of debt and other laws and
equitable principles relating to or affecting the enforcement of
creditors' rights generally as they may be applied in the event of the
bankruptcy, insolvency, reorganization, liquidation or readjustment of
debt of, or the appointment of a receiver with respect to the property
of, or a similar event applicable to, the Branch, and (B) the effect of
any moratorium or similar occurrence affecting the Branch;
iii) each of the Cash Collateral Trust Agreement and the
Loan Agreement, including the obligation of the Cash Collateral
Depositor, acting through the Branch, to deposit the Initial Cash
Collateral Amount in the Cash Collateral Account in accordance with the
terms of the Loan Agreement, is enforceable in accordance with its
terms against the Cash Collateral Depositor's head office in __________
if the Branch defaults in its obligations thereunder, subject, as to
enforcement, to (A) bankruptcy, insolvency, reorganization,
liquidation, readjustment of debt and other laws and equitable
principles relating to or affecting the enforcement of creditors'
rights generally as they may be applied in the event of the bankruptcy,
insolvency, reorganization, liquidation or readjustment of debt of, or
the appointment of a receiver with respect to the property of, or a
similar event applicable to, the Cash Collateral Depositor, and (B) the
effect of any moratorium or similar occurrence affecting the Cash
Collateral Depositor; and
iv) any judgment for a fixed and definite sum of money
rendered by the courts of the State of New York or the United States of
America located in the State of New York, in respect of any suit,
action or other proceeding
20
<PAGE> 21
against the Cash Collateral Depositor for the enforcement of the Cash
Collateral Trust Agreement or the Loan Agreement will, upon request, be
declared valid and enforceable against the Cash Collateral Depositor by
the competent courts of ____________, usually without reexamination of
the matters adjudicated upon, if such judgment is not subject to appeal
and is enforceable according to the laws of the State of New York or
United States Federal law. However, such judgment will not be enforced
if its contents are in violation of fundamental principles of the
___________ legal system (order public) or if it has been rendered in
violation of such principles. In addition, enforcement may be refused
if the foreign state does not observe reciprocity. According to the
approach of _____________ courts, reciprocity is affirmed with regard
to judgments of United States Federal courts and courts of the State of
New York. As a general rule it can be stated that judgments of United
States Federal courts and courts of the State of New York are
enforceable in __________, and such counsel knows of no reason why such
judgments would be a violation of the fundamental principles of the
______________ legal system.
(r) The Underwriter shall have received an opinion from
_________________________, special United States counsel for the Cash Collateral
Depositor, addressed to the Underwriter, dated the Closing Date and reasonably
satisfactory in form and substance to the Underwriter and its counsel, to the
effect that:
i) the Cash Collateral Depositor is licensed by
the Superintendent of Banks of the State of _____________________
to maintain a branch for the conduct of a banking
business at ________________________________________________________
_____________,
ii) no authorization, consent or approval of or by any
governmental authority of the United States or the State of New York is
necessary for the execution, delivery and performance by the Branch as
the Cash Collateral Depositor of the Cash Collateral Trust Agreement
and the Loan Agreement, including the obligation of the Cash Collateral
Depositor, acting through the Branch, to deposit the Initial Cash
Collateral Amount in the Cash Collateral Account in accordance with the
terms of the Loan Agreement, except such authorizations, consents and
approvals as are in full force and effect;
iii) each of the Cash Collateral Trust Agreement and the
Loan Agreement has been duly authorized, executed and delivered by the
Branch; and
21
<PAGE> 22
iv) each of the Cash Collateral Trust Agreement and the
Loan Agreement, including the obligation of the Cash Collateral
Depositor, acting through the Branch, to deposit the Initial Cash
Collateral Account in the Cash Collateral Account in accordance with
the terms of the Loan Agreement, constitutes the legal, valid and
binding obligation of the Cash Collateral Depositor and the Branch,
enforceable against the Cash Collateral Depositor and the Branch in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, liquidation,
moratorium, readjustment of debt or other similar laws affecting the
enforcement of creditors' rights generally, as such laws may be applied
in the event of a bankruptcy, insolvency, reorganization, liquidation,
moratorium, readjustment of debt or other similar proceedings of or
affecting the Cash Collateral Depositor or the Branch, and subject to
the application of general principles of equity regardless of whether
such enforceability is considered in a proceeding at law or in equity.
(s) The Underwriter shall have received the favorable opinion
of counsel to the Cash Collateral Trustee, addressed to the Underwriter, dated
the Closing Date and reasonably satisfactory in form and substance to the
Underwriter and its counsel, to the effect that:
i) the Cash Collateral Trustee is an association duly
organized, validly existing and in good standing as a licensed national
banking association under the laws of the United States, and has the
power and authority (corporate and other) to enter into, and to take
all action required of it under the Cash Collateral Trust Agreement and
the Loan Agreement; and
ii) the Cash Collateral Trust Agreement and the Loan
Agreement have each been duly authorized, executed and delivered by the
Cash Collateral Trustee and each constitutes a legal, valid and binding
agreement of the Cash Collateral Trustee, enforceable in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, liquidation, reorganization, moratorium or
other similar laws affecting the enforcement of rights of creditors
against the Cash Collateral Trustee generally, and the application of
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(t) The Underwriter shall have received from the Cash
Collateral Trustee a certificate dated the Closing Date of an authorized officer
of the Cash Collateral Trustee
22
<PAGE> 23
reasonably acceptable to the Underwriter in which such officer shall state that,
to the best of such officer's knowledge:
i) the execution and delivery of the Cash Collateral
Trust Agreement and the Loan Agreement by the Cash Collateral Trust and
the performance by the Cash Collateral Trustee of the terms thereof do
not conflict with or result in a violation of (A) the charter or
by-laws of the Cash Collateral Trustee or (B) any law of the United
States of America or the State of New York or any regulation governing
the banking or trust powers of the Cash Collateral Trustee; and
ii) no approval, authorization or other action by, or
filing with, any governmental authority of the United States of America
or the State of New York having jurisdiction over the banking or trust
powers of the Cash Collateral Trustee is required in connection with
its execution and delivery of the Cash Collateral Trust Agreement and
the Loan Agreement or the performance by the Cash Collateral Trustee of
the terms of the Cash Collateral Trust Agreement and the Loan
Agreement.
(u) ACC will provide or cause to be provided to the
Representative such conformed copies of such opinions, certificates, letters and
documents being provided pursuant hereto and such further information,
certificates and documents as the Underwriter may reasonably request. The
Underwriter may in its sole discretion waive compliance with any conditions to
the obligations of the Underwriter hereunder.
If any condition specified in this Section 6 shall not have
been fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriter by notice to ACC at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section 7.
7. Payment of Expenses. ACC agrees to pay all expenses
incident to the performance of its obligations under this Agreement, and will
reimburse the Underwriter (if and to the extent incurred by them) for any filing
fees and other expenses (including fees and disbursements of counsel), including
without limitation those related to (i) the filing of the Registration Statement
and all amendments thereto, (ii) the duplication and delivery to the
Underwriter, in such quantities as the Underwriter may reasonably request, of
copies of this Agreement, (iii) the preparation, issuance and delivery of the
Notes and the determination of their eligibility for investment under the laws
of such jurisdictions as the Underwriter designates, (iv) the fees and
disbursements of ___________________________________________________, counsel
23
<PAGE> 24
for ACC, 50% of the fees of _______________________, special counsel for ACC,
and the fees and disbursements of ________________________, accountants of ACC,
(v) the qualification of the Notes under securities and Blue Sky laws and the
determination of the eligibility of the Notes for investment in accordance with
the provisions of Section 5(g), including filing fees and disbursements and the
fees of _______________________, the Underwriter's counsel, in connection
therewith and in connection with the preparation of any Blue Sky Survey, (vi)
the printing and delivery to the Underwriter, in such quantities as the
Underwriter may reasonably request, hereinabove stated, of copies of the
Registration Statement and Prospectus and all amendments and supplements
thereto, and of any Blue Sky Survey, (vii) for the filing fee of the National
Association of Securities Dealers, Inc., (viii) the duplication and delivery to
the Underwriter in such quantities as the Underwriter may reasonably request, of
copies of the Pooling Agreement and the Collateral Trust Agreement, (ix) the
fees charged by nationally recognized statistical rating agencies for rating the
Notes, (x) the fees and expenses of the Trustee and its counsel, (xi) the fees
and expenses of the Cash Collateral Trustee and its counsel, (xii) the fees and
expenses of the Cash Collateral Depositor and its counsel.
8. Indemnification. ACC agrees to indemnify and hold harmless
the Underwriter and each person, if any, who controls the Underwriter within the
meaning of the Act or the Exchange Act, as follows:
(a) ACC will indemnify and hold harmless the Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading (in the case of the Prospectus or any amendment or
supplement thereto, in the light of the circumstances under which they were
made) and will reimburse the Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that ACC will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to ACC by
24
<PAGE> 25
the Underwriter specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (b) below.
(b) The Underwriter will indemnify and hold harmless ACC
against any losses, claims, damages or liabilities to which ACC may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading (in the case of the Prospectus, in the light of the circumstances
under which they were made), in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to ACC by the Underwriter specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by ACC in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, it being understood and agreed that the
only such information furnished by the Underwriter consists of (i) the following
information in the Prospectus furnished on behalf of the Underwriter: [the last
paragraph at the bottom of the cover page concerning the terms of the offering
by the Underwriter, the legend concerning overallotments and stabilizing on the
inside front cover page and the concession and reallowance figures appearing in
the third paragraph under the caption "Underwriting."]
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice
25
<PAGE> 26
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
9. Contribution. (a) If the indemnification provided for in
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) of Section 8 above, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in such
subsection (a) or (b) (i) in such proportion as is appropriate to reflect the
relative benefits received by ACC on the one hand and the Underwriter on the
other from the offering of the Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of ACC on the one hand and the Underwriter on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by ACC on the one hand and the
Underwriter on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by ACC
bear to the total underwriting discounts and commissions received by the
Underwriter. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by ACC or the Underwriter and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this Section 9 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any action or claim which is the subject of this Section 9. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be
26
<PAGE> 27
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(b) The obligations of ACC under this Section 9 shall be in
addition to any liability which ACC may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls the
Underwriter within the meaning of the Act; and the obligations of the
Underwriter under this Section 9 shall be in addition to any liability which the
Underwriter may otherwise have and shall extend, upon the same terms and
conditions, to each director of ACC, to each officer of ACC who has signed the
Registration Statement and to each person, if any, who controls ACC within the
meaning of the Act.
The Underwriter, with respect to the Notes, agrees that it
will not prepare or distribute to any proposed purchaser of any Notes any
Derived Information (as such term is hereinafter defined), unless it shall have
provided to the Servicer a copy of such Derived Information a sufficient time
prior to its proposed distribution to permit the Servicer to review and comment
upon such Derived Information, and the Underwriter shall have obtained the prior
written consent of the Servicer thereto following its review. In addition, the
Underwriter agrees to provide the Servicer, no later than the date on which the
Prospectus is required to be filed pursuant to Rule 424, with a definitive copy
of its Derived Information with respect to such Notes provided by the
Underwriter for filing with the Commission on Form 8-K.
The Underwriter agrees, assuming all Companies-Provided
Information (as such term is hereinafter defined) provided by ACC is accurate
and complete in all material respects, to indemnify and hold harmless ACC, each
of ACC's officers and directors and each person who controls ACC within the
meaning of the Act against any and all losses, claims, damages or liabilities,
joint or several, to which they may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of a material fact
contained in the Derived Information provided by the Underwriter, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and agrees to reimburse each such indemnified party for any legal or
other expenses reasonably incurred by him, her or it in connection with
investigating or defending or preparing to defend any such loss, claim, damage,
liability or action as such expenses are incurred. The obligations of the
Underwriter under this Section 8 shall be in addition to any liability which the
Underwriter may otherwise have.
27
<PAGE> 28
For purposes of this Section 9, the term "Derived Information"
means such portion, if any, of the information delivered to ACC for filing with
the Commission on Form 8-K as:
i) is not contained in the Prospectus without
taking into account information incorporated therein by
reference;
ii) does not constitute Companies-Provided
Information; and
iii) is not information provided by the Cash
Collateral Depositor or the Cash Collateral Trustee.
"Companies-Provided Information" means any computer tape furnished to the
Underwriter by ACC concerning the Receivables assigned to the Trust.
Notwithstanding the provisions of Sections 8 and 9, the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Notes underwritten by the
Underwriter and distributed to the public were offered to the public exceeds the
amount of any damages which the Underwriter has otherwise been required to pay
in respect of such losses, liabilities, claims, damages and expenses. For
purposes of this Section 9, each person, if any, who controls the Underwriter
within the meaning of the Act or the Exchange Act shall have the same rights to
contribution as the Underwriter and each director of ACC, each officer of ACC
who signed the Registration Statement, and each person, if any, who controls ACC
within the meaning of the Act or the Exchange Act shall have the same rights to
contribution as ACC.
10. Default of Underwriter. If the Underwriter defaults in its
obligations to purchase Notes hereunder on the Closing Date and the aggregate
principal amount of Notes that such defaulting Underwriter has agreed but failed
to purchase does not exceed 10% of the total principal amount of Notes that the
Underwriter is obligated to purchase on such Closing Date, the Underwriter may
make arrangements satisfactory to ACC for the purchase of such Notes by other
persons. If the Underwriter so defaults and the aggregate principal amount of
Notes with respect to which such default occurs exceeds % of the total principal
amount of Notes that the Underwriter is obligated to purchase on such Closing
Date and arrangements satisfactory to ACC for the purchase of such Notes by
other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of ACC, except as provided in
Section 11. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10. Nothing herein will
28
<PAGE> 29
relieve a defaulting Underwriter from liability for its default.
11. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of ACC or its officers and of the Underwriter set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of the Underwriter, ACC or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Notes. If this Agreement is terminated or if for any reason the purchase
of the Notes by the Underwriter is not consummated, ACC shall remain responsible
for the expenses to be paid or reimbursed by it pursuant to Section 7 and the
respective obligations of ACC and the Underwriter pursuant to Section 8 and 9
shall remain in effect, and if any Notes have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section 5
and 6 shall also remain in effect. If the purchase of the Notes by the
Underwriter is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 10 or the occurrence of any
event specified in clause (ii), (iv) or (v) of Section 6(n), ACC will reimburse
the Underwriter for all out-of-pocket expenses (including fees and disbursements
of _________________ , Underwriter's counsel) reasonably incurred by them in
connection with the offering of the Notes.
12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to the address set forth on the first page hereof,
or sent by facsimile machine which produces an electronic confirmation of
receipt to ____________, attention: _______________________________________.
Notices to ACC shall be directed to ACC Consumer Finance Corporation 12750 High
Bluff Drive, Suite 320, San Diego, California 92130, or sent by facsimile
machine which produces an electronic confirmation of receipt to
___________________________, attention:__________________________.
13. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriter and ACC, and their respective successors.
Nothing expressed or mentioned in this Agreement is intended nor shall it be
construed to give any person, firm or corporation, other than the parties hereto
or thereto and their respective successors and the controlling persons and
officers and directors referred to in Sections 8 and 9 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or with
29
<PAGE> 30
respect to this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties and their respective successors and such
controlling persons and officers and directors and their heirs and legal
representatives (to the extent of their rights as specified herein and therein)
and except as provided above for the benefit of no other person, firm or
corporation. No purchaser of Notes from the Underwriter shall be deemed to be a
successor by reason merely of such purchase.
14. GOVERNING LAW AND TIME; CONSENT TO JURISDICTION. THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND SHALL BE
CONSTRUED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAWS. ACC HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE FEDERAL AND
STATE COURTS IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
15. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but together they
shall constitute but one instrument.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and ACC in accordance with its terms.
Very truly yours,
ACC CONSUMER FINANCE CORPORATION
By: _______________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
___________________________,
as the Underwriter.
By: __________________________________
Name:
Title:
30
<PAGE> 31
Schedule 1
Underwriting
Class -
------------------------------------
<TABLE>
<CAPTION>
Proceeds to
Purchase ACC (includes
Price Principal accrued Accrued
Underwriters Percentage Amount interest) Interest
------------ ---------- ------ --------- --------
<S> <C> <C> <C> <C> <C>
$ $
</TABLE>
<PAGE> 1
EXHIBIT 1.2
$________________
ACC CONSUMER FINANCE CORPORATION
____% Automobile Receivables Backed Certificates
UNDERWRITING AGREEMENT
_________ __ , 19__
[NAME AND ADDRESS OF UNDERWRITER]
Dear Sirs:
1. Introduction. ACC Auto Finance Corporation, a Delaware
corporation ("ACC"), has authorized the issuance and sale of______% Automobile
Receivables Backed Certificates, (the "Certificates"), evidencing interests in a
trust (the "Trust") consisting of a combination of retail installment sales
contracts (the "Receivables") secured by new and used automobiles and light duty
trucks (the "Vehicles") financed thereby, amounts due or received thereunder on
or after _____ __, 199__, (the "Cut-Off Date"), and security interests in the
Vehicles financed thereby. The Certificates will be issued under a Pooling and
Servicing Agreement dated as of ______ __, 199__ (the "Pooling Agreement")
between ________________________________________, as seller,
_____________________________________, as issuer, ACC Auto Finance Corporation,
in its individual capacity, _________________________ as Back-up Servicer and
______________________________________ , as trustee (the "Trustee").
The Certificates will evidence fractional undivided interests
in the Trust. [The Trustee, on behalf of the holders of the Certificates (the
"Certificateholders"), will have the benefit of a cash collateral account (the
"Cash Collateral Account")]. The Certificates will be issued in an aggregate
principal amount of $_______, which is equal to the original pool balance of the
Receivables, exclusive of accrued interest, as of the opening of business on the
Cut-Off Date. The forms of the Pooling Agreement and the Cash Collateral Trust
Agreement (as such term is hereinafter defined) have been timely filed as
exhibits to the Registration Statement (as such term is hereinafter defined).
Capitalized terms used but not defined herein shall have the meanings given to
them in the Pooling Agreement.
<PAGE> 2
The Trustee, _________________________________, as cash
collateral trustee (the "Cash Collateral Trustee"), ______________, and a
financial institution as cash collateral depositor (the "Cash Collateral
Depositor"), will enter into a cash collateral trust agreement to be dated as of
_____ __, 199__ (the "Cash Collateral Trust Agreement") pursuant to which the
Cash Collateral Account will be established for the benefit of the Trustee and
the Cash Collateral Depositor, as secured parties. In addition, _____________,
the Cash Collateral Trustee, the lenders named therein and the Cash Collateral
Depositor will enter into a loan agreement to be dated as of the Closing Date
(the "Loan Agreement"), pursuant to which the Cash Collateral Depositor and the
Bank will deposit the Initial Cash Collateral Amount (as defined in the Cash
Collateral Trust Agreement) into the Cash Collateral Account.
ACC hereby agrees with the Underwriter named in Schedule 1
hereto (the "Underwriter") as follows:
2. Representations and Warranties of ACC. ACC represents and
warrants to, and agrees with, each of the Underwriters that:
(a) A Registration Statement on Form S-3 (No. 33- _______)
relating to the Certificates, including a form of Prospectus, has been filed
with the Securities and Exchange Commission (the "Commission") and either (i)
has been declared effective under the Act of 1933 (the "Act") and is not
proposed to be amended or (ii) is proposed to be amended by amendment or
post-effective amendment. If ACC does not propose to amend such Registration
Statement or if any post-effective amendment to such Registration Statement has
been filed with the Commission prior to the execution and delivery of this
Agreement, such Registration Statement or such post-effective amendment, as the
case may be, has been declared effective by the Commission. For purposes of this
Agreement, "Effective Time" means (i) if ACC has advised the Underwriter that it
does not propose to amend such Registration Statement, the date and time as of
which such Registration Statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this Agreement,
was declared effective by the Commission, or (ii) if ACC has advised the
Underwriter that it proposes to file an amendment or post-effective amendment to
such Registration Statement, the date and time as of which such Registration
Statement, as amended by such amendment or post-effective amendment, as the case
may be, is declared effective by the Commission. "Effective Date" means the date
of the Effective Time. Such Registration Statement, as amended at the Effective
Time, including all material incorporated by reference therein and including all
information, if any, deemed to be a part of such Registration Statement as of
the Effective Time pursuant to Rule 430A(b) under the Act, is referred to herein
as the
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<PAGE> 3
"Registration Statement", and the form of prospectus relating to the
Certificates, as first filed with the Commission pursuant to and in accordance
with Rule 424(b) under the Act or, if no such filing is required, as included in
the Registration Statement, including all material incorporated by reference in
such prospectus, is hereinafter referred to as the "Prospectus".
(b) If the Effective Time is prior to the execution and
delivery of this Agreement: (i) on the Effective Date, the Registration
Statement conformed, and on the date of this Agreement the Registration
Statement conforms, in all material respects with the requirements of the Act
and the rules and regulations of the Commission ("Rules and Regulations") and
did not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) on the date of this Agreement, the Prospectus
conforms, and at the time of filing of the Prospectus pursuant to Rule 424(b)
and at the Closing Date, the Prospectus will conform, in all material respects
to the requirements of the Act and the Rules and Regulations, and the Prospectus
does not include and does not omit, and will not include, any untrue statement
of a material fact, and does not omit, to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. If the Effective Time is subsequent to the
execution and delivery of this Agreement: on the Effective Date, the
Registration Statement and the Prospectus will conform in all material respects
to the requirements of the Act and the Rules and Regulations, and (i) the
Registration Statement will not include any untrue statement of a material fact
or will not omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (ii) the Prospectus
will not include an untrue statement of a material fact or will not omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The two
preceding sentences do not apply to statements in or omissions from the
Registration Statement or Prospectus based upon written information furnished to
ACC by the Underwriter specifically for use therein, it being understood the
only such information is that described as such in Section 8(b). The conditions
to the use by ACC of a Registration Statement on Form S-3 under the Act, as set
forth in the General Instructions to Form S-3, have been satisfied with respect
to the Registration Statement and the Prospectus. There are no contracts or
documents which are required to be filed as exhibits to the Registration
Statement pursuant to the Act or the Rules and Regulations which have not been
so filed on or prior to the Effective Date.
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<PAGE> 4
(c) Since the respective dates as of which information is
given in the Prospectus, or the Prospectus as amended and supplemented, there
has not been any material adverse change in the general affairs, management, or
results of operations of ACC or of its subsidiaries otherwise than as set forth
or contemplated in the Prospectus or the Prospectus as amended and supplemented,
nor has there been any adverse change in the general affairs, management, or
results of operations of any other affiliate of ACC which could have a material
adverse effect on the general affairs, management or results of operations of
ACC or its subsidiaries, otherwise than as set forth or contemplated in the
Prospectus or the Prospectus as amended and supplemented.
(d) ACC is a corporation duly organized and validly existing
under the laws of the State of Delaware, and has full corporate power, authority
and legal right to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement, the Pooling
Agreement, the Cash Collateral Trust Agreement, and the Loan Agreement, and to
cause the Certificates to be issued. ACC has conducted and is conducting its
business so as to comply in all material respects with all applicable statutes
and regulations. ACC is duly qualified to do business as a foreign corporation
in good standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification.
(e) (i) There are no legal, governmental or regulatory
proceedings pending to which ACC is a party or to which any of its property is
the subject, which, if determined adversely to ACC, would individually or in the
aggregate have a material adverse effect on the performance by ACC of this
Agreement, the Pooling Agreement, the Loan Agreement or the Cash Collateral
Trust Agreement or the consummation of the transactions contemplated hereunder
or thereunder and (ii) to the best of its knowledge, no such proceedings are
threatened or contemplated by governmental or regulatory authorities or
threatened by others.
(f) This Agreement has been duly authorized and validly
executed and delivered by ACC and constitutes a valid and binding agreement of
ACC, enforceable against ACC in accordance with its terms, except to the extent
that (i) the enforceability hereof may be subject to insolvency, reorganization,
moratorium, receivership, conservatorship, or other similar laws, regulations or
procedures of general applicability now or hereafter in effect, (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought and (iii) rights to indemnification
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<PAGE> 5
and contribution under this Agreement may be limited by state or federal
securities laws or the policies underlying such laws.
(g) The Pooling Agreement, the Loan Agreement and the Cash
Collateral Trust Agreement have been duly authorized by ACC and, when executed
and delivered by ACC and assuming the due authorization, execution and delivery
of the Pooling Agreement, the Loan Agreement and the Cash Collateral Trust
Agreement by the other parties thereto, will constitute valid and binding
obligations of ACC enforceable against ACC in accordance with their respective
terms, except to the extent that (i) the enforceability thereof may be subject
to insolvency, reorganization, moratorium, receivership, conservatorship, or
other similar laws, regulations or procedures of general applicability now or
hereafter in effect, and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
(h) The issuance and delivery of the Certificates, the
consummation of any other of the transactions contemplated herein, in the
Pooling Agreement, the Loan Agreement, or in the Cash Collateral Trust
Agreement, or the fulfillment of the terms of this Agreement, the Pooling
Agreement, the Loan Agreement or the Cash Collateral Trust Agreement, do not and
will not conflict with or violate any term or provision of the Certificate of
Incorporation By-Laws of ACC, any statute, order or regulation applicable to ACC
of any court, regulatory body, administrative agency or governmental body having
jurisdiction over ACC and do not and will not conflict with, result in a breach
or violation or the acceleration of or constitute a default under or result in
the creation or imposition of any lien, charge or encumbrance upon any of the
property or assets of ACC pursuant to the terms of, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which ACC is a
party or by which ACC may be bound or to which any of the property or assets of
ACC may be subject except for conflicts, violations, breaches, accelerations and
defaults which would not, individually or in the aggregate, be materially
adverse to ACC or materially adverse to the transactions contemplated by this
Agreement.
(i) _______________________________________________ is an
independent public accountant with respect to ACC as required by the Act and the
Rules and Regulations.
(j) The direction by ACC to the Trustee to execute,
countersign, issue and deliver the Certificates has been duly authorized by ACC,
and, assuming the Trustee has been duly authorized to do so, when executed,
countersigned, issued and delivered by the Trustee in accordance with the
Pooling
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<PAGE> 6
Agreement, the Certificates will be validly issued and outstanding and will be
entitled to the benefits of the Pooling Agreement.
(k) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body of the
United States is required for the issuance and sale of the Certificates, or the
consummation by ACC of the other transactions contemplated by this Agreement,
the Pooling Agreement, the Loan Agreement or the Cash Collateral Trust
Agreement, except the registration under the Act of the Certificates and such
consents, approvals, authorizations, registrations or qualifications as may have
been obtained or effected or as may be required under securities or Blue Sky
laws in connection with the purchase and distribution of the Certificates by the
Underwriter.
(l) ACC possesses all material licenses, certificates,
authorizations or permits issued by the appropriate state, Federal or foreign
regulatory agencies or bodies necessary to conduct the business now conducted by
it and as described in the Prospectus and ACC has not received notice of
proceedings relating to the revocation or modification of any such license,
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the conduct of its business, operations, financial condition or
income.
(m) At the time of execution and delivery of the Pooling
Agreement, ACC (i) will not have assigned to any person any of its right, title
or interest in the Receivables or in the Pooling Agreement or the Certificates
and (ii) will have the power and authority to sell the Receivables to the
Trustee and to sell the Certificates to the Underwriter, and upon execution and
delivery of the Pooling Agreement by the Trustee, the Trustee will have acquired
beneficial ownership of all of ACC's right, title and interest in and to the
Receivables, and upon delivery to the Underwriter of the Certificates the
Underwriter will have good and marketable title to the Certificates.
(n) As of the Cut-Off Date, the Receivables will meet the
eligibility criteria described in the Prospectus.
(o) The Trust created by the Pooling Agreement is not, and
immediately following the issuance and sale of the Certificates will not be,
required to be registered as an "investment company" under the Investment
Company Act of 1940, as amended (the "1940 Act"), as in effect on the date
hereof.
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<PAGE> 7
(p) ACC has authorized the conveyance of the Receivables to
the Trust, and ACC has authorized the Trust to issue the Certificates.
(q) Each of the Certificates, the Pooling Agreement and the
Cash Collateral Account conforms in all material respects to the descriptions
thereof contained in the Prospectus.
(r) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of this Agreement, the
Pooling Agreement, the Cash Collateral Trust Agreement, the Loan Agreement, the
Cash Collateral Account and the Certificates that are required to be paid by ACC
at or prior to the Closing Date have been paid or will be paid at or prior to
the Closing Date.
(s) ACC will not apply the proceeds of the sale of the
Certificates pursuant to this Agreement to purchase securities (which term does
not include the Receivables) within the meaning of Regulation T promulgated by
the Federal Reserve Board.
(t) As of the Closing Date, the representations and warranties
of ACC in the Pooling Agreement will be true and correct.
Any certificate signed by an officer of ACC and delivered to
the Underwriter or the Underwriter's counsel in connection with an offering of
the Certificates shall be deemed, and shall state that it is, a representation
and warranty as to the matters covered thereby to each person to whom the
representations and warranties in this Section 2 are made.
3. Purchase, Sale, Delivery and Payments. The Underwriter's
commitment to purchase the Certificates pursuant to this Agreement shall be
deemed to have been made on the basis of the representations and warranties
herein contained and shall be subject to the terms and conditions herein set
forth. ACC agrees to instruct the Trustee to issue and agrees to sell to the
Underwriter, and the Underwriter, severally and not jointly, agree, to purchase
from ACC at the purchase price for the Certificates set forth opposite the names
of the Underwriter on Schedule 1 hereto, the respective principal amount of
Certificates set forth on Schedule 1 hereto. Payment of the purchase price for,
and delivery of, any Certificates to be purchased by the Underwriter shall be
made at the office of Dewey Ballantine, 1301 Avenue of the Americas, New York,
New York, or at such other place as shall be agreed upon by the Underwriter and
ACC, at 10:00 a.m. New York City time on ______ __, 199__ (the "Closing Date"),
or at such other time or date or time as shall be agreed upon in
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<PAGE> 8
writing by the Underwriter and ACC. On the Closing Date, payment shall be made
to ACC by wire transfer of same day funds payable to the account of ACC against
delivery to the Trustee as custodian for The Depository Trust Company ("DTC") of
the Certificates in the form of one or more global securities in definitive form
(the "Global Certificates") and registered in the name of Cede & Co., as nominee
for DTC. The Global Certificates will be made available for checking at Dewey
Ballantine at least 24 hours prior to the Closing Date.
4. Offering by Underwriters. It is understood that the
Underwriter propose to offer the Certificates for sale to the public (which may
include selected dealers) as set forth in the Prospectus.
5. Covenants of ACC. ACC covenants with the Underwriter as
follows:
(a) To prepare a Prospectus setting forth any price related
information previously omitted from the effective Registration Statement
pursuant to Rule 430A under the Act within the time period prescribed by Rule
430A, and to transmit such Prospectus to the Commission for filing pursuant to
Rule 424(b) under the Act within the prescribed time period, and prior to the
Closing Date to provide evidence satisfactory to the Underwriter of such timely
filing, or to prepare and timely file a post-effective amendment to the
Registration Statement providing such information, which post-effective
amendment shall have been declared effective in accordance with the requirements
of Rule 430A under the Act and to provide evidence satisfactory to the
Underwriter of the effectiveness thereof.
(b) If at any time when the Prospectus as amended or
supplemented is required by the Act to be delivered in connection with sales of
the Certificates by the Underwriter, any event shall occur or condition exist as
a result of which it is necessary, in the opinion of the Underwriter's counsel
or counsel for ACC, further to amend or supplement the Prospectus as then
amended or supplemented in order that the Prospectus as amended or supplemented
will not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
circumstances existing at the time it is delivered to a purchaser, not
misleading or if it shall be necessary, in the opinion of any such counsel, at
any such time to amend or supplement the Registration Statement or the
Prospectus as then amended or supplemented in order to comply with the
requirements of the Act or the Rules and Regulations, or if required by such
Rules and Regulations, including Rule 430A thereunder, to file a post-effective
amendment to such Registration Statement (including an amended Prospectus), ACC
will promptly notify the Underwriter of such event and will
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<PAGE> 9
prepare and file with the Commission (subject to the Underwriter's prior
review), at its own expense, such amendment or supplement as may be necessary to
correct such untrue statement or omission or to make the Registration Statement
comply with such requirements, and within two Business Days will furnish to the
Underwriter as many copies of the Prospectus, as amended or supplemented, as the
Underwriter shall reasonably request. Neither the Underwriter's consent to, nor
the Underwriter's delivery of, any such amendment or supplement shall constitute
a waiver of any of the conditions set forth in Section 6 of this Agreement.
(c) ACC will give the Underwriter reasonable notice of its
intention to file any amendment to the Registration Statement, the Prospectus or
the Prospectus as amended or supplemented, pursuant to the Act, and will furnish
the Underwriter with copies of any such amendment or supplement proposed to be
filed a reasonable time in advance of filing, and will not file any such
amendment or supplement to which the Underwriter or the Underwriter's counsel
shall object.
(d) ACC will notify the Underwriter immediately, and confirm
the notice in writing, (i) of the effectiveness of any amendment to the
Registration Statement, (ii) of the mailing or the delivery to the Commission
for filing of any supplement to the Prospectus or the Prospectus as amended or
supplemented, (iii) of the receipt and contents of any comments from the
Commission with respect to the Registration Statement or the Prospectus or the
Prospectus as amended or supplemented, (iv) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information and (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose. ACC will make
every reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(e) ACC will deliver to the Underwriter as many signed and as
many conformed copies of the Registration Statement (as originally filed) and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference in the Prospectus),
each related preliminary prospectus, and so long as delivery of a Prospectus
relating to the Certificates is required to be delivered under the Act in
connection with sales by the Underwriter or dealer, the Prospectus and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as the Underwriter may reasonably request. ACC will also
furnish to the
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<PAGE> 10
Underwriter copies of any report on Form SR required by Rule 463 under the Act.
(f) ACC will make generally available to holders of the
Certificates as soon as practicable, but in any event not later than the
Availability Date (as defined below), earning statements of the Trust (which
need not be audited) complying with Section 11(a) of the Act and the Rules and
Regulations (including Rule 158) and covering a period of at least twelve
consecutive months beginning after the Effective Date which will satisfy the
provisions of Section 11(a) of the Act. For the purposes of the preceding
sentence, the "Availability Date" means the 45th day after the end of the
Trust's fourth fiscal quarter following the fiscal quarter that includes the
Effective Date, except that, if such fourth fiscal quarter is the last quarter
of the Trust's fiscal year, "Availability Date" means the 90th day after the end
of such fourth fiscal quarter.
(g) ACC will endeavor, in cooperation with the Underwriter, to
qualify the Certificates for sale and the determination of their eligibility for
investment under the applicable securities laws of such states and other
jurisdictions of the United States as the Underwriter may designate, and will
maintain or cause to be maintained such qualifications in effect for as long as
may be required for the distribution of the Certificates. ACC will file or cause
the filing of such statements and reports as may be required by the laws of each
jurisdiction in which the Certificates have been qualified as above provided.
(h) ACC will not, directly or indirectly, without the
Underwriter's prior consent, publicly offer or sell or contract to sell or
attempt to offer, sell or dispose of any certificates or other similar
securities representing interests in or secured by the Receivables for a period
of 30 days following the commencement of the offering of the Certificates to the
public.
(i) For a period from the date of this agreement until the
retirement of the Certificates, ACC Consumer Finance Corporation, as Servicer,
will deliver to the Underwriter, as soon as practicable, copies of each
certificate, report or notice and the annual statements of compliance delivered
by ACC Consumer Finance Corporation, as Servicer, to the Trustee pursuant to
Section ______ of the Pooling Agreement, the annual statement of a firm of
independent public accountants furnished to the Trustee pursuant to Section
__________ of the Pooling Agreement; and such other information concerning the
Receivables, ACC Financial Services, Inc. or the Certificates, as the
Underwriter may from time to time reasonably request.
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<PAGE> 11
(j) On or before the Closing Date, ACC shall furnish or make
available to the Underwriter or its counsel such additional documents and
information regarding ACC Financial Services, Inc. and its affairs as the
Underwriter may from time to time reasonably request, including any and all
documentation reasonably requested in connection with their due diligence
efforts regarding information in the Prospectus and in order to evidence the
accuracy or completeness of any of the conditions contained in this Agreement.
(k) So long as any Note is outstanding, ACC shall furnish to
the Underwriter by first-class mail as soon as practicable, all documents (A)
distributed, or caused to be distributed, by ACC to Certificateholders, (B)
filed, or caused to be filed, by ACC with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (C) any order
of the Commission under the Exchange Act or pursuant to a "no-action" letter
from the staff of the Commission and (D) from time to time, such other
information in the possession of ACC concerning the Trust as the Underwriter may
reasonably request.
(l) ACC shall apply the net proceeds from the sale of the
Certificates in the manner set forth in the Prospectus.
(m) If, between the date hereof or, if earlier, the dates as
of which information is given in the Prospectus and the Closing Date, to the
knowledge of ACC there shall have been any material change, or any development
involving a prospective material change in or affecting the general affairs,
management, financial position, shareholders' equity or results of operations of
ACC, ACC will give prompt written notice thereof to the Underwriter.
(n) To the extent, if any, that any rating provided with
respect to the Certificates set forth in Section 6(j) hereof is conditional upon
the furnishing of documents reasonably available to ACC or the taking of any
other reasonable actions by ACC, ACC shall furnish such documents or take any
such other actions.
6. Conditions of the Obligations of the Underwriter. The
obligations of the Underwriter to purchase the Certificates pursuant to this
Agreement are subject to the accuracy on and as of the Closing Date of the
representations and warranties on the part of ACC herein contained, to the
accuracy of the statements of officers of ACC made pursuant hereto, to the
performance by ACC of all of its obligations hereunder and to the following
conditions at the Closing Date:
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<PAGE> 12
(a) The Underwriter shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time is prior to the execution
and delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and delivery
of this Agreement, shall be prior to the filing of the amendment or
post-effective amendment to the Registration Statement to be filed shortly prior
to the Effective Time), from ______________________________________, in form
and substance satisfactory to the Underwriter and counsel for the Underwriter,
confirming that they are independent public accountants within the meaning of
the Act and the applicable published Rules and Regulations thereunder and
stating in effect that (i) they have performed certain specified procedures as a
result of which they have determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial or
statistical information derived from the general accounting records of the Trust
and ACC set forth in the Registration Statement and the Prospectus), agrees with
the accounting records of the Trust and ACC, excluding any questions of legal
interpretation, and (ii) they have performed certain specified procedures with
respect to the computer programs used to select the Receivables and to generate
information with respect to the Receivables set forth in the Registration
Statement and the Prospectus.
For purposes of this subsection (a), if the Effective Time is
subsequent to the execution and delivery of this Agreement, "Registration
Statement" shall mean the registration statement as proposed to be amended by
the amendment or post-effective amendment to be filed shortly prior to the
Effective Time, and "Prospectus" shall mean the prospectus included in such
Registration Statement. All financial statements included in material
incorporated by reference into the Prospectus shall be deemed included in the
Registration Statement for purposes of this subsection (a).
(b) If the Effective Time is not prior to the execution and
delivery of this Agreement, the Effective Time shall have occurred not later
than 10:00 p.m., New York time, on the date of this Agreement or such later date
as shall have been consented to by the Underwriter. If the Effective Time is
prior to the execution and delivery of this Agreement, the Prospectus shall have
been filed with the Commission in accordance with the Rules and Regulations and
Section 5(a) of this Agreement.
(c) The Registration Statement shall have been declared
effective by the Commission and no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the Act or proceedings
therefor initiated or threatened by the Commission, any price-related
information previously omitted from the effective Registration
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<PAGE> 13
Statement pursuant to Rule 430A under the Act shall have been included in the
Prospectus and transmitted to the Commission for filing pursuant to Rule 424
under the Act within the prescribed time period, and ACC shall have provided
evidence satisfactory to the Underwriter of such timely filing, or a
post-effective amendment to the Registration Statement providing such
information shall have been promptly filed with the Commission and declared
effective in accordance with the requirements of Rule 430A under the Act, and
prior to the Closing Date, ACC shall have provided evidence satisfactory to the
Underwriter of such effectiveness and there shall not have come to the attention
of the Underwriter facts that would cause the Underwriter to believe that the
Prospectus, at the time it was required to be delivered to a purchaser of the
Certificates, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at such time, not misleading.
(d) The Underwriter shall have received the favorable opinion,
dated the Closing Date, of __________________________________, counsel to ACC,
or other counsel to ACC, acceptable to the Underwriter and its counsel,
addressed to the Underwriter and in form and scope satisfactory to the
Underwriter's counsel, to the effect that:
i) ACC has been duly incorporated and is
validly existing as a corporation under the laws of the State of
Delaware and has full corporate power and authority to own its
properties and conduct its business as described in the Prospectus; ACC
has full corporate power and authority to execute, deliver, and perform
its obligations under this Agreement, the Pooling Agreement, the Loan
Agreement, and the Cash Collateral Trust Agreement and to cause the
Certificates to be issued and to consummate the transactions
contemplated hereby and thereby.
ii) ACC has duly authorized and executed
this Agreement, the Pooling Agreement, the Loan Agreement and the Cash
Collateral Trust Agreement and each such agreement constitutes the
valid, legal and binding obligation of ACC enforceable against ACC in
accordance with its terms.
iii) The execution and delivery, and
performance of the Pooling Agreement, the Cash Collateral Trust
Agreement, this Agreement, the transfer of the Receivables to the
Trust, the issuance and sale of the Certificates and consummation of
any other of the transactions contemplated herein or in the Pooling
Agreement do not conflict with or result in a violation of (a) any law
or regulation of the United States of
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America or the State of New York or Delaware, (b) the Certificate of
Incorporation or By-laws of ACC, (c) any order, writ, judgment or
decree known to such counsel to which ACC is a party or is subject, or
(d) result in any lien, charge or encumbrance upon any of the
properties or assets of ACC.
iv) The Certificates have been duly
authorized and, when executed and authenticated in accordance with the
terms of the Pooling Agreement and delivered to and paid for by the
Underwriter pursuant to this Agreement, will be duly and validly issued
and outstanding and will be entitled to the benefits of the Pooling
Agreement.
v) No consent, approval or authorization
of, or registration, declaration or filing with, any court or
governmental agency or body of the United States of America is required
for the issuance of the Certificates and the sale of the Certificates
to the Underwriter or the consummation of the other transactions
contemplated by this Agreement, the Pooling Agreement, the Loan
Agreement, or the Cash Collateral Trust Agreement except for (x) the
filing of a Uniform Commercial Code financing statement in the State of
_________ with respect to the transfer of the Receivables to the Trust,
(y) such as have been obtained and made under the Act and (z) such as
may be required under state securities laws.
vi) The Registration Statement was declared
effective under the Act as of the date and time specified in such
opinion, the Prospectus either was filed with the Commission pursuant
to the subparagraph of Rule 424(b) specified in such opinion on the
date specified therein or was included in the Registration Statement
(as the case may be), and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been instituted or is pending or
contemplated under the Act, and the Registration Statement and the
Prospectus, and each amendment or supplement thereof, as of their
respective effective or issue dates, complies as to form in all
material respects with the requirements of the Act and the Rules and
Regulations; such counsel have no reason to believe that the
Registration Statement or any amendment thereto, as of its Effective
Date, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Registration
Statement as of the Closing Date, or the Prospectus, as of its issue
date or as of such Closing Date, contained any untrue statement of a
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material fact or omitted to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; it being understood that such
counsel need express no opinion as to the financial statements or other
financial data contained in the Registration Statement or the
Prospectus.
vii) The conditions to the use by ACC of a
registration statement on Form S-3 under the Act, as set forth in the
General Instructions to Form S-3, have been satisfied with respect to
the Registration Statement and the Prospectus. There are no contracts
or documents of ACC which are required to be filed as exhibits to the
Registration Statement pursuant to the Act or the Rules and Regulations
thereunder which have not been so filed.
viii) There are no actions, proceedings or
investigations pending or threatened before any court, administrative
agency or other tribunal to which ACC is a named party or to which its
assets are subject (A) asserting the invalidity of the Pooling
Agreement, the Loan Agreement, the Cash Collateral Trust Agreement,
this Agreement or the Certificates, (B) seeking to prevent the issuance
of the Certificates or the consummation by ACC of any of the
transactions contemplated by the Pooling Agreement, the Loan Agreement,
the Cash Collateral Trust Agreement or this Agreement, (C) that might
adversely affect the validity or enforceability of the Pooling
Agreement, the Loan Agreement, the Cash Collateral Trust Agreement,
this Agreement or the Certificates, or (D) seeking to adversely affect
the federal income tax attributes of the Certificates as described in
the Prospectus under the heading "Certain Federal Income Tax
Consequences."
ix) The Registration Statement at the time
it became effective, and any amendment thereto at the time such
amendment became effective, complied as to form in all material
respects with the applicable requirements of the Act and the Rules and
Regulations.
x) The Pooling Agreement is not required to
be qualified under the Trust Indenture Act of 1939, as
amended.
xi) The Trust is not required to be
registered under the 1940 Act, and immediately following the issuance
and sale of the Certificates in the manner contemplated by the Pooling
Agreement and this Agreement, the Trust will not be required to be so
registered.
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xii) The Certificates, this Agreement, the
Pooling Agreement and the Cash Collateral Account conform in all
material respects to the respective descriptions thereof in the
Registration Statement and the Prospectus.
xiii) The statements in the Prospectus under
the heading "Certain Legal Aspects of the Receivables," "SUMMARY OF
TERMS -- Certain Legal Aspects of the Receivables," "SUMMARY OF TERMS
-- Certain Federal Tax Considerations," "Certain Federal Income Tax
Consequences," "ERISA Considerations," and "SPECIAL CONSIDERATIONS --
Certain Legal Aspects," to the extent that they constitute matters of
law or legal conclusions with respect thereto, have been prepared or
reviewed by such counsel and are correct in all material respects.
xiv) No filing or other action, except the
filing of a Uniform Commercial Code financing statement on Form UCC-1
with the ______________ [State Department of Assessments and Taxation]
naming ACC as "debtor" and the Trustee as "secured party," is necessary
to perfect the transfer of the Receivables and proceeds (as defined in
Section 9-306 of the ________________ Uniform Commercial Code) thereof
against the claims of creditors of, and transferees from, ACC.
xv) The Receivables constitute "chattel paper"
as defined in Section 9-105 of the Uniform Commercial Code as in effect
in the State of _______.
In addition, such counsel shall state that nothing has come to
their attention that would lead them to believe that the Registration Statement,
at the time it became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Prospectus,
as of its date and as of the Closing Date, contains an untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(e) The Underwriter shall have received the favorable opinion
of counsel to the Trustee, dated the Closing Date, addressed to the Underwriter
and in form and scope satisfactory to the Underwriter's counsel, to the effect
that:
i) The Trustee has duly authorized, executed and
delivered the Pooling Agreement and the Cash Collateral Trust
Agreement.
ii) The Trustee has been duly organized and is validly
existing as a _____________________________________ in
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good standing under the laws of _______________ of _____________ and
has full power and authority to execute and deliver the Pooling
Agreement and the Cash Collateral Trust Agreement and to perform its
obligations thereunder and each such Agreement constitutes the valid,
legal and binding obligation of the Trustee, enforceable against the
Trustee in accordance with its terms.
iii) The Certificates have been duly executed and
countersigned by the Trustee.
iv) The execution and delivery by the Trustee of the
Pooling Agreement and the Cash Collateral Trust Agreement and the
performance by the Trustee of its duties thereunder do not conflict
with or result in a violation of (a) any law or regulation of the
United States of America or the State of ___________, (b) the charter
or by-laws of the Trustee, (c) any order, writ, judgment or decree or
(d) any agreement, instrument, order, writ, judgment or decree known to
such counsel to which the Trustee is a party or is subject.
v) No consent, approval or authorization of, or
registration, declaration or filing with, any court or governmental
agency or body of the United States of America or any state thereof is
required for the execution, delivery or performance by the Trustee of
the Pooling Agreement and the Cash Collateral Trust Agreement.
(f) The Underwriters shall have received the favorable opinion
or opinions, dated the Closing Date, of the Underwriter's counsel,
__________________, with respect to the issuance and sale of the Certificates,
the Registration Statement, this Agreement, the Prospectus and such other
related matters as the Underwriter may require.
(g) The Underwriter shall have received an opinion, dated the
Closing Date, of Dewey Ballantine, special counsel to ACC, addressed to, and
satisfactory to, Standard & Poor's Corporation ("S&P"), Moody's Investors
Service, Inc. ("Moody's") and the Underwriter's counsel, relating to the sale of
the Receivables to the Trustee, and such counsel to ACC shall have consented to
reliance by the Underwriter on such opinion as though such opinion had been
addressed to the Underwriter.
(h) ACC shall have furnished to the Underwriter a certificate
signed on behalf of ACC by any two of the chairman of the board, the president,
any vice-chairman of the board, any executive vice president, any senior vice
president, any vice president, the treasurer, or the controller of the Seller or
the Servicer, as appropriate, dated the Closing Date, as to
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(i) the accuracy of the representations and warranties of ACC herein and in the
Pooling Agreement at and as of the Closing Date, (ii) the performance by ACC of
all of its obligations hereunder to be performed at or prior to the Closing Date
and (iii) such other matters as the Underwriter may reasonably request.
(i) The Trustee shall have furnished to the Underwriter a
certificate of the Trustee, signed by one or more duly authorized officers of
the Trustee, dated the Closing Date, as to the due acceptance of the Pooling
Agreement by the Trustee and the due execution and delivery of the Certificates
by the Trustee thereunder and such other matters as the Underwriter shall
reasonably request.
(j) The Certificates shall have been rated "___" by S&P and
"___" by Moody's, and such ratings shall not have been rescinded.
(k) The Underwriter shall have received from
__________________________________________, or other independent certified
public accountants acceptable to the Underwriter, a letter, dated as of the date
of the Closing Date, delivered at such time in form satisfactory to the
Underwriter.
(l) Prior to the Closing Date the Underwriter's counsel,
_______________, shall have been furnished with such documents and opinions as
they may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Certificates as herein contemplated and related
proceedings or in order to evidence the accuracy and completeness of any of the
representations and warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by ACC in connection with the
issuance and sale of the Certificates as herein contemplated shall be
satisfactory in form and substance to the Underwriter and ____________________.
(m) Since the respective dates as of which information is
given in the Prospectus, there shall not have been any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of operations of
ACC otherwise than as set forth in the Prospectus, the effect of which is in the
Underwriter's judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Certificates on the terms and in the manner contemplated in the Prospectus or
which, in the judgment of the Underwriter, materially impairs the investment
quality of the Certificates or the ability of the Servicer to service the
Receivables.
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(n) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, development or event
involving a prospective change, in the condition (financial or other), business,
properties or results of operations of ACC or its automobile loan business or
the Cash Collateral Depositor which, in the judgment of the Underwriter, is
material and adverse and makes it impracticable or inadvisable to proceed with
the completion of the public offering or the sale of and payment for the
Certificates or (ii) any downgrading in the rating of any securities of ACC or
the Cash Collateral Depositor by any nationally recognized statistical rating
organization (as defined for purposes of Rule 436(g) under the Act) or any
public announcement that any such organization has under surveillance or review
its rating of any securities of ACC or the Cash Collateral Depositor (other than
an announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); or (iv) any suspension
or limitation of trading in securities generally on the New York Stock Exchange,
or any setting of minimum prices for trading on such exchange; or (v) any
outbreak or escalation of major hostilities in which the United States is
involved, any declaration of war by Congress or any other substantial national
or international calamity, emergency or change in financial markets if, in the
Representative's judgment, the effect of any such outbreak, escalation,
declaration, calamity, emergency or change makes it impractical or inadvisable
to proceed with completion of the sale of and payment for the Certificates.
(o) The Cash Collateral Trust Agreement and the Loan Agreement
shall have been duly authorized, executed and delivered by each party thereto;
on or prior to the Closing Date, the Cash Collateral Trustee shall have
established the Cash Collateral Account pursuant to the Cash Collateral Trust
Agreement and the Cash Collateral Depositor and ACC shall have deposited the
Initial Cash Collateral Amount in the Cash Collateral Account pursuant to the
Loan Agreement; and all fees due and payable to the Cash Collateral Depositor as
of the Closing Date shall have been paid in full by ACC on or prior to the
Closing Date.
(p) The Underwriter shall have received evidence satisfactory
to the Underwriter and its counsel that (i) on or before the Closing Date, UCC-1
financing statements have been filed in the offices of the _______________
[State Department of Assessments and Taxation], reflecting the interest of the
Trust in the Receivables and the proceeds thereof and (ii) the Trust will have a
first priority perfected security interest in the amounts on deposit from time
to time in the Cash Collateral Account.
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(q) The Underwriter shall have received an opinion from _____
counsel for the Cash Collateral Depositor, addressed to the Underwriter, dated
the Closing Date and reasonably satisfactory in form and substance to the
Underwriter and its counsel, to the effect that:
i) the Cash Collateral Depositor is a corporation duly
organized and validly existing under the laws of _________________ and
has the corporate power and authority under the laws of ______________
to execute, deliver and perform its obligations under the Cash
Collateral Trust Agreement and the Loan Agreement through its New York
branch (the "Branch"), including the obligation of the Cash Collateral
Depositor to deposit the Initial Cash Collateral Amount in the Cash
Collateral Account in accordance with the terms of the Loan Agreement;
ii) each of the Cash Collateral Trust Agreement and the
Loan Agreement have been duly authorized and, when executed and
delivered by the Cash Collateral Depositor through the Branch, each as
the Cash Collateral Trust Agreement and the Loan Agreement, including
the obligation of the Cash Collateral Depositor, acting through the
Branch, to deposit the Initial Cash Collateral Amount in the Cash
Collateral Account in accordance with the terms of the Loan Agreement,
will constitute the valid and legally binding obligation of the Cash
Collateral Depositor enforceable against the Branch in accordance with
its terms subject, as to enforcement, to (A) bankruptcy, insolvency,
reorganization, liquidation, readjustment of debt and other laws and
equitable principles relating to or affecting the enforcement of
creditors' rights generally as they may be applied in the event of the
bankruptcy, insolvency, reorganization, liquidation or readjustment of
debt of, or the appointment of a receiver with respect to the property
of, or a similar event applicable to, the Branch, and (B) the effect of
any moratorium or similar occurrence affecting the Branch;
iii) each of the Cash Collateral Trust Agreement and the
Loan Agreement, including the obligation of the Cash Collateral
Depositor, acting through the Branch, to deposit the Initial Cash
Collateral Amount in the Cash Collateral Account in accordance with the
terms of the Loan Agreement, is enforceable in accordance with its
terms against the Cash Collateral Depositor's head office in
__________________________ if the Branch defaults in its obligations
thereunder, subject, as to enforcement, to (A) bankruptcy, insolvency,
reorganization, liquidation, readjustment of debt and other laws and
equitable principles relating to or affecting the enforcement of
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creditors' rights generally as they may be applied in the event of the
bankruptcy, insolvency, reorganization, liquidation or readjustment of
debt of, or the appointment of a receiver with respect to the property
of, or a similar event applicable to, the Cash Collateral Depositor,
and (B) the effect of any moratorium or similar occurrence affecting
the Cash Collateral Depositor; and
iv) any judgment for a fixed and definite sum of money
rendered by the courts of the State of New York or the United States of
America located in the State of New York, in respect of any suit,
action or other proceeding against the Cash Collateral Depositor for
the enforcement of the Cash Collateral Trust Agreement or the Loan
Agreement will, upon request, be declared valid and enforceable against
the Cash Collateral Depositor by the competent courts of ___________,
usually without reexamination of the matters adjudicated upon, if such
judgment is not subject to appeal and is enforceable according to the
laws of the State of New York or United States Federal law. However,
such judgment will not be enforced if its contents are in violation of
fundamental principles of the ______________ legal system (order
public) or if it has been rendered in violation of such principles. In
addition, enforcement may be refused if the foreign state does not
observe reciprocity. According to the approach of _________ courts,
reciprocity is affirmed with regard to judgments of United States
Federal courts and courts of the State of New York. As a general rule
it can be stated that judgments of United States Federal courts and
courts of the State of New York are enforceable in , and such counsel
knows of no reason why such judgments would be a violation of the
fundamental principles of the __________ legal system.
(r) The Underwriter shall have received an opinion from
_______________, special United States counsel for the Cash Collateral
Depositor, addressed to the Underwriter, dated the Closing Date and reasonably
satisfactory in form and substance to the Underwriter and its counsel, to the
effect that:
i) the Cash Collateral Depositor is licensed by the
Superintendent of Banks of the State of ____________ to maintain a
branch for the conduct of a banking business at
_____________________________________,
ii) no authorization, consent or approval of or by any
governmental authority of the United States or the State of New York is
necessary for the execution, delivery and performance by the Branch as
the Cash
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Collateral Depositor of the Cash Collateral Trust Agreement and the
Loan Agreement, including the obligation of the Cash Collateral
Depositor, acting through the Branch, to deposit the Initial Cash
Collateral Amount in the Cash Collateral Account in accordance with the
terms of the Loan Agreement, except such authorizations, consents and
approvals as are in full force and effect;
iii) each of the Cash Collateral Trust Agreement and the
Loan Agreement has been duly authorized, executed and delivered by the
Branch; and
iv) each of the Cash Collateral Trust Agreement and the
Loan Agreement, including the obligation of the Cash Collateral
Depositor, acting through the Branch, to deposit the Initial Cash
Collateral Account in the Cash Collateral Account in accordance with
the terms of the Loan Agreement, constitutes the legal, valid and
binding obligation of the Cash Collateral Depositor and the Branch,
enforceable against the Cash Collateral Depositor and the Branch in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, liquidation,
moratorium, readjustment of debt or other similar laws affecting the
enforcement of creditors' rights generally, as such laws may be applied
in the event of a bankruptcy, insolvency, reorganization, liquidation,
moratorium, readjustment of debt or other similar proceedings of or
affecting the Cash Collateral Depositor or the Branch, and subject to
the application of general principles of equity regardless of whether
such enforceability is considered in a proceeding at law or in equity.
(s) The Underwriter shall have received the favorable opinion
of counsel to the Cash Collateral Trustee, addressed to the Underwriter, dated
the Closing Date and reasonably satisfactory in form and substance to the
Underwriter and its counsel, to the effect that:
i) the Cash Collateral Trustee is an association duly
organized, validly existing and in good standing as a licensed national
banking association under the laws of the United States, and has the
power and authority (corporate and other) to enter into, and to take
all action required of it under the Cash Collateral Trust Agreement and
the Loan Agreement; and
ii) the Cash Collateral Trust Agreement and the Loan
Agreement have each been duly authorized, executed and delivered by the
Cash Collateral Trustee and each constitutes a legal, valid and binding
agreement of the Cash Collateral Trustee, enforceable in accordance
with
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its terms, except as such enforceability may be limited by bankruptcy,
insolvency, liquidation, reorganization, moratorium or other similar
laws affecting the enforcement of rights of creditors against the Cash
Collateral Trustee generally, and the application of general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(t) The Underwriter shall have received from the Cash
Collateral Trustee a certificate dated the Closing Date of an authorized officer
of the Cash Collateral Trustee reasonably acceptable to the Underwriter in which
such officer shall state that, to the best of such officer's knowledge:
i) the execution and delivery of the Cash Collateral
Trust Agreement and the Loan Agreement by the Cash Collateral Trust and
the performance by the Cash Collateral Trustee of the terms thereof do
not conflict with or result in a violation of (A) the charter or
by-laws of the Cash Collateral Trustee or (B) any law of the United
States of America or the State of New York or any regulation governing
the banking or trust powers of the Cash Collateral Trustee; and
ii) no approval, authorization or other action by, or
filing with, any governmental authority of the United States of America
or the State of New York having jurisdiction over the banking or trust
powers of the Cash Collateral Trustee is required in connection with
its execution and delivery of the Cash Collateral Trust Agreement and
the Loan Agreement or the performance by the Cash Collateral Trustee of
the terms of the Cash Collateral Trust Agreement and the Loan
Agreement.
(u) ACC will provide or cause to be provided to the
Representative such conformed copies of such opinions, certificates, letters and
documents being provided pursuant hereto and such further information,
certificates and documents as the Underwriter may reasonably request. The
Underwriter may in its sole discretion waive compliance with any conditions to
the obligations of the Underwriter hereunder.
If any condition specified in this Section 6 shall not have
been fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriter by notice to ACC at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section 7.
7. Payment of Expenses. ACC agrees to pay all expenses
incident to the performance of its obligations under
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this Agreement, and will reimburse the Underwriter (if and to the extent
incurred by them) for any filing fees and other expenses (including fees and
disbursements of counsel), including without limitation those related to (i) the
filing of the Registration Statement and all amendments thereto, (ii) the
duplication and delivery to the Underwriter, in such quantities as the
Underwriter may reasonably request, of copies of this Agreement, (iii) the
preparation, issuance and delivery of the Certificates and the determination of
their eligibility for investment under the laws of such jurisdictions as the
Underwriter designates, (iv) the fees and disbursements of ________________,
counsel for ACC, 50% of the fees of __________, special counsel for ACC, and the
fees and disbursements of ___________, accountants of ACC, (v) the qualification
of the Certificates under securities and Blue Sky laws and the determination of
the eligibility of the Certificates for investment in accordance with the
provisions of Section 5(g), including filing fees and disbursements and the fees
of _____________________________ , the Underwriter's counsel, in connection
therewith and in connection with the preparation of any Blue Sky Survey, (vi)
the printing and delivery to the Underwriter, in such quantities as the
Underwriter may reasonably request, hereinabove stated, of copies of the
Registration Statement and Prospectus and all amendments and supplements
thereto, and of any Blue Sky Survey, (vii) for the filing fee of the National
Association of Securities Dealers, Inc., (viii) the duplication and delivery to
the Underwriter in such quantities as the Underwriter may reasonably request, of
copies of the Pooling Agreement and the Collateral Trust Agreement, (ix) the
fees charged by nationally recognized statistical rating agencies for rating the
Certificates, (x) the fees and expenses of the Trustee and its counsel, (xi) the
fees and expenses of the Cash Collateral Trustee and its counsel, (xii) the fees
and expenses of the Cash Collateral Depositor and its counsel.
8. Indemnification. ACC agrees to indemnify and hold harmless
the Underwriter and each person, if any, who controls the Underwriter within the
meaning of the Act or the Exchange Act, as follows:
(a) ACC will indemnify and hold harmless the Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be
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stated therein or necessary to make the statements therein not misleading (in
the case of the Prospectus or any amendment or supplement thereto, in the light
of the circumstances under which they were made) and will reimburse the
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that ACC will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information furnished
to ACC by the Underwriter specifically for use therein, it being understood and
agreed that the only such information furnished by any Underwriter consists of
the information described as such in subsection (b) below.
(b) The Underwriter will indemnify and hold harmless ACC
against any losses, claims, damages or liabilities to which ACC may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading (in the case of the Prospectus, in the light of the circumstances
under which they were made), in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to ACC by the Underwriter specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by ACC in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, it being understood and agreed that the
only such information furnished by the Underwriter consists of (i) the following
information in the Prospectus furnished on behalf of the Underwriter: [the last
paragraph at the bottom of the cover page concerning the terms of the offering
by the Underwriter, the legend concerning overallotments and stabilizing on the
inside front cover page and the concession and reallowance figures appearing in
the third paragraph under the caption "Underwriting."]
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under
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subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
9. Contribution. (a) If the indemnification provided for in
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) of Section 8 above, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in such
subsection (a) or (b) (i) in such proportion as is appropriate to reflect the
relative benefits received by ACC on the one hand and the Underwriter on the
other from the offering of the Certificates or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of ACC on the one hand and the Underwriter on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by ACC on the one hand and the
Underwriter on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by ACC
bear to the total underwriting discounts and commissions received by the
Underwriter. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or
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alleged omission to state a material fact relates to information supplied by ACC
or the Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this Section
9 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this Section 9. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(b) The obligations of ACC under this Section 9 shall be in
addition to any liability which ACC may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls the
Underwriter within the meaning of the Act; and the obligations of the
Underwriter under this Section 9 shall be in addition to any liability which the
Underwriter may otherwise have and shall extend, upon the same terms and
conditions, to each director of ACC, to each officer of ACC who has signed the
Registration Statement and to each person, if any, who controls ACC within the
meaning of the Act.
The Underwriter, with respect to the Certificates, agrees that
it will not prepare or distribute to any proposed purchaser of any Certificates
any Derived Information (as such term is hereinafter defined), unless it shall
have provided to the Servicer a copy of such Derived Information a sufficient
time prior to its proposed distribution to permit the Servicer to review and
comment upon such Derived Information, and the Underwriter shall have obtained
the prior written consent of the Servicer thereto following its review. In
addition, the Underwriter agrees to provide the Servicer, no later than the date
on which the Prospectus is required to be filed pursuant to Rule 424, with a
definitive copy of its Derived Information with respect to such Certificates
provided by the Underwriter for filing with the Commission on Form 8-K.
The Underwriter agrees, assuming all Companies-Provided
Information (as such term is hereinafter defined) provided by ACC is accurate
and complete in all material respects, to indemnify and hold harmless ACC, each
of ACC's officers and directors and each person who controls ACC within the
meaning of the Act against any and all losses, claims, damages or liabilities,
joint or several, to which they may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of a material fact
contained in the Derived Information
27
<PAGE> 28
provided by the Underwriter, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by him,
her or it in connection with investigating or defending or preparing to defend
any such loss, claim, damage, liability or action as such expenses are incurred.
The obligations of the Underwriter under this Section 8 shall be in addition to
any liability which the Underwriter may otherwise have.
For purposes of this Section 9, the term "Derived Information"
means such portion, if any, of the information delivered to ACC for filing with
the Commission on Form 8-K as:
i) is not contained in the Prospectus without taking
into account information incorporated therein by reference;
ii) does not constitute Companies-Provided Information;
and
iii) is not information provided by the Cash Collateral
Depositor or the Cash Collateral Trustee.
"Companies-Provided Information" means any computer tape furnished to the
Underwriter by ACC concerning the Receivables assigned to the Trust.
Notwithstanding the provisions of Sections 8 and 9, the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Certificates underwritten by the
Underwriter and distributed to the public were offered to the public exceeds the
amount of any damages which the Underwriter has otherwise been required to pay
in respect of such losses, liabilities, claims, damages and expenses. For
purposes of this Section 9, each person, if any, who controls the Underwriter
within the meaning of the Act or the Exchange Act shall have the same rights to
contribution as the Underwriter and each director of ACC, each officer of ACC
who signed the Registration Statement, and each person, if any, who controls ACC
within the meaning of the Act or the Exchange Act shall have the same rights to
contribution as ACC.
10. Default of Underwriter. If the Underwriter defaults
in its obligations to purchase Certificates hereunder on the Closing Date and
the aggregate principal amount of Certificates that such defaulting Underwriter
has agreed but failed to purchase does not exceed 10% of the total principal
28
<PAGE> 29
amount of Certificates that the Underwriter is obligated to purchase on such
Closing Date, the Underwriter may make arrangements satisfactory to ACC for the
purchase of such Certificates by other persons. If the Underwriter so defaults
and the aggregate principal amount of Certificates with respect to which such
default occurs exceeds ___% of the total principal amount of Certificates that
the Underwriter is obligated to purchase on such Closing Date and arrangements
satisfactory to ACC for the purchase of such Certificates by other persons are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of ACC, except as provided in Section 11. As used
in this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
11. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of ACC or its officers and of the Underwriter set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of the Underwriter, ACC or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Certificates. If this Agreement is terminated or if for any reason the
purchase of the Certificates by the Underwriter is not consummated, ACC shall
remain responsible for the expenses to be paid or reimbursed by it pursuant to
Section 7 and the respective obligations of ACC and the Underwriter pursuant to
Section 8 and 9 shall remain in effect, and if any Certificates have been
purchased hereunder the representations and warranties in Section 2 and all
obligations under Section 5 and 6 shall also remain in effect. If the purchase
of the Certificates by the Underwriter is not consummated for any reason other
than solely because of the termination of this Agreement pursuant to Section 10
or the occurrence of any event specified in clause (ii), (iv) or (v) of Section
6(n), ACC will reimburse the Underwriter for all out-of-pocket expenses
(including fees and disbursements of ___________________________, Underwriter's
counsel) reasonably incurred by them in connection with the offering of the
Certificates.
12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to the address set forth on the first page hereof,
or sent by facsimile machine which produces an electronic confirmation of
receipt to 212/318-0532, attention: Investment Banking Department, Transactions
Advisory Group. Notices to
29
<PAGE> 30
ACC shall be directed to ACC Receivables Finance Corporation, 12750 High Bluff
Drive, Suite 320, San Diego, California 92130, or sent by facsimile machine
which produces an electronic confirmation of receipt to _____________,
attention: ______________________________.
13. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriter and ACC, and their respective successors.
Nothing expressed or mentioned in this Agreement is intended nor shall it be
construed to give any person, firm or corporation, other than the parties hereto
or thereto and their respective successors and the controlling persons and
officers and directors referred to in Sections 8 and 9 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or with
respect to this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties and their respective successors and such
controlling persons and officers and directors and their heirs and legal
representatives (to the extent of their rights as specified herein and therein)
and except as provided above for the benefit of no other person, firm or
corporation. No purchaser of Certificates from the Underwriter shall be deemed
to be a successor by reason merely of such purchase.
14. GOVERNING LAW AND TIME; CONSENT TO JURISDICTION. THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND SHALL BE
CONSTRUED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAWS. ACC HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE FEDERAL AND
STATE COURTS IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
15. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but together they
shall constitute but one instrument.
30
<PAGE> 31
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and ACC in accordance with its terms.
Very truly yours,
ACC CONSUMER FINANCE CORPORATION
By: _______________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
___________________________,
as the Underwriter.
By: __________________________________
Name:
Title:
31
<PAGE> 32
Schedule 1
Underwriting
Class -
--------------------------------------
<TABLE>
<CAPTION>
Proceeds to
Purchase ACC (includes
Price Principal accrued Accrued
Underwriters Percentage Amount interest) Interest
------------ ---------- ------ --------- --------
<S> <C> <C> <C> <C> <C>
% $ $
</TABLE>
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
ACC CONSUMER FINANCE CORPORATION
ARTICLE I.
The name of the corporation is ACC CONSUMER FINANCE
CORPORATION.
ARTICLE II.
The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle. The name of its registered agent at that
address is The Corporation Trust Company.
ARTICLE III.
The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware (the "GCL").
ARTICLE IV.
A. Authorized Common Stock and Preferred Stock. The
total authorized number of shares of the Corporation shall be 20,000,000
shares, consisting of 18,000,000 shares designated as Common Stock, $.001 par
value, and 2,000,000 shares designated as Preferred Stock, $.001 par value. Of
the authorized shares of Preferred Stock, 162,831 are hereby designated as
Series A Preferred Stock; 11,538 are hereby designated as Series B Preferred
Stock; and 1,825,631 shares of Preferred Stock may be established and
designated by the Board of Directors of the Corporation, and thereafter issued,
as described below.
B. Powers of Board of Directors to Establish and
Designate Series of Preferred Stock. In addition to Series A Preferred Stock
and Series B Preferred Stock, described below, shares of the Preferred Stock
may be issued from time to time in one or more other series. The Board of
Directors of the Corporation is hereby expressly authorized to establish and
designate one or more series of the Preferred Stock, to fix the number of
shares constituting each series, and to fix the designations and the powers,
preferences, qualifications and limitations, restrictions and dividend,
conversion, redemption, distribution, liquidation, special voting and other
rights of the shares of each series and the variations of the relative powers,
rights, preferences, qualifications, limitations and restrictions as between
series, and to increase and to decrease (but not below the number of shares of
such series then outstanding) the number of shares
<PAGE> 2
constituting each such additional series. Such determinations may be fixed by
a resolution or resolutions adopted by the Board of Directors.
C. Particular Rights, Preferences, Privileges and
Restrictions (Other than Voting Rights) of the Series A Preferred Stock and the
Series B Preferred Stock
1. Designation of Preferred. 162,831 shares of
Preferred Stock are designated Series A Preferred Stock (the "Series A
Preferred") and 11,538 shares of Preferred Stock are designated Series B
Preferred Stock (the "Series B Preferred") (the Series A and the Series B
Preferred are collectively referred to herein as the "Preferred"), with the
rights, preferences and privileges specified herein.
2. Dividend Rights of Preferred. The holders of
the then outstanding shares of Preferred shall be entitled to receive dividends
at the rate of $1.33 per share of Series A Preferred per annum and $3.90 per
share of Series B Preferred per annum when, as and if declared by the Board of
Directors out of any funds legally available therefor, prior and in preference
of any declaration or payment of any dividend on the Common Stock ("Common"),
and/or any other series of Preferred Stock established and designated by the
Board of Directors as described above, of the Corporation (other than dividends
and related declarations of dividends payable to holders of Common and payable
in Common or other securities and rights convertible into or entitling the
holder thereof to receive, directly or indirectly, additional shares of
Common). Such dividends shall be payable and accumulate annually and shall be
cumulative whether or not there are funds legally available therefor and
whether or not declared by the Board of Directors. Unpaid dividends shall
continue to accumulate annually on each such share of Preferred until the date
of payment or any unpaid cumulative dividends, provided that unpaid dividends
thereafter shall continue to accumulate hereunder. No interest (or equivalent)
shall be earned or accrued on any unpaid cumulative dividends. No holder of
shares of the Corporation's stock shall be entitled to any right or remedy by
virtue of the failure to declare or pay any cumulative dividends. The Board
shall not be obligated to declare dividends, notwithstanding the availability
of funds for that purpose, and in no event shall any dividend be paid prior to
the earlier of (i) July 8, 1998, (ii) thirty (30) days following the closing of
a firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Act"), covering the offer and sale of Common (whether for the account of the
Corporation or for the account of one or more stockholders of the Corporation)
to the public at an aggregate offering price of not less than $7,500,000 and at
a public offering price (prior to underwriters' discounts and expenses) equal
to or exceeding $75 per share of Common (as adjusted for any stock dividends,
combinations or splits with respect to such shares) (the "Company IPO"), (iii)
a liquidation of the Corporation (as described in Section 3 below) or (iv) any
redemption of the Preferred pursuant to Section 5 below.
No dividends (other than those to holders of Common payable
solely in Common, described above and discussed in Section 4(c)(6)) shall be
declared or paid on any Common and/or any other series of Preferred Stock
established and designated by the
2
July 19, 1997
<PAGE> 3
Board of Directors as described above, during any fiscal year of the
Corporation until the full annual dividend on the Preferred (and any dividends
from prior year(s) accumulated but unpaid) shall have been paid or declared and
set apart. No dividends shall accumulate or be paid or payable for nay partial
period.
Dividends, if paid, or of declared and set apart for payment,
must be paid contemporaneously on all series of Preferred for which any shares
are issued and outstanding, and, if less than full dividends are paid or
declared and set apart for payment, the same percentage of the dividend rate
shall be paid on or declared and set apart for payment for each series of
Preferred for which any shares are issued and outstanding.
3. Liquidation Preference.
a. In the event of any liquidation,
dissolution or winding up of the Corporation, either voluntary or involuntary,
the holders of the Preferred shall be entitled to receive, prior and in
preference to any distribution or any of the assets or surplus funds of the
Corporation to the holders of the Common and/or any other series of Preferred
Stock established and designated by the Board of Directors as described above,
by reason of their ownership thereof, the sum of (i) $33.17 per share for each
share of Series A Preferred and $65.00 per share of Series B Preferred then
held by them and (ii) an amount equal to all declared and/or accumulated but
unpaid dividends on the Series A Preferred and the Series B Preferred then held
by them. If, upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Series A Preferred and Series B Preferred
shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amount, the entire assets and funds of the Corporation
legally available for distribution shall be distributed ratably among the
holders of the Series A and Series B Preferred in proportion to the
preferential amount each such holder would have been entitled to receive
pursuant to this Section 3 if such distribution had been sufficient to permit
the full payment of such preferential amount. After payment has been made to
the holders of the Series A Preferred and Series B Preferred of the full
amounts to which they shall be entitled as aforesaid, the holders of any other
series of Preferred Stock shall be entitled to receive assets as provided by
the Board of Directors upon establishment and designation of such series and
the holders of the Common shall be entitled to receive all remaining assets of
the Corporation, if any, pro rata based on the number of shares of Common then
outstanding.
b. For purposes of this Section 3, a
merger or consolidation of the Corporation with or into any other corporation
or corporations (other than a merger or consolidation effected solely for the
purpose of changing the Corporation's state of incorporation), or the merger of
any other corporation or corporations into the Corporation, in which
consolidation or merger the stockholders of the Corporation receive
distributions in cash or in securities of another corporation or corporations
as a result of such consolidation or merger, or a sale of all or substantially
all of the assets of the Corporation (other than securitization or similar
transactions in the
3
July 19, 1997
<PAGE> 4
ordinary course of the Corporation's business), shall be treated as a
liquidation, dissolution or winding up of the Corporation.
4. Conversion. The holders of the Preferred
shall have conversion rights as follows (the "Conversion Rights"):
a. Optional and Automatic Conversion.
Each share of the Preferred shall be convertible at the option of the holder
thereof, without payment of additional consideration, at any time after the
date of issuance of such share, and prior to five (5) days preceding the date
of redemption thereof, at the office of the Corporation or any transfer agent
for the Preferred, into such number of fully paid and nonassessable shares of
Common as is determined by dividing $33.17 per share of Series A Preferred and
$65.00 per share of Series B Preferred, by the Series A Conversion Price and
Series B Conversion Price, respectively, determined as hereinafter provided, in
effect at the time of conversion. The price at which shares of Common shall be
deliverable upon conversion of the Series A Preferred (the "Series A Conversion
Price") shall initially be $33.17 per share of Common and the price at which
shares of Common shall be deliverable upon conversion of the Series B Preferred
(the "Series B Conversion Price") shall be $65.00 per share of Common. The
term "Conversion Price" as used hereinafter shall mean the Series A Conversion
Price and/or the Series B Conversion Price, as required by the context. Such
initial Conversion Price shall be subject to adjustment as hereinafter
provided.
Each share of Preferred shall automatically be converted into
shares of Common at the then effective Conversion Price in the event of either
(i) the Company IPO, or (ii) with respect to the Series A Preferred, the
written consent of holders of more than 50% of the then outstanding shares of
Series A Preferred voting as a class and, with respect to the Series B
Preferred, the written consent of holders of more than 50% of the then
outstanding shares of Series B Preferred voting as a class. In the event of
the automatic conversion of either series of Preferred upon a public offering
as aforesaid, the conversion shall be deemed to have occurred automatically at
the closing of such public offering.
b. Mechanics of Conversion. No
fractional shares of Common shall be issued upon conversion of the Preferred.
In lieu of any fractional shares to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied by
the then effective Conversion Price. Before any holder of Preferred shall be
entitled to covert the same into full shares of Common, it shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or any transfer agent for the Preferred, and shall give written
notice to the Corporation at such office that it elects to convert the same
(except that no such written notice of election to covert shall be necessary in
the event of an automatic conversion pursuant to Section 4a). The Corporation
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of Preferred a certificate or certificates registered in such names
as specified by the holder, for the number of shares of Common to which
4
July 19, 1997
<PAGE> 5
he shall be entitled as aforesaid and a check payable to the holder in the
amount of any cash amounts payable as a result of a conversion into fractional
shares of Common. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Preferred to be converted, and the person or persons entitled to
receive the shares of Common issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common on such
date (except that in the event of an automatic conversion pursuant to clause
(i) of the second paragraph of Section 4a such conversion shall be deemed to
have been made immediately prior to the closing of the offering referred to in
such clause (i) of Section 4a. If the conversion is in connection with an
underwritten offer of securities registered pursuant to the Act, the conversion
may, at the option of any holder tendering Preferred for conversion, be
conditioned upon the closing with the underwriter of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive the
Common issuable upon such conversion of the Preferred shall not be deemed to
have converted such Preferred until immediately prior to the closing of such
sale of securities.
If, on the date of conversion of any share of Preferred, there
are accumulated and unpaid dividends pursuant to Section 2 with respect to such
share, the Corporation shall defer any payment of any such accrued but unpaid
dividends until thirty (30) days following the Company IPO or a liquidation of
the Corporation (as described in Section 3 above), whichever occurs first, but
in no event later than July 8, 1998. The Corporation in its sole discretion
may elect to pay any accumulated but unpaid dividends or any portion thereof in
cash or shares of Common. To the extent that the Corporation elects to convert
any such accumulated dividends to Common, the number of shares of Common to be
delivered thereby shall be determined, with respect to each share of Preferred
so converted, by dividing (i) the aggregate amount of then accumulated but
unpaid dividends with respect to such share by (ii) the greater of (A) the fair
market value per share of the Common on the date of conversion as determined in
good faith by the Corporation's Board of Directors, or (B) the Conversion Price
in effect on such conversion date with respect to such share of Preferred.
c. Adjustments to Conversion Price for
Diluting Issues.
(1) Special Definitions. For purposes
of this Section 4c, the following definitions shall apply:
(a) "Options" shall mean rights,
options or warrants to subscribe for, purchase or otherwise acquire
either Common or Convertible Securities.
(b) "Original Issue Date" shall
mean July 15, 1993 with respect to the Series A Preferred, and
September 12, 1994 with respect to the Series B Preferred.
5
July 19, 1997
<PAGE> 6
(c) "Convertible Securities" shall
mean any evidences of indebtedness, shares (other than Preferred) or
other securities convertible into or exchangeable for Common.
(d) "Additional Shares of Common"
shall mean all shares of Common issued (or, pursuant to Section 4c(3),
deemed to be issued) by the Corporation, other than shares of Common
issued or issuable or deemed to be issued:
(i) upon conversion of shares of
Series A and/or Series B Preferred;
(ii) as a result of an adjustment
made pursuant to Sections 4c(4), 4c(6) or 4c(7);
(iii) to officers, directors,
employees of and/or consultants to, the Corporation pursuant
to stock option or purchase plans or agreements approved by
the Board of Directors;
(iv) relating to 1,696 shares of
Common originally issued to Cargill Financial Services
Corporation as shares of common stock of American Credit
Corporation, a California corporation on July 24, 1994;
(v) as a dividend or distribution on
Series A Preferred or Series B Preferred; or
(vi) by way of dividend or other
distribution on shares of Common excluded from the definition
of Additional Shares of Common by the foregoing clauses (i),
(ii), (iii), (iv), (v) or this clause (vi).
(2) No Adjustment of Conversion
Price. No adjustment in the Conversion Price of a particular share of
Preferred shall be made in respect of the issuance of Additional Shares of
Common unless the consideration per share for an Additional Share of Common
issued or deemed to be issued by the Corporation is less that the Conversion
Price in effect on the date of, and immediately prior to such issue, for such
share of Preferred.
(3) Deemed Issue of Additional
Shares of Common.
(a) Options and Convertible
Securities. In the event the Corporation at any time or from time to
time shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders
6
July 19, 1997
<PAGE> 7
of any class of securities entitled to receive any such Options or
Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such
number) of Common issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed
to be Additional Shares of Common issued as of the time of such issue
or, in the case of such a record date shall have been fixed, as of the
close of business on such record date, provided that Additional Shares
of Common shall not be deemed to have been issued unless the
consideration per share (determined pursuant to Section 4c(5) hereof)
of such Additional Shares of Common would be less than the Conversion
Price in effect on the date of and immediately prior to such issue, or
such record date, as the case may be, and provided further that in any
such case in which Additional Shares of Common are deemed to be
issued:
(i) no further adjustment in the
Conversion Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common upon the exercise
of such Options or conversion or exchange of such Convertible
Securities;
(ii) if such Options or Convertible
Securities by their terms provide, with the passage of time or
otherwise, for any increase in the consideration payable to
the Corporation, or decrease in the number of shares of Common
issuable, upon the exercise, conversion or exchange thereof,
the Conversion Price computed upon the original issue thereof
(or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming effective, be
recommended to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange
under such Convertible Securities; and
(iii) upon the expiration of any such
Options or any rights of conversion or exchange under such
Convertible Securities which shall not have been exercised,
the Conversion Price computed upon the original issue thereof
(or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall,
upon such expiration, be recomputed as if:
1. in the case of Convertible
Securities or Options for Common the only Additional
Shares of Common issued were the shares of Common, if
any, actually issued upon the exercise of such
Options or the conversion or exchange of such
Convertible Securities and the consideration received
therefor was the consideration actually received by
the Corporation for the issue of all such Options,
whether or not exercised, plus the consideration
7
July 19, 1997
<PAGE> 8
actually received by the Corporation upon such
exercise, or for the issue of all such Convertible
Securities which were actually converted or
exchanged, plus the additional consideration, if any,
actually received by the Corporation upon such
conversion or exchange; and
2. in the case of Options for
Convertible Securities only the Convertible
Securities, if any, actually issued upon the exercise
thereof were issued at the time of such Options, and
the consideration received by the Corporation for the
Additional Shares of Common deemed to have been then
issued was the consideration actually received by the
Corporation for the issue of all such Options,
whether or not exercised, plus the consideration
deemed to have been received by the Corporation upon
the issue of the Convertible Securities with respect
to which such Options were actually exercised; and
(iv) no readjustment pursuant to
clause (ii) or (iii) above shall have the effect of increasing
the Conversion Price to an amount which exceeds the lower of
(i) the Conversion Price on the original adjustment date prior
to the original adjustment, or (ii) the Conversion Price that
would have resulted from any issuance of Additional Shares of
Common between the original adjustment date and such
readjustment date.
(b) Stock Dividends and
Subdivisions. In the event that the Corporation at any time or from
time to time shall declare or pay any dividend on the Common payable
in Common, or effect a subdivision of the outstanding shares of Common
into a greater number of shares of Common (by reclassification or
otherwise than by payment of a dividend in Common), then and in any
such event, Additional Shares of Common shall not be deemed to have
been issued, but rather the provisions of Section 4c(6) below shall
apply.
(4) Adjustment of Conversion Price
Upon Issuance of Additional Shares of Common. In the event the Corporation
shall issue Additional Shares of Common (including Additional Shares of Common
deemed to be issued pursuant to Section 4c(3)) without consideration or for a
consideration per share less than the Conversion Price in effect on the date of
and immediately prior to such issue, then and in such event, such Conversion
Price shall be reduced, concurrently with such issue, to a price (calculated to
the nearest cent) determined by multiplying such Conversion Price by a
fraction, the numerator of which shall be the number of shares of Common
outstanding immediately prior to such issue plus the number of shares of Common
which the aggregate consideration received by the Corporation for the total
number of Additional Shares of Common so issued would purchase at such
Conversion Price and the denominator of which shall be the number of shares of
Common outstanding immediately prior to such issue plus the number of such
Additional Shares of Common
8
July 19, 1997
<PAGE> 9
so issued; provided, however, that for the purposes of this Section (4)), all
shares of Common issuable upon exercise of outstanding Options, or upon
conversion of outstanding Convertible Securities, shall be deemed to be
outstanding, and immediately after any Additional Shares of Common are deemed
issued pursuant to Section 4c(3), such Additional Shares shall be deemed to be
outstanding.
(5) Determination of Consideration.
For purposes of Section 4c, the consideration received by the Corporation for
the issue of any Additional Shares of Common shall be computed as follows:
(a) Cash and Property: Such
consideration shall:
(i) insofar as it consists of cash,
be computed at the aggregate amount of cash received by the
Corporation excluding amounts paid or payable for accrued
interest or accrued dividends;
(ii) insofar as it consists of
property other than cash, be computed at the fair market value
thereof at the time of such issue, as determined in good faith
by the Corporation's Board of Directors; and
(iii) in the event Additional Shares
of Common are issued together with other shares or securities
or other assets of the Corporation for consideration which
covers both, be the proportion of such consideration so
received, computed as provided in clauses (i) and (ii) above,
as determined in good faith by the Board.
(b) Options and Convertible
Securities. The consideration per share received by the Corporation for
Additional Shares of Common deemed to have been issued pursuant to Section
4(c)(3)(a), relating to Options and Convertible Securities, shall be determined
by dividing:
(i) the total amount, if any,
received or receivable by the Corporation as consideration for
the issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as set
forth in the instruments relating thereto, without regard to
any provision contained therein for a subsequent adjustment of
such consideration) payable to the Corporation upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities: by
9
July 19, 1997
<PAGE> 10
(ii) the maximum number of shares of
Common (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities.
(6) Adjustments for Subdivisions,
Dividends, Combinations or Consolidations of Common.
(a) In the event the outstanding
shares of Common shall be combined or consolidated by reclassification or
otherwise, into a lesser number of shares of Common, the Conversion Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
(b) In the event the Corporation
shall declare or pay any dividend on the Common payable in Common or in the
event the outstanding shares of Common shall be subdivided, by reclassification
or otherwise than by payment of a dividend in Common, into a greater number of
shares of Common, the Conversion Price in effect immediately prior to such
dividend or subdivision shall be proportionately decreased:
(i) in the case of any such dividend,
immediately after the close of business on the record date for
the determination of holders of any class of securities
entitled to receive such dividend, or
(ii) in the case of any such
subdivision, at the close of business on the date immediately
prior to the date upon which such corporate action becomes
effective.
If such record date shall have been
fixed and such dividend shall not have been fully paid on the date fixed
therefor, the adjustment previously made in the Conversion Price which became
effective on such record date shall be cancelled as of the close of business on
such record date, and thereafter the Conversion Price shall be adjusted as of
the time of actual payment of such dividend.
(7) Adjustments for Other
Reclassifications, Dividends and Distributions. If there occurs any capital
reorganization or any reclassification of the capital stock of the Corporation
(other than a subdivision, dividend, combination, consolidation or other
transaction provided for in Section 2 or Section 4c(6)), each share of Series A
Preferred or Series B shall thereafter be convertible into the same kind and
amounts of securities or other assets, or both, that were issuable or
distributable to the holders of outstanding Common Stock of the Corporation
upon such reorganization or reclassification, in respect of that number of
shares of Common Stock
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<PAGE> 11
into which such shares of Series A Preferred or Series B Preferred might have
been converted immediately prior to such reorganization or reclassification;
and in any such case, appropriate adjustments (as determined by the Board of
Directors) shall be made in the application of the provisions herein set forth
with respect to the rights and interests thereafter of the holders of Series A
Preferred and Series B Preferred to the end that the provisions of this
Certificate of Incorporation shall thereafter be applicable, as early as
reasonably may be, in relation to any securities or other assets thereafter
deliverable upon the conversion of the Series A Preferred and Series B
Preferred.
d. No Impairment. The Corporation
shall not, by amendment of this Certificate of Incorporation or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation but will at all times in
good faith assist in the carrying out of all the provisions of this Section 4
and in the taking of all such action as may be necessary or appropriate in
order to protect the Conversion Rights of the holders of the Series A Preferred
and the Series B Preferred against impairment.
e. Certificate to Adjustments. Upon
the occurrence of each adjustment or readjustment of the Conversion Price
pursuant to this Section 4, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to each holder of Series A Preferred and/or Series B Preferred, as the
case may be, a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is
based. The Corporation shall, upon the written request at any time of the
holder of Series A Preferred or Series B Preferred, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Price at the time in effect, and (iii)
the number of shares of Common and the amount, if any, of other property which
at the time would be received upon the conversion of the Series A Preferred or
the Series B Preferred.
f. Notices of Record Date. In the
event the Corporation shall propose at any time:
(1) to declare any dividend or
distribution upon its Common Stock, whether in cash, property, stock or other
securities, whether or not a regular cash dividend and whether or not out of
earnings or earned surplus:
(2) to offer for subscription pro
rata to the holders of any class or series of its stock any additional shares
of stock of any class or series or other rights;
(3) effect any reclassification or
recapitalization of its Common shares outstanding involving a change in the
Common shares; or
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(4) merge or consolidate with or
into any other corporation, or sell, lease or convey all or substantially all
its property or business, or to liquidate, dissolve or wind up:
then, in connection with each such event, the
Corporation shall send to the holders of the Preferred shares;
(a) at least 10 days' prior
written notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common shares shall be entitled thereto) or for determining rights
to vote in respect of the matters referred to in (3) and (4) above; and
(b) in the case of the matters
referred to in (3) and (4) above, at least 10 days' prior written notice of the
date when the same shall take place (and specifying, if practicable, or
estimating the date on which the holders of Common shares shall be entitled to
exchange their Common shares for securities or other property deliverable upon
the occurrence of such event).
Each such written notice shall be given
by first class mail, postage prepaid, addressed to the holders of the Preferred
at the address for each such holder as shown on the books of the Corporation.
(5) Common Stock Reserved. The
Corporation shall at all times reserve and keep available of its authorized but
unissued shares of Common Stock, solely for the purposes of effecting the
conversion of the shares of the Preferred, such number of shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Preferred (including those shares of Preferred
issuable upon the exercise of all outstanding warrants to acquire shares of
Preferred), and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Preferred, the Corporation shall take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
5. Redemption at Option of Holder.
a. Each holder of shares of the Series
A Preferred shall have the option, but not the obligation, at any time
subsequent to five years from the Original Issue Date of the Series A
Preferred, to require the Corporation to redeem, at the Redemption Price
provided for below, all or any part of such holder's shares of the Series A
Preferred as requested by such holder upon ninety (90) days' prior written
notice to the Corporation (the "Redemption Request") specifying the number of
shares to be redeemed and the effective date of such redemption pursuant to
this Section 5 (the "Redemption Date").
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<PAGE> 13
b. Each holder of the shares of the
Series B Preferred shall have the option, but not the obligation, at any time
subsequent to two years from the Original Issue Date of the Series B Preferred,
to require the Corporation to redeem, at the Redemption Price provided for
below, all or any part of such holder's shares of the Series B Preferred
pursuant to a Redemption Request specifying the number of shares to be redeemed
and the Redemption Date.
c. The price at which shares of
Preferred shall be redeemed pursuant to this Section 5 (the "Redemption Price")
shall be the price per share (appropriately adjusted for any stock dividends,
combinations or splits or similar events with respect to such shares) that is
equal to $33.17 per share of Series A Preferred (the "Series A Original Issue
Price") and $65.00 per share of Series B Preferred (the "Series B Original
Issue Price"), plus all accumulated and/or declared but unpaid dividends with
respect to such share.
d. Within ten (10) days of receipt of
any Redemption Request as provided for in this Section 5, the Corporation shall
cause a copy thereof to be mailed, first class postage prepaid, to each holder
of record (at the close of business on the business day next preceding the day
on which such copy is mailed) of the Preferred, other than the holders
requesting redemption pursuant to such Redemption Request, at the address last
shown in the stock books of the Corporation for such holder. The Corporation
shall also include with such copy a statement notifying such holder of the
facts relating to the redemption requested to be effected pursuant to this
Section 5, and informing such holder of its right to have all or part of its
shares of Preferred redeemed pursuant to this Section 5. Each such other
holder shall have the right to require the Corporation to redeem, on the
Redemption Date, all or part of such holder's shares of Preferred concurrently
with the shares to be redeemed pursuant to such Redemption Request by
delivering a written request therefor to the Corporation specifying the number
of shares requested to be redeemed pursuant to this Section 5 within thirty
(30) days of receipt of such copy of such Redemption Request by such holder.
e. At least fifteen (15) but no more
than thirty (30) days prior to a Redemption Date, written notice shall be
mailed, first class postage prepaid, to each holder of record (at the close of
business on the business day next preceding the day on which notice is given)
of the Preferred to be redeemed pursuant to this Section 5, at the address last
shown on the records of the Corporation for such holder, notifying such holder
of the redemption to be effected and specifying the number of shares to be
redeemed from such holder, the Redemption Date, the Redemption Price, the place
at which payment may be obtained and calling upon such holder to surrender to
the Corporation, in the manner and at the place designated, his certificate or
certificates representing the shares to be redeemed (the "Redemption Notice").
Except as provided in Section 5f, on or after the Redemption Date, each holder
of Preferred to be redeemed shall surrender to the Corporation the certificate
or certificates representing such shares, in the manner and at the place
designated in the Redemption Notice, and thereupon the Redemption Price of such
shares shall be payable to the order of the person whose name
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<PAGE> 14
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. In the event less than all the
shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
f. From and after the Redemption Date,
unless there shall have been a default in payment of the Redemption Price, all
rights of the holders of shares of Preferred designated for redemption in the
Redemption Notice as holders of Preferred (except the right to receive the
Redemption Price without interest upon surrender of their certificate or
certificates) shall cease with respect to such shares, and such shares shall
not thereafter be transferred on the books of the Corporation or be deemed to
be outstanding for any purpose whatsoever. If the funds of the Corporation
legally available for redemption of shares of Series A Preferred and Series B
Preferred on any Redemption Date are insufficient to redeem the total number of
shares of Series A Preferred and Series B Preferred to be redeemed on such
date, those funds which are legally available will be used to redeem the
maximum possible number of such shares ratably among the holders of such shares
to be redeemed based upon their holdings of Preferred. For the purpose of
determining whether funds are legally available for redemption of shares of
Preferred as provided herein, the Corporation shall value its assets at the
highest amount permissible under applicable law. The shares of Preferred not
redeemed shall remain outstanding and entitled to all the rights and
preferences provided herein. At any time thereafter when additional funds of
the Corporation are legally available for the redemption of shares of Preferred
such funds will immediately be used to redeem the balance of the shares which
the Corporation has become obliged to redeem on any Redemption Date, but which
it has not redeemed.
g. Subject to Section 5f, on or prior
to each Redemption Date, the Corporation shall deposit the Redemption Price of
all shares of Preferred to be redeemed pursuant to this Section 5 and not yet
redeemed with a bank or trust corporation having aggregate capital and surplus
in excess of $100,000,000 as a trust fund for the benefit of the respective
holders of the shares designated for redemption and not yet redeemed,with
irrevocable instructions and authority to the bank or trust corporation to pay
the Redemption Price for such shares to their respective holders on or after
the Redemption Date upon receipt of notification from the Corporation that such
holder has surrendered his share certificate to the Corporation pursuant to
Section 5e above. As of the Redemption Date, to the extent adequate funds are
on hand in the deposit account, the deposit shall constitute full payment of
the shares to their holders, and from and after the Redemption Date the shares
so called for redemption shall be redeemed and shall be deemed to be no longer
outstanding, and the holders thereof shall cease to be stockholders with
respect to such shares and shall have no rights with respect thereto except the
rights to receive from the bank or trust corporation payment of the Redemption
Price of the shares, without interest, upon surrender of their certificates
therefor. Such instructions shall also provide that any moneys deposited by
the Corporation pursuant to this Section 5g for the redemption of shares
thereafter converted into shares of the Corporation's Common Stock pursuant to
Section 4 hereof prior to the Redemption Date shall be
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July 19, 1997
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returned to the Corporation forthwith upon such conversion. The balance of any
moneys deposited by the Corporation pursuant to this Section 5g remaining
unclaimed at the expiration of two (2) years following the Redemption Date
shall thereafter be returned to the Corporation upon its request expressed in a
resolution of its Board of Directors.
D. Voting Rights of Stockholders.
1. Voting Rights in General. Except as
otherwise required by law and as provided in Sections 3 and 4 below:
a. each share of Common issued and
outstanding shall have one vote;
b. each share of Preferred issued and
outstanding shall have the number of votes equal to the number of Common shares
into which such share of Preferred is convertible as adjusted from time to time
pursuant to Section 4 above;
c. the Common and the Preferred shall
vote together as a single class; and
d. each share of Preferred Stock other
than Preferred issued and outstanding shall have the number of votes determined
by the Board of Directors upon establishment and designation of such shares as
described in Section 4 below.
2. Fractional Votes. Notwithstanding the
foregoing, fractional votes by the holders of Preferred shall not be permitted
and any fractional voting rights resulting from the above formula with respect
to Preferred (after aggregating all shares into which shares of Preferred held
by each holder could be converted) shall be rounded to the nearest whole
number.
3. Voting Rights for Election of Directors.
Notwithstanding Section 1 above, and so long as at least sixty thousand
(60,000) shares of Preferred remain outstanding, the holders of the Series B
Preferred shall be entitled to elect two (2) directors, the holders of the
Common voting together as a single class shall be entitled to elect one (1)
director and all remaining directors shall be elected by the holders of the
Common and Preferred voting together as a single class. The directors whom the
holders of Series B Preferred shall be entitled to elect voting alone as a
class shall both be in Class III; and the director whom the holders of Common
shall be entitled to elect voting along as a class shall be in Class II; as
such Classes are described in Article V of this Certificate of Incorporation.
At such time as less than sixty thousand (60,000) shares of Preferred shall be
outstanding, and therefore, the Common and Preferred shall vote together as a
single class in the election of all directors. The holders of shares of
Preferred Stock other than Preferred shall have no voting rights with respect
to the election of directors until the Company IPO, and following the Company
IPO such
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holders shall have such rights as given by the Board of Directors upon
establishment and designation of such shares.
4. Voting Rights Designated by Board of
Directors. Subject to the provisions of Section 3 above, the Board of
Directors shall fix the voting rights of each share of Preferred Stock other
than Preferred at the time of establishment and designation of such share as
provided in this Certificate of Incorporation.
E. Covenants.
In addition to any other rights provided by law and
so long as at least sixty thousand (60,000) shares of Preferred remain
outstanding, the Corporation shall not without first obtaining the affirmative
vote or written consent of:
1. The holders of not less than a majority of
all outstanding shares of Series A Preferred and a majority of all outstanding
shares of Series B Preferred, with each such series voting separately as a
single class:
a. alter or change the rights,
preferences, or privileges of the Preferred materially or adversely;
b. increase the authorized number of
shares of Preferred;
c. create any new class or series of
stock or any other securities convertible into equity securities of the
Corporation having a preference over the Preferred with respect to voting
rights, liquidation preferences or dividends; or
d. take any action that results in any
merger or consolidation of the Corporation, any sale of all or substantially
all of the assets of the Corporation (other than securitization or similar
transactions in the ordinary course of the Corporation's business) or any
reorganization of the Corporation's capital structure.
2. The holders of not less than a majority of
all outstanding shares of Series A Preferred, a majority of all outstanding
shares of Series B Preferred, a majority of each additional outstanding series
of Preferred Stock, if any, and a majority of all outstanding shares of Common,
each voting separately as a single class:
a. alter or change the terms or
provisions of Section D above (Voting Rights) of this Section E2a.
F. Residual Rights.
All rights accruing to the outstanding shares of the
Corporation not expressly provided for to the contrary herein shall be vested
in the Common, subject to
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any rights expressly granted by the Board of Directors with respect to shares
of any series of Preferred Stock (other than Preferred) established and
designated as provided herein.
G. Certain Repurchases Deemed to the Distributions.
Notwithstanding any other provisions of this Article III, the
corporation may, subject to restrictions imposed by applicable law, make any
necessary distributions in connection with the repurchase of shares of Common
issued to or held by officers, directors or employees of or consultants to the
Corporation upon termination of their employment or services pursuant to
agreements providing for the right of said repurchase between the Corporation
and such person.
ARTICLE V.
The business and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors. The number of directors
which shall constitute the Board of Directors shall be as specified in the
Bylaws of the Corporation.
The directors shall be divided into three classes, designated
Class I, Class II and Class III. The directors in Class III and one of the
directors in Class II shall be elected pursuant to the provisions of Section D3
of Article IV of this Certificate of Incorporation, if applicable. Each class
shall consist, as nearly as possible, of one-third of the total number of
directors constituting the entire Board of Directors. The term of the initial
Class I directors shall terminate on the date of the 1996 annual meeting of
stockholders; the term of the initial Class II directors shall terminate on the
date of the 1997 annual meeting of stockholders; and the term of the initial
Class III directors shall terminate on the date of the 1998 annual meeting of
stockholders. At each annual meeting of stockholders beginning in 1996,
successors to the class of directors whose term expires at that annual meeting
shall be elected for a three-year term. If the number of directors is changed,
any increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible, and
any additional directors of any class elected to fill a vacancy resulting from
an increase in such class shall hold office for a term that shall coincide with
the remaining term of that class, but in no case will a decrease in the number
of directors shorten the term of any incumbent director. A director shall hold
office until the annual meeting for the year in which his term expires and
until his successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal from office.
Any vacancy on the Board of Directors, howsoever resulting, may be filled by a
majority of the directors then in office, even if less than a quorum, or by a
sole remaining director. Any director elected to fill a vacancy shall hold
office for a term that shall coincide with the term of the class to which such
director shall have been elected.
ARTICLE VI.
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Any or all of the directors of the Corporation may be removed
from office at any time, but only by the affirmative vote of the holders of a
majority, if such removal is for cause, and of the holders of at least
two-thirds, if such removal is without cause, of the outstanding shares of
Voting Stock (as hereinafter defined) of the Corporation, considered for
purposes of this Article VI as one class; provided, however, that a director
elected by a particular class or series as provided in Section D3 of Article IV
of this Certificate of Incorporation may be removed only by the affirmative
vote of the holders of a majority, if such removal is for cause and of the
holders of at least two-thirds, if such removal is without cause, of the
outstanding shares of the particular class or series of shares that elected
such director.
ARTICLE VII.
Elections of directors at an annual or special meeting of
stockholders shall be by written ballot unless the Bylaws of the Corporation
shall otherwise provide.
ARTICLE VIII.
Except as otherwise provided in Article IV, no action may be
taken by the stockholders except at an annual or special meeting of
stockholders, and no action may be taken by stockholders by written consent.
ARTICLE IX.
Special meetings of the stockholders of the Corporation for
any purpose or purposes may be called as provided in the Bylaws of the
Corporation.
ARTICLE X.
The affirmative vote of the holders of not less than
two-thirds of the outstanding shares of "Voting Stock" (as hereinafter defined)
of the Corporation, voting as a single class, shall be required for the
approval or authorization of any "Business Combination" (as hereinafter
defined) of the Corporation with any "Related Person" (as hereinafter defined);
provided, however, that the two-thirds voting requirement shall not be
applicable if:
1. The Board of Directors of the Corporation by
a majority vote of the directors then holding office (a) has expressly approved
in advance the acquisition of the outstanding shares of Voting Stock of the
Corporation that caused the Related Person to become a Related Person or (b)
has approved the Business Combination prior
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July 19, 1997
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to the Related Person involved in the Business Combination having become a
Related Person;
2. The Board of Directors of the Corporation by
a majority vote of the disinterested directors approves the Business
Combination;
3. The Business Combination is solely between
the Corporation and another corporation, 100% of the Voting Stock of which is
owned directly or indirectly by the Corporation; or
4. The Business Combination is a merger or
consolidation and the cash or fair market value of the property, securities or
other consideration to be received per share by holders of Common Stock of the
Corporation in the Business Combination is not less than the highest per share
price (with appropriate adjustments for recapitalizations and for stock splits,
stock dividends and like distributions) paid by the Related Person in acquiring
any of its holdings of the Corporation's Common Stock.
For the purposes of this Article:
(i) The term "Business Combination" shall mean (a)
any merger or consolidation of the Corporation or a subsidiary with or
into a Related Person, (b) any sale, lease, exchange, transfer or
other disposition, including, without limitation, a mortgage or any
other security device, of all or any "Substantial Part" (as
hereinafter defined) of the assets either of the Corporation
(including, without limitation, any voting securities of a
subsidiary); or of a subsidiary to a Related Person, (c) any merger or
consolidation of a Related Person with or into the Corporation or a
subsidiary of the Corporation, (d) any sale, lease, exchange, transfer
or other disposition of all or any Substantial Part of the assets of a
Related Person to the Corporation or a subsidiary of the Corporation,
(e) the issuance of any securities (other than by way of pro rata
distribution to all stockholders) of the Corporation or a subsidiary
of the Corporation to a Related Person, (f) the acquisition by the
Corporation or a subsidiary of the Corporation of any securities of a
Related Person, (g) any recapitalization that would have the effect of
increasing the voting power of a Related Person, and (h) any
agreement,contract or other arrangement providing for any of the
transactions described in this definition of Business Combination.
(ii) The term "Related Person" shall mean and include
any individual corporation, partnership or other person or entity
which, together with its "Affiliates" and "Associates" (as defined on
September 1, 1995 in Rule 12d-2 under the Securities Exchange Act of
1934), is the "Beneficial Owner" (as defined on September 1, 1995 in
September 1, 1995 in Rule 13d-3 under the Securities Exchange Act of
1934) of in the aggregate 10% or more of the outstanding Voting Stock
of the Corporation, and any Affiliate or Associate of any such
individual, corporation, partnership or other person or entity.
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<PAGE> 20
(iii) The term "Substantial Part" shall mean more than
10% of the book value of the total assets of the company in question
as of the end of its most recent fiscal year ending prior to the time
the determination is being made.
(iv) Without limitation, any shares of Common Stock
of the Corporation that any Related Person has the right to acquire
pursuant to any agreement, or upon exercise of conversion rights,
warrants or options, or otherwise, shall be deemed beneficially owned
by the Related Person.
(v) For the purpose of Section 4 of this Article,
the term "other consideration to be received" shall include, without
limitation, Common Stock of the Corporation retained by its existing
public stockholders in the event of a Business Combination in which
the Corporation is the surviving corporation.
(vi) The term "Voting Stock" shall mean all
outstanding shares of capital stock of the Corporation or another
corporation entitled to vote generally in the election of directors
(other than Class III directors elected pursuant to Section D3 of
Article III of this Certificate of Incorporation) and each reference
to a proportion of shares of Voting Stock shall refer to such
proportion of the votes entitled to be cast by such shares.
Nothing contained in this Article X shall be construed to
limit any right conferred by the Corporation's charter documents or the GCL on
any class of stock of the Corporation to approve any Business Combination by
class vote.
ARTICLE XI.
No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty by such a director as a director. Notwithstanding the foregoing
sentence, a director shall be liable to the extent provided by applicable law
(i) for any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the GCL or (iv) for any transaction from which such director derived an
improper benefit. No amendment to or repeal of this Article XI or adoption of
any provision of this Certificate of Incorporation inconsistent with this
Article XI shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment, repeal or
adoption. If the GCL is hereafter amended to authorize the further elimination
or limitation of the liability of a director, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the GCL as so amended.
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ARTICLE XII.
In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to adopt, repeal,
alter, amend or rescind the Bylaws of the Corporation. In addition, the Bylaws
of the Corporation may be adopted, repealed, altered, amended or rescinded by
the affirmative vote of the holders of not less than two-thirds of the
outstanding stock of the Corporation entitled to vote thereon.
ARTICLE XIII.
The provisions set forth in this Article XIII, in the second
paragraph of Article V herein and in Articles VI, VIII, IX, X and XII herein
may not be repealed or amended in any respect, unless such action is approved
by the affirmative vote of the holders of not less than two-thirds of the
outstanding stock of the Corporation entitled to vote thereon.
ARTICLE XIV.
Subject to the foregoing, the Corporation reserves the right
to repeal, alter, amend or rescind any provision contained in this Certificate
of Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred on stockholders herein are granted subject to this
reservation.
ARTICLE XV.
Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 279 of Title S
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class
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of creditors, and/or on all the stockholders or class of stockholders, of this
corporation, as the case may be, and also on this corporation.
ARTICLE XVI.
The incorporator is Christopher J. Kearns, whose mailing
address is 501 West Broadway, 19th Floor, San Diego, California 92101.
IN WITNESS WHEREOF, ACC CONSUMER FINANCE CORPORATION has
caused this Certificate of Incorporation to be signed November 8, 1995, in the
City and County of San Diego, State of California.
ACC CONSUMER FINANCE CORPORATION
By____________________________________
Christopher J. Kearns, Incorporator
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF ACC CONSUMER FINANCE CORPORATION
ACC Consumer Finance Corporation, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the board of directors of said Corporation
adopted a resolution proposing and declaring advisable the following amendment
to the Certificate of Incorporation of said Corporation;
RESOLVED: that ARTICLE IV shall be amended by as follows:
Upon the filing of this Certificate of Amendment, every one
(1) outstanding share of Common Stock, $.001 par value, of the
Corporation ("Common Stock") shall be split and converted into
twenty-three (23) shares of Common Stock; and neither (i) the
authorized or outstanding shares of Common Stock, Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock nor any other Preferred Stock of the Corporation, nor
(ii) the powers, preferences or rights of any stockholder of
the Corporation, shall otherwise be affected.
SECOND: That in lieu of a meeting and vote of stockholders,
the stockholders have given written consent to said amendment in accordance
with the provisions of Section 228 of the General Corporation Law of the State
of Delaware, and said written consent was filed with the Corporation.
THIRD: That the aforesaid amendment was duly adopted in
accordance with applicable provisions of Sections 141, 242 and 228 of General
Corporation Law of the State of Delaware.
FOURTH: That the capital of the Corporation will not be
reduced under or by reason of said amendment.
<PAGE> 24
IN WITNESS WHEREOF, said ACC Consumer Finance Corporation has
caused this Certificate of Amendment to be signed by Rocco J. Fabiano, its
Chairman of the Board and Chief Executive Officer, and attested by Jack R.
Cohen, its Secretary as of May 13, 1996.
ACC CONSUMER FINANCE CORPORATION,
a Delaware corporation
By________________________________
Rocco J. Fabiano,
Chairman of the Board and
Chief Executive Officer
ATTEST:
__________________________
Jack R. Cohen,
Secretary
2
<PAGE> 1
EXHIBIT 3.2
ADOPTION OF BYLAWS AND
ELECTION OF DIRECTORS
BY INCORPORATOR OF
ACC CONSUMER FINANCE CORPORATION,
A Delaware corporation
The undersigned, sole incorporator named in the Certificate of
Incorporation of ACC Consumer Finance Corporation, a Delaware corporation,
hereby takes the following action to perfect the organization of the
corporation:
1. Adoption of Bylaws. The bylaws attached hereto are hereby adopted as
the Bylaws of the corporation.
2. Election of Directors. Ethan J. Falk (Class I), Jack P. Fitzpatrick
(Class I), Rocco J. Fabiano (Class II), Jeffrey S. Lambert (Class III) and
Jeffrey E. Susskind (Class III) are hereby elected directors of the corporation,
each for the Class (as defined in the Certificate of Incorporation of the
corporation) indicated and each to hold office until their successors are
elected and qualified in accordance with the Certificate of Incorporation of the
corporation.
3. Resignation of Incorporator. The undersigned resigns as incorporator
of the corporation.
Executed on November __, 1995.
___________________________________
Christopher J. Kearns, Incorporator
<PAGE> 2
BYLAWS
OF
ACC CONSUMER FINANCE CORPORATION
ARTICLE 1.
CORPORATE OFFICES
1.1 Principal Office. The principal office of the corporation shall be
12750 High Bluff Drive, Suite 320, San Diego, California 92130.
1.2 Registered Office. The registered office of the corporation
required by the Delaware General Corporation Law to be maintained in the State
of Delaware may, but need not, be identical with the principal office, and the
address of the registered office may be changed from time to time by the board
of directors.
1.3 Other Offices. The board of directors may at any time establish
other offices at any place or places within or outside the State of Delaware
where the corporation is qualified to do business.
ARTICLE 2.
MEETINGS OF STOCKHOLDERS
2.1 Place of Meetings. Meetings of stockholders shall be held at any
place, within or outside the State of Delaware, designated by the board of
directors. In the absence of any such designation, stockholders' meetings shall
be held at the registered office of the corporation.
2.2 Annual Meeting. The annual meeting of stockholders shall be held
each year on a date and at a time designated by the board of directors. At the
meeting, directors shall be elected and any other proper business may be
transacted.
2.3 Special Meeting. In addition to such special meetings as are
required by applicable law, a special meeting of the stockholders may be called
at any time only by the board of directors, the chairman of the board, the chief
executive officer, the president or, upon the written request of a stockholder
or stockholders holding shares in aggregate entitled to cast not less than 10%
of the votes at the meeting, by the secretary.
If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of such
meeting
<PAGE> 3
(which shall be not less than thirty-five (35) nor more than sixty (60) days
after the receipt of the request) and the general nature of the business
proposed to be transacted, and shall be delivered personally or sent by
registered mail or by telegraphic or other facsimile transmission to the
chairman of the board, the chief executive officer, the president, any vice
president or the secretary of the corporation. No business may be transacted at
such special meeting otherwise than specified in such notice. The officer
receiving the request shall cause notice to be promptly given to the
stockholders entitled to vote, in accordance with the provisions of Sections 2.4
and 2.7, explaining that a meeting will be held at the time requested by the
person or persons calling the meeting, and specifying such time. If the notice
is not given within twenty (20) days after the receipt of the request, the
person or persons requesting the meeting may give the notice. Nothing contained
in this paragraph of this Section 2.3 shall be construed as limiting, fixing or
affecting the time when a meeting of stockholders called by action of the board
of directors may be held.
2.4 Notice of Stockholders' Meetings. Except as otherwise required by
applicable law, all notices of meetings of stockholders shall be in writing and
shall be sent or otherwise given in accordance with Section 2.7 of these Bylaws
not less than ten (10) nor more than sixty (60) days before the date of the
meeting to each stockholder entitled to vote at such meeting. The notice shall
specify the place, date and hour of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting is called.
2.5 Director Nominations. Only persons who are nominated in accordance
with the procedures set forth in this Section 2.5 shall be eligible for election
as directors. Nominations of persons for election to the board of directors of
the corporation may be made at a meeting of stockholders by or at the direction
of the board of directors or by any stockholder of the corporation entitled to
vote for the election of directors at the meeting who complies with the notice
procedure set forth in this Section 2.5. Such nominations, other than those made
by or at the direction of the board of directors, shall be made pursuant to
timely notice in writing to the secretary of the corporation. To be timely, a
stockholder notice shall be delivered to or mailed and received at the principal
executive office of the corporation not less than sixty (60) days nor more than
ninety (90) days prior to the meeting; provided, however, that in the event that
less than sixty (60) days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such stockholder's notice shall set forth (a)
as to each person whom the stockholder proposes to nominate for election or
re-election as a director, (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of the corporation that are
beneficially owned by such person and (iv) any other information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required in such case pursuant to
Regulation 14A
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under the Securities Exchange Act of 1934, as amended (including without
limitation such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); and (b) as to the
stockholder giving the notice (i) the name and address, as they appear on the
corporation's books, of such stockholder and (ii) the class and number of shares
of the corporation that are beneficially owned by such stockholder. At the
request of the board of directors, any person nominated by the board of
directors for election as a director shall furnish to the secretary of the
corporation that information required to be set forth in a stockholder's notice
of nomination pertaining to the nominee. No person shall be eligible for
election as a director of the corporation unless nominated in accordance with
the procedures set forth in this Section 2.5. The chairman of the meeting shall,
if the facts warrant, determine that a nomination was not made in accordance
with the procedures prescribed by these Bylaws, and if he should so determine,
he shall so declare to the meeting and the defective nomination shall be
disregarded.
2.6 Business Introduced by Stockholders. With respect to business
introduced by a stockholder that is not specified in the notice of annual
meeting, the stockholder must have given timely notice thereof in writing to the
secretary of the corporation for that business to be properly introduced at the
annual meeting. To be timely, the notice must be delivered to or mailed and
received by the secretary of the corporation in the same manner and subject to
the same time requirements in accordance with the procedure set forth in Section
2.5. As to each matter the stockholder proposes to bring before the meeting, the
stockholder's notice must set forth the following: (i) a brief description of
the business sought to be presented at the meeting and the reasons for
conducting such business at the meeting, (ii) the name and record address of the
stockholder proposing such business, (iii) the class, series and number of
shares of corporation stock that are beneficially owned by the stockholder and
(iv) any material interest of the stockholder in such business.
2.7 Manner of Giving Notice; Affidavit of Notice. Except as otherwise
required by applicable law, written notice of any meeting of stockholders, if
mailed, shall be given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the records
of the corporation. An affidavit of the secretary or an assistant secretary or
of the transfer agent of the corporation that the notice has been given shall,
in the absence of fraud, be prima facie evidence of the facts stated therein.
2.8 Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote at the meeting, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the certificate of incorporation. If, however, such quorum is not
present or represented at any meeting of the stockholders, then either (i) the
chairman of the meeting or (ii) a majority of the stockholders entitled to vote
at the meeting, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than
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<PAGE> 5
announcement at the meeting, until a quorum is present or represented. At such
adjourned meeting at which a quorum is present or represented, any business may
be transacted that might have been transacted at the meeting as originally
noticed.
2.9 Adjourned Meeting; Notice. When a meeting is adjourned to another
time or place, unless these Bylaws or the certificate of incorporation or
applicable law otherwise requires, notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting, the corporation may transact any
business that might have been transacted at the original meeting. If the
adjournment is for more than thirty (30) days, or, if after the adjournment, a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
2.10 Conduct of Business. The chairman of any meeting of stockholders
shall determine the order of business and the procedure at the meeting,
including such regulation of the manner of voting and the conduct of business
and discussion as seem to the chairman to be in order.
2.11 Voting. The stockholders entitled to vote at any meeting of
stockholders shall be determined in accordance with the provisions of Section
2.13 of these Bylaws, subject to the provisions of Sections 217 and 218 of the
General Corporation Law of Delaware (relating to voting rights of fiduciaries,
pledgors and joint owners of stock and to voting trusts and other voting
agreements).
Except as may be otherwise provided in the certificate of
incorporation, each stockholder entitled to vote shall be entitled to one vote
for each share of capital stock held by such stockholder.
Directors shall be elected by plurality of the votes cast by holders of
shares entitled to vote thereon. All other elections shall be determined and all
questions decided by majority vote of the number of shares entitled to vote and
represented at any meeting at which there is a quorum, except in such cases as
shall otherwise be required by statute, the certificate of incorporation or
these Bylaws.
2.12 Waiver of Notice. Whenever notice is required to be given under
any provision of the General Corporation Law of Delaware or of the certificate
of incorporation or these Bylaws, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of stockholders need be specified
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<PAGE> 6
in any written waiver of notice unless so required by the certificate of
incorporation or these Bylaws.
2.13 Record Date for Stockholder Notice; Voting. Except as otherwise
required by applicable law, in order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or,
if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held.
(ii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the
board of directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.14 Proxies. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him by a written
proxy, signed by the stockholder and filed with the secretary of the
corporation, but no such proxy shall be voted or acted upon after three (3)
years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy (whether
by manual signature, facsimile signature, typewriting, telegraphic transmission
or otherwise) by the stockholder or the stockholder's attorney in fact. The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Section 212(c) of the General Corporation Law of
Delaware.
2.15 List of Stockholders Entitled to Vote. The officer who is in
charge of the stock ledger of the corporation shall prepare and make, at least
ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each
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stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during the ordinary business hours, for a period of at
least ten (10) days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present. Such list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
ARTICLE 3.
DIRECTORS
3.1 Powers. Subject to the provisions of the General Corporation Law of
Delaware and any limitations in the certificate of incorporation or these Bylaws
relating to action required to be approved by the stockholders of the
outstanding shares, the business, property and affairs of the corporation shall
be managed and all corporate powers shall be exercised by or under the direction
of the board of directors.
3.2 Number of Directors. The authorized number of directors shall be
not less than five nor more than nine. The board of directors shall consist of
five persons (one person in Class I, and two persons in each of Class II and
Class III, which Classes are described in the certificate of incorporation)
until changed by a proper amendment to this Section 3.2. No reduction of the
authorized number of directors shall have the effect of removing any director
before that director's term of office expires.
3.3 Election, Qualification and Term of Office of Directors. Except as
provided in Section 3.4 of these Bylaws, a class of directors shall be elected
at each annual meeting of stockholders to hold office until the expiration of
the director's term, as specified in the certificate of incorporation. Directors
need not be stockholders unless so required by the certificate of incorporation
or these Bylaws, wherein other qualifications for directors may be prescribed.
Each director, including a director elected to fill a vacancy, shall hold office
until his successor is elected and qualified or until his earlier resignation or
removal. Elections of directors need not be by written ballot.
3.4 Resignation and Vacancies. Any director may resign at any time upon
written notice to the attention of the secretary of the corporation. When one or
more directors so resigns and the resignation is effective at a future date, a
majority of the directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or
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resignations shall become effective, and each director so chosen shall hold
office as provided in this section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these
Bylaws, any vacancy in the board, whether because of death, resignation,
disqualification, an increase in the number of directors or any other cause may
be filled by a majority of directors then in office, although less than a
quorum, or by a sole remaining director.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may for the purpose of electing directors call a special
meeting of stockholders in accordance with the provisions of the certificate of
incorporation or these Bylaws, or may apply to the Court of Chancery for a
decree summarily ordering an election as provided in Section 211 of the General
Corporation Law of Delaware.
If, at the time of filling any vacancy, the directors then in office
constitute less than a majority of the whole board (as constituted immediately
prior to the filling of such vacancy), then the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten (10) percent
of the total number of the shares at the time outstanding having the right to
vote for such director, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office as aforesaid, which election shall be governed by
the provisions of Section 211 of the General Corporation Law of Delaware as far
as possible.
3.5 Place of Meeting; Meetings By Telephone. The board of directors of
the corporation may hold meetings, both regular and special, either within or
outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or by
these bylaws, members of the board of directors, or any committee designated by
the board of directors, may participate in a meeting of the board of directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 Regular Meetings. Regular meetings of the board of directors may be
held without notice at such time and at such place as shall from time to time be
determined by the board.
3.7 Special Meetings; Notice. Special meetings of the board of
directors for any purpose or purposes may be called at any time by the chairman
of the
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board, the chief executive officer, the president, any vice president, the
secretary or any two (2) directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, or facsimile transmission, addressed to each director
at that director's address as it is shown on the records of the corporation. If
the notice is mailed, it shall be deposited in the United States mail at least
three (3) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone, telegram, or facsimile transmission, it
shall be delivered personally or by telephone, or to the telegraph company, or
by facsimile transmission, at least twenty-four (24) hours before the time of
the holding of the meeting. Any oral notice given personally or by telephone may
be communicated either to the director or to a person at the office of the
director if the person giving the notice has reason to believe the notice will
be communicated promptly to the director. The notice need not specify the
purpose of the meeting or, if the meeting is to be held at the principal
executive office of the corporation, the place of the meeting.
3.8 Quorum. At all meetings of the board of directors, a majority of
the authorized number of directors shall constitute a quorum for the transaction
of business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of directors, except as
may be otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present may adjourn the meeting from time to time,
without notice other than an announcement at the meeting, until a quorum is
present.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 Waiver of Notice. Whenever notice is required to be given under any
provision of the General Corporation Law of Delaware or of the certificate of
incorporation or these Bylaws, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meetings except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
meeting of the directors, or members of a committee of directors, need be
specified in any written waiver of notice unless so required by the certificate
of incorporation or these Bylaws.
3.10 Board Action by Written Consent Without a Meeting. Unless
otherwise restricted by the certificate of incorporation or these Bylaws, any
action
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required or permitted to be taken at any meeting of the board of directors, or
of any committee thereof, may be taken without a meeting if all members of the
board or committee, as the case may be, consent thereto in writing and the
writing or writings are filed with the minutes of proceedings of the board or
committee.
3.11 Fees and Compensation of Directors. Unless otherwise restricted by
the certificate of incorporation or these Bylaws, the board of directors shall
have the authority to fix the compensation of a director.
3.12 Approval of Loans to Officers. The corporation may lend money to,
or guarantee any obligation of, or otherwise assist any officer or other
employee of the corporation or of any of its subsidiaries, including any officer
or employee who is a director of the corporation or of any of its subsidiaries,
whenever, in the judgment of the directors, such loan, guaranty or assistance
may reasonably be expected to benefit the corporation. The loan, guaranty or
other assistance may be with or without interest and may be unsecured, or
secured in such manner as the board of directors shall approve, including,
without limitation, a pledge of shares of stock of the corporation. Nothing
contained in this section shall be deemed to deny, limit or restrict the powers
of guaranty or warranty of the corporation at common law or under any statute.
3.13 Removal of Directors. Unless otherwise restricted by statute, by
the certificate of incorporation or by these Bylaws, any director or the entire
board of directors may be removed, but only by the affirmative vote of the
holders of a majority, if such removal is for cause, and of the holders of at
least two-thirds, if such removal is without cause, of the outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors.
ARTICLE 4.
COMMITTEES
4.1 Committees of Directors. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees, with
each committee to consist of one or more of the directors of the corporation.
The number of committee members may be increased or decreased from time to time
by resolution adopted by a majority of the entire board of directors. Each
committee member shall serve as such until the earliest of (i) the expiration of
his term as a director, (ii) his resignation as a committee member or as a
director or (iii) his removal as a committee member or as a director. The board
may designate one or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in
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the place of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the board of directors or in these Bylaws,
shall have and may exercise all the powers and authority of the board of
directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers that may
require it; but no such committee shall have the power or authority to (i) amend
the certificate of incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the board of directors as provided in Section 151(a) of the
General Corporation Law of Delaware, fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, (iv)
recommend to the stockholders a dissolution of the corporation or a revocation
of a dissolution or (v) amend these Bylaws; and, unless the board resolution
establishing the committee, these Bylaws or the certificate of incorporation
expressly so provides, no such committee shall have the power or authority to
declare a dividend, to authorize the issuance of stock or to adopt a certificate
of ownership and merger pursuant to Section 253 of the General Corporation Law
of Delaware.
4.2 Committee Minutes. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required to do so by
the board of directors.
4.3 Meetings and Actions of Committees. Meetings and actions of
committees shall be governed by, and held and taken in accordance with Section
3.5 (place of meetings and meetings by telephone), Section 3.6 (regular
meeting), Section 3.7 (special meetings and notice), Section 3.8 (quorum),
Section 3.9 (waiver of notice), and Section 3.10 (action without a meeting) of
these Bylaws, with such changes in the context of those provisions as are
necessary to substitute the committee and its members for the board of directors
and its members; provided, however, that the time of regular meetings of
committees may be determined either by resolution of the board of directors or
by resolution of the committee, that special meetings of committees may also be
called by resolution of the board of directors and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these Bylaws.
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ARTICLE 5.
OFFICERS
5.1 Officers. The Corporation shall have a chairman of the board, a
chief executive officer or a president or both, a secretary, a chief financial
officer and treasurer, a chief operating officer and a chief credit officer. The
corporation may also have, at the discretion of the board of directors, one or
more vice presidents, one or more assistant secretaries, one or more assistant
treasurers and any such other officers as may be appointed in accordance with
the provisions of Section 5.3 of these Bylaws. Any number of offices may be held
by the same person.
5.2 Appointment of Officers. The officers of the corporation, except
such officers as may be appointed in accordance with the provisions of Section
5.3 or 5.5 of these Bylaws, shall be appointed by the board of directors.
5.3 Subordinate Officers. The board of directors may appoint, or
empower the chief executive officer and/or the president to appoint, such other
officers and agents as the business of the corporation may require, each of whom
shall hold office for such period, have such authority, and perform such duties
as are provided in these Bylaws or as the board of directors may from time to
time determine
5.4 Removal and Resignation of Officer. Any officer may be removed,
either with or without cause, by an affirmative vote of the majority of the
board of directors at any regular or special meeting of the board, or by any
officer upon whom such power of removal may be conferred by the board of
directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 Vacancies in Offices. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
5.6 Chairman Of The Board. The chairman of the board shall, if present,
preside at all meetings of the board of directors and stockholders and exercise
and perform such other powers and duties as may be from time to time assigned to
him by the board of directors or prescribed by these Bylaws. If at any time
there is no chief executive officer or president, the chairman of the board
shall in addition have the powers and duties prescribed in Section 5.7 or 5.8 of
this Article 5, as applicable.
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5.7 Chief Executive Officer. The chief executive officer shall, subject
to the control of the board of directors, have general direction and strategic
control of the business and the officers of the corporation. In the absence of
the chairman of the board, the chief executive officer shall preside at all
meetings of the stockholders and at all meetings of the board of directors. The
chief executive officer shall exercise and perform such other powers and duties
as may from time to time be assigned to him by the board of directors or these
Bylaws.
5.8 President. The president shall have general supervision and control
of the sales and marketing and administration of the corporation and shall have
such other powers and duties as may be prescribed by the board of directors or
these Bylaws, subject to the control of the board of directors, the chairman of
the board and the chief executive officer.
5.9 Chief Operating Officer. The chief operating officer shall have
general supervision and control over the operations of the corporation, subject
to the control of the board of directors, chairman of the board, chief executive
officer and president. The chief operating officer may sign and execute, in the
name of the corporation, any instrument authorized by the board of directors,
except when a signing and/or execution thereof shall have been expressly
delegated by the board of directors or by these Bylaws to some other officer or
agent of the corporation. The chief operating officer shall have all the general
powers and duties of management usually vested in the chief operating officer of
a corporation, and shall have such other powers and duties as may be prescribed
from time to time by the board of directors of these Bylaws.
5.10 Vice Presidents. In the absence or disability of the chairman of
the board, the chief executive officer, the president and the chief operating,
officer, the vice presidents, if any, in order of their rank as fixed by the
board of directors or, if not ranked, a vice president designated by the board
of directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
board of directors, these Bylaws, the chairman of the board or the chief
executive officer.
5.11 Secretary. The secretary shall keep or cause to be kept, at the
principal executive office of the corporation or such other place as the board
of directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors and stockholders. The minutes shall show the
time and place of each meeting, the name of those present at directors' meetings
or committee meetings, the number of shares present or represented at
stockholders' meetings and the proceedings thereof.
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The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these Bylaws. The secretary shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these Bylaws.
5.12 Chief Credit Officer. The chief credit officer shall be
responsible for the credit approval department and the loan underwriting and
review process of loans purchased by the corporation. The chief credit officer
will be responsible for oversight of underwriting personnel of the corporation.
The chief credit officer shall also have such other powers and duties as may be
prescribed from time to time by the board of directors or these Bylaws.
5.13 Chief Financial Officer and Treasurer. The chief financial officer
and treasurer shall be the principal accounting officer of the corporation and
shall keep and maintain, or cause to be kept and maintained, adequate and
correct books and records of accounts of the properties and business
transactions of the corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, retained earnings and shares.
The books of account shall at all reasonable times be open to inspection by any
director.
The chief financial officer and treasurer shall deposit all moneys and
other valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. The chief financial
officer and treasurer shall disburse the funds of the corporation as may be
ordered by the board of directors, shall render to the chief executive officer,
the president and/or directors, whenever they request it, an account of all his
transactions as chief financial officer and treasurer and of the financial
condition of the corporation, and shall have other powers and perform such other
duties as may be prescribed by the board of directors or by these Bylaws.
5.14 Authority and Duties of Officers. In addition to the foregoing
authority and duties, all officers of the corporation shall respectively have
such authority and perform such duties in the management of the business of the
corporation as may be designated from time to time by the board of directors.
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ARTICLE 6.
RECORDS AND REPORTS
6.1 Maintenance and Inspection of Records. The corporation shall,
whether at its principal executive offices or at such places as designated by
the board of directors, keep a record of its stockholders listing their names
and addresses and the number and class of shares held by each stockholder, a
copy of these Bylaws as amended to date, accounting books and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours of business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
6.2 Inspection by Directors. Any director shall have the right to
examine the corporation's stock ledger, a list of its stockholders and its other
books and records for a purpose reasonably related to his position as a
director. The Court of Chancery is hereby vested with the exclusive jurisdiction
to determine whether a director is entitled to the inspection sought. The Court
may summarily order the corporation to permit the director to inspect any and
all books and records, the stock ledger, and the stock list and to make copies
or extract therefrom. The Court may, in its discretion, prescribe any
limitations or conditions with reference to the inspection, or award such other
and further relief as the Court may deem just and proper.
6.3 Annual Statement to Stockholders. The board of directors shall
present at each annual meeting and at any special meeting of the stockholders
when called for by vote of the stockholders, a full and clear statement of the
business and condition of the corporation.
ARTICLE 7.
GENERAL MATTERS
7.1 Checks. From time to time, the board of directors shall determine,
by resolution, which person or persons may sign or endorse all checks, drafts,
other orders for payment of money, notes or other evidences of indebtedness that
are issued
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in the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
7.2 Execution of Corporation Contracts and Instruments. The board of
directors, except as otherwise provided in these Bylaws, may authorize any
officer or officers, or agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation; such authority
may be general or confined to specific instances. Unless so authorized or
ratified by the board of directors or within the agency power of an officer, no
officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or for any amount.
7.3 Stock Certificates; Partly Paid Shares. The shares of the
corporation shall be represented by certificates, provided that the board of
directors of the corporation may provide by resolution or resolutions that some
or all of any or all classes or series of its stock shall be uncertificated
shares. Any such resolution shall not apply to shares represented by a
certificate until such certificate is surrendered to the corporation.
Notwithstanding the adoption of such a resolution by the board of directors,
every holder of stock represented by certificates and upon request every holder
of uncertificated shares shall be entitled to have a certificate signed by, or
in the name of the corporation by the chairman or vice-chairman of the board of
directors or the chief executive officer or president, and by the chief
financial officer and treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares and upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
7.4 Special Designation on Certificates. If the corporation is
authorized to issue more than one class of stock or more than one series of any
class, then the powers, the designations, the preferences and the relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights shall be set forth in full or
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summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements, there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock, a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
7.5 Lost Certificates. Except as provided in this Section 7.5, no new
certificates for shares shall be issued to replace a previously issued
certificate unless the latter is surrendered to the corporation and cancelled at
the same time. The corporation may issue a new certificate of stock or
uncertificated shares in the place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroyed, and the corporation may require
the owner of the lost, stolen or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate or uncertificated shares.
7.6 Construction; Definitions. Unless the context requires otherwise,
the general provisions, rules of construction and definitions in the Delaware
General Corporation Law shall govern the construction of these Bylaws. Without
limiting the generality of this provision, the singular number includes the
plural, the plural number includes the singular and the term "person" includes
both a corporation and a natural person.
7.7 Dividends. The directors of the corporation, subject to any
restrictions contained in (i) the General Corporation Law of Delaware or (ii)
the certificate of incorporation, may declare and pay dividends upon the shares
of its capital stock. Dividends may be paid in cash, in property or in shares of
the corporation's capital stock.
The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation and meeting contingencies.
7.8 Fiscal Year. The fiscal year of the corporation shall be fixed by
resolution of the board of directors and may be changed by the board of
directors.
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7.9 Seal. The corporation may adopt a corporate seal, which may be
altered at its pleasure, and may use the same by causing it or a facsimile
thereof to be impressed or affixed or in any other manner reproduced.
7.10 Transfer of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction in its books.
7.11 Stock Transfer Agreement. The corporation shall have power to
enter into and perform any agreement with any number of stockholders of any one
or more classes of stock of the corporation to restrict the transfer of shares
of stock of the corporation of any one or more classes owned by such
stockholders in any manner not prohibited by the General Corporation Law of
Delaware.
7.12 Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner, shall be entitled to
hold liable for calls and assessments the person registered on its books as the
owner of shares and shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of another person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
ARTICLE 8.
AMENDMENTS
Bylaws of the corporation may be adopted, amended or repealed by the
requisite number of stockholders entitled to vote as required by the certificate
of incorporation; provided, however, that the corporation may, in its
certificate of incorporation, confer the power to adopt, amend or repeal Bylaws
upon the directors.
ARTICLE 9.
INDEMNIFICATION
9.1 Indemnification -- Third Party Proceedings. The corporation (i)
shall indemnify any person who is or was a party or is threatened to be made a
party to any proceeding (other than an action by or in the right of the
corporation to procure a judgment in its favor) by reason of the fact that such
person is or was a director or officer of the corporation, or any subsidiary of
the corporation (the "Indemnitee"), and (ii) may indemnify a person who is or
was a party or is threatened to be made a party
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to any proceeding (other than an action by or in the right of the corporation to
procure a judgment in its favor) by reason of the fact that such person is or
was an employee or other agent of the corporation (the "Indemnitee Agent"), and
such proceeding relates to any action or inaction on the part of Indemnitee or
Indemnitee Agent while an officer, director, employee or agent, or by reason of
the fact that Indemnitee or Indemnitee Agent is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including, subject to Section 9.20, attorneys' fees and disbursements
and any expenses of establishing a right to indemnification pursuant to this
Article 9 or under Delaware law), judgments, fines, settlements (if such
settlement is approved in advance by the corporation, which approval shall not
be unreasonably withheld) and other amounts actually and reasonably incurred by
Indemnitee or Indemnitee Agent in connection with such proceeding if Indemnitee
or Indemnitee Agent acted in good faith and in a manner Indemnitee or Indemnitee
Agent reasonably believed to be in or not opposed to the best interests of the
corporation and, in the case of a criminal proceeding, if Indemnitee or
Indemnitee Agent had no reasonable cause to believe Indemnitee's or Indemnitee
Agent's conduct was unlawful. The termination of any proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that Indemnitee or
Indemnitee Agent did not act in good faith and in a manner that Indemnitee or
Indemnitee Agent reasonably believed to be in or not opposed to the best
interests of the corporation, or, with respect to any criminal proceeding, shall
not create a presumption that Indemnitee or Indemnitee Agent had reasonable
cause to believe that Indemnitee or Indemnitee Agent's conduct was unlawful.
9.2 Indemnification -- Proceedings by or in the Right of the
Corporation. The corporation shall indemnify Indemnitee and may indemnify
Indemnitee Agent if Indemnitee, or Indemnitee Agent, as the case may be, was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation or any subsidiary
of the corporation to procure a judgment in its favor by reason of the fact that
Indemnitee or Indemnitee Agent is or was a director, officer, employee or other
agent of the corporation, or any subsidiary of the corporation, and such action
relates to any action or inaction on the part of Indemnitee or Indemnitee Agent
while an officer, director, employee or agent, or by reason of the fact that
Indemnitee or Indemnitee Agent is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including, subject to Section 9.20, attorneys' fees and disbursements and any
expenses of establishing a right to indemnification pursuant to this Article 9
or under Delaware law) and, to the fullest extent permitted by law, amounts paid
in settlement, in each case to the extent actually and reasonably incurred by
Indemnitee or Indemnitee Agent in connection with the defense or settlement of
the action or suit if Indemnitee or Indemnitee Agent acted in good faith and in
a manner Indemnitee or Indemnitee Agent believed to be in or not opposed to the
best interests of the corporation, except that no indemnification shall be made
with respect to any claim, issue or matter to which
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Indemnitee (or Indemnitee Agent) shall have been adjudged to have been liable to
the corporation in the performance of Indemnitee's or Indemnitee Agent's duty to
the corporation, unless and only to the extent that the Court of Chancery or the
court in which such action or suit is or was pending shall determine upon
application that, in view of all the circumstances of the case, Indemnitee (or
Indemnitee Agent) is fairly and reasonably entitled to indemnity for expenses
and then only to the extent that such court shall determine is proper.
9.3 Determination of Right of Indemnification. Any indemnification
under Section 9.1 or 9.2 (unless ordered by a court) shall be made by the
corporation unless a determination is reasonably and promptly made (i) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (ii) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders, that such person acted in bad faith and in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation, or, with respect to any criminal proceeding, that such person
believed or had reasonable cause to believe that his conduct was unlawful.
9.4 Successful Defense on Merits. To the extent that Indemnitee (or
Indemnitee Agent) without limitation has been successful on the merits in
defense of any proceeding referred to in Sections 9.1 or 9.2 above, or in
defense of any claim, issue or matter therein, the corporation shall indemnify
Indemnitee (or Indemnitee Agent) against expenses (including attorneys' fees and
disbursements) actually and reasonably incurred by Indemnitee (or Indemnitee
Agent) in connection therewith.
9.5 Certain Terms Defined. For purposes of this Article 9, references
to "other enterprises" shall include employee benefit plans, references to
"fines" shall include any excise taxes assessed on Indemnitee or Indemnitee
Agent with respect to an employee benefit plan, and references to "proceeding"
shall include any threatened, pending or completed action or proceeding, whether
civil, criminal, administrative or investigative. References to "corporation"
include all constituent corporations absorbed in a consolidation or merger as
well as the resulting or surviving corporation, so that any person who is or was
a director, officer, employee or other agent of such a constituent corporation
or who, being or having been such a director, officer, employee or other agent
of another corporation, partnership, joint venture, trust or other enterprise
shall stand in the same position under the provisions of this Article 9 with
respect to the resulting or surviving corporation as such person would if he or
she had served the resulting or surviving corporation in the same capacity.
9.6 Advancement of Expenses. The corporation shall advance all expenses
incurred by Indemnitee and may advance all or any expenses incurred by
Indemnitee Agent in connection with the investigation, defense, settlement
(excluding amounts actually paid in settlement of any action, suit or
proceeding) or appeal of any civil or criminal action, suit or proceeding
referenced in Sections 9.1 or 9.2 hereof;
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provided, that Indemnitee or Indemnitee Agent undertakes to repay such amounts
advanced only if, and to the extent that, it shall be determined ultimately that
Indemnitee or Indemnitee Agent is not entitled to be indemnified by the
corporation as authorized hereby. The advances to be made hereunder shall be
paid by the corporation (i) to Indemnitee within twenty (20) days following
delivery of a written request therefor by Indemnitee to the corporation; and
(ii) to Indemnitee Agent within twenty (20) days following the later of a
written request therefor by Indemnitee Agent to the corporation and
determination by the corporation to advance expenses to Indemnitee Agent
pursuant to the corporation's discretionary authority hereunder.
9.7 Notice of Claim. Indemnitee shall, as a condition precedent to his
or her right to be indemnified under this Article 9, and Indemnitee Agent shall,
as a condition precedent to his or her ability to be indemnified under this
Article 9, give the corporation notice in writing as soon as practicable of any
claim made against Indemnitee or Indemnitee Agent, as the case may be, for which
indemnification will or could be sought under this Article 9. Notice to the
corporation shall be directed to the secretary of the corporation at the
principal business office of the corporation (or such other address as the
corporation shall designate in writing, to Indemnitee or Indemnitee Agent). In
addition, Indemnitee or Indemnitee Agent shall give the corporation such
information and cooperation as it may reasonably require and as shall be within
Indemnitee's or Indemnitee Agent's power.
9.8 Enforcement Rights. Any indemnification provided for in Sections
9.1 or 9.2 or 9.4 shall be made no later than sixty (GO) days after receipt of
the written request of Indemnitee. If a claim or request under this Article 9 or
under any statute providing for indemnification is not paid by the corporation,
or on its behalf, within sixty (60) days after written request for payment
thereof has been received by the corporation, Indemnitee may, but need not, at
any time thereafter bring suit against the corporation to recover the unpaid
amount of the claim or request, and subject to Section 6.20, Indemnitee shall
also be entitled to be paid for the expenses (including attorneys' fees and
disbursements) of bringing such action. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
connection with any action, suit or proceeding in advance of its final
disposition) that Indemnitee has not met the standards of conduct that make it
permissible under applicable law for the corporation to indemnify Indemnitee for
the amount claimed, but the burden of proving such defense shall be on the
corporation, and Indemnitee shall be entitled to receive interim payments of
expenses pursuant to Section 9.6 unless and until such defense may be finally
adjudicated by court order or judgment for which no further right of appeal
exists. The parties hereto intend that if the corporation contests Indemnitee's
right to indemnification, the question of Indemnitee's right to indemnification
shall be a decision for the court, and no presumption regarding whether the
applicable standard has been met will arise based on any determination or lack
of determination of such by the corporation (including its board of directors or
any subgroup thereof, independent legal counsel or its stockholders). The board
of
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directors may, in its discretion, provide by resolution for similar or identical
enforcement rights for any Indemnitee Agent.
9.9 Assumption of Defense. In the event the corporation shall be
obligated to pay the expenses of any proceeding against an Indemnitee (or
Indemnitee Agent), the corporation, if appropriate, shall be entitled to assume
the defense of such proceeding with counsel approved by Indemnitee (or
Indemnitee Agent), which approval shall not be unreasonably withheld, upon the
delivery to Indemnitee (or Indemnitee Agent) of written notice of its election
so to do. After delivery of such notice, approval of such counsel by Indemnitee
(or Indemnitee Agent) and the retention of such counsel by the corporation, the
corporation will not be liable to Indemnitee (or Indemnitee Agent) under this
Article 9 for any fees of counsel subsequently incurred by Indemnitee (or
Indemnitee Agent) with respect to the same proceeding, unless (i) the employment
of counsel by Indemnitee (or Indemnitee Agent) is authorized by the corporation,
(ii) Indemnitee (or Indemnitee Agent) shall have reasonably concluded that there
may be a conflict of interest of such counsel retained by the corporation
between the corporation and Indemnitee (or Indemnitee Agent) in the conduct of
such defense, or (iii) the corporation ceases or terminates the employment of
such counsel with respect to the defense of such proceeding, in any of which
events then the fees and expenses of Indemnitee's (or Indemnitee Agent's)
counsel shall be at the expense of the corporation. At all times, Indemnitee (or
Indemnitee Agent) shall have the right to employ other counsel in any such
proceeding at Indemnitee's (or Indemnitee Agent's) expense.
9.10 Approval of Expenses. No expenses for which indemnity shall be
sought under this Article 9, other than those in respect of judgments and
verdicts actually rendered, shall be incurred without the prior consent of the
corporation, which consent shall not be unreasonably withheld.
9.11 Subrogation. In the event of payment under this Article 9, the
corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee (or Indemnitee Agent), who shall do all
things that may be necessary to secure such rights, including the execution of
such documents necessary to enable the corporation effectively to bring suit to
enforce such rights.
9.12 Exceptions. Notwithstanding any other provision herein to the
contrary, the corporation shall not be obligated pursuant to this Article 9:
(a) Claims Initiated by Indemnitee. To indemnify, or advance expenses
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Article 9 or any other statute or law or as otherwise required under the
Delaware General Corporation Law, but such indemnification or advancement of
expenses may be provided by the corporation in
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specific cases if the board of directors has approved the initiation or bringing
of such suit; or
(b) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Article 9, if a court of competent
jurisdiction determines that such proceeding was not made in good faith or was
frivolous; or
(c) Insured Claims. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) that
have been paid directly to Indemnitee by an insurance carrier under a policy of
officers' and directors' liability insurance maintained by the corporation; or
(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.
9.13 Partial Indemnification. If Indemnitee is entitled under any
provision of this Article 9 to indemnification by the corporation for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred by the Indemnitee in the investigation, defense, appeal or settlement
of any civil or criminal action, suit or proceeding, but not, however, for the
total amount thereof, the corporation shall nevertheless indemnify Indemnitee
for the portion of such expenses, judgments, fines or penalties to which
Indemnitee is entitled.
9.14 Coverage. This Article 9 shall, with respect to expenses incurred
following adoption of this Article 9, to the extent permitted by law, apply to
acts or omissions of (a) Indemnitee that occurred prior to the adoption of this
Article 9 if Indemnitee was a director or officer of the corporation, or any
predecessor corporation or constituent corporation in a merger involving the
corporation, or was serving at the request of the corporation as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, at the time such act or omission occurred; and (b) Indemnitee Agent
that occurred prior to the adoption of this Article 9 if Indemnitee Agent was an
employee or other agent of the corporation, or any preclusion or constituent
corporation to a merger involving the corporation, or was serving at the request
of the corporation as an employee or agent of another corporation, partnership,
joint venture, trust or other enterprise at the time such act or omission
occurred. All rights to indemnification under this Article 9 shall be deemed to
be provided by a contract between the corporation and the Indemnitee in which
the corporation hereby agrees to indemnify Indemnitee to the fullest extent
permitted by law, including those circumstances in which indemnification would
otherwise be discretionary and notwithstanding that such indemnification is not
specifically authorized by these Bylaws or by statute. Any repeal or
modification of these Bylaws, the Delaware
22
July 19, 1997
<PAGE> 24
General Corporation Law or any other applicable law shall not affect any rights
or obligations then existing under this Article 9. The provisions of this
Article 9 shall continue as to Indemnitee and Indemnitee Agent for any action
taken or not taken while serving in an indemnified capacity even though the
Indemnitee or Indemnitee Agent may have ceased to serve in such capacity at the
time of any action, suit or other covered proceeding. This Article 9 shall be
binding upon the corporation and its successors and assigns and shall inure to
the benefit of Indemnitee and Indemnitee Agent and Indemnitee's and Indemnitee
Agent's estate, heirs, legal representatives and assigns.
9.15 Non-Exclusivity. Nothing herein shall be deemed to diminish or
otherwise restrict any rights to which Indemnitee or Indemnitee Agent may be
entitled under these Bylaws, any agreement, any vote of stockholders or
disinterested directors, or under the laws of the State of Delaware. The
corporation may enter into indemnification agreements with its directors,
officers, employees or agents.
9.16 Severability. Nothing in this Article 9 is intended to require or
shall be construed as requiring the corporation to do or fail to do any act in
violation of applicable law. If this Article 9 or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify Indemnitee or Indemnitee Agent to the
fullest extent permitted by any applicable portion of this Article 9 that shall
not have been invalidated.
9.17 Enforceability Acknowledgment. In certain instances, Federal law
or applicable public policy may prohibit the corporation from indemnifying its
directors and officers under this Article 9 or otherwise. The corporation, if
appropriate, may undertake with the Securities and Exchange Commission to submit
the question of indemnification to a court in certain circumstances for a
determination of the corporation's right under public policy to indemnify an
Indemnitee or Indemnitee Agent.
9.18 Officer And Director Liability Insurance. The corporation shall,
from time to time, make the good faith determination whether or not it is
practicable for the corporation to obtain and maintain a policy or policies of
insurance with reputable insurance companies providing the officers and
directors of the corporation with coverage for losses from wrongful acts, or to
ensure the corporation's performance of its indemnification obligations under
this Article 9. Among other considerations, the corporation will weigh the costs
of obtaining such insurance coverage against the protection afforded by such
coverage. Notwithstanding the foregoing, the corporation shall have no
obligation to obtain or maintain such insurance if the corporation determines in
good faith that such insurance is not reasonably available, if the premium costs
for such insurance are disproportionate to the amount of coverage provided, if
the coverage provided by such insurance is limited by exclusions so as to
provide an insufficient benefit, or if Indemnitee is covered by similar
insurance maintained by a subsidiary or parent of the corporation.
23
July 19, 1997
<PAGE> 25
9.19 Notice To Insurers. If, at the time of the receipt of a notice of
a claim pursuant to Section 9.7 hereof, the corporation has director and officer
liability insurance in effect, the corporation shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The corporation shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such proceeding
in accordance with the terms of such policies.
9.20 Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Article 9 to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that the action was not instituted in good faith or was frivolous. In the event
of an action instituted by or in the name of the corporation under this Article
9, or to enforce or interpret any of the terms of this Article 9, Indemnitee
shall be entitled to be paid all court costs and expenses, including attorneys'
fees, incurred by Indemnitee in defense of such action (including with respect
to Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action the court determines that Indemnitee's defenses to such
action were not made in good faith or were frivolous. The board of directors
may, in its discretion, provide by resolution for payment of such attorneys'
fees to any Indemnitee Agent.
9.21 Notice. All notices, requests, demands and other communications
under this Article 9 shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked.
24
July 19, 1997
<PAGE> 26
CERTIFICATE OF ADOPTION OF BYLAWS
OF
ACC CONSUMER FINANCE CORPORATION
The undersigned person appointed in the Certificate of Incorporation to
act as the Incorporator of ACC CONSUMER FINANCE CORPORATION, hereby adopts the
foregoing bylaws, comprising nineteen (19) pages, as the Bylaws of the
corporation.
Executed this _____ day of __________, 1995.
________________________________
Christopher J. Kearns
25
July 19, 1997
<PAGE> 1
Exhibit 4.1
________________________________________________________________________________
[ACC AUTOMOBILE RECEIVABLES TRUST]
Class A-1 [Floating Rate] Auto Receivables Backed Notes
Class A-1 [Floating Rate] Auto Receivables Backed Notes
_________________________________
INDENTURE
Dated as of _____________, 199__
_________________________________
_____________________
Indenture Trustee
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I Definitions and Incorporation by Reference
SECTION 1.1 (a) Definitions................................................ 2
SECTION 1.2 Incorporation by Reference of Trust
Indenture Act....................................................... 12
SECTION 1.3 Rules of Construction............................................... 12
SECTION 1.4 Calculations of Interest............................................ 13
ARTICLE II
The Notes
SECTION 2.1 Form................................................................ 13
SECTION 2.2 Execution, Authentication and Delivery.............................. 13
SECTION 2.3 Temporary Notes..................................................... 14
SECTION 2.4 Registration; Registration of
Transfer Exchange................................................... 15
SECTION 2.5 Mutilated, Destroyed, Lost or
Stolen Notes........................................................ 16
SECTION 2.6 Persons Deemed Owner................................................ 17
SECTION 2.7 Payment of Principal and Interest;
Defaulted Interest.................................................. 17
SECTION 2.8 Cancellation........................................................ 18
SECTION 2.9 Release of Collateral............................................... 19
SECTION 2.10 Book-Entry Notes.................................................... 19
SECTION 2.11 Notices to Clearing Agency.......................................... 20
SECTION 2.12 Definitive Notes.................................................... 20
ARTICLE III Covenants..................................................................... 21
SECTION 3.1 Payment of Principal and Interest................................... 21
SECTION 3.2 Maintenance of Office or Agency..................................... 21
SECTION 3.3 Money for Payments To Be Held in Trust.............................. 21
SECTION 3.4 Existence........................................................... 23
SECTION 3.5 Protection of Trust Estate.......................................... 23
SECTION 3.6 Opinions as to Trust Estate......................................... 24
SECTION 3.7 Performance of Obligations; Servicing
of Receivables...................................................... 25
SECTION 3.8 Negative Covenants.................................................. 27
SECTION 3.9 Annual Statement as to Compliance................................... 28
SECTION 3.10 Issuer May Consolidate, etc., Only
on Certain Term..................................................... 29
SECTION 3.11 Successor or Transferee............................................. 30
SECTION 3.12 No Other Business................................................... 31
SECTION 3.13 No Borrowing........................................................ 31
SECTION 3.14 Servicer's Obligations.............................................. 31
</TABLE>
i
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<TABLE>
<S> <C>
SECTION 3.15 Guarantees, Loans, Advances and
Other Liabilities................................................... 31
SECTION 3.16 Capital Expenditures................................................ 31
SECTION 3.17 Removal of Administrator............................................ 31
SECTION 3.18 Restricted Payments................................................. 32
SECTION 3.19 Notice of Events of Default......................................... 32
SECTION 3.20 Further Instruments and Acts........................................ 32
ARTICLE IV Satisfaction and Discharge.................................................... 32
SECTION 4.1 Satisfaction and Discharge of Indenture............................. 32
SECTION 4.2 Application of Trust Money.......................................... 34
SECTION 4.3 Repayment of Moneys Held
by Paying Agent.................................................... 34
ARTICLE V Remedies...................................................................... 34
SECTION 5.1 Events of Default................................................... 34
SECTION 5.2 Acceleration of Maturity;
Rescission and Annulment............................................ 36
SECTION 5.3 Collection of Indebtedness and Suits
for Enforcement by Indenture Trustee................................ 36
SECTION 5.4 Remedies; Priorities................................................ 39
SECTION 5.5 Optional Preservation of the
Receivables......................................................... 40
SECTION 5.6 Limitation of Suits................................................. 41
SECTION 5.7 Unconditional Rights of Noteholders
To Receive Principal and Interest................................... 42
SECTION 5.8 Restoration of Rights and Remedies.................................. 42
SECTION 5.9 Rights and Remedies Cumulative...................................... 42
SECTION 5.10 Delay or Omission Not a Waiver...................................... 42
SECTION 5.11 Control by Noteholders.............................................. 42
SECTION 5.12 Waiver of Past Defaults............................................. 43
SECTION 5.13 Undertaking for Costs............................................... 43
SECTION 5.14 Waiver of Stay or Extension Laws.................................... 44
SECTION 5.15 Action on Notes..................................................... 44
SECTION 5.16 Performance and Enforcement of
Certain Obligations................................................. 44
ARTICLE VI Indenture Trustee............................................................. 46
SECTION 6.1 Duties of Indenture Trustee......................................... 46
SECTION 6.2 Rights of Indenture Trustee......................................... 47
SECTION 6.3 Individual Rights of Indenture Trustee.............................. 48
SECTION 6.4 Indenture Trustee's Disclaimer...................................... 48
SECTION 6.5 Notice of Defaults.................................................. 48
SECTION 6.6 Reports by Indenture Trustee to Holders............................. 49
SECTION 6.7 Compensation and Indemnity.......................................... 49
SECTION 6.8 Replacement of Indenture Trustee.................................... 50
SECTION 6.9 Successor Indenture Trustee by Merger............................... 51
SECTION 6.10 Appointment of Co-Trustee or
Separate Trustee.................................................... 51
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SECTION 6.11 Eligibility; Disqualification....................................... 53
SECTION 6.12 Preferential Collection of Claims
Against Issuer...................................................... 53
ARTICLE VII Noteholders' Lists and Reports.............................................. 53
SECTION 7.1 Issuer to Furnish Indenture Trustee
Names and Addresses to Noteholders.................................. 53
SECTION 7.2 Preservation of Information;
Communications to Noteholders....................................... 54
SECTION 7.3 Reports by Issuer................................................... 54
SECTION 7.4 Reports by Indenture Trustee........................................ 55
ARTICLE VIII Accounts, Disbursements and Releases........................................ 55
SECTION 8.1 Collection of Money................................................. 55
SECTION 8.2 Trust Accounts...................................................... 55
SECTION 8.3 General Provisions Regarding Accounts............................... 56
SECTION 8.4 Release of Trust Estate............................................. 57
SECTION 8.5 Opinion of Counsel.................................................. 58
ARTICLE IX Supplemental Indentures..................................................... 58
SECTION 9.1 Supplemental Indentures Without
Consent of Noteholders.............................................. 58
SECTION 9.2 Supplemental Indentures with Consent
of Noteholders...................................................... 60
SECTION 9.3 Execution of Supplemental Indentures................................ 61
SECTION 9.4 Effect of Supplemental Indenture.................................... 62
SECTION 9.5 Conformity with Trust Indenture Act................................. 62
SECTION 9.6 Reference in Notes to Supplemental
Indentures.......................................................... 62
ARTICLE X Redemption of Notes........................................................ 62
SECTION 10.1 Redemption.......................................................... 62
SECTION 10.2 Form of Redemption Notice........................................... 63
SECTION 10.3 Notes Payable on Redemption Date.................................... 64
ARTICLE XI Miscellaneous............................................................... 64
SECTION 11.1 Compliance Certificates and
Opinions, etc....................................................... 64
SECTION 11.2 Form of Documents Delivered to
Indenture Trustee................................................... 66
SECTION 11.3 Acts of Noteholders................................................. 67
SECTION 11.4 Notices, etc., to Indenture Trustee,
Issuer and Rating Agencies.......................................... 67
SECTION 11.5 Notices to Noteholders; Waiver...................................... 68
SECTION 11.6 Alternate Payment and Notice Provisions............................. 69
SECTION 11.7 Conflict with Trust Indenture Act................................... 69
SECTION 11.8 Effect of Headings and Table of
</TABLE>
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<TABLE>
<S> <C>
Contents............................................................ 69
SECTION 11.9 Successors and Assigns.............................................. 69
SECTION 11.10 Separability........................................................ 70
SECTION 11.11 Benefits of Indenture............................................... 70
SECTION 11.12 Legal Holidays...................................................... 70
SECTION 11.13 GOVERNING LAW....................................................... 70
SECTION 11.14 Counterparts........................................................ 70
SECTION 11.15 Recording of Indenture.............................................. 70
SECTION 11.16 Trust Obligation.................................................... 70
SECTION 11.17 No Petition......................................................... 71
SECTION 11.18 Inspection.......................................................... 71
</TABLE>
iv
<PAGE> 6
EXHIBITS
Testimonium, Signatures and Seals
Acknowledgments
Exhibit A Schedule of Receivables
Exhibit B Form of Pooling and Servicing Agreement
Exhibit C Form of Depository Agreement
Exhibit D Form of [Class A-1] Note
Exhibit E Form of [Class A-2] Note
v
<PAGE> 7
This INDENTURE dated as of _____________, 199_, between
[AUTOMOBILE RECEIVABLES TRUST.], a Delaware business trust (the "Issuer"), and
_____________, a ________________ [banking corporation], solely as trustee and
not in its individual capacity (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Issuer's Class
A-1 [Floating Rate] Auto Receivables Backed Notes (the "Class A-1 Notes", Class
A-2 [Floating Rate] Auto Receivables Backed Notes (the "Class A-2 Notes") and
Class B Auto Receivables Backed Notes (the "Class B Notes") (collectively, the
"Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the
Closing Date, as trustee for the benefit of the Holders of the Notes, all of the
Issuer's right, title and interest in and to (a) the Receivables and all moneys
due thereon on or after the Cut-off Date; (b) the security interests in the
Financed Vehicles granted by Obligors pursuant to the Receivables and any other
interest of the Issuer in the Financed Vehicles; (c) any proceeds with respect
to the Receivables from claims on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or Obligors; (d) the Receivables
Acquisition Agreement, including the right assigned to the Issuer to cause the
Originator to repurchase Receivables from the Depositor under certain
circumstances; (e) all funds on deposit from time to time in the Trust Accounts,
including the Reserve Account Initial Deposit, and in all investments and
proceeds thereof (including all income thereon); (f) the Pooling and Servicing
Agreement (including all rights of the Depositor under the Receivables
Acquisition Agreement assigned to the Issuer pursuant to the Pooling and
Servicing Agreement); and (g) all present and future claims, demands, causes and
chooses in action in respect of any or all of the foregoing and all payments on
or under and all proceeds of every kind and nature whatsoever in respect of any
or all of the foregoing, including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with
<PAGE> 8
the provisions of this Indenture, all as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders of the
Notes, acknowledges such Grant, and accepts the trusts under this Indenture in
accordance with the provisions of this Indenture for the use and benefit of such
Holders.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1 (a) Definitions. Except as otherwise specified
herein or as the context may otherwise require, the following terms have the
respective meanings see forth below for all purposes of this Indenture.
"Act" has the meaning specified in Section 11.3(a).
"Affiliate" means, with respect to any specified person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any
officer of the Owner Trustee who is authorized to act for the Owner Trustee in
matters relating to the Issuer and who is identified on the list of Authorized
Officers, containing the specimen signature of each such Person, delivered by
the Owner Trustee to the Indenture Trustee on the Closing Date (as such list may
be modified or supplemented from time to time thereafter).
"Basic Documents" means the Certificate of Trust, the Trust
Agreement, the Receivables Acquisition Agreement, the Pooling and Servicing
Agreement, the Depository Agreement and other documents and certificates
delivered in connection therewith.
"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.
"Business Day" means any day other than a Saturday, Sunday or
a day on which banking institutions or trust companies
2
<PAGE> 9
in the City of New York are authorized or obligated by law, regulation or
executive order to remain closed.
"Certificate" has the meaning assigned to it in the Trust
Agreement.
"Certificate of Trust" means the certificate of trust of the
Issuer substantially in the form of Exhibit A to the Trust Agreement.
"[Class A-1] Note" means a [Class A-1] [Floating Rate] Auto
Receivables Backed Note, substantially in the form of Exhibit D.
"[Class A-l] Note Interest Rate" means, for a Payment Date,
[the lesser of (i) LIBO for such Payment Date minus __% and (ii)] __%; provided
that if the weighted average Net APR for the Receivables during the Collection
Period immediately preceding such Payment Date is less than the interest rate
computed without giving effect to this proviso, then the [Class A-1] Note
Interest Rate for such Payment Date shall not exceed such weighted average Net
APR.
"[Class A-2] Note" means a [Class A-2] [Floating Rate] Auto
Receivables Backed Note, substantially in the form of Exhibit E.
"[Class A-2] Note Interest Rate" means, for a Payment Date,
[the lesser of (i) LIBO for such Payment Date plus and (ii)] __%; provided that
if the weighted average Net APR or the Receivables during the Collection Period
immediately receding such Payment Date is less than the interest rate computed
without giving effect to this proviso plus [0.25]%, then the [Class A-2] Note
Interest Rate for such Payment Date shall not exceed such weighted average Net
APR less [0.25]%.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Date" means ___________________, 199_.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations Promulgated thereunder.
"Collateral" has the meaning specified in the granting Clause
of this Indenture.
3
<PAGE> 10
"Corporate Trust Office" means the principal office of the
Indenture Trustee at which at any particular time its corporate trust business
shall be administered which office to date of the execution of this Agreement is
located at ____________________________________________________________________
________________________________________________________________________________
____________________________________________ , Attention: Corporate Trustee
Administration; or at such other address as the Indenture Trustee may designate
from time to time by notice to the Noteholders and the Issuer, or the principal
corporate trust office of any successor Indenture Trustee (the addresses of
which the successor Indenture Trustee will notify the Noteholders and the
Issuer).
"Default" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
"Depository Agreement" means the agreement among the Issuer,
the Indenture Trustee, and The Depository Trust Company, as the initial Clearing
Agency, dated as of the Closing Date, substantially in the form of Exhibit C.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Executive Officer" means, with respect to any corporation,
and Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; and with respect to any partnership, any general
partner thereof.
"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and grant a lien
upon and a security interest in and right of set-off against, deposit, set over
and confirm pursuant to this Indenture. A Grant of the Collateral or of any
other agreement or instrument shall include all rights, powers and options (but
none of the obligations) of the Granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect of the Collateral and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the Granting party or otherwise and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive hereunder or with respect thereto.
4
<PAGE> 11
"Holder" or "Noteholder" means the Person in whose name a
[Class A-1] Note or a [Class A-2] Note is registered on the Note Register.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Indenture Trustee" means _____________________, a
_____________ [banking corporation], as Indenture Trustee under this Indenture,
or any successor Indenture Trustee under this Indenture.
"Independent" means, when used with respect to any specified
Person, that the Person (a) is in fact independent of the Issuer, any other
obligor upon the Notes, the Depositor and any Affiliate of any of the foregoing
Persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Depositor
or any Affiliate of any of the foregoing Persons and (c) is not connected with
the Issuer, any such other obligor, the Depositor 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, made by
an Independent appraiser or other expert appointed by an Issuer order and
approved by the Indenture Trustee, and such opinion or certificate shall state
that the signer has read the definition of "Independent" in this Indenture and
that the signer is Independent within the meaning thereof.
"Issuer" means [ACC AUTOMOBILE RECEIVABLES TRUST] until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
["LIBO" with respect to any Payment Date shall be established
by the Indenture Trustee and shall equal the arithmetic mean (rounded upwards,
if necessary, to the nearest one-sixteenth of a percent) of the offered rates
for United States dollar deposits for three months which appear on the Reuters
Screen LIBO Page (as defined below) as of 11:00 A.M., London time, on the second
LIBO Business Day prior to the immediately preceding Payment Date (or the
Closing Date in the case of the first Payment Date); provided that at least two
such
5
<PAGE> 12
offered rates appear on the Reuters Screen LIBO Page on such date. If fewer than
two offered rates appear, LIBO will be determined on such date as described in
the paragraph below. "Reuters Screen LIBO Page" means the display designated as
page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as
may replace the LIBO page on that service for the purpose of displaying London
inter-bank offered rates of major banks). "LIBO Business Day" is a day that is
both a Business Day and a day on which banking institutions in the City of
London, England are not required or authorized by law to be closed.
If on such date fewer than two offered rates appear on the
Reuters Screen LIBO Page, the Indenture Trustee will request of each of the
Reference Banks (which shall be major banks that are engaged in transactions in
the London inter-bank market, selected by the Indenture Trustee after
consultation with the Depositor) to provide the Indenture Trustee with its
offered quotation for United States dollar deposits for three months to prime
banks in the London inter-bank market as of 11:00 A.M., London time, on such
date. If at least two Reference Banks provide the Indenture Trustee with such
offered quotations, LIBO on such date will be the arithmetic mean (rounded
upwards, if necessary, to the nearest one-sixteenth of a percent) of all such
quotations. If on such date fewer than two of the Reference Banks provide the
Indenture Trustee with such an offered quotation, LIBO on such date will be the
arithmetic mean (rounded upwards, if necessary, to the nearest one-sixteenth of
a percent) of the offered per annum rates which one or more leading banks in the
City of New York selected by the Indenture Trustee (after consultation with the
Depositor) are quoting as of 11:00 A.M., New York City time, on such date to
leading European banks for United States dollar deposits for one month,
provided, however, that if such banks are not quoting as described above, LIBO
will be the LIBO applicable to the immediately preceding Payment Date.]
"Net APR" means, with respect to a Receivable, its APR less
the Servicing Fee Rate.
"Note Interest Rate" means the per annum interest rate borne
by a Note.
"Note Owner" means, with respect to a Book-Entry Note, the
Person who is the owner of such Book-Entry Note, as reflected all the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such Clearing
Agency).
"Note Register" and "Note Registrar" have the respective
meanings specified in Section 2.4.
6
<PAGE> 13
"Notes" means the [Class A-l] Notes and the [Class A-2] Notes.
"Officers' Certificate" means a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, and
delivered to the Indenture Trustee. Unless otherwise specified, any reference in
this Indenture to an Officers' Certificate shall be to an Officers' Certificate
of any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of
counsel who may, except as otherwise expressly provided in this Indenture, be
employees of or counsel to the Issuer and who shall be acceptable to the
Indenture Trustee, and which opinion or opinions shall be addressed to the
Indenture Trustee as Indenture Trustee, and shall comply with ny applicable
requirements of Section 11.1.
"Originator" means __________________, a _______________
corporation, and its successor.
"Outstanding" means, as of the date of determination, all
Notes theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited wi.h the Indenture Trustee
or any Paying Agent in trust for the Holders of such Notes (provided, however,
that if such Notes are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor, satisfactory to the
Indenture Trustee): and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are held
by a bona fide purchaser;
provided that in determining whether the Holders of the requisite Outstanding
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document, Notes owned by
the Issuer, any Depositor obligor upon the Notes, the Depositor or any Affiliate
of any of the foregoing Persons shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that the Indenture Trustee knows to be so
7
<PAGE> 14
owned shall be so disregarded. Notes so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee's right so to act with respect
to such Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes, the Depositor or any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of
all Notes, or a Class of Notes, as applicable, Outstanding at the date of
determination.
"Owner Trustee" means ___________ not in its individual
capacity but solely as Owner Trustee under the Agreement, or any successor Owner
Trustee under the Agreement.
"Paying Agent" means the [Indenture Trustee] or any Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 a authorized by the Issuer to make the payments to and
distributions from the Collection Account and the Note Distribution Account,
including payment of principal of or interest on the Notes on behalf of the
Issuer.
"Payment Date" means the _th day of each and
[___________________, ______________, and ______________], or, if any such date
is not a Business Day, the next succeeding Business Day, commencing
______________, 199__.
"Person" means any individual, corporation, estate,
partnership, joint venture, association, joint stock company, (including any
beneficiary thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Pooling and Servicing Agreement" means the Pooling and
Servicing Agreement dated as of __________, 199_ among the Issuer, the Depositor
and the Servicer, in the form of Exhibit B.
"Predecessor Note" means, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law other
judicial or administrative proceeding.
"Rating Agency" means [Moody's], [Standard & Poor's] and [Duff
& Phelps]. If no such organization or successor is any longer in existence,
"Rating Agency" shall be a nationally recognized statistical rating organization
or other comparable Person designated by the Issuer, notice of which designation
8
<PAGE> 15
shall be given to the Indenture Trustee, Owner Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action,
that each Rating Agency shall have been given [10] days or notice thereof and
that each of the Rating Agencies will have notified the Depositor, the Servicer
and the Issuer in writing that such action will not result in a reduction or
withdrawal of the then current rating of the Notes.
"Record Date" means, with respect to a Payment Date Redemption
Date, the close of business on the [fourteenth] day or of the calendar month in
which such Payment Date or Redemption Date occurs.
"Redemption Date" means the Payment Date specified by the
Servicer or the Issuer pursuant to Section 10.1(a) or , as applicable.
"Redemption Price" means (a) in the case of a redemption of
the Notes pursuant to Section 10.1(a), an amount equal to the principal amount
of the Notes redeemed plus accrued and unpaid interest thereon at the related
Note Interest Rate to but excluding the Redemption Date, or (b) in the case of a
payment made to Noteholders pursuant to Section 10.1(b), the amount on deposit
in the Note Distribution Account, but not in excess of the amount specified in
clause (a) above.
"Registered Holder" means the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Indenture
Trustee, any officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Secretary, Assistant
Secretary, or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"Schedule of Receivables" means the listing of the Receivables
set forth in Exhibit A (which Exhibit may be in form of microfiche).
"State" means any one of the 50 states of the United States of
America or the District of Columbia.
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<PAGE> 16
"Successor Servicer" has the meaning specified in Section
3.7(e).
"Trust Estate" means all money, instruments, rights and other
property that are subject or intended to be subject the lien and security
interest of this Indenture for the benefit of the Noteholders (including,
without limitation, all property and interests Granted to the Indenture
Trustee), including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the
Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended
from time to time.
(b) Except as otherwise specified herein or as the context may
otherwise require, the following terms have the respective meanings set forth in
the Pooling and Servicing Agreement as in effect on the Closing Date for all
purposes of this Indenture, and the definitions of such terms are equally
applicable both to the singular and plural forms of such terms:
10
<PAGE> 17
<TABLE>
<CAPTION>
==================================================================
Term Section of Pooling and
Servicing Agreement
==================================================================
<S> <C>
APR Section 1.1
- ------------------------------------------------------------------
Certificate Section 1.1
- ------------------------------------------------------------------
Certificateholders Section 1.1
- ------------------------------------------------------------------
[Class A-2] Final Section 1.1
Scheduled Payment Date
- ------------------------------------------------------------------
Collection Account Section 1.1
- ------------------------------------------------------------------
Collection Period Section 1.1
- ------------------------------------------------------------------
Contract Section 1.1
- ------------------------------------------------------------------
Cut-off Date Section 1.1
- ------------------------------------------------------------------
Dealers Section 1.1
- ------------------------------------------------------------------
Depositor Section 1.1
- ------------------------------------------------------------------
[Duff & Phelps Section 1.1]
- ------------------------------------------------------------------
Eligible Deposit Account Section 1.1
- ------------------------------------------------------------------
Eligible Investments Section 1.1
- ------------------------------------------------------------------
Financed Vehicles Section 1.1
- ------------------------------------------------------------------
[Fitch Section 1.1]
- ------------------------------------------------------------------
Originator Section 1.1
- ------------------------------------------------------------------
[Moody's Section 1.1]
- ------------------------------------------------------------------
Note Distribution Account Section 1.1
- ------------------------------------------------------------------
Noteholders Distributable Amount Section 1.1
- ------------------------------------------------------------------
Obligor Section 1.1
- ------------------------------------------------------------------
Pool Balance Section 1.1
- ------------------------------------------------------------------
Receivables Acquisition Agreement Section 1.1
- ------------------------------------------------------------------
Purchased Receivable Section 1.1
- ------------------------------------------------------------------
Receivable Section 1.1
- ------------------------------------------------------------------
Recoveries Section 1.1
- ------------------------------------------------------------------
Reserve Account Section 1.1
- ------------------------------------------------------------------
Reserve Account Initial Deposit Section 1.1
- ------------------------------------------------------------------
</TABLE>
11
<PAGE> 18
<TABLE>
<CAPTION>
===============================================================================
Term Section of Pooling and
Servicing Agreement
===============================================================================
<S> <C>
Servicer Section 1.1
- -------------------------------------------------------------------------------
Servicer Default Section 1.1
- -------------------------------------------------------------------------------
Servicing Fee Rate Section 1.1
- -------------------------------------------------------------------------------
Specified Reserve Account Balance Section 1.1
- -------------------------------------------------------------------------------
[Standard & Poor's Section 1.1]
- -------------------------------------------------------------------------------
Total Distribution Amount Section 1.1
- -------------------------------------------------------------------------------
Transfer Date Section 1.1
- -------------------------------------------------------------------------------
Trust Accounts Section 1.1
- -------------------------------------------------------------------------------
Trust Agreement Section 1.1
===============================================================================
</TABLE>
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means Indenture
Trustee.
"Obligor" on the indenture securities means the Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rule have the meaning assigned to them by such definitions.
SECTION 1.3 Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
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<PAGE> 19
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means "including without limitation"; and
(v) words in the singular include the plural and words in
the plural include the singular.
SECTION 1.4 Calculations of Interest. All calculations of
interest made hereunder shall be made on the is of a year of 360 days, in each
case for the actual number of days in the period for which such interest is
payable.
ARTICLE II
The Notes
SECTION 2.1 Form. The [Class A-1] and [Class A-2] Notes, in
each case together with the Indenture Trustee's certificate of authentication,
shall be in substantially the forms set forth in Exhibits D and E, respectively,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may, consistently herewith, be determined by the officers executing
such Notes, as evidenced by their execution of the Notes. Any portion of the
text of any Note may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed,
lithographed or engraved or produced by any combination of methods (with or
without steel engraved borders), all determined by the officers executing such
Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The
terms of the Notes set forth in Exhibits are part of the terms of this
Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of
individual's who were at any time Authorized Officers of the
13
<PAGE> 20
Issuer shall bind the Issuer, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Notes or did not hold such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Order authenticate and
deliver [Class A-1] Notes for original issue in an aggregate principal amount of
$____________________ and [Class A-2] Notes for an original issue in an
aggregate principal amount of $______________. The aggregate principal amount of
[Class A-1] and [Class A-2] Notes outstanding at any time may not exceed such
amounts, respectively, except as provided Section 2.5.
Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered the minimum denomination of $______ and in
integral multiples thereof.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.3 Temporary Notes. Pending the preparation of
definitive Notes, the Issuer may execute, and upon receipt of an Issuer Order
the Indenture Trustee shall authenticate and deliver, temporary Notes which are
printed, lithographed, typewritten, mimeographed or otherwise produced, of the
tenor of the definitive Notes in lieu of which they are issued and with such
variations not inconsistent with the terms of this Indenture as the officers
executing such notes may determine, as evidenced by their execution of such
Notes.
If temporary Notes are issued, the Issuer will cause
definitive Notes to be prepared without unreasonable delay. After preparation of
definitive Notes, the temporary Notes shall be exchangeable for definitive Notes
upon surrender of the temporary Notes at the office or agency of the Issuer to
be maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer
execute and the Indenture Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
14
<PAGE> 21
SECTION 2.4 Registration; Registration of Transfer Exchange.
The Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee shall be "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by
the Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Holders of the Notes and
the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.2, if
the requirements of Section 8-401(1) of the UCC are met the Issuer shall
execute, and the Indenture Trustees shall authenticate and the Noteholders shall
obtain from the Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes of the same Class in any authorized
denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other
Notes of the same Class in any authorized denominations, of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, if the requirements
of Section 8-401(1) of the UCC are met the Issuer shall execute, and the
Indenture Trustee authenticate and the Noteholder shall obtain from the
Indenture Trustee, the Notes which the Noteholder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in the form of Exhibit F hereto, duly executed by, the
Holder thereof or such Holder's
15
<PAGE> 22
attorney duly authorized in writing, with such signature guaranteed by a
commercial bank or trust company located, or having a correspondent located, in
the City of New York or the city in which the Corporate Trust Office is located,
or by a member firm of a national securities exchange, and such other documents
as the Indenture Trustee may require.
No service charge shall be made to a Holder for any
registration of transfer or exchange of Notes, but the Issuer may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 2.3 or 9.6 not involving any
transfer.
The preceding provisions of this Section 2.4 notwithstanding,
the Issuer shall not be required to make and the Note Registrar need not
register transfers or exchanges of Notes selected for redemption or of any Note
for a period of [15] days preceding the due date for any payment with respect to
the Note.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. If (i)
any mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, and (ii) there is delivered to the Indenture Trustee such security
or indemnity as may be required by it to hold the Issuer and the Indenture
Trustee harmless, then, in the absence of notice to the Issuer, the Note
Registrar or the Indenture Trustee that such Note has been acquired by a bona
fide purchaser, and provided that the requirements of Section 8-405 of the UCC
are met, the Issuer shall execute and upon its request the Indenture Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note of the same Class;
provided, however, that if any such destroyed, lost or stolen Note, but not a
mutilated Note, shall have become or within seven days shall be due and payable,
or shall have been called for redemption, instead of issuing a replacement Note,
the Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense
16
<PAGE> 23
incurred by the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section,
the Issuer may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and neither the Issuer, the Indenture Trustee nor any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest; Defaulted
Interest.
(a) The Notes shall accrue interest as provided in the forms
of the [Class A-1] Note and [Class A-2] Note set forth in Exhibits D and E,
respectively, and such interest shall be payable on each Payment Date as
specified therein. Any installment of interest or principal, if any, payable on
any Note which is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall be paid to the Person in whose name such Note (or
one or more Predecessor Notes) is registered on the Record Date, by check mailed
first-class, postage prepaid to such Person's address as it appears on the Note
Register on such Record Date, except that, unless Definitive Notes have been
issued pursuant to Section 2.12, with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency [(initially, such nominee
to be Cede & Co.)], payment will
17
<PAGE> 24
be made by wire transfer in immediately available funds to the account
designated by such nominee and except for the final installment of principal
payable with respect to such Note on a Payment Date (and except for the
Redemption Price for any Note called for redemption pursuant to Section 10.1(a))
which shall be payable as provided below. The funds represented by any such
checks returned undelivered shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in
installments on each Payment Date as provided in the forms of the [Class A-1]
Note and [Class A-2] Note set forth in Exhibits D and E, respectively.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable, if not previously paid, on the date on which an Event
of Default shall have occurred and be continuing, if the Indenture Trustee or
the Holders of the Notes representing not less than a majority of the
Outstanding Amount of the Notes have declared the Notes to be immediately due
and payable in the manner provided in Section 5.2. All principal payments on
each Class of Notes shall be made pro rata to the Noteholders of such Class
entitled thereto. Upon notice to the Indenture Trustee by the Issuer, the
Indenture Trustee shall notify the Person in whose name a Note is registered at
the close of business on the Record Date preceding the Payment Date on which the
Issuer expects that the final installment of principal of and interest on such
Note will be paid. Such notice shall be mailed no later than [five] Business
Days prior to such final Payment Date and shall specify that such final
installment will be payable only upon presentation and surrender of such Note
and shall specify the place where such Note may be presented and surrendered for
payment of such installment. Notices in connection with redemptions of Notes
shall be mailed to Noteholders as provided in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the
Notes, the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) in any lawful manner. The Issuer may pay such
defaulted interest to the persons who are Noteholders on a subsequent special
record date, which date shall be at least [five] Business Days prior to the
payment date. The Issuer shall fix or cause to be fixed any such special record
date and payment date, and, at least [10] days before any such special record
date, the Issuer shall mail to each Noteholder a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.8 Cancellation. All notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes
18
<PAGE> 25
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Indenture Trustee. No Notes shall be authenticated in lieu of
or in exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Notes may be held or
disposed of by the Indenture Trustee in accordance with its standard retention
or disposal policy as in effect at the time unless the Issuer shall direct by an
Issuer Order that they be destroyed or returned to it; provided that such Issuer
Order is timely and the Notes have not been previously disposed of by the
Indenture Trustee.
SECTION 2.9 Release of Collateral. Subject to Section 11.1,
the Indenture Trustee shall release property from the lien of this Indenture
only upon receipt of an Issuer Request accompanied by an Officers' Certificate,
an Opinion of Counsel and Independent Certificates in accordance with
TIA Sections 314(c) and 314(d)(1) or an Opinion of Counsel in lieu of such
Independent Certificates to the effect that the TIA does not require any such
Independent Certificates.
SECTION 2.10 Book-Entry Notes. The Notes, upon original
issuance, will be issued in the form of a typewritten Note or Notes representing
the Book-Entry Notes, to be delivered to The Depository Trust Company, the
initial Clearing Agency, by, or on behalf of, the Issuer. Such Note shall
initially be registered on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Note Owner will receive a
Definitive Note (as hereinafter defined) representing such Note Owner's interest
in such Note, except as provided in Section 2.12. Unless and until definitive,
fully registered Notes (the "Definitive Notes") have been issued to Note Owners
pursuant to Section 2.12:
(i) the provisions of this Section shall be in full
force and effect;
(ii) the Note Registrar and the Indenture Trustee
shall be entitled to deal with the Clearing Agency for all
purposes of this Indenture (including the payment of principal
of and interest on the Notes and the giving of instructions or
directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this
Section conflict with any other provisions of this Indenture,
the provisions of this Section shall control;
19
<PAGE> 26
(iv) the rights of Note Owners shall be exercised
only through the Clearing Agency and shall be limited to those
established by law and agreements between such Note Owners and
the Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the Depository Agreement, unless and until
Definitive Notes are issued pursuant to Section 2.12, the
initial Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit
payments of principal of and interest on the Notes to such
Clearing Agency Participants; and
(v) whenever this Indenture requires or permits
actions to be taken based upon instructions or directions of
Holders of Notes evidencing a specified percentage of the
Outstanding Amount of the Notes, the Clearing Agency shall be
deemed to represent such percentage only to the extent that it
has received instructions to such effect from Note Owners
and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial
interest in the Notes and has delivered such instructions to
the Indenture Trustee.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or
other communication to the Noteholders is required or other communication to the
Noteholders is required under this Indenture, unless and until Definitive Notes
shall have been issued to Note Owners pursuant to Section 2.12, the Indenture
Trustee shall give all such notices and communications specified herein to be
given to Holders of the Notes to the Clearing Agency, and shall have no
obligation to the Note Owners or other Holders of the Notes.
SECTION 2.12 Definitive Notes. If (i) the Indenture Trustee is
notified in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities with respect to the Notes, and the
Indenture Trustee is unable to locate a qualified successor, (ii) the Indenture
Trustee elects to terminate the book-entry system through the Clearing Agency or
(iii) after the occurrence of an Event of Default or a Servicer Default, Note
Owners representing beneficial interests aggregating at least a majority of the
Outstanding Amount of the Notes advise the Clearing Agency in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the Note Owners, then the Clearing Agency shall notify all
Note Owners and the Indenture Trustee of the occurrence of any such event and of
the availability of Definitive Notes to Note Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Note or Notes representing
the Book-Entry Notes by the Clearing Agency, accompanied by registration
instructions, the Issuer shall
20
<PAGE> 27
execute and the Indenture Trustee shall authenticate the Definitive Notes in
accordance with the instructions of the Clearing Agency. None of the Issuer, the
Note Registrar or the Indenture Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes
as Noteholders.
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest. The Issuer will
duly and punctually pay the principal of and interest, if any, on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, the Issuer will cause to be distributed all amounts on deposit in the
Note Distribution Account on a Payment Date. Amounts properly withheld under the
Code by any Person from a payment to any Noteholder of interest and/or principal
shall be considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.
SECTION 3.2 Maintenance of Office or Agency. The Issuer will
maintain in the [County of _____________, State of ______________], an office or
agency where Notes may be surrendered for registration of transfer or exchange,
and where notices and demands to or upon the Issuer in respect of the Notes and
this Indenture may be served. The Issuer hereby initially appoints
______________________ to serve as its agent for the foregoing purposes. The
Issuer will give prompt written notice to the Indenture Trustee of the location,
and of any change in the location, of any such office or agency. If at any time
the Issuer shall fail to maintain any such office or agency or shall fail to
furnish the Indenture Trustee with the address thereof, such surrenders, notices
and demands may be made or served at the Corporate Trust Office, and the Issuer
hereby appoints the Indenture Trustee as its agent to receive all such
surrenders, notices and demands.
SECTION 3.3 Money for Payments To Be Held in Trust. As
provided in Section 8.02(a) and (b), all payments of amounts due and payable
with respect to any Notes that are to be made from amounts withdrawn from the
Collection Account and the Note Distribution Account pursuant to Section 8.02(c)
shall be made on behalf of the Issuer by the Indenture Trustee or by another
Paying Agent, and no amounts so withdrawn from the Collection Account and the
Note Distribution Account for payments of Notes shall be paid over to the Issuer
except as provided in this Section.
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On or before [noon (New York time)] on each Payment Date and
Redemption Date, the Issuer shall deposit or cause to be deposited in the Note
Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due under the Notes, such sum to be held in trust for the benefit of
the Persons entitled thereto and (unless the Paying Agent is the Indenture
Trustee) shall promptly notify the Indenture Trustee of its action or failure so
to act.
The Issuer will cause each Paying Agent other than the
Indenture Trustee to execute and deliver to the Indenture Trustee an instrument
in which such Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the
provisions of this Section, that such Paying Agent will:
(i) hold sums held by it for the payment of amounts
due with respect to the Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and pay
such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default
by the Issuer of which it has actual knowledge (or any other
obligor upon the Notes) in the making of any payment required
to be made with respect to the Notes;
(iii) at any time during the continuance of any such
default, upon the written request of the Indenture Trustee,
forthwith pay to the Indenture Trustee all sums so held in
trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and
forthwith pay to the Indenture Trustee all sums held by it in
trust for the payment of Notes if at any time it ceases to
meet the standards required to be met by a Paying Agent at the
time of its appointment; and
(v) comply with all requirements of the Code with
respect to the withholding from any payments made by it on any
Notes of any applicable withholding taxes imposed thereon and
with respect to any applicable reporting requirements in
connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same terms as those upon which the sums were held by such Paying
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Agent; and upon such payment by any Paying Agent to the Indenture Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Subject to applicable laws with respect to escheat of funds,
any money held by the Indenture Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Note and remaining unclaimed for
[two] years after such amount has become due and payable shall be discharged
from such trust, and the Indenture Trustee or such Paying Agent, as the case may
be, shall give prompt notice of such occurrence to the Issuer and shall release
such money to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Issuer cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in the City of _____________, notice that such money
remains unclaimed and that, after the date specified therein, which shall not be
less than [30] days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Issuer. The Indenture Trustee
may also adopt and employ, at the expense of the Issuer, any other reasonable
means of notification of such repayment (including, but not limited to, mailing
notice of such repayment to Holders whose Notes have been called but have not
been surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).
SECTION 3.4 Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of [Nevada] (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Estate.
SECTION 3.5 Protection of Trust Estate. The Issuer will from
time to time prepare, execute, deliver and file all such supplements and
amendments hereto and all such financing
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statements, continuation statements, instruments of further assurance and other
instruments, and will take such other action necessary or advisable to:
(i) maintain or preserve the lien and security
interest (and the priority thereof) of this Indenture
or carry out more effectively the purposes hereof;
(ii) perfect, publish notice of or protect the
validity of any Grant made or to be made by this
Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Trust Estate
and the rights of the Indenture Trustee and the Noteholders in
such Trust Estate against the claims of all persons and
parties. The Issuer hereby designates the Indenture Trustee,
and hereby authorizes the Indenture Trustee as its agent and
attorney-in-fact, to execute any financing statement,
continuation statement or other instrument required by the
Indenture Trustee pursuant to this Section.
SECTION 3.6 Opinions as to Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the
Indenture Trustee an Opinion of Counsel either stating that, in the opinion of
such counsel, such action has been taken with respect to the recording and
filing of this Indenture, any indentures supplemental hereto, and other
requisite documents, and with respect to the execution and filing of any
financing statements and continuation statements, as are necessary to perfect
and make effective the lien and security interest of this Indenture and reciting
the details of such action, or stating that, in the opinion of such counsel, no
such action is necessary to make such lien and security interest effective.
(b) On or before _______________ in each calendar year,
beginning in 199_, the Issuer shall furnish to the Indenture Trustee an Opinion
of Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and refiling of
this Indenture, any indentures supplemental hereto and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as is necessary to maintain the lien and
security interest created by this Indenture and reciting the details of such
action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental
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hereto and any other requisite documents and the execution and filing of any
financing statements and continuation statements that will, in the opinion of
such counsel, be required to maintain the lien and security interest of this
Indenture until _________________ in the following calendar year.
SECTION 3.7 Performance of Obligations; Servicing of
Receivables.
(a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Pooling and Servicing Agreement or
such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officers' Certificate of
the Issuer shall be deemed to be action taken by the Issuer. Initially, the
Issuer has contracted with the Servicer to assist the Issuer in performing its
duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate, including but
not limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Pooling and Servicing Agreement in accordance with and within the time
periods provided for herein and therein. Except as otherwise expressly provided
therein, the Issuer shall not waive, amend, modify, supplement or terminate any
Basic Document or any provision thereof without the consent of the Indenture
Trustee or the Holders of at least a majority of the Outstanding Amount of the
Notes.
(d) If the Issuer shall have knowledge of the occurrence of a
Servicer Default under the Pooling and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee and the Rating Agencies thereof, and shall
specify in such notice the action, if any, the Issuer is taking with respect to
such default. If a Servicer Default shall arise from the failure of the Servicer
to perform any of its duties or obligations under
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the Pooling and Servicing Agreement with respect to the Receivables, the Issuer
shall take all reasonable steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of
termination to the Servicer of the Servicer's rights and powers pursuant to
Section ____ of the Pooling and Servicing Agreement, the Issuer shall appoint a
successor servicer (the "Successor Servicer"), and such Successor Servicer shall
accept its appointment by a written assumption in a form acceptable to the
Indenture Trustee. In the event that a Successor Servicer has not been appointed
and accepted its appointment at the time when the Servicer ceases to act as
Servicer, the Indenture Trustee without further action shall automatically be
appointed the Successor Servicer, subject to Section ____ of the Pooling and
Servicing Agreement. The Indenture Trustee may resign as the Servicer by giving
written notice of such resignation to the Issuer and in such event will be
released from such duties and obligations, such release not to be effective
until the date a new servicer enters into a servicing agreement with the Issuer
as provided below. Upon delivery of any such notice to the Issuer, the Issuer
shall obtain a new servicer as the Successor Servicer under the Pooling and
Servicing Agreement. Any Successor Servicer other than the Indenture Trustee
shall (i) be an established financial institution having a net worth of not less
than $_______________ and whose regular business includes the servicing of
automobile receivables and (ii) enter into a servicing agreement with the Issuer
having substantially the same provisions as the provisions of the Pooling and
Servicing Agreement applicable to the Servicer. If within [30] days after the
delivery of the notice referred to above, the Issuer shall not have obtained
such a new servicer, the Indenture Trustee may appoint, or may petition a court
of competent jurisdiction to appoint, a Successor Servicer. In connection with
any such appointment, the Indenture Trustee may make such arrangements for the
compensation of such successor as it and such successor shall agree, subject to
the limitations set forth below and in the Pooling and Servicing Agreement, and
in accordance with Section ____ of the Pooling and Servicing Agreement, the
Issuer shall enter into an agreement with such successor for the servicing of
the Receivables (such agreement to be in form and substance satisfactory to the
Indenture Trustee). If the Indenture Trustee shall succeed to the Servicer's
duties as servicer of the Receivables as provided herein, it shall do so in its
capacity as servicer and not in its capacity as Indenture Trustee and,
accordingly, the provisions of Article VI hereof shall be inapplicable to the
Indenture Trustee in its duties as the successor to the Servicer and the
servicing of the Receivables. In case the Indenture Trustee shall become
successor to the Servicer under the Pooling and Servicing Agreement, the
Indenture Trustee shall be entitled to appoint as Servicer any one of its
affiliates, provided that it shall be
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fully liable for the actions and omissions of such affiliate in such capacity as
Successor Servicer.
(f) Upon any termination of the Servicer's rights and powers
pursuant to the Pooling and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee. As soon as a Successor Servicer is appointed, the
Issuer shall notify the Indenture Trustee of such appointment, specifying in
such notice the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the
assignment granted to the Indenture Trustee under this Indenture or the rights
of the Indenture Trustee hereunder, the Issuer agrees that it will not, without
the prior written consent of the Indenture Trustee or the Holders of a least a
majority in Outstanding Amount of the Notes, amend, modify, waive, supplement,
terminate or surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms of any Collateral (except to the
extent otherwise provided in the Pooling and Servicing Agreement) or the Basic
Documents, or waive timely performance or observance by the Servicer or the
Depositor under the Pooling and Servicing Agreement or the Originator under the
Receivables Acquisition Agreement; provided, however, that no such amendment
shall (i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on Receivables or distributions that are
required to be made for the benefit of the Noteholders or (ii) reduce the
aforesaid percentage of the Notes which are required to consent to any such
amendment, without the consent of the holders of all the outstanding Notes. If
any such amendment, modification, supplement or waiver shall be so consented to
by the Indenture Trustee or such Holders, the Issuer agrees, promptly following
a request by the Indenture Trustee to do so, to execute and deliver, in its own
name and at its own expense, such agreements, instruments, consents and other
documents as the Indenture Trustee may reasonably deem necessary or appropriate
in the circumstances.
SECTION 3.8 Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture,
the Receivables Acquisition Agreement or the Pooling and
Servicing Agreement, sell, transfer, exchange or otherwise
dispose of any of the properties or assets of the Issuer,
including those included in the Trust Estate, unless directed
to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction from
the principal or interest payable in respect of, the Notes
(other than amounts properly withheld from
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such payments under the Code) or assert any claim against any
present or former Noteholder by reason of the payment of the
taxes levied or assessed upon any part of the Trust Estate;
(iii) dissolve or liquidate in whole or in part; or
(iv) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture
to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any
covenants or obligations with respect to the Notes under this
Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise
upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof (other than tax
liens, mechanics' liens and other liens that arise by
operation of law, in each case on a Financed Vehicle and
arising solely as a result of an action or omission of the
related Obligor) or (C) permit the lien of this Indenture not
to constitute a valid first priority (other than with respect
to any such tax, mechanics' or other lien) security interest
in the Trust Estate.
SECTION 3.9 Annual Statement as to Compliance. The Issuer will
deliver to the Indenture Trustee, within 120 days after the end of each fiscal
year of the Issuer (commencing with the fiscal year 199_), an Officers'
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that
(i) a review of the activities of the Issuer during
the 12-month period ending at the end of such fiscal year (or
in the case of the fiscal year ending [October 31, 199_,] the
period from the Closing Date to [October 31, 199_)] and of
performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's
knowledge, based on such review, the Issuer has complied with
all conditions and covenants under this Indenture throughout
such year, or, if there has been a default in the compliance
of any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and
status thereof.
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SECTION 3.10 Issuer May Consolidate, etc., Only on Certain
Term. (a) The Issuer shall not consolidate or merge with or into any other
Person, unless
(i) the Person (if other than the Issuer) formed by
or surviving such consolidation or merger shall be a Person
organized and existing under the laws of the United States of
America or any State and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture
Trustee, the due and punctual payment of the principal of and
interest on all Notes and the performance or observance of
every agreement and covenant of this Indenture on the part of
the Issuer to be performed or observed, all as provided
herein;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have
occurred and be continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the
Indenture Trustee) to the effect that such transaction will
not have any material adverse tax consequence to the Trust,
any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the
lien and security interest created by this Indenture
shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officers' Certificate and an Opinion of Counsel
each stating that such consolidation or merger and such
supplemental indenture comply with this Article III and that
all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing
required by the Exchange Act).
(b) The Issuer shall not convey or transfer any of its
properties or assets, including those included in the Trust Estate, to any
Person, unless
(i) the Person that acquires by conveyance or
transfer the properties and assets of the Issuer the
conveyance or transfer of which is hereby restricted shall (A)
be a United States citizen or a Person organized and existing
under the laws of the United
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States of America or any State, (B) expressly assumes, by an
indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture
Trustee, the due and punctual payment of the principal of and
interest on all Notes and the performance or observance of
every agreement and covenant of this Indenture on the part of
the Issuer to be performed or observed, all as provided
herein, (C) expressly agrees by means of such supplemental
indenture that all right, title and interest so conveyed or
transferred shall be subject and subordinate to the rights of
Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agrees to indemnify, defend
and hold harmless the Issuer against and from any loss,
liability or expense arising under or related to this
Indenture and the Notes and (E) expressly agrees by means of
such supplemental indenture that such Person (or if a group of
Persons, then one specified Person) shall make all filings
with the Commission (and any other appropriate Person)
required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have
occurred and be continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the
Indenture Trustee) to the effect that such transaction will
not have any material adverse tax consequence to the Trust,
any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the
lien and security interest created by this Indenture
shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel
each stating that such conveyance or transfer and such
supplemental indenture comply with this Article III and that
all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing
required by the Exchange Act).
SECTION 3.11 Successor or Transferee.
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(a) Upon any consolidation or merger of the Issuer in
accordance with Section 3.10(a), the Person formed by or surviving such
consolidation or merger (if other than the Issuer) shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with the same effect as if such Person had been named as the
Issuer herein.
(b) Upon a conveyance or transfer of all the assets and
properties of the Issuer pursuant to Section 3.10(b), the Issuer will be
released from every covenant and agreement of this Indenture to be observed or
performed on the part of the Issuer with respect to the Notes immediately upon
the delivery to and acceptance by the Indenture Trustee of the Officer's
Certificate and Opinion of Counsel specified in Section 3.10(b)(vi) stating that
the Issuer is to be so released.
SECTION 3.12 No Other Business. The Issuer shall not engage in
any business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the Basic
Documents, issuing the Notes and Certificates and activities incidental thereto.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
SECTION 3.14 Servicer's Obligations. The Issuer shall cause
the Servicer to comply with Sections 4.9, 4.10, 4.11 and 5.06 of the Pooling and
Servicing Agreement.
SECTION 3.15 Guarantees, Loans, Advances and Other
Liabilities. Except as contemplated by the Pooling and Servicing Agreement or
this Indenture, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any
other interest in, or make any capital contribution to, any other Person.
SECTION 3.16 Capital Expenditures. The Issuer shall not make
any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personalty).
SECTION 3.17 Removal of Administrator. So long as any Notes
are Outstanding, the Issuer shall not remove the Administrator without cause
unless the Rating Agency Condition shall have been satisfied in connection with
such removal.
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SECTION 3.18 Restricted Payments. The Issuer shall not,
directly or indirectly, (i) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, to the Owner Trustee or any owner of a beneficial interest
in the Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire
or otherwise acquire for value any such ownership or equity interest or security
or (iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee and the Certificateholders as permitted by,
and to the extent funds are available for such purpose under, the Pooling and
Servicing Agreement. The Issuer will not, directly or indirectly, make payments
to or distributions from the Collection Account except in accordance with this
Indenture and the Basic Documents.
SECTION 3.19 Notice of Events of Default. The Issuer agrees to
give the Indenture Trustee and the Rating Agencies prompt written notice of each
Event of Default hereunder and, within [five] days after obtaining knowledge of
any of the following occurrences, written notice of each default on the part of
the Servicer or the Depositor of its obligations under the Pooling and Servicing
Agreement and each default on the part of the Originator of its obligations
under the Receivables Acquisition Agreement.
SECTION 3.20 Further Instruments and Acts. Upon request of the
Indenture Trustee, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon, (iv) Sections 3.3,
3.4, 3.5, 3.8, 3.10, 3.12 and 3.13, (v) the rights, obligations and immunities
of the Indenture Trustee hereunder (including the rights of the Indenture
Trustee under Section 6.7 and the obligations of the Indenture Trustee under
Section 4.2) and (vi) the rights of Noteholders as beneficiaries hereof with
respect to the property so deposited with the Indenture Trustee payable to all
or any of them, and the Indenture Trustee, on demand of and
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at the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section 2.5
and (ii) Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust or
discharged form such trust, as provided in Section 3.3) have
been delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the
Indenture Trustee for cancellation
(i) have become due and payable.
(ii) will become due and payable at the
[Class A-2] Final Schedule Payment Date within one
year, or
(iii) are to be called for redemption within
one year under arrangements satisfactory to the
Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and
at the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) and the
Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited
with the Indenture Trustee cash or direct obligations of or
obligations guaranteed by the United States of America (which
will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not
theretofore delivered to the Indenture Trustee for
cancellation when due on the [Class A-2] Final Scheduled
Payment Date or Redemption Date (if Notes shall have been
called for redemption pursuant to Section 10.1(a)), as the
case may be;
(B) The Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee an
Officers' Certificate, an Opinion of Counsel and (if required by the
TIA) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section
11.1(a) and each stating that all
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conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
SECTION 4.2 Application of Trust Money. All moneys deposited
with the Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Holders of the particular Notes for the
payment or redemption of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest; but such moneys need not be segregated from other funds except to the
extent required herein or in the Pooling and Servicing Agreement or required by
law.
SECTION 4.3 Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all moneys then held by any Paying Agent other than the Indenture
Trustee under the provisions of this Indenture with respect to such Notes shall,
upon demand of the Issuer, be paid to the Indenture Trustee to be held and
applied according to Section 3.3 and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.
ARTICLE V
Remedies
SECTION 5.1 Events of Default. "Event of Default", wherever
used herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any
Note when the same becomes due and payable, and such
default shall continue for a period of [five] days; or
(ii) default in the payment of the principal of or
any installment of the principal of any Note when the
same becomes due and payable; or
(iii) default in the observance or performance of any
covenant or agreement of the Issuer made in this Indenture
(other than a covenant or agreement, a default in the
observance or performance of which is
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elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this
Indenture or in any certificate or other writing delivered
pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when the same
shall have been made, and such default shall continue or not
be cured, or the circumstance or condition in respect of which
such representation or warranty was incorrect shall not have
been eliminated or otherwise cured, for a period of [30] days
after there shall have been given, by registered or certified
mail, to the Issuer by the Indenture Trustee or to the Issuer
and the Indenture Trustee by the Holders of at least [____%]
of the Outstanding Amount of the Notes, a written notice
specifying such default or incorrect representation or
warranty and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(iv) the filing of a decree or order for relief by a
court having jurisdiction in the premises in respect of the
Issuer or any substantial part of the Trust Estate in an
involuntary case under any applicable Federal or state
bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for the
Issuer or for any substantial part of the Trust Estate, or
ordering the winding-up or liquidation of the Issuer's
affairs, and such decree or order shall remain unstayed and in
effect for a period of [90] consecutive days; or
(v) the commencement by the Issuer of a voluntary
case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or
the consent by the Issuer to the entry of an order for relief
in an involuntary case under any such law, or the consent by
the Issuer to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any
substantial part of the Trust Estate, or the making by the
Issuer of any general assignment for the benefit of creditors,
or the failure by the Issuer generally to pay its debts as
such debts become due, or the taking of action by the Issuer
in furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within
[five] days after the occurrence thereof, written notice in the form of an
Officers' Certificate of any event which with the giving of notice and the lapse
of time would become an Event
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of Default under clause (iii), its status and what action the Issuer is taking
or proposes to take with respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and
Annulment. If an Event of Default should occur and be continuing, then and in
every such case the Indenture Trustee or the Holders of Notes representing a
majority of the Outstanding Amount of the Notes may declare all the Notes to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by Noteholders), and upon any such declaration the
unpaid principal amount of the Notes, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
At any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the money due has
been obtained by the Indenture Trustee as hereinafter in this Article V
provided, the Holders of Notes representing a majority of the Outstanding Amount
of the Notes, by written notice to the Issuer and the Indenture Trustee, may
rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the
Indenture Trustee a sum sufficient to pay
(A) all payment of principal of and interest
on all Notes and all other amounts that would then be
due hereunder or upon such Notes if the Event of
Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the
Indenture Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of
the Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment
of the principal of the Notes that has become due solely by
such acceleration, have been cured or waived as provided in
Section 5.12.
No such rescission shall affect any subsequent default or
impair any right consequent thereto.
SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee.
(a) The Issuer covenants that if (i) default is made in the
payment of any interest on any Note when the same becomes due and payable, and
such default continues for a period of [five] days, or (ii) default is made in
the payment of the
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principal of or any installment of the principal of any Note when the same
becomes due and payable, the Issuer will, upon demand of the Indenture Trustee,
pay to it, for the benefit of the Holders of the Notes, the whole amount then
due and payable on such Notes for principal and interest, with interest upon the
overdue principal, and, to the extent payment at such rate of interest shall be
legally enforceable, upon overdue installments of interest, at the respective
Note Interest Rate borne by the Notes and in addition thereto such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such
amounts upon such demand, the Indenture Trustee, in its own name and as trustee
of an express trust, may institute a Proceeding for the collection of the sums
so due and unpaid, and may prosecute such Proceeding to judgment or final
decree, and may enforce the same against the Issuer or other obligor upon such
Notes and collect in the manner provided by law out of the property of the
Issuer or other obligor upon such Notes, wherever situated, the moneys adjudged
or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the
Indenture may, as more particularly provided in Section 5.4, in its discretion,
proceed to protect and enforce its rights and the rights of the Noteholders, by
such appropriate Proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or
any other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, Proceedings under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
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(i) to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect
of the Notes and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the
Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and
each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Noteholders allowed in
such Proceedings;
(ii) unless prohibited by applicable law and
regulations, to vote on behalf of the Holders of Notes in any
election of a trustee, a standby trustee or Person performing
similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute all amounts received with respect to the claims of
the Noteholders and of the Indenture Trustee on their behalf;
and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have
the claims of the Indenture Trustee or the Holders of Notes
allowed in any judicial proceedings relative to the Issuer,
its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to
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vote for the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial of other Proceedings relative thereto, and any such action or Proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Indenture Trustee (and
also any Proceedings involving the interpretation of any provision of this
Indenture to which the Indenture Trustee shall be a party), the Indenture
Trustee shall be held to represent all the Holders of the Notes, and it shall
not be necessary to make any Noteholder a party to any such Proceedings.
SECTION 5.4 Remedies; Priorities. (a) If an Event of Default
shall have occurred and be continuing, the Indenture Trustee may do one or more
of the following (subject to Section 5.5):
(i) institute Proceedings in its own name and as
trustee of an express trust for the collection of all amounts
then payable on the Notes or under this Indenture with respect
thereto, whether by declaration or otherwise, enforce any
judgment obtained, and collect from the Issuer and any other
obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for
the complete or partial foreclosure of this Indenture
with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under
the UCC and take any other appropriate action to protect and
enforce the rights and remedies of the Indenture Trustee and
the Holders of the Notes; and
(iv) sell the Trust Estate or any portion thereof or
rights or interest therein, at one or more public or private
sales called and conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or
otherwise liquidate the Trust Estate following an Event of
Default, other than an Event of Default
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described in Section 5.01(i) or (ii), unless (A) the Holders
of 100% of the Outstanding Amount of the Notes consent
thereto, (B) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to discharge
in full all amounts then due and unpaid upon such Notes for
principal and interest or (C) the Indenture Trustee determines
that the Trust Estate will not continue to provide sufficient
funds for the payment of principal of and interest on the
Notes as they would have become due if the Notes had not been
declared due and payable, and the Indenture Trustee obtains
the consent of Holders of [66-2/3%] of the Outstanding Amount
of the Notes. In determining such sufficiency or insufficiency
with respect to clause (B) and (C), the Indenture Trustee may,
but need not, obtain and rely upon an opinion of an
independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and
as to the sufficiency of the Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property
pursuant to this Article V, it shall pay out the money or property in the
following order:
FIRST: to the Indenture Trustee for amounts due under Section
6.7;
SECOND: to Noteholders for amounts due and unpaid on the
Notes for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Notes for principal and interest, respectably; and
THIRD: to the Issuer for distribution to the
Certificateholders.
The Indenture Trustee may fix a record date and payment date
for any payment to Noteholders pursuant to this Section. At least [15] days
before such record date, the Issuer shall mail to each Noteholder and the
Indenture Trustee a notice that states the record date, the payment date and the
amount to be paid.
SECTION 5.5 Optional Preservation of the Receivables. If the
Notes have been declared to be due and payable under Section 5.2 following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Trust Estate. It is the desire of the parties hereto
and the Noteholders that there be at all times sufficient funds for the payment
of principal of and interest on the Notes, and the Indenture Trustee shall take
such desire into
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account when determining whether or not to maintain possession of the Trust
Estate, the Indenture Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such for such purpose.
SECTION 5.6 Limitation of Suits. No Holder of any Note shall
have any right to institute any Proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice
to the Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than [____%] of the
Outstanding Amount of the Notes have made written request to
the Indenture Trustee to institute such Proceeding in respect
of such Event of Default in its own name as Indenture Trustee
hereunder;
(iii) such Holder or Holders have offered to the
Indenture Trustee indemnity against the costs, expenses and
liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for [60] days after its
receipt of such notice, request and offer of indemnity has
failed to institute such Proceedings; and
(v) no direction inconsistent with such written
request has been given to the Indenture Trustee during such
[60-day] period by the Holders of a majority of the
Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatsoever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided.
In the event the Indenture Trustee shall receive conflicting
or inconsistent requests and indemnity from two or more groups of Holders of
Notes, each representing less than a majority of the Outstanding Amount of the
Notes, the Indenture Trustee in its sole discretion may determine what action,
if any, shall be taken, notwithstanding any other provisions of this Indenture,
and shall have no liability to any person for such action or inaction.
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SECTION 5.7 Unconditional Rights of Noteholders To Receive
Principal and Interest. Notwithstanding any other provisions in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of the interest, if any, on
such Note on or after the respective due dates thereof expressed in such Note or
in this Indenture (or, in the case of redemption, on or after the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Holder.
SECTION 5.8 Restoration of Rights and Remedies. If the
Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any
right or remedy under this Indenture and such Proceeding has been discontinued
or abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had been
instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Indenture Trustee or to the Noteholders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or
omission of the Indenture Trustee or any Holder of any Note to exercise any
right or remedy accruing upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this Article
V or by law to the Indenture Trustee or to the Noteholders may be exercised from
time to time, and as often as may be deemed expedient, by the Indenture Trustee
or by the Noteholders, as the case may be.
SECTION 5.11 Control by Noteholders. The Holders of a majority
of the Outstanding Amount of the Notes shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Indenture Trustee with respect to the Notes or exercising any trust or power
conferred on the Indenture Trustee; provided that
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(i) such direction shall not be in conflict with any
rule of law or with this Indenture;
(ii) subject to the express terms of Section 5.4, any
direction to the Indenture Trustee to sell or liquidate the
Trust Estate shall be by the Holders of Notes representing not
less than [____%] of the Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have
been satisfied and the Indenture Trustee elects to retain the
Trust Estate pursuant to such Section, then any direction to
the Indenture Trustee by Holders of Notes representing less
than [____%] of the Outstanding Amount of the Notes to sell or
liquidate the Trust Estate shall be of no force and effect;
and
(iv) the Indenture Trustee may take any other action
deemed proper by the Indenture Trustee that is not
inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
SECTION 5.12 Waiver of Past Defaults. Prior to the declaration
of the acceleration of the maturity of the Notes as provided in Section 5.2, the
Holders of Notes of not less than a majority of the Outstanding Amount of the
Notes may waive any past Default or Event of Default and its consequences except
a Default (a) in payment of principal of or interest on any of the Notes or (b)
in respect of a covenant or provision hereof which cannot be modified or amended
without the consent of the Holder of each Note. In the case of any such waiver,
the Issuer, the Indenture Trustee and the Holders of the Notes shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
SECTION 5.13 Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Note by such Holder's acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the
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enforcement of any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than [____%] of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder for
the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer
covenants (to the extent it may lawfully do so) that it will not at any time
insist upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law has been enacted.
SECTION 5.15 Action on Notes. The Indenture Trustee's right to
seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee or the Noteholders shall be impaired
by the recovery of any judgment by the Indenture Trustee against the Issuer or
by the levy of any execution under such judgment upon any portion of the Trust
Estate or upon any of the assets of the Issuer. Any money or property collected
by the Indenture Trustee shall be applied in accordance with Section 5.4(b).
SECTION 5.16 Performance and Enforcement of Certain
Obligations. (a) Promptly following a request from the Indenture Trustee to do
so, the Issuer agrees to take all such lawful action as the Indenture Trustee
may request to compel or secure the performance and observance by the Depositor
and the Servicer, as applicable, of each of their obligations to the Issuer
under or in connection with the Pooling and Servicing Agreement or to the
Originator under or in connection with the
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Receivables Acquisition Agreement in accordance with the terms thereof, and to
exercise any and all rights, remedies, powers and privileges lawfully available
to the Issuer under or in connection with the Pooling and Servicing Agreement to
the extent and in the manner directed by the Indenture Trustee, including the
transmission of notices of default on the part of the Depositor or the Servicer
thereunder and the institution of legal or administrative actions or proceedings
to compel or secure performance by the Depositor or the Servicer of each of
their obligations under the Pooling and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of the Holders of [___%]
of the Outstanding Amount of the Notes shall exercise all rights, remedies,
powers, privileges and claims of the Issuer against the Depositor or the
Servicer under or in connection with the Pooling and Servicing Agreement,
including the right or power to take any action to compel or secure performance
or observance by the Depositor or the Servicer of each of their obligations to
the Issuer thereunder and to give any consent, request, notice, direction,
approval, extension or waiver under the Pooling and Servicing Agreement, and any
right of the Issuer to take such action shall be suspended.
(c) Promptly following a request from the Indenture Trustee to
do so, the Issuer agrees to take all such lawful action as the Indenture Trustee
may request to compel or secure the performance and observance by the Originator
of each of its obligations to the Depositor under or in connection with the
Receivables Acquisition Agreement in accordance with the terms thereof, and to
exercise any and all rights, remedies, powers and privileges lawfully available
to the Issuer under or in connection with the Receivables Acquisition Agreement
to the extent and in the manner directed by the Indenture Trustee, including the
transmission of notices of default on the part of the Depositor thereunder and
the institution of legal or administrative actions or proceedings to compel or
secure performance by the Originator of each of its obligations under the
Receivables Acquisition Agreement.
(d) If an Event of Default has occurred and is continuing, the
Indenture Trustee at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of the Holders of [___%]
of the Outstanding Amount of the Notes shall exercise all rights, remedies,
powers, privileges and claims of the Depositor against the Originator under or
in connection with the Receivables Acquisition Agreement, including the right or
power to take any action to compel or secure performance or observance by the
Originator of each of its obligations to the Depositor thereunder
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and to give any consent, request, notice, direction, approval, extension or
waiver under the Receivables Acquisition Agreement, and any right of the
Depositor to take such action shall be suspended.
ARTICLE VI
Indenture Trustee
SECTION 6.1 Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in
this Indenture and no implied covenants or obligations shall
be read into this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Indenture Trustee and conforming to the requirements of this
Indenture; however, the Indenture Trustee shall examine the
certificates and opinions to determine whether or not they
conform on their face to the requirements of this Indenture.
Except for its calculation of LIBO, the Indenture Trustee shall not be required
to determine, confirm or recalculate the information contained in the Servicer's
Certificate delivered to it pursuant to the Pooling and Servicing Agreement.
(c) the Indenture Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
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(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Indenture Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer unless it is proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good faith
in accordance with a direction received by it pursuant to
Section 5.11 or otherwise from Holders under the Indenture.
(d) Every provision of this Indenture that in any way relates
to the Indenture Trustee is subject to paragraphs (a), (b) and (c) of this
Section.
(e) The Indenture Trustee shall not be liable for interest on
any money received by it except as the Indenture Trustee may agree in writing
with the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture or the Pooling and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayments of such funds or adequate indemnity satisfactory to it against such
loss, liability or expense is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
SECTION 6.2 Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by
it to be genuine and to have been signed or presented by the proper person. The
Indenture Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Indenture Trustee acts or refrains from acting,
it may require an Officers' Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any
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action it takes or omits to take in good faith in reliance on the Officers'
Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian or nominee, and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of, or for
the supervision of, any such agent, attorney, custodian or nominee appointed
with due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute wilful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
SECTION 6.3 Individual Rights of Indenture Trustee. The
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Issuer or its affiliates
with the same rights it would have if it were not Indenture Trustee. Any Paying
Agent, Note Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Indenture Trustee must comply with Sections 6.10 and 6.11.
SECTION 6.4 Indenture Trustee's Disclaimer. The Indenture
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of the Trust Estate, this Indenture or the Notes, it shall
not be accountable for the Issuer's use of the proceeds from the Notes, and it
shall not be responsible for any statement of the Issuer in the Indenture or in
any document issued in connection with the sale of the Notes or in the Notes
other than the Indenture Trustee's certificate of authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is
continuing and if it is actually known to a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall mail to each Noteholder notice of the
Default within 90 days after it occurs. Except in the case of a Default in
payment of principal of or interest on any Note (including payments pursuant to
the mandatory redemption provision of such Note), the Indenture Trustee may
withhold the notice if and so long as a
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committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Noteholders; and provided that in the case of
any default of the character specified in Section 5.1(iii), no such notice to
Holders shall be given until at least [30] days after the occurrence thereof.
SECTION 6.6 Reports by Indenture Trustee to Holders. The
Indenture Trustee shall deliver to each Noteholder such information as may be
required to enable such holder to prepare its Federal and state income tax
returns. The Indenture Trustee shall only be required to provide to the
Noteholders the information given to it by the Servicer. The Indenture Trustee
shall not be required to determine, confirm or recompute any such information.
SECTION 6.7 Compensation and Indemnity. The Issuer shall or
shall cause the Servicer to pay to the Indenture Trustee from time to time
reasonable compensation for its services. The Indenture Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuer shall or shall cause the Servicer to reimburse the Indenture
Trustee for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Issuer shall or shall cause the Servicer to
indemnify the Indenture Trustee against any and all loss, liability or expense
(including the fees of either in-house counsel or outside counsel, but not both)
incurred by it in connection with the administration of this trust and the
performance of its duties hereunder. The Indenture Trustee shall notify the
Issuer and the Servicer promptly of any claim for which it may seek indemnity.
Failure by the Indenture Trustee to so notify the Issuer and the Servicer shall
not relieve the Issuer or the Servicer of its obligations hereunder. The Issuer
shall or shall cause the Servicer to defend the claim and the Indenture Trustee
may have separate counsel and the Issuer shall or shall cause the Servicer to
pay the fees and expenses of such counsel. Neither the Issuer nor the Servicer
need reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee's own wilful
misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee
pursuant to this Section shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of a Default specified in
Section 5.1(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or similar law.
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SECTION 6.8 Replacement of Indenture Trustee. No resignation
or removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.8. The Indenture Trustee
may resign at any time by so notifying the Issuer. The Holders of a majority in
Outstanding Amount of the Notes may remove the Indenture Trustee by so notifying
the Indenture Trustee and may appoint a successor Indenture Trustee. The Issuer
shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with
Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt
or insolvent;
(iii) a receiver or other public officer takes charge of
the Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy
exists in the office of Indenture Trustee for any reason (the Indenture Trustee
in such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee, which successor
shall be, if the Originator is the Servicer, reasonably acceptable to the
Depositor.
A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within
[60] days after the retiring Indenture Trustee resigns or is removed, the
retiring Indenture Trustee, the Issuer or the Holders of a majority in
Outstanding Amount of the Notes may petition any court of competent jurisdiction
for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11,
any Noteholder may petition any court of competent
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jurisdiction for the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee
pursuant to this Section, the Issuer's obligations under Section 6.7 shall
continue for the benefit of the retiring Indenture Trustee.
SECTION 6.9 Successor Indenture Trustee by Merger. If the
Indenture Trustee consolidates with, merges or converts into, or transfers all
or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation or banking association without any further act shall be the
successor Indenture Trustee. The Indenture Trustee shall provide the Rating
Agencies prior written notice of any such transaction, provided that such
corporation or banking association shall be otherwise qualified and eligible
under Section 6.11.
In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Indenture, at
any time, for the purpose of meeting any legal requirement of any jurisdiction
in which any part of the Trust may at the time be located, the Indenture Trustee
shall have the power and may execute and deliver all instruments to appoint one
or more Persons reasonably acceptable to the Depositor to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Trust, or any part hereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Indenture Trustee may consider necessary
or desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 6.11 and no
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notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be
conferred or imposed upon and exercised or performed by the
Indenture Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular
act or acts are to be performed the Indenture Trustee shall be
incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but
solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder;
and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the
Indenture Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to each of them.
Every instrument appointing any separate trustee or co-trustee shall refer to
this Agreement and the conditions of this Article VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Indenture Trustee or separately, as may be provided therein,
subject to all the provisions of this Indenture, specifically including every
provision of this Indenture relating to the conduct of, affecting the liability
of, or affording protection to, the Indenture Trustee. Every such instrument
shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time
constitute the Indenture Trustee, its agent or attorney-in-fact with full power
and authority, to the extent not prohibited by
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law, to do any lawful act under or in respect of this Agreement on its behalf
and in its name. If any separate trustee or co-trustee shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Indenture
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 6.11 Eligibility; Disqualification. The Indenture
Trustee shall at all times satisfy the requirements of TIA Section 310(a). The
Indenture Trustee shall have a combined capital and surplus of at least
$__________ as set forth in its most recent published annual report of condition
and its long- term unsecured debt shall be rated at least [Baa3] by [Moody's.]
The Indenture Trustee shall comply with TIA Section 310(b), including the
optional provision permitted by the second sentence of TIA Section 310(b)(9);
provided, however, that there shall be excluded from -------- ------- the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities of the issuer are outstanding if the requirements for such exclusion
set forth in TIA Section 310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An indenture trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer to Furnish Indenture Trustee Names and
Addresses to Noteholders. The Issuer will furnish or cause to be furnished to
the Indenture trustee (a) not more than [five] days after the earlier of (i)
each Record Date and (ii) [three] months after the last Record Date, a list, in
such form as the Indenture Trustee may reasonably require, of the names and
addresses of the Holders of Notes as of such Record Date, (b) at such other
times as the Indenture Trustee may request in writing, within [30] days after
receipt by the Issuer of any such request, a list of similar form and content as
of a date not more than [10] days prior to the time such list is furnished;
provided, however, that so long as the Indenture Trustee is the Note Registrar,
no such list shall be required to be furnished.
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SECTION 7.2 Preservation of Information; Communications to
Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.1 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.1 upon receipt of
a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar
shall have the protection of TIA Section 312(c).
SECTION 7.3 Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within [15] days
after the Issuer is required to file the same with the
Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the
Issuer may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to
time by the Commission such additional information, documents
and reports with respect to compliance by the Issuer with the
conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in
TIA Section 313(c)) such summaries of any information,
documents and reports required to be filed by the Issuer
pursuant to clauses (i) and (ii) of this Section 7.3(a) as may
be required by rules and regulations prescribed from time to
time by the Commission.
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(b) Unless the Issuer otherwise determines, the fiscal year of
the Issuer shall end on __________ of each year.
SECTION 7.4 Reports by Indenture Trustee. If required by TIA
Section 313(a), within [60] days after each [February 1] beginning with
[February 1, 199__,] the Indenture Trustee shall mail to each Noteholder as
required by TIA Section 313(c) a brief report dated as of such date that
complies with TIA Section 313(a). The Indenture Trustee also shall comply with
TIA Section 313(b).
A copy of each report at the time of its mailing to
Noteholders shall be filed by the Indenture Trustee with the Commission and each
stock exchange, if any, on which the Notes are listed. The Issuer shall notify
the Indenture Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.2 Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause
the Servicer to establish and maintain, in the name of the Indenture Trustee,
for the benefit of the Noteholders and the Certificateholders, the Trust
Accounts as provided in Section [5.01] of the Pooling and Servicing Agreement.
(b) Not less than [two] Business Days prior to each Payment
Date, the Total Distribution Amount with respect to the preceding Collection
Period will be deposited in the Collection Account as provided in Section [5.02]
of the Pooling and
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Servicing Agreement. On or before each Payment Date, the Noteholders'
Distributable Amount with respect to the preceding Collection Period will be
transferred from the Collection Account and/or the Reserve Account to the Note
Distribution Account as provided in Sections [5.04] and [5.05] of the Pooling
and Servicing Agreement.
(c) On each Payment Date and Redemption Date, the Indenture
Trustee shall distribute all amounts on deposit in the Note Distribution Account
to Noteholders in respect of the Notes to the extent of amounts due and unpaid
on the Notes for principal and interest in the following amounts and in the
following order of priority (except as otherwise provided in Section 5.4(b)):
(i) accrued and unpaid interest on the Notes;
provided that if there are not sufficient funds in the Note
Distribution Account to pay the entire amount of accrued and
unpaid interest then due on the Notes, the amount in Note
Distribution Account shall be applied to the payment of such
interest on the Notes pro rata on the basis of the total such
interest due on the Notes;
(ii) to the [Class A-1] Noteholders until the Outstanding
Amount of the [Class A-1] Notes is reduced to zero; and
(iii) to the [Class A-2] Noteholders until the Outstanding
Amount of the [Class A-2] Notes is reduced to zero.
(d) The Indenture Trustee shall calculate LIBO for each
Payment Date (other than the first Payment Date) as soon as such calculation can
be made. Upon telephone request, the Indenture Trustee shall inform, by
telephone (confirmed in writing), a representative of each of the Issuer, [and
the Underwriter] of LIBO for a Payment Date.
SECTION 8.3 General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have
occurred and be continuing, all or a portion of the funds in the Trust Accounts
shall be invested in Eligible Investments and reinvested by the Indenture
Trustee upon Issuer Order, subject to the provisions of Section [5.01(b)] of the
Pooling and Servicing Agreement. All income or other gain from investments of
monies deposited in the Trust Accounts net of any investment expenses and any
losses resulting from such investments shall be deposited by the Indenture
Trustee in the Collection Account. The Issuer will not direct the Indenture
Trustee to make any investment of any funds or to sell any investment held in
any of the Trust Accounts unless the security interest granted and perfected in
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such account will continue to be perfected in such investment or the proceeds of
such sale, in either case without any further action by any Person, and, in
connection with any direction to the Indenture Trustee to make any such
investment or sale, if requested by the Indenture Trustee, the Issuer shall
deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect.
(b) Subject to Section 6.1(c), the Indenture Trustee shall not
in any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included therein
except for losses attributable to the Indenture Trustee's failure to make
payments on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as Indenture Trustee, in
accordance with their terms.
(c) If (i) the issuer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Indenture
Trustee by [12:00 noon New York Time] (or such other time as may be agreed by
the Issuer and Indenture Trustee) on any Business Day; or (ii) a Default or
Event of Default shall have occurred and be continuing with respect to the Notes
but the Notes shall not have been declared due and payable pursuant to Section
5.2, or, if such Notes shall have been declared due and payable following an
Event of Default, amounts collected or receivable from the Trust Estate are
being applied in accordance with Section 5.3 as if there had not been such a
declaration; then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Trust Accounts in one or more
Eligible Investments.
SECTION 8.4 Release of Trust Estate.
(a) Subject to the payment of its fees and expenses pursuant
to Section 6.7, the Indenture Trustee may, and when required by the provisions
of this Indenture shall, execute instruments to release property from the lien
of this Indenture, or convey the Indenture Trustee's interest in the same, in a
manner and under circumstances that are not inconsistent with the provisions of
this Indenture. No party relying upon an instrument executed by the Indenture
Trustee as provided in this Article VIII shall be bound to ascertain the
Indenture Trustee's authority, inquire into the satisfaction of any conditions
precedent or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no
Notes Outstanding and all sums due the Indenture Trustee pursuant to Section 6.7
have been paid, release any remaining portion of the Trust Estate that secured
the Notes from the lien of this Indenture and release to the Issuer or any other
Person entitled thereto any funds then on deposit in the Trust Accounts.
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The Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.4(b) only upon receipt of an Issuer Request
accompanied by an Officers' Certificate, an Opinion of Counsel and (if required
by the TIA) Independent Certificates in accordance with TIA Sections 14(c) and
314(d)(1) meeting the applicable requirements of Section 11.1.
SECTION 8.5 Opinion of Counsel. The Indenture Trustee shall
receive at least [seven] days' notice when requested by the Issuer to take any
action pursuant to Section 8.4(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require as a condition to such
action, an Opinion of Counsel, in form and substance satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such action
will not materially and adversely impair the security for the Notes or the
rights of the Noteholders in contravention of the provisions of this Indenture;
provided, however, that such Opinion of Counsel shall not be required to express
an opinion as to the fair value of the Trust Estate. Counsel rendering any such
opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without Consent of
Noteholders.
(a) Without the consent of the Holders of any Notes but with
prior notice to the Rating Agencies, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the
Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any
property at any time subject to the lien of this Indenture, or
better to assure, convey and confirm unto the Indenture
Trustee any property subject or required to be subjected to
the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with
the applicable provisions hereof, of another
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person to the Issuer, and the assumption by any such successor
of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the
benefit of the Holders of the Notes, or to surrender any right
or power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge
any property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement
any provision herein or in any supplemental indenture which
may be inconsistent with any other provision herein or in any
supplemental indenture or to make any other provisions with
respect to matters or questions arising under this Indenture
or in any supplemental indenture; provided that such action
shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of the Holders of
the Notes;
(vi) to evidence and provide for the acceptance of
the appointment hereunder by a successor trustee with respect
to the Notes and to add to or change any of the provisions of
this Indenture as shall be necessary to facilitate the
administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions
of this Indenture to such extent as shall be necessary to
effect the qualification of this Indenture under the TIA or
under any similar Federal statute hereafter enacted and to add
to this Indenture such other provisions as may be expressly
required by the TIA.
The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by
an Issuer Order, may, also without the consent of any of the Holders of the
Notes but with prior notice to the Rating Agencies, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however,
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that such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Noteholder.
SECTION 9.2 Supplemental Indentures with Consent of
Noteholders. The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, also may, with prior notice to the Rating Agencies and with the consent
of the Holders of not less than a majority of the Outstanding Amount of the
Notes, by Act of such Holders delivered to the Issuer and the Indenture Trustee,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the right of the
Holders of the Notes under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(i) change the date of payment of any installment of
principal amount thereof, the interest rate thereon or the
Redemption Price with respect thereto, change the provision of
this Indenture relating to the application of collections on,
or the proceeds of the sale of, the Trust Estate to payment of
principal of or interest on the Notes, or change any place of
payment where, or the coin or currency in which, any Note or
the interest thereon is payable, or impair the right to
institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such
amount due on the Notes on or after the respective due dates
thereof (or, in the case of redemption, on or after the
Redemption Date);
(ii) reduce the percentage of the Outstanding Amount
of the Notes, the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the
Holders of which is required for any waiver of compliance with
certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this
Indenture;
(iii) modify or alter the provisions of the proviso
to the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount
of the Notes required to direct the Indenture Trustee to
direct the Issuer to sell or liquidate the Trust Estate
pursuant to Section 5.04;
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(v) modify any provision of this Section except to
increase any percentage specified herein or to provide that
certain additional provisions of this Indenture or the Basic
Documents cannot be modified or waived without the consent of
the Holder of each Outstanding Note affected thereby;
(vi) modify any of the provisions of this Indenture
in such manner as to affect the calculation of the amount of
any payment of interest or principal due on any Note on any
Payment Date (including the calculation of any of the
individual components of such calculation) or to affect the
rights of the Holders of Notes to the benefit of any
provisions for the mandatory redemption of the Notes contained
herein; or
(vii) permit the creation of any lien ranking prior
to or on a parity with the lien of this Indenture with respect
to any part of the Trust Estate or, except as otherwise
permitted or contemplated herein, terminate the lien of this
Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security provided by the
lien of this Indenture.
The Indenture Trustee may in its discretion determine whether
or not any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer and the Indenture
Trustee of any supplemental indenture pursuant to this Section, the Indenture
Trustee shall mail to the Holders of the Notes to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures. In
executing, or permitting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture,
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the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01
and 6.02, shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith with respect to the notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Holders of the Notes
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.5 Conformity with Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article IX shall conform to the requirements of the Trust Indenture Act
as then in effect so long as this Indenture shall then be qualified under the
Trust Indenture Act.
SECTION 9.6 Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption. (a) The Notes are subject to
redemption in whole, but not in part, at the written direction of the Servicer
pursuant to Section [9.01(a)] of the Pooling and Servicing Agreement, on any
Payment Date, if the then outstanding
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Pool Balance is [___%] or less of the Original Pool Balance, for a purchase
price equal to the Redemption Price; provided, however, that the Issuer has
available funds sufficient to pay the Redemption Price. The Servicer or the
Issuer shall furnish the Rating Agencies notice of such redemption. If the Notes
are to be redeemed pursuant to this Section 10.01(a), the Servicer or the Issuer
shall furnish notice of such election to the Indenture Trustee not later than
[25] days prior to the Redemption Date and the Issuer shall deposit with the
Indenture Trustee in the Note Distribution Account the Redemption Price of the
Notes to be redeemed whereupon all such Notes shall be due and payable on the
Redemption Date upon the furnishing of a notice complying with Section 10.2 to
each Holder of the Notes.
(b) In the event that the assets of the Trust are sold
pursuant to Section 9.2 of the Trust Agreement, all amounts on deposit in the
Note Distribution Account shall be paid to the Noteholders up to the Outstanding
Amount of the Notes and all accrued and unpaid interest thereon. If amounts are
to be paid to Noteholders pursuant to this Section 10.1(b), the Servicer or the
Issuer shall, to the extent practicable, furnish notice of such event to the
Indenture Trustee not later than [25] days prior to the Redemption Date
whereupon all such amounts shall be payable on the Redemption Date.
SECTION 10.2 Form of Redemption Notice.
(a) Notice of redemption under Section 10.1(a) shall be given
by the Indenture Trustee by first-class mail, postage prepaid, mailed not less
than [five] days prior to the applicable Redemption Date to each Holder of
Notes, as of the close of business on the Record Date preceding the applicable
Redemption Date, at such Holder's address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the place where such Notes are to be
surrendered for payment of the Redemption Price (which shall
be the office or agency of the Issuer to be maintained as
provided in Section 3.2); and
(iv) CUSIP number.
Notice of redemption of the Notes shall be given by the
Indenture Trustee in the name and at the expense of the Issuer. Failure to give
notice of redemption, or any defect therein, to any Holder of any Note shall not
impair or affect the validity of the redemption of any other Note.
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(b) Prior notice of redemption under Section 10.1(b) is not
required to be given to Noteholders.
SECTION 10.3 Notes Payable on Redemption Date: The Notes or
portions thereof to be redeemed shall, following notice of redemption as
required by Section 10.02 (in the case of redemption pursuant to Section
10.1(a)), on the Redemption Date become due and payable at the Redemption Price
and (unless the Issuer shall default in the payment of the Redemption Price) no
interest shall accrue on the Redemption Price for any period after the date to
which accrued interest is calculated for purposes of calculating the Redemption
Price.
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc. (a)
Upon any application or request by the Issuer to the Indenture Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Indenture Trustee (i) an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such
certificate or opinion has read or has caused to be read such
covenant or condition and the definitions herein relating
thereto;
(ii) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each
such signatory, such signatory has made such
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examination or investigation as is necessary to enable such
signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of
each such signatory, such condition or covenant has been
complied with.
(b) (i) Prior to the deposit of any Collateral or other
property or securities with the Indenture Trustee that is to be made the basis
for the release of any property or securities subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in Section
11.1(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an
Officers' Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (within [90] days of such deposit) to the
Issuer of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish
to the Indenture Trustee an Officers' Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (i) above,
the Issuer shall also deliver to the Indenture Trustee an Independent
Certificate as to the same matters, if the fair value to the Issuer of the
securities to be so deposited and of all other such securities made the basis of
any such withdrawal or release since the commencement of the then-current fiscal
year of the Issuer, as set forth in the certificates delivered pursuant to
clause (i) above and this clause (ii), is [___%] or more of the Outstanding
Amount of the Notes, but such a certificate need not be furnished with respect
to any securities so deposited, if the fair value thereof to the Issuer as set
forth in the related Officers' Certificate is less than $________ or less than
[one] percent of the Outstanding Amount of the Notes.
(iii) Other than with respect to the release of
any Purchased Receivables or Defaulted Receivables, whenever any property or
securities are to be released from the lien of this Indenture, the Issuer shall
also furnish to the Indenture Trustee an Officers' Certificate certifying or
stating the opinion of each person signing such certificate as to the fair value
(within [90] days of such release) of the property or securities proposed to be
released and stating that in the opinion of such person the proposed release
will not impair the security under this Indenture in contravention of the
provisions hereof.
(iv) Whenever the Issuer is required to furnish to
the Indenture Trustee an Officers' Certificate certifying or stating the opinion
of any signer thereof as to the matters described in clause (iii) above, the
Issuer shall also furnish to
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the Indenture Trustee an Independent Certificate as to the same matters if the
fair value of the property or securities and of all other property other than
Purchased Receivables and Defaulted Receivables, or securities released from the
lien of this Indenture since the commencement of the then current calendar year,
as set forth in the certificates required by clause (iii) above and this clause
(iv), equals [___%] or more of the Outstanding Amount of the Notes, but such
certificate need not be furnished in the case of any release of property or
securities if the fair value thereof as set forth in the related Officers'
Certificate is less than $________ or less than [one] percent of the then
Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.9 or any other provision of this
Section, the Issuer may (A) collect, liquidate, sell or otherwise dispose of
Receivables as and to the extent permitted or required by the Basic Documents
and (B) make cash payments out of the Trust Accounts as and to the extent
permitted or required by the Basic Documents.
SECTION 11.2 Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Depositor or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the
Depositor or the Issuer, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
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Whenever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the grating of such
application, or as evidence of the Issuer's compliance with any term hereof, it
is intended that the truth and accuracy, at the time of the grating of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application granted
or to the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Indenture Trustee's right to rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
SECTION 11.3 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
deliver to the Indenture Trustee, and, where it is hereby expressly required, to
the Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing of such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any person of any
such instrument or writing may be proved in any manner that the Indenture
Trustee deems sufficient.
(c) The ownership of Notes shall be provided by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and
Rating Agencies. Any request, demand, authorization,
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direction, notice, consent, waiver or Act of Noteholders or other documents
provided or permitted by this Indenture to be made upon, given or furnished to
or filed with:
(a) The Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Indenture Trustee and
received at its Corporate Trust Office, or
(b) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and
mailed, first-class, postage prepaid, to the Issuer addressed to: ACC
Automobile Receivables Trust, [Owner Trustee], Attention:
____________________, or at any other address previously furnished in
writing to the Indenture Trustee by Issuer. The Issuer shall promptly
transmit any notice received by it from the Noteholders to the
Indenture Trustee.
Notices required to be given to the Rating Agencies by the
Issuer, the Indenture Trustee or the Owner Trustee shall be in writing,
personally delivered or mailed by certified mail, return receipt requested to
(i) in the case of [Moody's,] at the following address: [Moody's Investors
Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York
10007], (ii) in the case of [Standard & Poor's,] at the following address:
[Standard & Poor's Corporation, 26 Broadway (20th Floor), New York, New York
10004, Attention of Asset Backed Surveillance Department,] (iii) in the case of
[Fitch,] at the following address: [Fitch Investors Service, Inc., One State
Street Plaza, New York, New York 10004, Attention: Structured Finance
Surveillance] [and (iv) in the case of Duff & Phelps, at the following address:
Duff & Phelps Credit Rating Co., 55 east Monroe Street (35th Floor), Chicago,
Illinois 60603, Attention: ________]; or as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties.
SECTION 11.5 Notices to Noteholders; Waiver. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
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Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder, and shall not under any circumstance constitute a
Default or Event of Default.
SECTION 11.6 Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, to the extent satisfactory to the Indenture Trustee, the Issuer may
enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder,
that is different from the methods provided for in this Indenture for such
payments or notices. The Issuer will furnish to the Indenture Trustee a copy of
each such agreement and the Indenture Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflict with another provision hereof
that is required to be included in this Indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that
impose duties on any person (including the provisions automatically deemed
included herein unless expressly excluded by this Indenture) are a part of and
govern this Indenture, whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns. All covenants
and agreements in this Indenture and the Notes by the Issuer
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shall bind its successors and assigns, whether so expressed or not.
All agreements of the Indenture Trustee in this Indenture
shall bind its successors, co-trustees and agents of the Indenture Trustee.
SECTION 11.10 Separability. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 11.11 Benefits of Indenture. Nothing in this Indenture
or in the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other Person with an ownership interest
in any part of the Trust Estate, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 11.12 Legal Holidays. In any case where the date on
which any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF [NEW YORK.]
SECTION 11.14 Counterparts. This Indenture may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15 Recording of Indenture. If this Indenture is
subject to recording in any appropriate public recording offices, such recording
is to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
SECTION 11.16 Trust Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee or the Indenture Trustee on the Notes or under this Indenture or any
certificate or other writing
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delivered in connection herewith or therewith, against (i) the Indenture Trustee
or the Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Indenture
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity. For all purposes of this Indenture, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
SECTION 11.17 No Petition. The Indenture Trustee, by entering
into this Indenture, and each Noteholder, by accepting a Note, hereby covenant
and agree that they will not at any time institute against the Depositor or the
Trust, or join in any institution against the Depositor or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents.
SECTION 11.18 Inspection. The Issuer agrees that, on
reasonable prior notice, it will permit any representative of the Indenture
Trustee, during the issuer's normal business hours, to examine all the books of
account, records, reports, and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by independent certified
public accountants, and to discuss the Issuer's affairs, finances and accounts
with the Issuer's officers, employees, and independent certified public
accountants, and at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall and shall cause its representatives to
hold in confidence all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its obligations hereunder.
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have
caused this Indenture to be duly executed by their respective officers,
thereunto duly authorized, all as of the day and year first above written.
ACC AUTOMOBILE RECEIVABLES
TRUST
By:___________________, not in
its individual capacity but
solely as Owner Trustee,
By: ____________________
Name:
Title
_____________________, not in
its individual capacity but
solely as Indenture Trustee,
By: _________________________
Name:
Title:
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STATE OF __________________ )
) ss.:
COUNTY OF _________________ )
BEFORE ME, the undersigned authority, a Notary Public in and
for said County and State, on this day personally appeared _______________,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said [ACC AUTOMOBILE RECEIVABLES TRUST], a Delaware business trust, and that he
executed the same as the act of the said business trust for the purpose and
consideration therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of
________, 199_.
_______________________________
Notary Public
My commission expires:
_____________________________
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STATE OF __________________ )
) ss.:
COUNTY OF _________________ )
BEFORE ME, the undersigned authority, a Notary Public in and
for said County and State, on this day personally appeared _______________,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said bank and that he executed the same as the corporation for the purposes and
consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of
________, 199_.
________________________________
Notary Public
My commission expires:
______________________________
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EXHIBIT A
Schedule of Receivables
[To be delivered to the Trust at Closing]
A-1
<PAGE> 82
EXHIBIT B
[Form of Pooling and Servicing Agreement]
B-1
<PAGE> 83
EXHIBIT C
[Form of Depository Agreement]
C-1
<PAGE> 84
EXHIBIT D
REGISTERED $_______________
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.
[Unless this Note is presented by an authorized representative
of The Depository Trust company, a New York corporation ("DTC"), to the issuer
or its agent for registration of transfer, exchange or payment, and any note
issued is registered in the name of Ceede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC) - ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IN WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
[ACC AUTOMOBILE RECEIVABLES TRUST]
[FLOATING RATE] AUTO RECEIVABLES BACKED NOTES,
[CLASS A-1]
[Advanta Auto Receivables Trust 199_, - a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to
[_________________], or registered assigns, the principal sum of
[_______________] DOLLARS payable on each Payment Date in an amount equal to the
result obtained by multiplying (i) a fraction the numerator of which is $[INSERT
INITIAL PRINCIPAL AMOUNT OF NOTE] and the denominator of which is
[$________________________] by (ii) the aggregate amount, if any, payable from
the Note Distribution Account in respect of principal on the [Class A-1] Notes
pursuant to Section 8.2(c) of the Indenture; provided, however, that the entire
unpaid principal amount of this Note shall be due and payable on the earlier of
____________, 199_ and the Redemption Date, if any, pursuant to Section 10.1(a)
of the Indenture. No payments of principal of the [Class A-2] Notes shall be
made until the principal of the [Class A-1] Notes has been paid in its
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<PAGE> 85
entirety. The Issuer will pay interest on this Note at the [Class A-1] Note
Interest Rate on each Payment Date until principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date after giving effect to all payments of principal made on
such preceding Payment Date (or in the case of the first Payment Date, on the
initial principal amount of this Note). Interest on this Note will accrue for
each Payment Date from and including the most recent Payment Date on which
interest has been paid to but excluding such Payment Date or, if no interest has
yet been paid, from ________, 199_. Interest will be computed on the basis of a
360-day year for the actual number of days in the period for which such interest
is payable. Such principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of Payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Note shall not be entitled to any benefit under the indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer.
Date: _______________ [ACC AUTOMOBILE RECEIVABLES TRUST],
By: [Owner Trustee] not in its
individual capacity but solely
as Owner Trustee,
By:___________________________
Name:
Title
D-2
<PAGE> 86
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
_____________________, not in
its individual capacity but
solely as Indenture Trustee,
By:__________________________
Authorized Signatory
D-3
<PAGE> 87
[REVERSE OF NOTE]
This Note is one of the [Class A-1] Notes of a duly authorized
issue of Notes of the Issuer, designated as its [Floating Rate] Auto Receivables
Backed Notes (herein called the "Notes"), all issued under an Indenture dated as
of _______________, 199_ (such indenture, as supplemented or amended, is herein
called the "Indenture"), between the Issuer and ____________________, as
indenture trustee (the "Indenture Trustee", which term includes any successor
indenture trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes. The Notes are subject to all terms of the Indentures. All
terms used in this Note that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in or pursuant to the
Indenture, as so supplemented or amended.
The Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Payment Date in
an amount described on the face hereof. "Payment Date" means the __th day of
each ________, ________, ________ and ________ or, if any such date is not a
Business Day, the next succeeding Business Day, commencing ________, 199_.
As described above, the entire unpaid principal amount of this
Note shall be due and payable on the earlier of ________, 199_ and the
Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and the Indenture Trustee or the Holders of the Notes
representing not less than a majority of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments on the Notes of a Class
shall be made pro rata to the Noteholders of such Class entitled thereto.
Payments of interest on this Note due and payable on each
Payment Date, together with the installment of principal, if any, to the extent
not in full payment of this Note, shall be made by check mailed to the Person
whose name appears as the Registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transferring immediately available
funds to the account
D-4
<PAGE> 88
designated by such nominee. Such checks shall be mailed to the Person entitled
thereof at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Payment Date
shall be binding upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchanged hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date preceding such Payment Date by
notice mailed within [five] days of such Payment Date and the amount then due
and payable shall be payable only upon presentation and surrender of this Note
at the Indenture Trustee's principal Corporate Trust Office or at the office of
the Indenture Trustee's agent appointed for such purposes located in
______________________.
The Issuer shall pay interest on overdue installments of
interest at the [Class A-1] Note Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed in
whole, but not in part, at the option of the Servicer, on any Payment Date on or
after the date on which the Pool Balance is less than or equal to ten percent of
the Initial Pool Balance.
As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located, in The City of New York or the city in which the
Corporate Trust Office is located, or a member firm of a national securities
exchange, and such other documents as the Indenture Trustee may require, and
thereupon one or more new Notes of authorized denominations and in the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of transfer
or exchange of this Note, but the transferor may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
D-5
<PAGE> 89
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note covenants and agrees
that no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person my have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note covenants and agrees
that by accepting the benefits of the indenture that such Noteholder will not at
any time institute against the Depositor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
Federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Holders of the Notes under the
Indenture at any time by the Issuer with the consent of the Holders of Notes
representing a majority of the Outstanding Amount of all Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of the Notes,
on behalf of this Note (or any one or more Predecessor Notes) shall be
conclusive and binding upon such Holder and upon all future Holders of this Note
and of
D-6
<PAGE> 90
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof whether or not notation of such consent or waiver is made upon
this Note. the Indenture also permits the Indenture Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the consent of
Holders of the Note issued thereunder.
The term "Issuer" as used in this Note includes any successor
to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
The Note and the Indenture shall be construed in accordance
with the laws of the State of [New York], without reference to its conflict of
law provisions, and the obligations, rights and remedies of the parties
hereunder and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the time, place, and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, neither [Owner Trustee] in its
individual capacity, [Indenture Trustee], in its individual capacity, any owner
of a beneficial in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on, or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in this
Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Owner Trustee for the
sole purposes of binding the interests of the Owner Trustee in the assets of the
Issuer. The Holder of this Note by the acceptance hereof agrees that except as
expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer
D-7
<PAGE> 91
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Note.
D-8
<PAGE> 92
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
___________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________________________________________________________
______________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: ______________ ________________________NOTE: The
signature to this assignment must
correspond with the name of the
registered owner as it appears on the
face of the within Note in every
particular, without alteration,
enlargement or any change whatsoever.
Signature Guaranteed:
________________________
Signatures must be guaranteed by an
"eligible guarantor institution" meeting
the requirements of the Indenture
Trustee which requirements will include
membership or participation in STAMP or
such other "signature guarantee program"
as may be determined by the Indenture
Trustee in addition to, or in
substitution for, STAMP, all in
accordance with the Securities Act of
1934, as amended.
_________________________
D-9
<PAGE> 93
EXHIBIT E
REGISTERED $_________
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.
[Unless this note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the issuer
or its agent for registration of transfer, exchange or payment, and any Note
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC) - ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
[ACC AUTOMOBILE RECEIVABLES TRUST]
[FLOATING RATE] AUTO RECEIVABLES BACKED NOTES,
[Class A-2]
[ADVANTA Auto Receivables Trust 199_, - a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to
[_____________________], or registered assigns, the principal sum of
[____________] DOLLARS payable on each Payment Day in an amount equal to the
result obtained by multiplying (i) a fraction the numerator of which is $[INSERT
INITIAL PRINCIPAL AMOUNT OF NOTE] and the denominator of which is
[$_____________] by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the [Class A-2] Notes pursuant
to Section 8.02(c) of the Indenture; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the earlier of
___________, 199_ and the Redemption Date, if any, pursuant to Section 10.1(a)
of the Indenture. No payments of principal of the [Class A-2] Notes shall be
made until the principal of the [Class A-1] Notes has been paid in its entirety.
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<PAGE> 94
The Issuer will pay interest on this Note at the [Class A-2] Note Interest Rate
on each Payment Date until the principal of this Note is paid or made available
for payment, on the principal amount of this Note outstanding on the preceding
Payment Date after giving effect to all payments of principal made on such
preceding Payment Date (or in the case of the first Payment Date, on the initial
principal amount of this Note). Interest on this Note will accrue for each
Payment Date from and including the most recent Payment Date on which interest
has been paid to but excluding such Payment Date or, if no interest has yet been
paid, from ________, 199_. Interest will be computed on the basis of a 360-day
year for the actual number of days in the period for which such interest is
payable. Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
Unless the certificate of authentication hereof has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Note shall not be entitled to any benefit under the indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer.
Date: [ACC AUTOMOBILE RECEIVABLES TRUST]
By: [OWNER TRUSTEE],
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement,
By:___________________________
Name:
Title:
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<PAGE> 95
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
By:______________________________,
not in its individual capacity
but solely as Trustee,
By:___________________________
Authorized Signatory
E-3
<PAGE> 96
[REVERSE OF NOTE]
This Note is one of the [Class A-2] Notes of a duly authorized
issue of Notes of the Issuer, designated as its [Floating Rate] Auto Receivables
Backed Notes (herein called the "Notes"), all issued under an Indenture dated as
of _____________, 199_ (such indenture, as supplemented or amended, is herein
called the "Indenture"), between the Issuer and __________________, as indenture
trustee (the "Indenture Trustee", which term includes any successor indenture
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Payment Date in
an amount described on the face hereof. "Payment Date" means the __th day of
each ______, ______, ______ and ______ or, if any such date is not a Business
Day, the next succeeding Business Day, commencing _____________, 1993.
As described above, the entire unpaid principal amount of this
Note shall be due and payable on the earlier of _______, 199_ and the Redemption
Date, if any, pursuant to Section 10.01(a) of the Indenture. Notwithstanding the
foregoing, the entire unpaid principal amount of the Notes shall be due and
payable on the date on which an Event of Default shall have occurred and be
continuing and the Indenture Trustee or the Holders of the Notes representing
not less than a majority of the Outstanding Amount of the Notes have declared
the Notes to be immediately due and payable in the manner provided in Section
5.02 of the Indenture. All principal payments on the Notes of a Class shall be
made pro rata to the Noteholders of such Class entitled thereto.
Payments of interest on this Note due and payable on each
Payment Date, together with the installment of principal, if any, to the extent
not in full payment of this Note, shall be made by check mailed to the Person
whose name appears as the Registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Note registered on the Record
E-4
<PAGE> 97
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected by
any payments made on any Payment Date shall be binding upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Indenture Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the Registered Holder hereof as of the Record Date preceding
such Payment Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Indenture Trustee's principal
Corporate Trust Office or at the office of the Indenture Trustee's agent
appointed for such purposes located in ____________________.
The Issuer shall pay interest on overdue installments of
interest at the [Class A-2] Note Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed in
while, but not in part, at the option of the Servicer, or any Payment Date on or
after the date on which the Pool Balance is less than or equal to ten percent of
the Initial Pool Balance.
As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or his
attorney duly authorized in writing, with such signature guaranteed by a
commercial bank or trust company located, or having a correspondent located, in
The City of New York or the city in which the Corporate Trust Office is located,
or a member firm of a national securities exchange, and such other documents as
the Indenture Trustee may require, and thereupon one or more new Notes of
authorized denominations and in the same aggregate principal amount will be
issued to the
E-5
<PAGE> 98
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note covenants and agrees
that no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or the Owner Trustee or its individual capacity, except as any
such Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note covenants and agrees
that by accepting the benefits of the indenture that such Noteholder will not at
any time institute against the Depositor, or join in any institution against the
Depositor of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the
E-6
<PAGE> 99
Holders of the Notes under the Indenture at any time by the Issuer with the
consent of the Holders of Notes representing a majority of the Outstanding
amount of all Notes at the time Outstanding. The Indenture also contains
provisions permitting the Holders of Notes representing specified percentages of
the Outstanding Amount of the Notes, on behalf of the Holders of Notes
representing specified percentages of the Outstanding Amount of the Notes, on
behalf of the Holders of all the Notes, to waive compliance by the Issuer with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note (or any one or more Predecessor Notes) shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of [New York,] without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and i the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither [Owner Trustee] in its individual
capacity, [Indenture Trustee], in its individual capacity, any owner of a
beneficial interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
E-7
<PAGE> 100
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on, or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in this
Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Owner Trustee for the
sole purposes of binding the interests of the Owner Trustee in the assets of the
Issuer. The Holder of this Note by the acceptance hereof agrees that except as
expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
E-8
<PAGE> 101
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
__________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto __________________________________________________________________________
_______________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: _______________ ________________________NOTE:
The signature to this assignment
must correspond with the name of
the registered owner as it appears
on the face of the within Note in
every particular, without
alteration, enlargement or any
change whatsoever.
Signature Guaranteed:
________________________
Signatures must be
guaranteed by an "eligible
guarantor institution"
meeting the requirements of
the Indenture Trustee which
requirements will include
membership or participation
in STAMP or such other
"signature guarantee
program" as may be
determined by the Indenture
Trustee in addition to, or
in substitution for, STAMP,
all in accordance with the
Securities Exchange Act of
1934, as amended.
____________________________
E-9
<PAGE> 102
EXHIBIT F
[Form of Transferee Certificate]
F-1
<PAGE> 1
Exhibit 4.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ACC CONSUMER FINANCE CORPORATION
SPONSOR
AND
------------------------------------
INDENTURE TRUSTEE
INDENTURE
Dated as of , 199
------------- --
$ % AUTO RECEIVABLES-BACKED NOTES, [CLASS A]
----------- -----
$ % AUTO RECEIVABLES-BACKED NOTES, [CLASS B]
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION...................................................... 3
SECTION 1.01. General Definitions............................................... 3
SECTION 1.02. Compliance Certificates and
Opinions...................................................... 21
SECTION 1.03. Form of Documents Delivered to
Indenture Trustee............................................. 22
SECTION 1.04. Acts of Noteholders, etc.......................................... 23
SECTION 1.05. Notices, etc., to Trustee,
Servicer and Issuer........................................... 24
SECTION 1.06. Notice to Noteholders; Waiver..................................... 25
SECTION 1.07. Effect of Headings and Table of
Contents...................................................... 26
SECTION 1.08. Successors and Assigns............................................ 26
SECTION 1.09. Severability Clause............................................... 26
SECTION 1.10. Benefits of Indenture............................................. 26
SECTION 1.11. Governing Law..................................................... 26
SECTION 1.12. Legal Holidays.................................................... 26
SECTION 1.13. Execution in Counterparts......................................... 27
SECTION 1.14. Inspection........................................................ 27
SECTION 1.15. Survival of Representations and
Warranties.................................................... 27
ARTICLE II THE NOTES................................................................... 28
SECTION 2.01. General Provisions................................................ 28
SECTION 2.02. Execution, Authentication,
Delivery, and Dating.......................................... 30
SECTION 2.03. Registration, Transfer and
Exchange...................................................... 30
SECTION 2.04. Mutilated, Destroyed, Lost and
Stolen Notes.................................................. 32
SECTION 2.05. Delivery of [Class C] Notes....................................... 33
SECTION 2.06. Payment of Interest and Principal;
Rights Preserved.............................................. 34
SECTION 2.07. Persons Deemed Owners............................................. 35
SECTION 2.08. Cancellation...................................................... 35
ARTICLE III ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION
AND APPLICATION OF MONEYS; REPORTS.......................................... 35
SECTION 3.01. Accounts; Investments by Indenture
Trustee....................................................... 35
SECTION 3.02. Collection of Moneys; Lockbox
Facility; Lockbox Account..................................... 39
SECTION 3.03. Collection of Moneys.............................................. 39
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SECTION 3.04. Collection Account................................................ 39
SECTION 3.05. Reserve Account................................................... 43
SECTION 3.06. Pre-Funding Account............................................... 44
SECTION 3.07. Capitalized Interest Account...................................... 44
SECTION 3.08. Reserved.......................................................... 45
SECTION 3.09. Reports by Indenture Trustee;
Notices of Certain Payments................................... 45
SECTION 3.10. Indenture Trustee May Rely on
Certain Information from
Originator and Servicer....................................... 46
ARTICLE IV RELEASE OF CONTRACTS AND VEHICLES........................................... 46
SECTION 4.01. Release of Contracts and Vehicles
Upon Final Contract Payment................................... 46
SECTION 4.02. Release of Contracts and Vehicles
Following Substitution or
Repurchase.................................................... 47
SECTION 4.03. Execution of Documents............................................ 47
ARTICLE V SERVICER EVENTS OF DEFAULT; SUBSTITUTE
SERVICER.................................................................... 47
SECTION 5.01. Servicer Events of Default........................................ 47
SECTION 5.02. Substitute Servicer............................................... 47
SECTION 5.03. Notification to Noteholders....................................... 48
ARTICLE VI EVENTS OF DEFAULT; REMEDIES................................................. 48
SECTION 6.01. Events of Default................................................. 48
SECTION 6.02. Acceleration of Maturity;
Rescission and Annulment...................................... 50
SECTION 6.03. Remedies.......................................................... 51
SECTION 6.04. Indenture Trustee May File Proofs
of Claim...................................................... 51
SECTION 6.05. Indenture Trustee May Enforce
Claims Without Possession of
Notes......................................................... 52
SECTION 6.06. Application of Money Collected.................................... 53
SECTION 6.07. Limitation on Suits............................................... 54
SECTION 6.08. Unconditional Right of Noteholders
to Receive Payment............................................ 55
SECTION 6.09. Restoration of Rights and
Remedies...................................................... 55
SECTION 6.10. Rights and Remedies Cumulative.................................... 55
SECTION 6.11. Delay or Omission Not Waiver...................................... 56
SECTION 6.12. Control by Noteholders............................................ 56
SECTION 6.13. Waiver of Events of Default....................................... 57
SECTION 6.14. Waiver of Stay or Extension Laws.................................. 57
SECTION 6.15. Sale of Trust Estate.............................................. 57
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ARTICLE VII THE INDENTURE TRUSTEE....................................................... 59
SECTION 7.01. Certain Duties and
Responsibilities.............................................. 59
SECTION 7.02. Notice of Defaults or Events of
Default....................................................... 60
SECTION 7.03. Certain Rights of Indenture
Trustee....................................................... 61
SECTION 7.04. Not Responsible for Recitals or
Issuance of Notes............................................. 62
SECTION 7.05. Money Held in Trust............................................... 62
SECTION 7.06. Compensation, Reimbursement, etc.................................. 62
SECTION 7.07. Corporate Indenture Trustee
Required; Eligibility......................................... 63
SECTION 7.08. Resignation and Removal;
Appointment of Successor...................................... 63
SECTION 7.09. Acceptance of Appointment by
Successor..................................................... 64
SECTION 7.10. Merger, Conversion, Consolidation
or Succession to Business..................................... 65
SECTION 7.11. Co-trustees and Separate Indenture
Trustees...................................................... 65
SECTION 7.12. Indenture Trustee to Hold
Contracts..................................................... 67
SECTION 7.13. Request for Opinion of Counsel.................................... 67
SECTION 7.14. Financing Statements.............................................. 67
SECTION 7.15. Power of Attorney................................................. 67
ARTICLE VIII COVENANTS................................................................... 68
SECTION 8.01. Payment of Principal and
Interest...................................................... 68
SECTION 8.02. Maintenance of Office or Agency;
Chief Executive Office........................................ 68
SECTION 8.03. Money for Payments to Noteholders
to be Held in Trust........................................... 68
SECTION 8.04. Corporate Existence; Merger;
Consolidation, etc............................................ 69
SECTION 8.05. Protection of Trust Estate;
Further Assurances............................................ 70
SECTION 8.06. Reserved.......................................................... 71
SECTION 8.07. Performance of Obligations;
Receivables Acquisition
Agreement..................................................... 71
SECTION 8.08. Negative Covenants................................................ 72
SECTION 8.09. Information as to the Issuer...................................... 73
SECTION 8.10. Taxes............................................................. 74
SECTION 8.11. Indemnification................................................... 75
SECTION 8.12. Certificates of Title............................................. 75
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ARTICLE IX AMENDMENTS AND SUPPLEMENTAL INDENTURES...................................... 76
SECTION 9.01. Amendments and Supplemental
Indentures.................................................... 76
SECTION 9.02. Execution of Amendments and
Supplemental Indentures....................................... 76
SECTION 9.03. Effect of Amendments and
Supplemental Indentures....................................... 77
SECTION 9.04. Reference in Notes to Amendments
and Supplemental Indentures................................... 77
ARTICLE X REDEMPTION OF NOTES......................................................... 77
SECTION 10.01. Optional Redemption; Election to
Redeem........................................................ 77
SECTION 10.02. Notice to Indenture Trustee....................................... 78
SECTION 10.03. Notice of Redemption by the
Issuer........................................................ 78
SECTION 10.04. Deposit of the Redemption Price................................... 78
SECTION 10.05. Notes Payable on Redemption Date.................................. 79
ARTICLE XI SATISFACTION AND DISCHARGE.................................................. 79
SECTION 11.01. Satisfaction and Discharge of
Indenture..................................................... 79
SECTION 11.02. Application of Trust Money........................................ 80
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SCHEDULE 1 - Contract Schedule
SCHEDULE 2 - Amortization Schedule
EXHIBIT A - Form of [Class A] Notes
EXHIBIT B - Form of [Class B] Notes
EXHIBIT C - Form of Class C Notes
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<PAGE> 6
INDENTURE
This INDENTURE dated as of _____________, 199__, is between
ACC CONSUMER FINANCE CORPORATION, a Delaware corporation (herein called the
"Issuer"), and ___________________________, a national banking association, as
trustee (herein called the "Indenture Trustee").
RECITALS OF THE ISSUER
The Issuer has duly authorized the issue of $_____________ in aggregate
principal amount of its _____% Auto Receivables-Backed Notes, [Class A] (the
"[Class A] Notes") and $_____________ _____% Auto Receivables-Backed Notes,
[Class B] (the "[Class B] Notes" and together with the [Class A] Notes, the
"Offered Notes") of substantially the tenor hereinafter set forth, and to
provide therefor the Issuer has duly authorized the execution and delivery of
this Indenture.
The Issuer may, from time to time, subject to certain conditions set
forth herein, enter into a Supplement directing the issuance of a third class of
Notes (the "[Class C] Notes" and together with the Offered Notes, the "Notes")
which will be subordinate to the [Class A] Notes and to the [Class B] Notes.
All things necessary to make the Notes, when executed by the Issuer and
authenticated and delivered hereunder, the valid obligations of the Issuer, and
to make this Indenture a valid agreement of the Issuer, in accordance with its
terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the holders thereof, it is mutually covenanted and agreed, for the benefit of
all Noteholders, as follows:
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee, for the benefit and
security of the Noteholders, all of the Issuer's right, title and interest in
and to (a) the Initial Contracts and all Contract Payments, [Repurchase
Amounts,] Prepayment Amounts and other amounts now due or hereafter becoming due
with respect thereto (other than any prepayments of rent required pursuant to
the terms of any Initial Contract at or before the commencement of the Contract
and any payments due before the Cut-Off Date for such Initial Contract), (b) any
and all Additional Contracts or Substitute Contracts and
<PAGE> 7
all Contract Payments, [Repurchase Amounts,] Prepayment Amounts and other
amounts now due or hereafter becoming due with respect thereto (other than any
prepayments of rent required pursuant to the terms of any Additional Contract or
Substitute Contract at or before the commencement of any such Additional
Contract or Substitute Contract and any payments due before the related Cut-Off
Date for such Additional Contract or Substitute Contract), (c) all rights of the
Issuer to or under any guarantees of or collateral for the Obligor's obligations
under any Contract, [(d) all Vehicles at any time subject to any Contract,] (e)
all moneys from time to time held by the Indenture Trustee pursuant to Section
3.01 hereof pending deposit in one of the accounts referred to therein, (f) all
moneys from time to time on deposit in the Collection Account, including all
investments and income from the investment of such moneys, (g) all moneys from
time to time on deposit in the Reserve Account, including all investments and
income from the investment of such moneys, (h) all moneys from time to time on
deposit in the Pre-Funding Account, including all investments and income from
the investment of such moneys, (i) all moneys from time to time on deposit in
the Capitalized Interest Account, including all investments and income from the
investment of such moneys, (j) all rights of the Issuer under the Receivables
Acquisition Agreement, (k) all rights of the Issuer under any program agreement,
purchase agreement, assignment agreement or other document pursuant to which the
Originator acquired an interest in any Contract and the Vehicles subject
thereto, and (l) all proceeds of any of the foregoing. Such Grant is made in
trust to secure (i) the payment of all amounts due on the Notes in accordance
with their terms, equally and ratably without prejudice, priority, or
distinction between any Note of the same class and any other Note of the same
class by reason of differences in time of issuance or otherwise, except as
otherwise may be provided in this Indenture or any Supplement, (ii) the payment
of all other sums payable under this Indenture with respect to the Notes and
(iii) compliance with the provisions of this Indenture and any Supplement with
respect to the Notes.
The Indenture Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions hereof, and agrees to perform the
duties herein required to the best of its ability and to the end that the
interests of the Noteholders may be adequately and effectively protected as
hereinafter provided.
2
<PAGE> 8
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. General Definitions.
Except as otherwise specified or as the context may otherwise
require, the following terms have the meanings set forth below for all purposes
of this Indenture and any Supplement, and the definitions of such terms are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
Accrual Date: ____________, 199__
Act: with respect to any Noteholder, as defined in Section
1.04.
Additional Contract: each separate installment sale contract
and each contract schedule acquired by the Issuer from the Originator out of
funds on deposit in the Pre-Funding Account pursuant to the related Additional
Contract Transfer Agreement.
Additional Contract Transfer Agreement: as provided in Section
____ of the Receivables Acquisition Agreement.
Additional Contract Transfer Date: the date specified in each
Additional Contract Transfer Agreement.
Affiliate: of any specified Person, any other Person (i) which
directly or indirectly controls, or whose directors or officers directly or
indirectly control, or is controlled by, or is under common control with, such
specified Person, (ii) which beneficially owns or holds, or whose directors or
officers beneficially own or hold, 25% or more of any class of the Voting Stock
(or, in the case of an entity that is not a corporation, 25% of the equity
interest) of such specified Person, or (iii) 25% or more of the Voting Stock
(or, in the case of an entity that is not a corporation, 25% of the equity
interest) of which is owned or held by such specified Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
Aggregate Implicit Contract Balance: means, with respect to
any Calculation Date, the sum of the Implicit Contract Balances of all
Contracts.
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<PAGE> 9
Authorized Officer: with respect to any matter, any officer of
or other Person representing the Issuer, the Originator, the Servicer, the
Indenture Trustee or a Noteholder, as the case may be, who is authorized to act
for that party.
Available Funds: means, with respect to each Payment Date, the
collections from the immediately preceding Collection Period on deposit in the
Collection Account.
Business Day: any day that is not a Saturday, Sunday or other
day on which commercial banking institutions in the city in which the Corporate
Trust Office is located are authorized or obligated by law or executive order to
remain closed.
Calculation Date: the first day of any calendar month.
Capitalized Interest Account: the account by that name
established and maintained by the Indenture Trustee pursuant to Section 3.01.
Capitalized Interest Requirement: means, with respect to each
Payment Date, the excess, if any, of (x) the interest due on the Notes on such
Payment Date over (y) the sum of (i) one-month's interest on the Implicit
Contract Balance of all Contracts as of the close of business on the last day of
the immediately preceding Collection Period, calculated at the Weighted Average
Note Rate and (ii) any Pre-Funding Earnings to be transferred to the Collection
Account on such Payment Date pursuant to Section 3.06(c) hereof.
Capital Stock: as defined in Section ____ of the Receivables
Acquisition Agreement.
[Class A] Distribution Account: the account or accounts by
that name established and maintained by the Indenture Trustee pursuant to
Section 3.01.
[Class A] Monthly Interest: means, for the initial Payment
Date, one-twelfth of the product of the [Class A] Note Rate and the initial
[Class A] Note Balance, and for any subsequent Payment Date, one-twelfth of the
product of (a) the [Class A] Note Rate and (b) the sum of (i) the Outstanding
[Class A] Note Balance as of the immediately preceding Payment Date (after
giving effect to all payments of [Class A] Monthly Principal and [Class A]
Overdue Principal made on such immediately preceding Payment Date) and (ii) any
[Class A] Overdue Interest.
[Class A] Monthly Principal: with respect to all of the
Contracts for any Payment Date, the product of (x) the sum
4
<PAGE> 10
of (i) the Contract Payments due during the related Collection Period minus the
aggregate of the Monthly Contract Yield for all Contracts, (ii) for each
Contract that is a Defaulted Contract, the Implicit Contract Balance and (iii)
for each Contract that is the subject of a prepayment (provided that such
Prepayment Amount has actually been deposited in the Collection Account), an
amount equal to the Implicit Contract Balance immediately prior to prepayment
and (y) the [Class A] Percentage. To the extent that an amount is included in
any of clauses (i) through (iii) above, such amount shall not be included in any
other such clause for purposes of calculating the [Class A] Monthly Principal.
[Class A] Noteholder: at any time, any Person in whose name a
[Class A] Note is registered in the Note Register.
[Class A] Note Balance: means, as of the Closing Date,
$_____________ and thereafter, as of each Payment Date, an amount equal to the
initial [Class A] Note Balance reduced by all payments on the [Class A] Notes
pursuant to Section 3.04(b)(vi) hereof.
[Class A] Note Rate: the rate at which interest accrues on the
[Class A] Notes, which rate shall be ____% per annum.
[Class A] Notes: any [Class A] Notes described in Article II
of, and authorized by, and authenticated and delivered under, this Indenture.
[Class A] Overdue Interest: with respect to any Payment Date,
the excess, if any, of (a) the aggregate amount of [Class A] Monthly Interest
due on all prior Payment Dates over (b) the aggregate amount of [Class A]
Monthly Interest (from whatever source) actually paid to [Class A] Noteholders
on all prior Payment Dates.
[Class A] Overdue Principal: with respect to any Payment Date,
the excess, if any, of (a) the aggregate amount of [Class A] Monthly Principal
due on all prior Payment Dates over (b) the aggregate amount of [Class A]
Monthly Principal (from whatever source) actually paid to [Class A] Noteholders
on all prior Payment Dates.
[Class A] Percentage: _____%.
[Class B] Distribution Account: the account or accounts by
that name established and maintained by the Indenture Trustee pursuant to
Section 3.01.
[Class B] Monthly Interest: means, for the initial Payment
Date, one-twelfth of the product of the [Class B] Note
5
<PAGE> 11
Rate and the initial [Class B] Note Balance, and for any subsequent Payment
Date, one-twelfth of the product of (a) the [Class B] Note Rate and (b) the sum
of (i) the Outstanding [Class B] Note Balance as of the immediately preceding
Payment Date (after giving effect to all payments of [Class B] Monthly Principal
and [Class B] Overdue Principal made on such immediately preceding Payment Date)
and (ii) any [Class B] Overdue Interest.
[Class B] Monthly Principal: with respect to all of the
Contracts for any Payment Date, the product of (x) the sum of (i) the Contract
Payments due during the related Collection Period minus the aggregate of the
Monthly Contract Yield for all Contracts, (ii) for each Contract that is a
Defaulted Contract, the Implicit Contract Balance and (iii) for each Contract
that is the subject of a prepayment (provided that such Prepayment Amount has
actually been deposited in the Collection Account), an amount equal to the
Implicit Contract Balance immediately prior to prepayment and (y) the [Class B]
Percentage. To the extent that an amount is included in any of clauses (i)
through (iii) above, such amount shall not be included in any other such clause
for purposes of calculating the [Class B] Monthly Principal.
[Class B] Noteholder: at any time, any Person in whose name a
[Class B] Note is registered in the Note Register.
[Class B] Note Balance: means, as of the Closing Date,
$_____________ and thereafter, as of each Payment Date, an amount equal to the
initial [Class B] Note Balance reduced by all payments on the [Class B] Notes
pursuant to Section 3.04(b)(vii) hereof.
[Class B] Note Rate: the rate at which interest accrues on the
[Class B] Notes, which rate shall be _____% per annum.
[Class B] Notes: any [Class B] Notes described in Article II
of, and authorized by, and authenticated and delivered under, this Indenture.
[Class B] Overdue Interest: with respect to any Payment Date,
the excess, if any, of (a) the aggregate amount of [Class B] Monthly Interest
due on all prior Payment Dates over (b) the aggregate amount of [Class B]
Monthly Interest (from whatever source) actually paid to [Class B] Noteholders
on all prior Payment Dates.
[Class B] Overdue Principal: with respect to any Payment Date,
the excess, if any, of (a) the aggregate amount of [Class B] Monthly Principal
due on all prior Payment Dates over (b) the aggregate amount of [Class B]
Monthly Principal
6
<PAGE> 12
(from whatever source) actually paid to [Class B] Noteholders on all prior
Payment Dates.
[Class B] Percentage: _____%.
[Class C] Distribution Account: the account or accounts by
that name established and maintained by the Indenture Trustee pursuant to
Section 3.01.
[Class C] Monthly Interest: means, for the initial Payment
Date of the [Class C] Notes, if any, one-twelfth of the product of the [Class C]
Note Rate and the Initial [Class C] Note Balance, and for any subsequent Payment
Date, one-twelfth of the product of (a) the [Class C] Note Rate and (b) the sum
of (i) the Outstanding [Class C] Note Balance as of the immediately preceding
Payment Date (after giving effect to all payments of [Class C] Monthly Principal
and [Class C] Overdue Principal made on such immediately preceding Payment Date)
and (ii) any [Class C] Overdue Interest.
[Class C] Monthly Principal: with respect to all of the
Contracts for any Payment Date, the product of (x) the sum of (i) the Contract
Payments due during the related Collection Period minus the aggregate of the
Monthly Contract Yield for all Contracts, (ii) for each Contract that is a
Defaulted Contract, the Implicit Contract Balance and (iii) for each Contract
that is the subject of a prepayment (provided that such Prepayment Amount has
actually been deposited in the Collection Account), an amount equal to the
Implicit Contract Balance immediately prior to prepayment and (y) the [Class C]
Percentage. To the extent that an amount is included in any of clauses (i)
through (iii) above, such amount shall not be included in any other such clause
for purposes of calculating the [Class C] Monthly Principal.
[Class C] Noteholder: at any time, any Person in whose name a
[Class C] Note is registered in the Note Register.
[Class C] Note Balance: means an amount equal to the Initial
[Class C] Note Balance reduced by all payments on the [Class C] Notes pursuant
to Section 3.04(b)(viii) hereof.
[Class C] Note Rate: the rate at which interest accrues on the
[Class C] Notes, which rate shall be established on the date of original
issuance of the [Class C] Notes in the related Supplement.
[Class C] Notes: any [Class C] Notes described in Article II
of, and authorized by, and authenticated and delivered under, this Indenture and
the related Supplement.
7
<PAGE> 13
[Class C] Overdue Interest: with respect to any Payment Date,
the excess, if any, of (a) the aggregate amount of [Class C] Monthly Interest
due on all prior Payment Dates over (b) the aggregate amount of [Class C]
Monthly Interest (from whatever source) actually paid to [Class C] Noteholders
on all prior Payment Dates.
[Class C] Overdue Principal: with respect to any Payment Date,
the excess, if any, of (a) the aggregate amount of [Class C] Monthly Principal
due on all prior Payment Dates over (b) the aggregate amount of [Class C]
Monthly Principal (from whatever source) actually paid to [Class C] Noteholders
on all prior Payment Dates.
[Class C] Percentage: a specified percentage of the Initial
Aggregate Balance, as determined on the date of issuance of the [Class C] Notes,
not to exceed _____%.
Closing Date: ______________, 199__.
Collection Account: the account or accounts by that name
established and maintained by the Indenture Trustee pursuant to Section 3.01.
Collection Period: with respect to a Payment Date, the period
from the first day of the calendar month immediately preceding the month in
which such Payment Date occurs through the last day of such calendar month.
Contract: at any time, each Initial Contract, Substitute
Contract and Additional Contract subject to the lien of this Indenture;
provided, that, for purposes of calculating the [Class A] Monthly Principal, the
[Class B] Monthly Principal or the [Class C] Monthly Principal with respect to
any Payment Date, (i) any Contract released from the lien of this Indenture
pursuant to Sections 4.01 or 4.02 hereof following the Indenture Trustee's
receipt of a Default Payment shall, notwithstanding such release, be deemed to
be a Contract hereunder to and including the Payment Date next following the
date on which such Default Payment was received and (ii) any other Contract
released from the lien of this Indenture following the Indenture Trustee's
receipt of the final Contract Payment, or a Prepayment Amount shall,
notwithstanding such release, be deemed to be a Contract to and including the
Payment Date next following the Contract Payment Period during which such final
Contract Payment was received.
Contract Payment: each periodic installment payable by a
Obligor under a Contract (excluding any Excess Contract Receivables). Prepayment
Amounts, prepayments required pursuant to the terms of a Contract at or before
the commencement of the Contract, payments becoming due before the
8
<PAGE> 14
Cut-Off Date and supplemental or additional payments required by the terms of a
Contract with respect to taxes, insurance, maintenance, indemnities, or other
specific charges shall not be Contract Payments hereunder.
Contract Payment Period: with respect to any Payment Date and
the Determination Date with respect thereto, the calendar month prior to the
month in which such Payment Date and such Determination Date occur.
Corporate Trust Office: the principal corporate trust office
of the Indenture Trustee located at ________________________________, or at such
other address as the Trustee may designate from time to time by notice to the
Noteholders and the Issuer.
Cut-Off Date: as defined in Section _____ of the Note
Agreement.
Default: any occurrence that is, or with notice or the lapse
of time or both would become, an Indenture Event of Default.
Defaulted Contract: any Contract with respect to which either
(i) four Contract Payments are due and unpaid as of any Calculation Date or (ii)
the Servicer has declined to advance any delinquent Contract Payment in
accordance with Section _____ of the Receivables Acquisition Agreement on the
grounds that such advance would be a Nonrecoverable Advance or (iii) such
Contract has been rejected by or on behalf of the Obligor in a bankruptcy
proceeding.
Default Payment: any payment made with respect to a Defaulted
Contract (i) by the Obligor under or with respect to such Contract (or by the
application of any security deposit or other monies owed or belonging to such
Obligor) as actual, liquidated or punitive damages resulting from the breach of
such Contract, (ii) by a transfer to the Collection Account pursuant to Section
3.04, or (iii) by the Servicer or the Indenture Trustee from the proceeds of any
disposition of the Vehicle subject to such Contract. Contract Payments for any
Contract Payment Period prior to a Contract becoming a Defaulted Contract are
not Default Payments.
Default Pay-Through Amount: with respect to any Contract with
respect to which a Default Payment is made or due, an amount equal to the
Implicit Contract Balance of such Contract as of the Payment Date immediately
following the first Determination Date on which such Contract was a Defaulted
Contract.
Delinquency Condition: the condition which exists on and as of
any Payment Date or on and as of the related
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Determination Date if (x) the aggregate of the Contract Payments due during the
related Contract Payment Period under all Contracts with respect to which any
Contract Payment or portion thereof was overdue as of each of the two
immediately preceding Payment Dates (after excluding any such Contract Payment
which was paid in full prior to the related Determination Date) exceeds (y) ____
percent of the aggregate of the Contract Payments due during the related
Contract Payment Period under all Contracts. If a Delinquency Condition exists
on any Payment Date, such Delinquency Condition shall be deemed to continue to
and include the day immediately preceding the next Payment Date.
Delinquency Payment: any payment made with respect to a
Delinquent Contract in an amount equal to all or part of any specific Contract
Payment due with respect to such Contract (i) by the Servicer pursuant to
Section ____ of the Receivables Acquisition Agreement or (ii) by a transfer to
the Collection Account pursuant to Section 3.04.
Delinquent Contract: as of any Determination Date, any
Contract (other than a Contract which became a Defaulted Contract prior to such
Determination Date) with respect to which the Obligor has not paid all Contract
Payments then due.
Determination Date: with respect to any Payment Date, the
[fifth] Business Day immediately preceding such Payment Date.
Discount Rate: _____% per annum, which rate represents the
Weighted Average Note Rate plus the Servicing Fee Rate on an annualized basis.
Eligible Account: any one or more of the following accounts:
(i) an account maintained with a depository institution or
trust company whose long-term unsecured debt obligations are rated at
least A by the Rating Agency at the time of any deposit therein (or, if
such obligations are, at the time of such deposit, not rated by the
Rating Agency, its equivalent rating from one other nationally
recognized rating agency); or
(ii) a trust account or accounts maintained with a federal or
state chartered depository institution or trust company subject to
regulations regarding collateralized fiduciary funds on deposit
substantially similar to 12 C.F.R. Section 9.10(b).
Eligible Investments: any one or more of the following
obligations or securities:
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(i) direct obligations of, and obligations fully guaranteed
by, the United States of America, or any agency or instrumentality of
the United States of America the obligations of which are backed by the
full faith and credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of deposit
of, bankers' acceptances issued by, or federal funds sold by any
commercial bank, depository institution or trust company (including the
Indenture Trustee acting in its commercial capacity) incorporated under
the laws of the United States of America or any state thereof provided,
that (x) such commercial bank, depository institution or trust company
shall have a combined capital and surplus of at least $500,000,000 and
be subject to supervision and examination by federal and/or state
banking authorities and (y) at the time of such investment or
contractual commitment providing for such investment such commercial
bank, depository institution or trust company has a long-term unsecured
debt rating of at least AA issued by the Rating Agency (or, if such
obligations are, at the time of such deposit, not rated by the Rating
Agency, its equivalent rating from one other nationally recognized
agency) (or, in the case of a commercial bank or depository institution
which is the principal subsidiary of a holding company, such holding
company has a short-term credit rating of at least Duff-1 issued by the
Rating Agency (or, if such obligations are, at the time of such
deposit, not rated by the Rating Agency, its equivalent rating from one
other nationally recognized rating agency) and (B) any other demand or
time deposit or certificate of deposit which is fully insured by the
Federal Deposit Insurance Corporation;
(iii) repurchase obligations with respect to and
collateralized by (A) any security described in clause (i) above or (B)
any other security issued or guaranteed by an agency or instrumentality
of the United States of America, in each case entered into with a
depository institution or trust company (acting as principal) of the
type described in clause (ii) above, provided that the Indenture
Trustee has taken delivery of such security;
(iv) commercial paper (including both non-interest bearing
discount obligations and interest-bearing obligations) payable on
demand or on a specified date not more than 270 days after the date of
issuance thereof having a short-term credit rating of at least Duff-1
from the Rating Agency (or, if such obligations are, at the time of
such deposit, not rated by the Rating Agency, its equivalent rating
from one other nationally recognized rating agency) at the time of such
investment; and
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(v) shares with a constant net asset value in a mutual fund
investing solely in short-term securities of the United States
government and having the highest short-term credit rating of at least
Duff-1 from the Rating Agency (or, if such obligations are, at the time
of such deposit, not rated by the Rating Agency, its equivalent rating
from one other nationally recognized rating agency) which shares are
freely transferable by the holder on a daily basis.
Excess Collections: as of each Payment Date, the amount on
deposit in the Collection Account after payments to the Servicer, [Class A]
Noteholders and [Class B] Noteholders.
Excess Contract Receivables: with respect to any Excess
Receivables Contract and any Payment Date, the excess, if any, of (x) the
Contract Payment with respect to such Contract over (y) the amount which would
have been received with respect to such Contract during the Contract Payment
Period with respect to such Payment Date if the Implicit Contract Balance of
such Contract or its Predecessor Contract, in the case of a Substitute Contract,
on the Closing Date had equalled _____% of the Initial Aggregate Balance, which
amount with respect to each Initial Contract is set forth on Schedule 1 hereto.
Excess Receivables Contract: any Initial Contract which at the
Closing Date has an Implicit Contract Balance in excess of _____% of the Initial
Aggregate Balance, any Additional Contract which at the related Additional
Contract Transfer Date has an Implicit Contract Balance in excess of _____% of
the Initial Aggregate Balance and any Substitute Contract substituted pursuant
to Section ____ of the Receivables Acquisition Agreement for a Predecessor
Contract which is an Excess Receivables Contract.
Final Additional Closing Date: three months following the end
of the month which includes the Closing Date.
Financing Statement: as defined in Section ____ of the Note
Agreement.
Grant: grant, bargain, sell, convey, assign, transfer,
mortgage, pledge, create and grant a security interest in and right of set-off
against, deposit, set over and confirm. The Grant of the Trust Estate effected
by this Indenture shall include all rights, powers, and options (but none of the
obligations) of the Issuer with respect thereto, including, without limitation,
the immediate and continuing right to claim for, collect, receive, and give
receipts for Contract Payments in respect of the Contracts and all other moneys
payable thereunder, to give and receive notices and
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other communications, to make waivers, amendments or other agreements, to
exercise all rights and options, to bring judicial proceedings in the name of
the Issuer or otherwise, to terminate a contract pursuant to the terms thereof,
and generally to do and receive anything that the Issuer is or may be entitled
to do or receive thereunder or with respect thereto.
Implicit Contract Balance: means, with respect to a Contract,
the present value of all Contract Payments that become due thereon on or after
the immediately preceding Calculation Date, discounted monthly at the product of
(i) one-twelfth and (ii) the Discount Rate.
Indenture or this Indenture: this instrument as originally
executed and as from time to time supplemented or amended pursuant to the
applicable provisions hereof.
Indenture Event of Default: as defined in Section 6.01.
Indenture Trustee: The Person named as the "Indenture Trustee"
in the first paragraph of this instrument until a successor Person shall have
become the Indenture Trustee pursuant to the applicable provisions of this
Indenture, and thereafter "Indenture Trustee" shall mean such successor;
provided, that the provisions of Section 7.06 and Section 8.11, as applicable to
any Person at any time serving as Indenture Trustee hereunder, shall survive
(with respect to any period prior to the date of such termination) the
termination of such Person's status as Indenture Trustee hereunder and the
succession of any other Person to such status.
Initial Aggregate Balance: an amount equal to $_____________,
calculated as the sum of the Initial Aggregate Implicit Contract Balance and the
Original Pre-Funded Amount.
Initial Aggregate Implicit Contract Balance: an amount equal
to $_______________.
Initial [Class C] Note Balance: an amount equal to the product
of (x) $_____________ minus all principal theretofore paid by the Trustee to the
[Class A] Noteholders, the [Class B] Noteholders or the Issuer and (y) the
[Class C] Percentage.
Initial Contract: each separate installment sale contract and
each contract schedule described in Schedule 1 hereto, as the same may be
amended or modified from time to time in accordance with the provisions hereof
and thereof.
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Initial Deposit: the initial amount, equal to _____% of the
Initial Aggregate Balance, to be deposited by the Trustee in the Reserve
Account.
Insurance Policy: any insurance policy required to be
maintained by the Obligor pursuant to the related Contract that covers physical
damage to the Vehicle or any liability arising out of the use of such Vehicle.
Insurance Proceeds: any proceeds of an Insurance Policy not
applied to repair or replacement of a Vehicle.
Issuer Order or Issuer Request: a written order or request
delivered to the Indenture Trustee and signed in the name of the Issuer by an
Authorized Officer.
Lockbox Account: as defined in Section 3.02(a).
Lockbox Facility: as defined in Section 3.02(a).
Maturity Date: with respect to any installment of principal of
or interest on any Note, the date on which such installment is due and payable
as therein or herein provided, whether at the Stated Maturity Date, by
declaration of acceleration, or otherwise.
Maximum Reserve Amount: means, with respect to any Payment
Date, an amount equal to the lesser of (i) _____% of the Initial Aggregate
Balance or (ii) the sum of (x) the Outstanding [Class A] Note Balance and (y)
the Outstanding [Class B] Note Balance less (z) the Outstanding [Class C] Note
Balance.
Monthly Contract Yield: with respect to each Contract, on any
Payment Date, one-twelfth of the product of the Discount Rate and the Aggregate
Implicit Contract Balance on the immediately preceding Payment Date (or the
Cut-Off Date in the case of the initial Payment Date).
Monthly Servicer Report: the report attached as Exhibit ___ to
the Receivables Acquisition Agreement.
Nonrecoverable Advance: as defined in Section ____ of the
Receivables Acquisition Agreement.
Note Agreement: the agreement dated as of the date hereof
between the Issuer and the initial purchasers of the Offered Notes with respect
to the purchase and sale of the Offered Notes as the same may be modified or
amended from time to time in accordance with its terms.
Noteholder: at any time, any Person in whose name a Note is
registered in the Note Register.
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Note Rate: the [Class A] Note Rate, the [Class B] Note Rate or
the [Class C] Note Rate, as applicable.
Note Register: as defined in Section 2.03.
Notes: any notes described in Article II of, and authorized
by, and authenticated and delivered under, this Indenture or any Supplement.
Obligor: the obligor under any Contract including the
guarantor.
Offered Notes: the [Class A] Notes and the [Class B] Notes.
[Officers' Certificate: a certificate delivered to the
Indenture Trustee and signed by the Chairman, the President, or a Vice President
of the Issuer, and by another Vice President, the Treasurer, an Assistant
Treasurer, the Secretary, or an Assistant Secretary of the Issuer who is not the
same Person as the other officer signing such certificate.]
Opinion of Counsel: a written opinion, which shall be
satisfactory in form and substance to the Indenture Trustee, of counsel who may,
except as otherwise expressly provided in this Indenture, be inside or outside
counsel for the Issuer and who shall be satisfactory to the Indenture Trustee.
Optional Redemption: prepayment of the Offered Notes, in their
entirety, by the Issuer, without premium, on any Payment Date when the
Outstanding [Class A] Note Balance is less than or equal to _____% of the
initial [Class A] Note Balance and the Outstanding [Class B] Note Balance is
less than or equal to _____% of the initial [Class B] Note Balance (after giving
effect to payments of principal on such Payment Date).
Original Capitalized Interest Amount: means the amount
deposited in the Capitalized Interest Account on the Closing Date pursuant to
Section 3.07(a) of this Indenture.
Original Pre-Funded Amount: means the amount deposited in the
Pre-Funding Account on the Closing Date pursuant to Section 3.06(a) of this
Indenture.
Originator: _______________, a _____________ organized and
existing under the laws of the State of ___________________, and its successors.
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Outstanding: with respect to the Notes, as of any date of
determination, all Notes theretofore authenticated and delivered under this
Indenture or any Supplement except:
(i) Notes theretofore cancelled by the
Trustee or delivered to the Trustee for cancellation;
(ii) Notes or portions thereof for whose payment
money in the necessary amount has been theretofore irrevocably
deposited with the Indenture Trustee in trust for the holders such
Notes; and
(iii) Notes in exchange for or in lieu of which
other Notes have been authenticated and delivered pursuant to this Indenture or
any Supplement unless proof satisfactory to the Indenture Trustee is presented
that any such Notes are held by a Person in whose hands the Note is a valid
obligation;
provided, however, that in determining whether the holders of Notes evidencing
the requisite percentage of Voting Rights have given any request, demand,
authorization, direction, notice, consent, or waiver hereunder, (i) Notes owned
by the Issuer or any Affiliate of the Issuer shall be disregarded and deemed not
to be Outstanding, except that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent, or waiver, only Notes that a Responsible Officer of
the Indenture Trustee actually knows to be so owned shall be so disregarded and
(ii) Notes owned by the Indenture Trustee or any Affiliate of the Indenture
Trustee shall be disregarded and deemed not to be Outstanding for purposes of
determining whether the requisite holders of the Notes have voted in favor of
any action or matter to be approved by them in accordance with Section 7.08
hereof.
Overfunded Interest Amount: means, with respect to each
Payment Date, the excess of (A) the amount on deposit in the Capitalized
Interest Account (after giving effect to any withdrawals on such Payment Date
from the Capitalized Interest Account pursuant to Section 3.07(b) of this
Indenture) over (B) the product of (i) one twelfth, (ii) the Weighted Average
Note Rate, (iii) the number of months remaining in the maximum Funding Period
and (iv) the excess of (x) the amount on deposit in the Pre-Funding Account as
of the immediately preceding Payment Date (excluding Pre-Funding Earnings) (or,
in the case of the initial Payment Date, the Original Pre-Funded Amount) over
(y) the amount on deposit in the Pre-Funding Account on such Payment Date
(excluding Pre-Funding Earnings).
Payment Date: the [twentieth] day of each month (or if such
date is not a Business Day, the next succeeding
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Business Day), commencing ____________, 199__, and ending with the Stated
Maturity Date.
Person: any individual, corporation, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
Predecessor Contract: with respect to any Substitute Contract
acquired by the Issuer by substitution pursuant to Section ____ of the
Receivables Acquisition Agreement, the Contract or Contracts for which such
Substitute Contract or any intervening Substitute Contract has been substituted.
Predecessor Notes: with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.04 in lieu of a lost, destroyed or
stolen Note (or a mutilated Note surrendered to the Indenture Trustee) shall be
deemed to evidence the same debt as the lost, destroyed or stolen Note (or a
mutilated Note surrendered to the Indenture Trustee).
Pre-Funded Amount: with respect to any Determination Date, the
amount on deposit in the Pre-Funding Account.
Pre-Funding Account: the account or accounts by that name
established and maintained by the Indenture Trustee pursuant to Section 3.01.
Pre-Funding Earnings: the actual investment earnings earned on
the Pre-Funding Account during each Collection Period.
Prepayment Amount: means, with respect to any Contract, the
sum of (1) the Implicit Contract Balance as of the first day of the Collection
Period preceding such prepayment, together with one month of interest thereon at
the Discount Rate, (2) any unreimbursed Servicer Advances with respect to such
Contract and (3) any Contract Payments due and outstanding under such Contract
that are not the subject of a Servicer Advance.
Prepayment Premium: means the greater of (i) zero and (ii) the
excess of (A) the product of (1) the present value of the remaining payments on
the Outstanding [Class A] Notes, the Outstanding [Class B] Notes or the
Outstanding [Class C] Notes, as applicable, discounted on a monthly basis
(assuming a calendar year consisting of twelve 30-day months)
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at a discount rate equal to the sum of (x) the rate on U.S. Treasury securities
with a remaining maturity equal to the weighted average life of the prepaid
principal plus (y) _____%, and (2) a fraction, the numerator of which is the
prepaid principal and the denominator of which is the Outstanding [Class A] Note
Balance, the Outstanding [Class B] Note Balance or the Outstanding [Class C]
Note Balance, as applicable, over (B) the prepaid principal. A Prepayment
Premium shall be payable only pursuant to Section 2.01(c) and (d) hereof.
Purchaser: an initial purchaser of Offered Notes under the
Note Agreement.
Rating Agency: _________________ and any successor thereto.
Receivables Acquisition Agreement: the Receivables Acquisition
Agreement dated as of the date hereof between the Issuer and the Originator, as
the same may be amended or modified from time to time in accordance with the
provisions hereof and thereof.
Record Date: with respect to any Payment Date, the last
Business Day of the month immediately preceding such Payment Date.
Redemption Date: with respect to any redemption of Offered
Notes, a date fixed pursuant to Section 10.01.
Redemption Price: with respect to any Offered Note, and as of
any redemption date fixed by the Indenture Trustee, the Outstanding [Class A]
Note Balance or the Outstanding [Class B] Note Balance, as applicable, of such
Offered Note, together with interest accrued thereon to such redemption date at
the [Class A] Note Rate or the [Class B] Note Rate, as applicable (exclusive of
installments of interest and principal maturing on or prior to such date,
payment of which shall have been made to the holder of such Note on the
applicable Record Date or as otherwise provided herein).
Redemption Record Date: with respect to any redemption of
Offered Notes, a date fixed pursuant to Section 10.01.
[Repurchase Amount: an amount equal to the sum of (1) the
Implicit Contract Balance as of the first day of the Collection Period preceding
such repurchase, together with one month of interest thereon at the Discount
Rate, (2) any unreimbursed Servicer Advances with respect to such Contract and
(3) any Contract Payments due and outstanding under such Contract that are not
the subject of a Servicer Advance.]
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Required Deposit Date: as defined in Section 3.02(b).
Required Payments: the payments required pursuant to clauses
(i), (ii) and (iii) of Section 3.04(b) hereof.
Reserve Account: the account or accounts by that name
established and maintained by the Indenture Trustee pursuant to Section 3.01.
Reserve Account Payment: as of any Payment Date, an amount
equal to the excess, if any, of Required Payments over the amount on deposit in
the Collection Account.
Responsible Officer: with respect to the Indenture Trustee,
any officer regularly engaged in the administration or supervision of corporate
trust accounts and also, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
Restricting Event: as of any Payment Date or as of the related
Determination Date, the occurrence and continuance of a Delinquency Condition on
(i) such Payment Date, (ii) such related Determination Date or (iii) any of the
five previous Payment Dates.
Servicer: the Originator and any Successor Servicer appointed
pursuant to the terms hereof and of the Receivables Acquisition Agreement.
Servicer Advance: as defined in Section ____ of the
Receivables Acquisition Agreement.
Servicer Event of Default: as defined in Section ____ of the
Receivables Acquisition Agreement.
Servicer Order: a written order or request delivered to the
Indenture Trustee and signed in the name of the Servicer by an Authorized
Officer.
Servicing Fee: an amount equal to the sum of (a) the product
of (i) one-twelfth, (ii) the Servicing Fee Rate and (iii) the Aggregate Implicit
Contract Balance as of the beginning of the previous Collection Period, (b) late
payment fees and certain other fees paid by the Obligors during the previous
Collection Period and (c) any investment earnings on amounts held in the
Collection Account.
Servicing Fee Rate: _____%.
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Sponsor: ___________________________________, a corporation
organized and existing under the laws of the State of Delaware, and its
successors.
Stated Maturity Date: the date on which the entire unpaid
principal amount of the Notes is due and payable, which date is ________ __,
199__.
Substitute Contract: each separate installment sale contract
and each contract schedule substituted for another Contract pursuant to the
provisions of Section ____ of the Receivables Acquisition Agreement, as the same
may be amended or modified from time to time in accordance with the provisions
hereof and thereof.
Successor Servicer: the Indenture Trustee or any successor to
the Servicer pursuant to the Receivables Acquisition Agreement.
Supplement: with respect to the [Class C] Notes, if any are
issued, a supplement to this Indenture complying with the terms of Section 2.05
hereof.
Transaction Payment Amount: for each Required Deposit Date,
the amount of all Contract Payments, Excess Contract Receivables, Delinquency
Payments, Default Payments, Prepayment Amounts and other payments on or in
respect to a Contract received by the Trustee in the Lockbox Facility or
otherwise and deposited in the Lockbox Account pursuant to Section 3.02(a)
hereof and reported by the Servicer for such Required Deposit Date in accordance
with Section ____ of the Receivables Acquisition Agreement.
Trust Estate: all Contracts, Vehicles, money, instruments,
accounts and other property subject to or intended to be subject to the lien of
this Indenture including all proceeds thereof.
Uniform Commercial Code or UCC: with respect to a particular
jurisdiction, the Uniform Commercial Code, as in effect from time to time in
such jurisdiction, or any successor statute thereto.
Vehicles: each item of property, together with any replacement
parts, additions, and repairs thereto, any replacements thereof, any accessories
incorporated therein and/or affixed thereto, subject to a Contract or, following
expiration or termination of the Contract to which the same was previously
subject, remaining subject to the lien of this Indenture in accordance with the
provisions hereof.
Voting Rights: means, for so long as any [Class A] Notes
remain Outstanding, 100% of the Voting Rights shall be
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exercised by the [Class A] Noteholders, with each [Class A] Noteholder having
its proportionate percentage interest in all Voting Rights. When no [Class A]
Note is Outstanding, 100% of the Voting Rights shall be exercised by the [Class
B] Noteholders, with each [Class B] Noteholder having its proportionate
percentage interest in all Voting Rights. When no [Class A] Notes and [Class B]
Notes are Outstanding, 100% of the Voting Rights shall be exercised by the
[Class C] Noteholders, if any, with each [Class C] Noteholder having its
proportionate percentage interest in all Voting Rights.
Voting Stock: capital stock of any class of a corporation
having power to vote for the election of the members of the board of directors
of such corporation, or persons performing similar functions (whether or not at
the time stock of any class shall have or might have special voting powers or
rights by reason of the happening of any contingency).
Weighted Average Note Rate: the weighted average of the [Class
A] Note Rate, the [Class B] Note Rate and the [Class C] Note Rate, calculated as
of the Closing Date. For purposes of calculating the Weighted Average Note Rate,
the [Class C] Note Rate shall be equal to the [Class B] Note Rate and the
balance applicable thereto shall equal _____% of the Initial Aggregate Balance.
SECTION 1.02. Compliance Certificates and Opinions.
Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture or any
Supplement, other than any request that (i) the Indenture Trustee authenticate
the Notes specified in such request, (ii) the Indenture Trustee invest moneys in
the Collection Account, the Reserve Account, the Pre-Funding Account or the
Capitalized Interest Account pursuant to the written directions specified in
such request, or (iii) the Indenture Trustee pay moneys due and payable to the
Issuer hereunder to the Issuer's assignee specified in such request, the
Indenture Trustee may require the Issuer to furnish to the Indenture Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture or any Supplement relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such requested action as to which other evidence of
satisfaction of the conditions precedent thereto is specifically required by any
provision of this Indenture or any Supplement, no additional certificate or
opinion need be furnished.
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SECTION 1.03. Form of Documents Delivered to Indenture
Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any Officer's Certificate or opinion and any Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Authorized Officer or Authorized Officers of the
Issuer as to such factual matters unless such Authorized Officer or counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous. Any
Opinion of Counsel may be based on the written opinion of other counsel, in
which event such Opinion of Counsel shall be accompanied by a copy of such other
counsel's opinion, which shall include the Noteholders as addressees thereof,
and shall include a statement to the effect that such counsel believes that such
counsel, the Indenture Trustee and the Noteholders may reasonably rely upon the
opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture or any Supplement, they may, but need not, be
consolidated and form one instrument.
Wherever in this Indenture or any Supplement, in connection with any
application or certificate or report to the Indenture Trustee, it is provided
that the Issuer shall deliver any document as a condition of the granting of
such application, or as evidence of compliance with any term hereof, it is
intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application granted
or to the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Indenture Trustee's right to rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Section 7.01(a)(ii).
Whenever in this Indenture or any Supplement it is provided that the
absence of the occurrence and continuation
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of a Default or an Indenture Event of Default or a Servicer Event of Default is
a condition precedent to the taking of any action by the Indenture Trustee at
the request or direction of the Issuer, then, notwithstanding that the
satisfaction of such condition is a condition precedent to the Issuer's right to
make such request or direction, the Indenture Trustee shall be protected in
acting in accordance with such request or direction if it does not have
knowledge of the occurrence and continuation of such Default or Indenture Event
of Default or Servicer Event of Default. For all purposes of this Indenture and
any Supplement, the Indenture Trustee shall not be deemed to have knowledge of
any Default or Indenture Event of Default (other than an Indenture Event of
Default of the kind described in clause (i) of Section 6.01) or Servicer Event
of Default unless a Responsible Officer of the Indenture Trustee shall have
actual knowledge thereof or shall have been notified in writing thereof by the
Issuer, the Servicer or any Noteholder.
SECTION 1.04. Acts of Noteholders, etc.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture or any Supplement to
be given or taken by Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Noteholders in person
or by agents duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Indenture Trustee, with a copy (or if expressly
required an original) to the Issuer and the Servicer. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Noteholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
or any Supplement and (subject to Section 7.01) conclusive in favor of the
Indenture Trustee and the Issuer, if made in the manner provided in this Section
1.04.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person
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executing the same, may also be proved in any other manner which the Indenture
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the holder of any Note shall bind every future
holder of the same Note and the holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
(d) By accepting the Notes issued pursuant to this Indenture
and any Supplement, each Noteholder irrevocably appoints the Indenture Trustee
hereunder as the special attorney-in-fact for such Noteholder vested with full
power on behalf of such Noteholder to effect and enforce the rights of such
Noteholder pursuant hereto and the provisions hereof for the benefit of such
Noteholder.
SECTION 1.05. Notices, etc., to Trustee, Servicer and Issuer.
Any request, demand, authorization, direction, notice,
consent, waiver, Act of Noteholders, or other document provided or permitted by
this Indenture or any Supplement to be made upon, given or furnished to, or
filed with, the Indenture Trustee, the Issuer or the Servicer shall be
sufficient for every purpose hereunder if in writing and telexed, telecopied
(with a copy of the telexed or telecopied material sent to the recipient by
overnight courier on the day of the telex or telecopy), mailed, first-class
postage prepaid, or hand delivered. Unless otherwise specifically provided
herein, no such request, demand, authorization, direction, notice, consent,
waiver, Act of Noteholders or other document shall be effective until received
and any provision hereof requiring the making, giving, furnishing, or filing of
the same on any date shall be interpreted as requiring the same to be sent or
delivered in such fashion that it will be received on such date. Any such
request, demand, authorization, direction, notice, consent, waiver, Act of
Noteholders, or other document shall be sent or delivered to the following
addresses:
(i) if to the Indenture Trustee, at the [Corporate Trust
Office], Attention: ________________ (Number for telecopy: ______________;
(ii) if to the Issuer, at ACC Consumer Financial Corporation
(Number for telecopy: (212) ________)], or at any other address previously
furnished in writing to the Indenture Trustee and the Servicer by the Issuer;
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(iii) if to the Originator, at ________
________________________ (Number for telecopy: (___) ________), or at any other
address previously furnished in writing to the Indenture Trustee, the Issuer and
the Servicer by the Originator; or
(iv) if to the Servicer, at ___________
___________________________________________________ (Number for telecopy:
_______________, or at any other address previously furnished in writing to the
Indenture Trustee, the Issuer and the Originator by the Servicer.
The Indenture Trustee will send to each Noteholder a copy of any notice
it receives hereunder by the Business Day following the receipt thereof by the
Indenture Trustee.
SECTION 1.06. Notice to Noteholders; Waiver.
(a) Where this Indenture or any Supplement provides for notice
to Noteholders of any event, or the mailing of any report to Noteholders, such
notice or report shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, certified mail return-receipt requested, or
sent by private courier or confirmed telecopy (with a copy of the telecopied
material sent to the recipient by overnight courier on the day of the telecopy)
to each Noteholder affected by such event or to whom such report is required to
be mailed, at his address as it appears in the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice or the mailing of such report. In any case where a notice or
report to Noteholders is mailed, neither the failure to mail such notice or
report, nor any defect in any notice or report so mailed, to any particular
Noteholder shall affect the sufficiency of such notice or report with respect to
other Noteholders. Where this Indenture or any Supplement provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Noteholders shall be filed
with the Indenture Trustee, but such filing shall not be a condition precedent
to the validity of any action taken in reliance upon such waiver.
(b) In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable to mail or
send notice to Noteholders, in accordance with Section 1.06(a), of any event or
any report to Noteholders when such notice or report is required to be delivered
pursuant to any provision of this Indenture or any Supplement, then such
notification or delivery as shall be made with the approval of the Indenture
Trustee shall
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constitute a sufficient notification for every purpose hereunder.
SECTION 1.07. Effect of Headings and Table of Contents.
The Article and Section headings herein and in the Table of
Contents are for convenience only and shall not affect the construction hereof.
SECTION 1.08. Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer
or the Indenture Trustee shall bind its respective successors and permitted
assigns, whether so expressed or not.
SECTION 1.09. Severability Clause.
In case any provision in this Indenture, any Supplement or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 1.10. Benefits of Indenture.
Nothing in this Indenture, any Supplement or in the Notes,
express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder, any separate trustee or co-trustee appointed under
Section 7.11 hereof and the holders of Notes, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 1.11. Governing Law.
This Indenture, any Supplement and the Notes shall be governed
by, and construed in accordance with, the laws of the State of [New York],
without regard to conflict of laws principles; provided that any provision of
this Indenture which relates to, or provides for, the rights, duties and
obligations of the Indenture Trustee shall be governed by, and construed in
accordance with, the laws of the State of _____________. This Indenture is not
subject to the Trust Indenture Act of 1939 and shall not be governed thereby or
construed in accordance therewith.
SECTION 1.12. Legal Holidays.
In any case where any Payment Date or the Stated Maturity Date
or any other date on which principal of or interest on any Note is proposed to
be paid shall not be a Business Day, then (notwithstanding any other provision
of
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this Indenture or of the Notes) such payment shall be made on the immediately
succeeding Business Day.
SECTION 1.13. Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
SECTION 1.14. Inspection.
The Issuer agrees that it will permit the representatives of
the Indenture Trustee or any Noteholder, during the Issuer's normal business
hours, to examine all of the books of account, records, reports and other papers
of the Issuer, to make copies thereof and extracts therefrom, to cause such
books to be audited by independent accountants selected by the Issuer and
reasonably acceptable to the Indenture Trustee or such Noteholder, as the case
may be, and to discuss its affairs, finances and accounts with its officers,
employees and independent accountants (and by this provision the Issuer hereby
authorizes its accountants to discuss with such representatives such affairs,
finances and accounts), all at such times and as often as may be reasonably
requested for the purpose of reviewing or evaluating the financial condition or
affairs of the Issuer or the performance of and compliance with the covenants
and undertakings of the Issuer in this Indenture, the Note Agreement, the
Receivables Acquisition Agreement, or any of the other documents referred to
herein or therein. Any expense incident to the exercise by the Indenture Trustee
or any Noteholder during the continuance of any Default or Indenture Event of
Default of any right under this Section 1.14 shall be borne by the Issuer, but
any expense due to the exercise of a right by any such Person prior to the
occurrence of a Default or Indenture Event of Default shall be borne by such
Person.
SECTION 1.15. Survival of Representations and Warranties.
The representations, warranties and certifications of the
Issuer made in this Indenture or in any certificate or other writing delivered
by the Issuer pursuant hereto shall survive the authentication and delivery of
the Notes hereunder, but unless explicitly provided to the contrary, they are
made only as of the Closing Date.
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ARTICLE II
THE NOTES
SECTION 2.01. General Provisions.
(a) The Notes issuable hereunder shall be issued as registered
Notes in no more than [three classes] as from time to time shall be authorized
by the Issuer on or before __________, 199__. The Notes of all classes shall be
known and entitled generally as the "Prudential Securities Secured Financing
Corporation Auto Receivables-Backed Notes." The Notes of each class shall have
further particular designation as the Issuer may adopt for each class, and each
Note issued hereunder shall bear upon the face thereof the designation so
adopted for the class to which it belongs. The Indenture Trustee is hereby
authorized and directed to authenticate and deliver Notes to be issued hereunder
in two classes entitled "_____% Auto Receivables-Backed Notes, [Class A]" and
"_____% Auto Receivables-Backed Notes, [Class B]", respectively. The Issuer may,
from time to time, subject to certain conditions precedent set forth in this
Article II, direct the issuance of the [third class] of Notes which will be
subordinate to the [Class A] Notes and to the [Class B] Notes by entering into a
Supplement. The form of each class of Notes and of the Indenture Trustee's
certificate of authentication shall be in substantially the forms set forth in
Exhibits A, B and C hereto, with such appropriate insertions, omissions,
substitutions, and other variations as are required or permitted by this
Indenture. The aggregate principal amount of Notes which may be authenticated
and delivered under this Indenture is limited to $_____________ (of which the
aggregate principal amount of the [Class A] Notes and the [Class B] Notes is
$_____________) except for Notes authenticated and delivered upon registration
of, transfer of, or in exchange for, or in lieu of, other Notes pursuant to
Section 2.03, 2.04, or 9.04. The [Class A] Notes shall be issuable only in
registered form and only in denominations of at least $_____________, provided
that the foregoing shall not restrict or prevent the transfer or issuance in
accordance with Sections 2.03 or 2.04 of any [Class A] Note having a remaining
outstanding principal amount of less than $_____________. The [Class B] Notes
shall be issuable only in registered form and only in denominations of at least
$_____________, provided that the foregoing shall not restrict or prevent the
transfer or issuance in accordance with Sections 2.03 or 2.04 of any [Class B]
Note having a remaining outstanding principal amount of less than
$_____________. [Class C] Notes, if any, shall be issued in the minimum
denominations indicated in the related Supplement.
(b) The aggregate amount of principal due and payable on each
class of Notes on each Payment Date shall be
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equal to the [Class A] Monthly Principal, the [Class B] Monthly Principal or the
[Class C] Monthly Principal, as applicable, with respect to such Payment Date.
Except (i) for Optional Redemption pursuant to Section 10.01, (ii) Prepayment
Amounts, (iii) Repurchase Amounts, (iv) prepayments from funds remaining in the
Pre-Funding Account, or (v) as otherwise provided in Section 6.02, no part of
the principal of any Note shall be paid prior to the Payment Date on which such
principal is due in accordance with the preceding provisions of this Section
2.01(b).
(c) If the [Class A] Monthly Principal, the [Class B] Monthly
Principal or the [Class C] Monthly Principal, as applicable, to be paid on the
Notes on any Payment Date includes any amount pursuant to clause (iii) of the
definition of the [Class A] Monthly Principal, the [Class B] Monthly Principal
or the [Class C] Monthly Principal, as applicable (other than any prepayment in
connection with casualty to Vehicles or a Defaulted Contract), there shall also
be paid to the Noteholders on such Payment Date a premium equal to the
Prepayment Premium with respect to such amount to be paid pursuant to such
clause (iii).
(d) Any amounts on deposit in the Pre-Funding Account after
the Final Additional Closing Date will be applied as a prepayment of the Notes
to the Noteholders on the next succeeding Payment Date in accordance with their
respective Class Percentages. If such prepayment is of an amount greater than
$_____________, a Prepayment Premium shall also be paid to the [Class A]
Noteholders and [Class B] Noteholders.
(e) Interest on the unpaid principal amount of each
Outstanding Note shall be payable on each Payment Date at the [Class A] Note
Rate, the [Class B] Note Rate or the [Class C] Note Rate, as applicable, for the
period from the Accrual Date, in the case of the [Class A] Notes and the [Class
B] Notes, and from and including the closing date thereof in the case of [Class
C] Notes or, in either case, such later date to which interest has been paid or
duly provided for, to such Payment Date. Interest on the Notes shall be computed
on the basis of a 360-day year of twelve 30-day months.
(f) All payments made with respect to any Note shall be made
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts and shall be
applied first to the interest then due and payable on such Notes, then to
Prepayment Premium, if any, and finally the principal thereof.
(g) All Notes of the same class issued under this Indenture or
any Supplement shall be in all respects equally and ratably entitled to the
benefits hereof and thereof
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without preference, priority or distinction on account of the actual time or
times of authentication and delivery, all in accordance with the terms and
provisions of this Indenture or any Supplement. Payments of principal, the
Prepayment Premium, if any, and interest on Notes of the same class shall be
made pro rata among all Outstanding Notes of such class, without preference or
priority of any kind.
SECTION 2.02. Execution, Authentication, Delivery, and Dating.
(a) The Notes shall be manually executed on behalf of the
Issuer by an Authorized Officer.
(b) Any Note bearing the signature of an individual who was at
the time of execution thereof a proper officer of the Issuer shall bind the
Issuer, notwithstanding that such individual ceases to hold such office prior to
the authentication and delivery of such Note or did not hold such office at the
date of such Note.
(c) No Note shall be entitled to any benefit under this
Indenture or any Supplement or be valid or obligatory for any purpose unless
there appears on such Note a certificate of authentication substantially in the
form provided for herein, executed by the Indenture Trustee by manual signature,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
Each Note shall be dated the date of its authentication.
(d) The Notes may from time to time be executed by the Issuer
and delivered to the Indenture Trustee for authentication together with an
Issuer Request to the Indenture Trustee directing the authentication and
delivery of such Notes and thereupon the same shall be authenticated and
delivered by the Indenture Trustee in accordance with such Issuer Request.
SECTION 2.03. Registration, Transfer and Exchange.
(a) The Issuer shall cause to be kept at the Corporate Trust
Office a register (the "Note Register") in which, subject to such reasonable
regulations as the Indenture Trustee may prescribe, the Issuer shall provide for
the registration of Notes and of transfers of Notes. The Indenture Trustee is
hereby appointed "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided.
(b) Upon surrender for registration of transfer of any Note at
the office of the Issuer designated pursuant to Section 8.02 for such purpose,
the Issuer shall execute and
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the Indenture Trustee upon request shall authenticate and deliver, in the name
of the designated transferee or transferees, one or more new Notes of the same
class, of any authorized denominations and of a like aggregate original
principal amount. The Indenture Trustee shall make a notation on any such new
Note of the amount of principal, if any, that has been paid on such Note and
shall make the appropriate entries in the Note Register.
(c) All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Issuer, evidencing the
same debt, and entitled to the same benefits under this Indenture and any
Supplement, as the Notes surrendered upon such registration of transfer or
exchange.
(d) Every Note presented or surrendered for registration of
transfer or for exchange shall (if so required by the Issuer or the Indenture
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Issuer and the Indenture Trustee duly executed, by
the holder thereof or his attorney duly authorized in writing.
(e) No service charge shall be made for any registration of
transfer or exchange of Notes, but the Issuer or the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 9.04 not involving
any transfer.
(f) Each prospective initial Noteholder acquiring a Note, each
prospective transferee acquiring a Note and each prospective owner of a
beneficial interest in Notes acquiring such beneficial interest (the prospective
initial Noteholder, the prospective transferee and the prospective beneficial
owner, each, a "Prospective Owner"), shall either (i) represent and warrant, in
writing, to the Issuer, the Trustee, the Servicer and any Successor Servicer
that the Prospective Owner is not an "employee benefit plan" within the meaning
of Section 3(3) of ERISA or a "plan" within the meaning of Section 4975(e)(1) of
the Code (any such plan or employee benefit plan, a "Plan") and the Prospective
Owner is not directly or indirectly acquiring the Note on behalf of, as
investment manager of, as named fiduciary of, as trustee of, or with assets of a
Plan, or (ii) furnish to the Issuer, the Indenture Trustee, the Servicer and any
Successor Servicer an opinion of counsel acceptable to the Issuer, the Indenture
Trustee, the Servicer and any Successor Servicer that (a) the proposed
acquisition or transfer will not cause any of the assets of the Issuer to be
deemed to be assets of a Plan, or (b) the proposed acquisition or transfer will
not cause the
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Issuer, the Indenture Trustee, the Servicer or any Successor Servicer to be a
fiduciary of a Plan within the meaning of Section 3(21) of ERISA and will not
give rise to a transaction described in Section 406 of ERISA or Section
4975(e)(1) of the Code for which a statutory or administrative exemption is
unavailable.
SECTION 2.04. Mutilated, Destroyed, Lost and Stolen Notes.
(a) If any mutilated Note is surrendered to the Indenture
Trustee, the Issuer shall execute and the Indenture Trustee shall authenticate
and deliver in exchange therefor a replacement Note of the same class, of like
tenor and principal amount and bearing a number not contemporaneously
outstanding.
(b) If there shall be delivered to the Issuer and the
Indenture Trustee (i) evidence to their satisfaction of the destruction, loss or
theft of any Note (provided, that any Noteholder's affidavit shall be sufficient
evidence for these purposes) and (ii) such security or indemnity as may be
required by them to save each of them and any agent of either of them harmless
(provided, that any institutional Noteholder's own unsecured agreement of
indemnity shall be sufficient for these purposes), then, in the absence of
actual notice to the Issuer or the Indenture Trustee that such Note has been
acquired by a bona fide purchaser, the Issuer shall execute and upon its request
the Indenture Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Note, a replacement Note of the same class, of like
tenor and principal amount and bearing a number not contemporaneously
outstanding.
(c) In case the final installment of principal on any such
mutilated, destroyed, lost or stolen Note has become or will at the next Payment
Date become due and payable, the Issuer in its discretion may, instead of
issuing a replacement Note, pay such Note.
(d) Upon the issuance of any replacement Note under this
Section, the Issuer or the Indenture Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed as
a result of the issuance of such replacement Note.
(e) Every replacement Note issued pursuant to this Section in
lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture and any
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Supplement equally and proportionately with any and all other Notes of the same
class, duly issued hereunder.
(f) The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.05. Delivery of [Class C] Notes.
(a) Upon delivery to the Indenture Trustee of an Officers'
Certificate of the Issuer (a) requesting the authentication of the [Class C]
Notes and (b) stating the date upon which such [Class C] Notes are to be issued
(such date, the "Issuance Date" and such notice, the "Issuance Notice") and
certifying the satisfaction of the conditions stated in this Section and Section
2.01, the Indenture Trustee shall, subject to Section 2.05(b), authenticate
pursuant to Section 2.02 and deliver to or upon the order of the Issuer on such
Issuance Date such [Class C] Notes. Any such [Class C] Note shall be
substantially in the form of Exhibit C hereto and shall bear, upon its face, the
designation for such class to which it belongs so selected by the Issuer and set
forth in the related Supplement. All [Class C] Notes shall be identical in all
respects except for the denominations thereof and shall be equally and ratably
entitled among themselves to the benefits of this Agreement and any Supplement
thereof without preference, priority or distinction on account of the actual
title or times of authentication and delivery, all in accordance with the terms
and provisions of this Agreement and such Supplement. Notwithstanding anything
contained in any Supplement, no [Class C] Notes issued pursuant to the
provisions of this Section shall adversely affect the method of allocating
Available Funds to [Class A] Notes or [Class B] Notes for any period over which
such [Class C] Notes shall be outstanding.
(b) On the Issuance Date, the Indenture Trustee shall
authenticate and deliver any such [Class C] Notes upon delivery to it of the
following: (i) a Supplement substantially in the form of ____________ and in
form reasonably satisfactory to the Indenture Trustee executed by the Issuer and
the Indenture Trustee and specifying the items provided in Section 2.05(c) and
any other terms (the "Principal Terms"), (ii) an Opinion of Counsel delivered by
outside counsel to the Issuer reasonably acceptable to the Indenture Trustee, to
the effect that (A) the newly issued [Class C] Notes would be treated as debt
for Federal income tax purposes under existing law, (B) immediately following
the issuance of the [Class C] Notes, the Outstanding [Class A] Notes and the
Outstanding [Class B] Notes will continue to be treated as debt for Federal
income tax purposes under existing law and (C) such issuance of the [Class C]
Notes will not have
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a material adverse tax effect on any Outstanding [Class A] Notes or Outstanding
[Class B] Notes, (iii) written confirmation from the Rating Agency that the
issuance of such [Class C] Notes will not result in the Rating Agency's reducing
or withdrawing its rating on the Outstanding [Class A] Notes or Outstanding
[Class B] Notes, (iv) such other closing documents, certificates and opinions of
counsel as may be required by the applicable Supplement. Notwithstanding the
foregoing, the Indenture Trustee shall not authenticate and deliver any [Class
C] Notes hereunder unless it also received on or prior to the Issuance Date, an
Officers' Certificate of the Issuer stating: (A) the [Class C] Percentage, which
percentage shall not exceed _____%, (B) the Initial [Class C] Note Balance, and
(C) the [Class C] Note Rate.
(c) Any Supplement relating to [Class C] Notes shall define or
make provision with respect to the [Class C] Notes to be issued pursuant thereto
including, but not limited to, the following Principal Terms: (i) the name or
designation of the [Class C] Notes, (ii) the Initial [Class C] Note Balance
thereof, (iii) the [Class C] Note Rate (or the formula for the determination
thereof, which may provide that such rate is a floating rate), (iv) the [Class
C] Percentage, (v) the Stated Maturity Date and (vi) the Redemption Price, if
any.
SECTION 2.06. Payment of Interest and Principal; Rights
Preserved.
(a) Any installment of interest or principal and Prepayment
Premium, if any, payable on any Note that is paid or duly provided for by the
Issuer on the applicable Payment Date shall be paid to the Person in whose name
such Note was registered at the close of business on the Record Date for such
Payment Date by wire transfer of federal funds to the account and number
specified in the Note Register on such Record Date for such Person (which shall
be, as to each original purchaser of the Notes, the account and number specified
on Exhibit A to the Note Agreement until such time as such purchaser notifies
the Indenture Trustee in writing of a change therein) or, if no such account or
number is so specified, then by check mailed to such Person's address as it
appears in the Note Register on such Record Date.
(b) All reductions in the principal amount of a Note effected
by payments of installments of principal made on any Payment Date shall be
binding upon all holders of such Note and of any Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof,
whether or not such payment is noted on such Note. All payments on the Notes
shall be paid without any requirement of presentment but each holder of any Note
shall be deemed to agree, by its
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acceptance of the same, to surrender such Note at the Corporate Trust Office
within ten Business Days following payment of the final installment of principal
of such Note.
SECTION 2.07. Persons Deemed Owners. Prior to due presentment
of a Note for registration or transfer, the Issuer, the Indenture Trustee, and
any agent of the Issuer or the Indenture Trustee may treat the Noteholder as the
owner of such Note for the purpose of receiving payment of principal of and
interest on such Note and for all other purposes whatsoever, whether or not such
Note be overdue, and neither the Issuer, the Indenture Trustee, nor any agent of
the Issuer or the Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.08. Cancellation. All Notes surrendered for
registration of transfer or exchange or following final payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Indenture
Trustee and shall be promptly cancelled by it. The Issuer may at any time
deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Notes held by the Indenture Trustee may be
disposed of in the normal course of its business or as directed by an Issuer
Order.
ARTICLE III
ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION
AND APPLICATION OF MONEYS; REPORTS
SECTION 3.01. Accounts; Investments by Indenture Trustee.
(a) On or before the Closing Date, the Indenture Trustee shall
establish in the name of the Indenture Trustee for the benefit of the
Noteholders and the Issuer to the extent of their interests therein as provided
in this Indenture and in the Receivables Acquisition Agreement, the following
accounts, which accounts shall be trust accounts maintained at the Corporate
Trust Office:
(i) Collection Account;
(ii) [Class A] Distribution Account;
(iii) [Class B] Distribution Account;
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(iv) [Class C] Distribution Account;
(v) Reserve Account;
(vi) Pre-Funding Account;
(vii) Capitalized Interest Account; and
(viii) Lockbox Account.
Each of such accounts shall be established and maintained as an Eligible
Account. Subject to the further provisions of this Section 3.01(a), the
Indenture Trustee shall, upon receipt or upon transfer from another account, as
the case may be, deposit into such accounts all amounts received by it which are
required to be deposited therein in accordance with the provisions of this
Indenture. All such amounts and all investments made with such amounts,
including all income and other gain from such investments, shall be held by the
Indenture Trustee in such accounts as part of the Trust Estate as herein
provided, subject to withdrawal by the Indenture Trustee in accordance with, and
for the purposes specified in the provisions of, this Indenture.
(b) Subject to Section 3.02, the Indenture Trustee shall hold
in trust but shall not be required to deposit in any account specified in
Section 3.01(a) any payment received by it until such time as the Indenture
Trustee shall have identified to its reasonable satisfaction the nature of such
payment and, on the basis thereof, the proper account or accounts into which
such payment is to be deposited. In determining into which of the accounts, if
any, referred to above any amount received by the Indenture Trustee is to be
deposited, the Indenture Trustee may conclusively rely (in the absence of bad
faith on the part of the Indenture Trustee) on the written instructions of the
Servicer. Subject to Section 3.02, unless otherwise advised in writing by the
Obligor making the payment or by the Servicer, the Indenture Trustee shall
assume that any amount remitted to it by such Obligor is to be deposited into
the Collection Account pursuant to Section 3.03. The Indenture Trustee may
establish from time to time such deadline or deadlines as it shall determine are
reasonable or necessary in the administration of the Trust Estate after which
all amounts received or collected by the Indenture Trustee on any day shall not
be deemed to have been received or collected until the next succeeding Business
Day.
(c) The Indenture Trustee shall have no right of set-off with
respect to the Lockbox Account, the Collection Account, the [Class A]
Distribution Account, the [Class B] Distribution Account, the [Class C]
Distribution Account, the Reserve Account, the Pre-Funding Account, the
Capitalized
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Interest Account or any investment therein, whether or not commingled.
(d) So long as no Default or Indenture Event of Default shall
have occurred and be continuing, the amounts in the Collection Account, the
Reserve Account, the Pre-Funding Account and the Capitalized Interest Account
shall be invested and reinvested by the Indenture Trustee pursuant to an
Issuer's Order or Servicer Order in one or more Eligible Investments. Subject to
the restrictions on the maturity of investments set forth in Section 3.01(f),
each such Issuer Order or Servicer Order may authorize the Indenture Trustee to
make the specific Eligible Investments set forth therein, to make Eligible
Investments from time to time consistent with the general instructions set forth
therein, or to make specific Eligible Investments pursuant to instructions
received in writing or by telegraph or facsimile transmission from the employees
or agents of the Issuer or the Servicer, as the case may be, identified therein,
in each case in such amounts as such Issuer Order or Servicer Order shall
specify. The Issuer agrees to report as income for financial reporting and tax
purposes (to the extent reportable) all investment earnings on amounts in the
Collection Account, the Reserve Account, the Pre-Funding Account, and the
Capitalized Interest Account.
(e) In the event that either (i) the Issuer or the Servicer,
as applicable, shall have failed to give investment directions to the Indenture
Trustee by [12:00 P.M. New York time] on any Business Day on which there may be
uninvested cash or (ii) a Default or Indenture Event of Default shall have
occurred and be continuing, then the Indenture Trustee shall promptly notify
each Noteholder of such fact and indicate that the Indenture Trustee is prepared
to invest such funds in one or more Eligible Investments in accordance with the
instructions of the holders of Notes evidencing more than [50%] of Voting
Rights. In the absence of such instructions, the Indenture Trustee shall invest
and reinvest the funds then in the Collection Account, the Reserve Account, the
Pre-Funding Account, or the Capitalized Interest Account, as the case may be, to
the fullest extent practicable in one or more Eligible Investments. All
investments made by the Indenture Trustee shall mature no later than the
maturity date therefor permitted by Section 3.01(f).
(f) No investment of any amount held in the Collection
Account, the Reserve Account, the Pre-Funding Account, or the Capitalized
Interest Account shall mature later than the Business Day immediately preceding
the Payment Date which is scheduled to occur immediately following the date of
investment. All income or other gains from the investment of moneys deposited in
the Collection Account, the Reserve Account, the Pre-Funding Account, or the
Capitalized
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Interest Account shall be deposited by the Indenture Trustee in such account
immediately upon receipt. Any net loss of principal (determined on a month by
month basis) resulting from such investment of amounts in the Collection
Account, the Reserve Account, the Pre-Funding Account, or the Capitalized
Interest Account shall be charged to the Issuer, and upon notice thereof by the
Indenture Trustee, the Issuer shall reimburse such account for such loss within
[three] Business Days.
(g) Any investment of any funds in the Collection Account, the
Reserve Account, the Pre-Funding Account, or the Capitalized Interest Account,
and any sale of any investment held in such accounts, shall be made under the
following terms and conditions:
(i) each such investment shall be made in the name of the
Indenture Trustee (in its capacity as such) or in the name of a nominee
of the Indenture Trustee;
(ii) the investment earnings of any investment shall be
credited to the account for which such investment was made;
(iii) any certificate or other instrument evidencing such
investment shall be delivered directly to the Indenture Trustee or its
agent and the Indenture Trustee shall have sole possession of such
instrument, and all income on such investment; and
(iv) the proceeds of any sale of an investment shall be
remitted by the purchaser thereof directly to the Indenture Trustee for
deposit in the account in which such investment was held.
(h) If any amounts are needed for disbursement from the
Collection Account, the Reserve Account, the Pre-Funding Account, or the
Capitalized Interest Account, and sufficient uninvested funds are not collected
and available therein to make such disbursement, in the absence of an Issuer
Order or Servicer Order for the liquidation of investments held therein in an
amount sufficient to provide the required funds, the Indenture Trustee shall
cause to be sold or otherwise converted to cash a sufficient amount of the
investments in such account selected by it in its absolute discretion and shall
not be liable for any loss resulting therefrom.
(i) The Indenture Trustee shall not in any way be held liable
by reason of any insufficiency in the Collection Account, the Reserve Account,
the Pre-Funding Account, or the Capitalized Interest Account, resulting from
losses on investments made in accordance with the provisions of this Section
3.01 (but the institution serving as Indenture Trustee
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shall at all times remain liable for its own debt obligations, if any,
constituting part of such investments). The Indenture Trustee shall not be
liable for any investment made by it in accordance with this Section 3.01 on the
grounds that it could have made a more favorable investment.
SECTION 3.02. Collection of Moneys; Lockbox Facility; Lockbox
Account.
(a) On or before the Closing Date, the Indenture Trustee shall
establish, in the name of the Indenture Trustee, a post office box (the "Lockbox
Facility") for the receipt directly from Obligors of all Contract Payments,
Excess Contract Receivables and Prepayment Amounts on or in respect of each
Contract. No Person other than the Indenture Trustee shall be permitted to have
access to such Lockbox Facility. On each Business Day, the Indenture Trustee
shall cause all items received in the Lockbox Facility since the preceding
Business Day to be deposited into an account maintained with the Indenture
Trustee in the name of (and under the sole control of) the Indenture Trustee
(the "Lockbox Account"). All Contract Payments, [Repurchase Amounts,] Prepayment
Amounts and other payments relating to a Contract received in the Lockbox
Facility and so deposited in the Lockbox Account shall constitute part of the
Trust Estate.
(b) The Indenture Trustee shall, on each Business Day on which
the Indenture Trustee receives a report from the Servicer pursuant to Section
_____ of the Receivables Acquisition Agreement (each such day, a "Required
Deposit Date"), in accordance with the information provided therein, withdraw
from the Lockbox Account and deposit in the Collection Account the Transaction
Payment Amount.
SECTION 3.03. Collection of Moneys. If at any time the Issuer
shall receive any payment on or in respect of any Contract or Vehicle, it shall
hold such payment in trust for the benefit of the Indenture Trustee and the
holders of the Notes, shall segregate such payment from the other property of
the Issuer, and shall, within one day of receipt, deliver such payment in the
form received (with any necessary endorsement) by it to the Indenture Trustee.
SECTION 3.04. Collection Account.
(a) The Indenture Trustee shall deposit the following into the
Collection Account:
(i) each Contract Payment received by the Indenture Trustee
in the Lockbox Facility or otherwise received by the Indenture Trustee,
including all Contract Payments deposited with the Indenture Trustee by
the
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Originator on the Closing Date pursuant to Section ________ of the Note
Agreement;
(ii) the amount of each Delinquency Payment or portion
thereof received by the Indenture Trustee (whether from the Servicer as
a Servicer Advance pursuant to Section ____ of the Receivables
Acquisition Agreement, from transfers from the Reserve Account, or from
a combination thereof);
(iii) the amount of each Default Payment or portion thereof
received by the Indenture Trustee (whether from transfers from the
Reserve Account or otherwise); and the proceeds of any repurchase of
Contracts and Vehicles pursuant to Section ________ of the Receivables
Acquisition Agreement;
(iv) each Prepayment Amount received in the Lockbox Facility
or otherwise received by the Indenture Trustee;
[(v) each Repurchase Amount received in the Lockbox Facility
or otherwise received by the Indenture Trustee;]
(vi) each Excess Contract Receivable received in the Lockbox
Facility or otherwise received by the Indenture Trustee;
(vii) any Insurance Proceeds received in the Lockbox Facility
or otherwise received by the Indenture Trustee;
(viii) the Pre-Funding Earnings, if any, on each Payment Date;
and
(ix) the Capitalized Interest Requirement, if any, on each
Payment Date from amounts on deposit in the Capitalized Interest
Account.
(b) Unless the Notes have been declared due and payable
pursuant to Section 6.02 and moneys collected by the Indenture Trustee are being
applied in accordance with Section 6.06, the Indenture Trustee shall on each
Payment Date withdraw and pay or cause to be paid all Available Funds and any
Reserve Account Payment deposited in the Collection Account (including any
investment income with respect to monies on deposit in the Collection Account)
the amounts required, for application in the following order of priority:
(i) to the Servicer, the Servicing Fee due to the Servicer
on such Payment Date and any unreimbursed
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Nonrecoverable Advances or Servicer Advances, with respect to Defaulted
Contracts;
(ii) to the [Class A] Distribution Account, in the
following order of priority, the sum of:
(a) the [Class A] Overdue Interest, if any;
(b) the [Class A] Monthly interest;
(c) the Prepayment Premium due to [Class A]
Noteholders on such Payment Date, if any;
(d) if such Payment Date follows the Final
Additional Closing Date, the product of (x)
the amount, if any, remaining in the
Pre-Funding Account on such Payment Date and
(y) the [Class A] Percentage;
(e) the [Class A] Overdue Principal, if any;
and
(f) the [Class A] Monthly Principal.
(iii) to the [Class B] Distribution Account, in the
following order of priority, the sum of:
(a) the [Class B] Overdue Interest, if any;
(b) the [Class B] Monthly Interest;
(c) the Prepayment Premium due to [Class B]
Noteholders on such Payment Date, if any;
(d) if such Payment Date follows the Final
Additional Closing Date, the product of (x)
the amount, if any, remaining in the
Pre-Funding Account on such Payment Date and
(y) the [Class B] Percentage;
(e) the [Class B] Overdue Principal, if any;
and
(f) the [Class B] Monthly Principal.
(iv) to the Reserve Account, an amount equal to the
excess, if any, of the Maximum Reserve Amount for the next succeeding
Payment Date over the amount on deposit in the Reserve Account (after
giving effect to any withdrawals from the Reserve Account on such
Payment Date);
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(v) to the [Class C] Distribution Account, in the
following order of priority, the sum of:
(a) the [Class C] Overdue Interest, if any;
(b) the [Class C] Monthly Interest;
(c) the Prepayment Premium due to [Class C]
Noteholders on such Payment Date, if any;
(d) if such Payment Date follows the Final
Additional Closing Date, the product of (x)
the amount, if any, remaining in the
Pre-Funding Account on such Payment Date and
(y) the [Class C] Percentage;
(e) the [Class C] Overdue Principal, if any;
and
(f) the [Class C] Monthly Principal;
provided, however, that if a Restricting Event shall have occurred and
be continuing on such Payment Date, any such amounts otherwise payable
under this clause (v) shall be deposited in the Reserve Account;
(vi) to the [Class A Noteholders], pro rata, the amount
then on deposit in the [Class A] Distribution Account;
(vii) to the [Class B Noteholders], pro rata, the amount
then on deposit in the [Class B] Distribution Account;
(viii) to the [Class C Noteholders], pro rata, the amount
then on deposit in the [Class C] Distribution Account; and
(ix) all remaining amounts in the Collection Account
shall be paid to the Issuer; provided, however, that if a Restricting
Event shall have occurred and be continuing on such Payment Date, any
such amounts otherwise payable under this clause (ix) shall be
deposited in the Reserve Account.
If at any time any amount or portion thereof previously distributed pursuant to
this Section 3.04(b) shall have been recovered, or shall be subject to recovery,
in any proceeding with respect to the Issuer or otherwise, then for purposes of
determining future distributions pursuant to this Section 3.04(b) such amount or
portion thereof shall be deemed not to have been previously so distributed. The
Indenture Trustee shall make no disbursal pursuant to any clause of this Section
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3.04 on any Payment Date if funds are not available after all prior payments are
made on such Payment Date.
SECTION 3.05. Reserve Account.
(a) On the Closing Date, the Issuer shall direct the Indenture
Trustee to deposit in the Reserve Account an amount equal to ________% of the
Initial Aggregate Balance from proceeds of the sale of the Offered Notes. On
each Payment Date, the Excess Collections shall be deposited in the Reserve
Account to the extent necessary, if any, to bring the balance in the Reserve
Account to the Maximum Reserve Amount.
(b) If by [12:00 noon, New York time], on the Business Day
preceding any Payment Date, Available Funds are insufficient to permit, on such
Payment Date, the distribution of all Required Payments under this Indenture,
then the Indenture Trustee shall transfer, not later than the end of such
Business Day, from the Reserve Account to the Collection Account such amount as
shall be necessary to make all Required Payments on such Payment Date.
(c) If at the time of any required transfer from the Reserve
Account to the Collection Account pursuant to Section 3.05(b) or any addition or
substitution of one or more Additional Contracts or Substitute Contracts
pursuant to Section ________ of the Receivables Acquisition Agreement, the
Indenture Trustee has been advised in writing by the Servicer that the Servicer
has made one or more Servicer Advances pursuant to Section ________ of the
Receivables Acquisition Agreement with respect to any Contract which has become
a Defaulted Contract for which the Servicer has not otherwise been reimbursed,
before transferring any funds from the Reserve Account to the Collection
Account, the Indenture Trustee shall first transfer from the amounts available
in the Reserve Account to the Servicer the amount of such advance or advances.
(d) On each Payment Date, funds on deposit in the Reserve
Account (after withdrawal of any Reserve Account Payment) in excess of the
Maximum Reserve Amount will be distributed to the [Class C] Distribution Account
to the extent of [Class C] Overdue Interest and [Class C] Overdue Principal and
any remainder shall be distributed to the Issuer in accordance with this
Indenture; provided, however, that if a Restricting Event exists on such Payment
Date, all funds on deposit in the Reserve Account (after withdrawal of any
Reserve Account Payment) shall remain in the Reserve Account, subject to use as
otherwise provided in this Section. If the amount on deposit in the Reserve
Account is insufficient to pay the Required Payments, no other assets will be
available on the related Payment Date for the payment of the deficiency. Upon
discharge of this Indenture, after all obligations to the
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Noteholders have been fully and irrevocably satisfied, any balance remaining in
the Reserve Account shall be paid to the Issuer.
SECTION 3.06. Pre-Funding Account.
(a) On the Closing Date, the Indenture Trustee shall deposit,
on behalf of the Noteholders, in the Pre-Funding Account the Original Pre-Funded
Amount in an amount equal to $_________ from the proceeds of the sale of the
Offered Notes.
(b) On any Additional Contract Transfer Date, the Issuer shall
instruct the Indenture Trustee to withdraw from the Pre-Funding Account an
amount equal to ___% of the Implicit Contract Balance of the Additional
Contracts sold to the Issuer on such Additional Contract Transfer Date and pay
such amount to the Originator upon an Issuer Order detailing satisfaction of the
conditions set forth in Section ________ of the Receivables Acquisition
Agreement with respect to such transfer.
(c) On each Payment Date through and including the Payment
Date immediately following the Final Additional Closing Date (or, if the Final
Additional Closing Date is also a Payment Date, then on the Final Additional
Closing Date), the Indenture Trustee shall transfer from the Pre-Funding Account
to the Collection Account the Pre-Funding Earnings, if any, applicable to each
such Payment Date.
(d) If the Pre-Funding Account has not been reduced to zero on
the Final Additional Closing Date, the Indenture Trustee, upon a Servicer Order,
shall withdraw from the Pre-Funding Account on such Final Additional Closing
Date the remaining Pre-Funded Amount on deposit in the Pre-Funding Account and
shall distribute such amounts on such Final Additional Closing Date to the
Noteholders, in accordance with their respective Class Percentages, as a
prepayment on the Notes. To the extent that such prepayment is of an amount
greater than $___________, a Prepayment Premium shall also be paid to the [Class
A Noteholders] and [Class B Noteholders] pursuant to Section 2.01(d) of this
Indenture.
SECTION 3.07. Capitalized Interest Account.
(a) On the Closing Date, the Indenture Trustee shall deposit
in the Capitalized Interest Account the Original Capitalized Interest Amount in
an amount equal to $_________ from the proceeds of the sale of the Offered
Notes.
(b) On each Payment Date through and including the Payment
Date immediately following the Final Additional Closing Date (or, if the Final
Additional Closing Date is also
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a Payment Date, then on the Final Additional Closing Date), the Indenture
Trustee shall transfer from the Capitalized Interest Account to the Collection
Account the Capitalized Interest Requirement for such Payment Date.
(c) On each Payment Date prior to the Final Additional Closing
Date, the Indenture Trustee, upon an Issuer Order, shall withdraw from the
Capitalized Interest Account and pay on such Payment Date to the Issuer the
Overfunded Interest Amount for such Payment Date.
(d) On the Payment Date following the Final Additional Closing
Date (or, if the Final Additional Closing Date is also a Payment Date, then on
the Final Additional Closing Date), any amounts remaining in the Capitalized
Interest Account, after taking into account the transfers on such Payment Date
described in clause (c) above, shall be paid to the Issuer on such Payment Date
and the Capitalized Interest Account shall be closed.
SECTION 3.08. Reserved.
SECTION 3.09. Reports by Indenture Trustee; Notices of Certain
Payments.
(a) The Indenture Trustee shall on each Business Day report to
the Originator and the Servicer the name of each Obligor from which any payment
has been received by the Indenture Trustee (in the Lockbox Facility or
otherwise) since the preceding report of the Indenture Trustee pursuant to this
Section 3.09(a), the amount of such payment, and (if such payment was
accompanied by information identifying the Contract or Contracts to which it
relates), the Contract or Contracts to which such payment relate.
(b) Concurrently with each payment to the Noteholders, the
Indenture Trustee shall mail to the Issuer, the Originator, the Servicer and
each Noteholder the following information:
(i) the Monthly Servicer Report furnished by the Servicer to
the Indenture Trustee following such Payment Date pursuant to Section
________ of the Receivables Acquisition Agreement (or if such report
has not been received, a written statement to such effect); and
(ii) the amount on deposit as of such Payment Date in the
Collection Account, the Reserve Account, the Pre-Funding Account and
the Capitalized Interest Account, in each case after giving effect to
all of the withdrawals and applications or transfers required on such
Payment Date pursuant to Article III.
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(c) The Indenture Trustee shall within [five] Business Days
after the request of the Issuer or the Servicer, deliver to the Issuer and the
Servicer a written report setting forth the amounts on deposit in the Collection
Account, the Reserve Account, Pre-Funding Account and the Capitalized Interest
Account, and identifying the investments included therein.
SECTION 3.10. Indenture Trustee May Rely on Certain
Information from Originator and Servicer.
Pursuant to Sections ________, ________ and ________ through
________ of the Receivables Acquisition Agreement, the Originator and the
Servicer are required to furnish to the Indenture Trustee from time to time
certain information and make various calculations which are relevant to the
performance of the Indenture Trustee's duties in this Article Three and in
Article Four of this Indenture. The Indenture Trustee shall be entitled to rely
in good faith on any such information and calculations in the performance of its
duties hereunder, (i) unless and until a Responsible Officer of the Indenture
Trustee has actual knowledge, or is advised by any Noteholder (either in writing
or orally with prompt written or telecopied confirmation), that such information
or calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information; provided that the Indenture Trustee shall verify, using
all available information, the [Class A] Monthly Principal, the [Class B]
Monthly Principal, the [Class C] Monthly Principal, the [Class A] Monthly
Interest, the [Class B] Monthly Interest, the [Class C] Monthly Interest and the
Prepayment Premium, if any, to be paid on each Payment Date.
ARTICLE IV
RELEASE OF CONTRACTS AND VEHICLES
SECTION 4.01. Release of Contracts and Vehicles Upon Final
Contract Payment. In the event that the Indenture Trustee shall have received
written certification from an Authorized Officer of the Servicer that the
Indenture Trustee has received from amounts paid by the Obligor or from the
proceeds of the Vehicle subject to any Contract (i) the final Contract Payment
due and payable under any Contract, or (ii) a Prepayment Amount in respect of
any Contract and, following such final Contract Payment or Prepayment Amount, no
further payments on or in respect of such Contract are or will be due and
payable, or (iii) the full amount of any Contract Default Pay-Through Amount
with respect to any Contract, such Contract and the Vehicle subject thereto
shall be released from the lien of this Indenture.
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SECTION 4.02. Release of Contracts and Vehicles Following
Substitution or Repurchase.
In the event that (i) the Originator shall have substituted a
Substitute Contract and the Vehicle subject thereto for a Predecessor Contract
and the Vehicle subject thereto in accordance with Section ________ of the
Receivables Acquisition Agreement, or (ii) the Originator shall have repurchased
a Contract and the related Vehicle in accordance with Section ________ of the
Receivables Acquisition Agreement, the Predecessor Contract, or the repurchased
Contract, and the Vehicle subject thereto shall be released from the lien of
this Indenture when the Indenture Trustee shall have received written
certification from an Authorized Officer of the Servicer that there are no
unreimbursed amounts drawn on the Reserve Account with respect to such Contract.
If there are such unreimbursed amounts any proceeds received with respect to
such Predecessor Contract and the related Vehicle shall be applied hereunder
only to the extent necessary to reimburse the Reserve Account for such amounts
drawn thereon and the balance of such proceeds, if any, shall be paid to, or as
directed by, the Originator.
SECTION 4.03. Execution of Documents.
The Indenture Trustee shall promptly execute and deliver such
documents (which shall be furnished to the Indenture Trustee by the Issuer) and
take such other actions as the Issuer, by Issuer Request, may reasonably request
to fully effectuate the release from this Indenture of any Contract and Vehicle
required to be so released pursuant to Sections 4.01 and 4.02.
ARTICLE V
SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER
SECTION 5.01. Servicer Events of Default.
If a Servicer Event of Default shall have occurred and be
continuing, the Indenture Trustee shall, upon the request of the holders of
Notes evidencing more than [50%] of Voting Rights, give notice in writing to the
Servicer of its termination as Servicer and shall act as substitute Servicer in
accordance with Section ________ of the Receivables Acquisition Agreement.
SECTION 5.02. Substitute Servicer.
Notwithstanding the provisions of Section 5.01, the Indenture
Trustee may, if it shall be unwilling to continue to act as the Successor
Servicer in accordance with Section 5.01
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or if it is unable to continue to so act, appoint a Successor Servicer in
accordance with the provisions of Section ________ of the Receivables
Acquisition Agreement.
SECTION 5.03. Notification to Noteholders.
Upon any termination of the Servicer or appointment of a
Successor Servicer, the Indenture Trustee shall give prompt notice of such
termination or appointment to each Noteholder in the manner provided herein.
ARTICLE VI
EVENTS OF DEFAULT; REMEDIES
SECTION 6.01. Events of Default.
"Indenture Event of Default," wherever used herein, means any
one of the following (whatever the reason for such Indenture Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(i) default in the payment of any principal of or interest
and premium, if any, upon any Outstanding Note when it becomes due and
payable;
(ii) default in the performance, or breach, of any covenant
set forth in Section 8.07(b), 8.07(e) and Section 8.08;
(iii) default in the performance, or breach, of any covenant
of the Issuer in this Indenture (other than a covenant default the
performance of which or breach of which is elsewhere in this Section
6.01 specifically dealt with), the Note Agreement or the Receivables
Acquisition Agreement and continuance of such default or breach for a
period of [30] days after the earliest of (A) any officer of the Issuer
first acquiring knowledge thereof, (B) the Indenture Trustee's giving
written notice thereof to the Issuer or (C) the holder of any Note
giving written notice thereof to the Issuer;
(iv) if any representation or warranty of the Issuer or the
Originator made in this Indenture, the Note Agreement or the
Receivables Acquisition Agreement or any other writing provided to the
Noteholders in connection with the foregoing documents shall prove to
be incorrect in any material respect as of the time when the same shall
have been made; provided, however, that the breach
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of any representation or warranty made by the Originator in Section
________ or ________ of the Receivables Acquisition Agreement with
respect to any of the Contracts or the Vehicle subject thereto shall
not constitute an Indenture Event of Default if the Originator
substitutes one or more Substitute Contracts and the Vehicle subject
thereto for such Contract and Vehicle in accordance with Section
________ of the Receivables Acquisition Agreement or repurchases a
Contract and the related Vehicle in accordance with Section ________ of
the Receivables Acquisition Agreement;
(v) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Issuer in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law or (B) a
decree or order adjudging the Issuer a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of or in respect of the Issuer
under any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator, or other similar
official of the Issuer or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days;
(vi) the commencement by the Issuer of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the consent
by it to the entry of a decree or order for relief in respect of the
Issuer in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization, or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable
federal or state law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator, or similar
official of the Issuer or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
Issuer's failure to pay its debts generally as they become due, or the
taking of corporate action by the Issuer in furtherance of any such
action; or
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(vii) the rendering against the Issuer of a final judgment, decree
or order for the payment of money in excess of [$10,000] and the
continuance of such judgment, decree or order unsatisfied for any
period of [60] consecutive days without a stay of execution.
SECTION 6.02. Acceleration of Maturity; Rescission and
Annulment.
(a) If an Indenture Event of Default of the kind specified in
clauses (v) or (vi) of Section 6.01 occurs, the unpaid principal amount of the
Notes shall automatically become due and payable at par together with all
accrued and unpaid interest thereon, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Issuer. If an
Indenture Event of Default (other than an Indenture Event of Default of the kind
described in clauses (v) or (vi) of Section 6.01) occurs and is continuing, then
and in every such case the Indenture Trustee or the holders of Notes evidencing
not less than [66-2/3%] of Voting Rights may declare the unpaid principal amount
of all the Notes to be due and payable immediately, by a notice in writing to
the Issuer (and to the Indenture Trustee if given by the Noteholders), and upon
any such declaration such principal amount shall become immediately due and
payable together with all accrued and unpaid interest thereon, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Issuer.
(b) At any time after such a declaration of acceleration has
been made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article provided, the
holders of Notes evidencing not less than [33-1/3%] of Voting Rights, by written
notice to the Issuer and the Indenture Trustee, may rescind and annul such
declaration and its consequences if:
(i) the Issuer has paid or deposited with the
Indenture Trustee a sum sufficient to pay:
(A) all principal of and premium, if any, of any
Notes which have become due otherwise than by such declaration
of acceleration and interest thereon from the date when the
same first became due at the applicable Note Rate plus _____
basis points,
(B) all interest which has became due with respect to
the Notes and, to the extent that payment of such interest is
lawful, interest upon overdue interest from the date when the
same first became due at a rate per annum equal to the
applicable Note Rate plus _____ basis points, and
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(C) all sums paid or advanced by the Indenture
Trustee hereunder and the reasonable compensation, expenses,
disbursements, and advances of the Indenture Trustee, its
agents and counsel; and
(ii) all Indenture Events of Default, other than the
non-payment of the aggregate principal amount of the Notes which has
become due solely by such declaration of acceleration, have been cured
or waived as provided in Section 6.13.
No such rescission shall affect any subsequent Indenture Event of Default or
impair any right consequent thereon.
SECTION 6.03. Remedies.
(a) If an Indenture Event of Default occurs and is continuing
of which a Responsible Officer has actual knowledge, the Indenture Trustee shall
give notice to each Noteholder as set forth in Section 7.02 and shall solicit
the Noteholders for advice. The Indenture Trustee shall then take such action,
if any, as may be directed by the holders of Notes evidencing not less than
[66-2/3%] of Voting Rights.
(b) Following any acceleration of the Notes, the Indenture
Trustee shall have all of the rights, powers and remedies with respect to the
Trust Estate as are available to secured parties under the Uniform Commercial
Code or other applicable law. Such rights, powers and remedies may be exercised
by the Indenture Trustee in its own name as trustee of an express trust.
SECTION 6.04. Indenture Trustee May File Proofs of Claim.
(a) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition,
or other judicial proceeding relative to the Issuer, the Originator, the
Servicer or any other obligor upon the Notes or the other obligations secured
hereby or relating to the property of the Issuer, the Originator, the Servicer
or of such other obligor or their creditors, the Indenture Trustee (irrespective
of whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Indenture Trustee shall have made any demand on the Issuer, the Originator or
the Servicer for the payment of overdue principal or overdue interest or any
such other obligation) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
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(i) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the Notes and any
other obligation secured hereby and to file such other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Indenture
Trustee, its agents and counsel) and of the Noteholders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator, or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder to make such payments to the Indenture Trustee and, in the event
that the Indenture Trustee shall consent to the making of such payments directly
to the Noteholders to pay to the Indenture Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee, its agents and counsel, and any other amounts due the Indenture Trustee
under Section 7.06.
(b) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any holder thereof or to authorize the
Indenture Trustee to vote in respect of the claim of any Noteholder in any such
proceeding.
SECTION 6.05. Indenture Trustee May Enforce Claims Without
Possession of Notes.
All rights of action and claims under this Indenture or the
Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Indenture Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee, its
agents and counsel, be for the ratable benefit of the holders of the Notes in
respect of which such judgment has been recovered.
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SECTION 6.06. Application of Money Collected.
Any money collected by the Indenture Trustee pursuant to this
Article, and any moneys that may then be held or thereafter received by the
Indenture Trustee, shall be applied in the following order, at the date or dates
fixed by the Indenture Trustee and, in case of the distribution of the entire
amount due on account of principal or interest, upon presentation of the Notes
and surrender thereof:
first, to the payment of all costs and expenses of collection
incurred by the Indenture Trustee (including the reasonable fees and
expenses of any counsel to the Indenture Trustee) and all other amounts
due the Indenture Trustee under Section 7.06 and, after such costs and
expenses incurred by the Indenture Trustee have been paid, then to the
payment of any such costs and expenses incurred by the Noteholders;
second, to the payment of all unreimbursed Servicer Advances
and Servicing Fees then due to such Person;
third, to the payment of all accrued and unpaid interest on
the Outstanding [Class A] Note Balance to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the date such
installment was due to the date of payment thereof at the rate per
annum equal to the [Class A] Note Rate plus ________ basis points, all
such amounts to be paid ratably among the [Class A] Notes, without
preference or priority of any kind;
fourth, to the payment of the Outstanding [Class A] Note
Balance and any other amounts due to the [Class A] Noteholders ratably,
without preference or priority of any kind;
fifth, to the payment of all accrued and unpaid interest on
the Outstanding [Class B] Note Balance to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the date such
installment was due to the date of payment thereof at the rate per
annum equal to the [Class B] Note Rate plus ________ basis points, all
such amounts to be paid ratably among the [Class B] Notes, without
preference or priority of any kind;
sixth, to the payment of the Outstanding [Class B] Note
Balance and any other amounts due to the [Class B] Noteholders ratably,
without preference or priority of any kind;
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seventh, to the payment of all accrued and unpaid interest on
the Outstanding [Class C] Note Balance to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the date such
installment was due to the date of payment thereof at the rate per
annum equal to the [Class C] Note Rate plus ________ basis points, all
such amounts to be paid ratably among the [Class C] Notes, without
preference or priority of any kind;
eighth, to the payment of the Outstanding [Class C] Note
Balance and any other amounts due to the [Class C] Noteholders ratably,
without preference or priority of any kind; and
ninth, to the payment of the remainder, if any, to or at the
order of the Issuer.
SECTION 6.07. Limitation on Suits.
The holder of any Note shall not have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(i) such Noteholder has previously given written notice to
the Indenture Trustee of a continuing Indenture Event of Default;
(ii) the holders of Notes evidencing not less than ________%
of Voting Rights shall have made written request to the Indenture
Trustee to institute proceedings in respect of such Indenture Event of
Default in its own name as Indenture Trustee hereunder;
(iii) such Noteholder or Noteholders have offered to the
Indenture Trustee adequate indemnity (which the Indenture Trustee
agrees, in the case of each of the original purchasers of the Notes,
need only be the written promise of such Person) against the costs,
expenses and liabilities to be incurred in compliance with such
request;
(iv) the Indenture Trustee for [60] days after its receipt of
such notice, request and offer of indemnity has failed to institute any
such proceeding; and
(v) so long as any of the Notes remain Outstanding, no
direction inconsistent with such written request has been given to the
Indenture Trustee during such [60-day] period by the holders of Notes
evidencing more than [50%] of Voting Rights;
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it being understood and intended that no one or more Noteholder shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb, or prejudice the rights of any other
Noteholder, or to obtain or to seek to obtain priority or preference over any
other Noteholder or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Noteholders.
SECTION 6.08. Unconditional Right of Noteholders to Receive
Payment.
Notwithstanding any other provision in this Indenture, other
than the provisions hereof establishing priorities of payment or limiting the
right to recover amounts due on the Notes to recoveries from the property of the
Trust Estate, the holder of any Note shall have the absolute and unconditional
right to receive payment of the principal of and interest on such Note on the
Payment Dates for such payments, including the Stated Maturity Date, and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Noteholder.
SECTION 6.09. Restoration of Rights and Remedies.
If the Indenture Trustee or any Noteholder has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Indenture Trustee or to such Noteholder, then and in
every such case, subject to any determination in such proceeding, the Issuer,
the Indenture Trustee and the Noteholders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Indenture Trustee and the Noteholders shall continue as though
no such proceeding had been instituted.
SECTION 6.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost, or stolen Notes in the last paragraph
of Section 2.04, no right or remedy herein conferred upon or reserved to the
Indenture Trustee or to the Noteholders is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
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SECTION 6.11. Delay or Omission Not Waiver.
No delay or omission of the Indenture Trustee or of any holder
of any Note to exercise any right or remedy accruing upon any Indenture Event of
Default shall impair any such right or remedy or constitute a waiver of any such
Indenture Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Indenture Trustee or to the Noteholders
may be exercised from time to time, and as often as may be deemed expedient, by
the Indenture Trustee or by the Noteholders, as the case may be.
SECTION 6.12. Control by Noteholders.
Except as provided in Sections 4.01 and 5.01, until such time
as the conditions specified in Sections 11.01(a)(i) and (ii) have been satisfied
in full, the holders of Notes evidencing not less than [________%] of Voting
Rights shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee or exercising
any trust or power conferred on the Indenture Trustee. Notwithstanding the
foregoing:
(i) no such direction shall be in conflict with any rule of
law or with this Indenture;
(ii) any direction to the Indenture Trustee by the
Noteholders to undertake a private sale of the Trust Estate shall be by
the holders of Notes evidencing ________% of the Voting Rights, unless
the condition set forth in Section 6.15(b)(ii) is met;
(iii) the Indenture Trustee shall not be required to follow
any such direction which the Indenture Trustee reasonably believes may
be prejudicial to any Noteholder not joining in such direction or which
the Indenture Trustee reasonably believes might result in any personal
liability on the part of the Indenture Trustee for which the Indenture
Trustee is not adequately indemnified;
(iv) the Indenture Trustee shall not undertake a private sale
of the Trust Estate unless the conditions set forth in Section 6.15(b)
are met; and
(v) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee which is not inconsistent with any such
direction; provided, that the Indenture Trustee shall give notice of
any such action to each Noteholder.
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SECTION 6.13. Waiver of Events of Default.
(a) The holders of Notes evidencing not less than [66-2/3%] of
Voting Rights may, by one or more instruments in writing, waive any Indenture
Event of Default hereunder and its consequences, except a continuing Indenture
Event of Default:
(i) in respect of the payment of the principal of or premium
or interest on any Outstanding Note (which may only be waived by the
holder of such Note), or
(ii) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
holder of each Outstanding Note affected (which only may be waived by
the holders of all Outstanding Notes affected).
(b) A copy of each waiver pursuant to Section 6.13(a) shall be
furnished by the Issuer to the Indenture Trustee. Upon any such waiver, such
Indenture Event of Default shall cease to exist and shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Indenture Event of Default or impair any right
consequent thereon.
SECTION 6.14. Waiver of Stay or Extension Laws.
The Issuer covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Issuer (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Indenture Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 6.15. Sale of Trust Estate.
(a) The power to effect any sale of any portion of the Trust
Estate pursuant to Section 6.03 shall not be exhausted by any one or more sales
as to any portion of the Trust Estate remaining unsold, but shall continue
unimpaired until the entire Trust Estate shall have been sold or all amounts
payable on the Notes shall have been paid. The Indenture Trustee may from time
to time postpone any public sale by public announcement made at the time and
place of such sale.
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(b) To the extent permitted by applicable law, the Indenture
Trustee shall not in any private sale sell to a third party the Trust Estate, or
any portion thereof unless either (i) the holders of Notes evidencing 100% of
the Voting Rights consent to or direct the Indenture Trustee to make such sale;
or (ii) the proceeds of such sale would be not less than the sum of all amounts
due to the Indenture Trustee hereunder and the entire unpaid principal amount of
the Notes and the Prepayment Premium, if any, and interest due or to become due
thereon in accordance with Section 6.06 on the Payment Date next succeeding the
date of such sale.
The Indenture Trustee may not purchase all or any portion of
the Trust Estate at a private sale.
(c) In connection with a sale of all or any portion of the
Trust Estate:
(i) any one or more Noteholders may bid for and purchase the
property offered for sale, and upon compliance with the terms of sale
may hold, retain, and possess and dispose of such property, without
further accountability, and any Noteholder may, in paying the purchase
money therefor, deliver in lieu of cash any Outstanding Notes or claims
for interest thereon for credit in the amount that shall, upon
distribution of the net proceeds of such sale, be payable thereon, and
such Notes, in case the amounts so payable thereon shall be less than
the amount due thereon, shall be returned to the Noteholders after
being appropriately stamped to show such partial payment;
(ii) the Indenture Trustee may not bid for and acquire the
property offered for sale in connection with any public sale thereof;
(iii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Trust Estate in connection with a sale thereof;
(iv) the Indenture Trustee is hereby irrevocably appointed
the agent and attorney-in-fact of the Issuer to transfer and convey its
interest in any portion of the Trust Estate in connection with a sale
thereof, and to take all action necessary to effect such sale; and
(v) no purchaser or transferee at such a sale shall be bound
to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of
any moneys.
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(d) The method, manner, time, place and terms of any sale
of all or any portion of the Trust Estate shall be commercially reasonable.
(e) The provisions of this Section 6.15 shall not be construed
to restrict the ability of the Indenture Trustee to exercise any rights and
powers against the Issuer or the Trust Estate that are vested in the Indenture
Trustee by this Indenture, including, without limitation, the power of the
Indenture Trustee to proceed against the collateral subject to the lien of this
Indenture and to institute judicial proceedings for the collection of any
deficiency remaining thereafter.
ARTICLE VII
THE INDENTURE TRUSTEE
SECTION 7.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Indenture Event of
Default known to the Indenture Trustee,
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; but in the case of any such
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Indenture Trustee, the Indenture
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture.
(b) In case an Indenture Event of Default has occurred and is
continuing to the actual knowledge of a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Indenture Trustee from liability for
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its own negligent action, its own negligent failure to act, or its own wilful
misconduct, except that:
(i) this subsection shall not be construed to limit the
effect of subsection (a) of this Section;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Indenture Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Noteholders in accordance with
Section 6.12 relating to the time, method, and place of conducting any
proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee,
under this Indenture; and
(iv) no provision of this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Indenture Trustee (solely in its role as
Indenture Trustee and not in its role as substitute Servicer) shall be subject
to the provisions of this Section.
SECTION 7.02. Notice of Defaults or Events of Default.
Within two Business Days after a Responsible Officer obtains
knowledge of the occurrence of any Default or Indenture Event of Default
hereunder or Servicer Event of Default under the Receivables Acquisition
Agreement, the Indenture Trustee shall transmit by facsimile (if a facsimile
number is reasonably obtainable by the Indenture Trustee), with a copy by
registered mail, to all Noteholders, as their names, addresses and facsimile
numbers appear in the Note Register, the Issuer, the Servicer and the Originator
notice of such Default, Indenture Event of Default or Servicer Event of Default
hereunder known to the Indenture Trustee, unless such Default, Indenture Event
of Default or Servicer Event of Default shall have been cured or waived.
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SECTION 7.03. Certain Rights of Indenture Trustee.
Subject to the provisions of Section 7.01:
(i) the Indenture Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, note, debenture, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(ii) any request or direction of the Issuer mentioned herein
shall be sufficiently evidenced by an Issuer Request or Issuer Order
and any action of the Issuer may be sufficiently evidenced by an Issuer
Order;
(iii) whenever in the administration of this Indenture the
Indenture Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Indenture Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(iv) the Indenture Trustee may consult with counsel as to
legal matters and the written advice of any such counsel selected and
supervised by the Indenture Trustee with due care shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(v) the Indenture Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at
the request or direction of any of the Noteholders pursuant to this
Indenture, unless such Noteholders shall have offered to the Indenture
Trustee reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in compliance with such
request or direction;
(vi) the Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, note, debenture, other evidence of
indebtedness, or other paper or document, but the Indenture Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Indenture Trustee
shall determine to make such further inquiry or investigation, it shall
be
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entitled to examine the books, records and premises of the Issuer,
personally or by agent or attorney; and
(vii) the Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed and supervised with due care by it hereunder.
SECTION 7.04. Not Responsible for Recitals or Issuance of
Notes.
The recitals contained herein and in the Notes, except the
Indenture Trustee's certificates of authentication, shall be taken as the
statements of the Issuer, and the Indenture Trustee assumes no responsibility
for their correctness. The Indenture Trustee makes no representations as to the
validity or sufficiency of this Indenture or of the Notes. The Indenture Trustee
shall not be accountable for the use or application by the Issuer of the
proceeds of the Notes.
SECTION 7.05. Money Held in Trust.
Money and investments held by the Indenture Trustee shall be
held in trust in one or more trust accounts as required hereunder.
SECTION 7.06. Compensation, Reimbursement, etc.
The Issuer agrees:
(i) to pay to the Indenture Trustee from time to time such
compensation for all services rendered by it hereunder as the Issuer
and the Indenture Trustee have agreed in writing prior to the Closing
Date (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust), such
payment to be made independent of the other payment obligations of the
Issuer hereunder; and
(ii) except as otherwise expressly provided herein, to
reimburse the Indenture Trustee upon its request for all reasonable
expenses, disbursements, and advances incurred or made by the Indenture
Trustee in accordance with any provision of this Indenture (including
the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement, or advance
as may be attributable to its negligence or bad faith.
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SECTION 7.07. Corporate Indenture Trustee Required;
Eligibility.
There shall at all times be an Indenture Trustee hereunder
which (i) shall be a corporation organized and doing business under the laws of
the United States of America, any state thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers; (ii) shall have a
combined capital and surplus of at least [$250,000,000] or be a wholly owned
subsidiary of a bank holding company having such a capital and surplus; (iii)
shall be subject to supervision or examination by federal or state authority;
(iv) at the time of appointment, shall have commercial paper or other short-term
debt obligations (or, if the Indenture Trustee does not have outstanding
commercial paper or other short-term obligations and is a subsidiary of a
holding company, which holding company shall have commercial paper or other
short term obligations) having either of the two highest short-term credit
ratings available from the Rating Agency (or if the Rating Agency does not rate
such obligations, its equivalent from one other nationally recognized rating
agency); and (v) shall not be affiliated (as such term is defined in Rule 405
under the Securities Act of 1933, as amended) with the Issuer or with any Person
involved in the organization or operation of the Issuer. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Indenture Trustee shall
cease to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
SECTION 7.08. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 7.09.
(b) The Indenture Trustee may resign for cause at any time by
giving written notice thereof to the Issuer and by mailing notice of resignation
by first-class mail, postage prepaid, to the Noteholders at their addresses
appearing on the Note Register.
(c) The Indenture Trustee may be removed at any time by Act of
the holders of Notes evidencing more than [50%]
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of Voting Rights, delivered to the Indenture Trustee and the Issuer.
(d) If the Indenture Trustee shall resign, be removed, or
become incapable of acting, or if a vacancy shall occur in the office of
Indenture Trustee for any cause, the Issuer, with the consent of the holders of
Notes evidencing not less than [66-2/3%] of Voting Rights, by an act of the
Issuer, shall promptly appoint a successor Indenture Trustee.
(e) If no successor Indenture Trustee shall have been so
appointed by the Issuer as hereinbefore provided and accepted appointment in the
manner hereinafter provided within 30 days after any such resignation or
removal, existence of incapability, or occurrence of such vacancy, the Indenture
Trustee or any Noteholder may petition any court of competent jurisdiction for
the appointment of a successor Indenture Trustee.
(f) The Issuer shall give notice of each resignation and each
removal of the Indenture Trustee and each appointment of a successor Indenture
Trustee by mailing written notice of such event by first-class mail, postage
prepaid, to all Noteholders, as their names and addresses appear in the Note
Register. Each notice shall include the name of the successor Indenture Trustee
and the address of its Corporate Trust Office.
SECTION 7.09. Acceptance of Appointment by Successor.
(a) Every successor Indenture Trustee appointed hereunder
shall execute, acknowledge and deliver to the Issuer and to the retiring
Indenture Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective
and such successor Indenture Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Indenture Trustee; but, on request of the Issuer or the
successor Indenture Trustee, such retiring Indenture Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such successor
Indenture Trustee all the rights, powers and trusts of the retiring Indenture
Trustee and shall duly assign, transfer and deliver to such successor Indenture
Trustee all property and money held by such retiring Indenture Trustee
hereunder. Upon request of any such successor Indenture Trustee, the Issuer
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Indenture Trustee all such rights, powers and
trusts.
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(b) No successor Indenture Trustee shall accept its
appointment unless at the time of such acceptance such successor Indenture
Trustee shall be qualified and eligible under this Article.
SECTION 7.10. Merger, Conversion, Consolidation or Succession
to Business.
Any Person into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which the Indenture Trustee shall be a
party, or any Person succeeding to all or substantially all the corporate trust
business of the Indenture Trustee, shall be the successor of the Indenture
Trustee hereunder, provided such Person shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Notes shall
have been authenticated, but not delivered, by the Indenture Trustee then in
office, any successor by merger, conversion, or consolidation to such
authenticating Indenture Trustee may adopt such authentication and deliver the
Notes so authenticated with the same effect as if such successor Indenture
Trustee had itself authenticated such Notes.
SECTION 7.11. Co-trustees and Separate Indenture Trustees.
(a) At any time or times, for the purpose of meeting the legal
requirements of any jurisdiction in which any of the Trust Estate may at the
time be located, the Issuer and the Indenture Trustee shall have power to
appoint, and, upon the written request of the Indenture Trustee, the holders of
Notes evidencing more than [50%] of Voting Rights, the Issuer shall for such
purpose join with the Indenture Trustee in the execution, delivery, and
performance of all instruments and agreements necessary or proper to appoint one
or more Persons approved by the Indenture Trustee either to act as co-trustee,
jointly with the Indenture Trustee, of all or any part of such Trust Estate, or
to act as separate trustee of any such property, in either case with such powers
as may be provided in the instrument of appointment, and to vest in such Person
or Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If the
Issuer does not join in such appointment within [15] days after the receipt by
it of a request so to do, or in case an Indenture Event of Default has occurred
and is continuing, the Indenture Trustee alone shall have power to make such
appointment.
(b) Should any written instrument from the Issuer be required
by any co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate
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trustee such property, title, right, or power, any and all such instruments
shall, on request, be executed, acknowledged and delivered by the Issuer.
(c) Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the following
terms:
(i) The Notes shall be authenticated and delivered and all
rights, powers, duties, and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Indenture Trustee
hereunder, shall be exercised solely by the Indenture Trustee.
(ii) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Indenture Trustee in respect of any
property covered by such appointment shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee or by the Indenture
Trustee and such co-trustee or separate trustee jointly, as shall be
provided in the instrument appointing such co-trustee or separate
trustee, except to the extent that, under any law of any jurisdiction
in which any particular act is to be performed, the Indenture Trustee
shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee.
(iii) The Indenture Trustee at any time, by an instrument in
writing executed by it, with the concurrence of the Issuer evidenced by
an Issuer Order, may accept the resignation of or remove any co-trustee
or separate trustee appointed under this Section, and, in case an
Indenture Event of Default has occurred and is continuing, the
Indenture Trustee shall have power to accept the resignation of, or
remove, any such co-trustee or separate trustee without the concurrence
of the Issuer. Upon the written request of the Indenture Trustee, the
Issuer shall join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to
effectuate such resignation or removal. A successor to any co-trustee
or separate trustee so resigned or removed may be appointed in the
manner provided in this Section.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Indenture
Trustee or any other such trustee hereunder and the Indenture Trustee
shall not be personally liable by reason of any act or omission of any
co-trustee or other such separate trustee hereunder
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selected and supervised by the Indenture Trustee with due care or
appointed in accordance with directions to the Indenture Trustee
pursuant to Section 6.12.
(v) Any Act of Noteholders delivered to the Indenture
Trustee shall be deemed to have been delivered to each such co-trustee
and separate trustee.
SECTION 7.12. Indenture Trustee to Hold Contracts.
The Indenture Trustee shall hold the sole original, manually
executed counterpart of each Contract that constitutes chattel paper, together
with any documents relating thereto that may from time to time be delivered to
the Indenture Trustee, until such time as such Contract is released from the
lien of this Indenture pursuant to the provisions hereof.
SECTION 7.13. Request for Opinion of Counsel.
By its execution of this Indenture, the Indenture Trustee
specifically requests [counsel], the Indenture Trustee's special counsel in
connection with the transactions contemplated hereby, to prepare and deliver to
each initial purchaser of the Offered Notes the closing opinion contemplated by
Section ____ of the Note Agreement.
SECTION 7.14. Financing Statements.
The Indenture Trustee shall execute such Financing Statements
and continuation statements as shall be necessary and shall furnish the Servicer
with any powers of attorney or other documents necessary or appropriate to
enable the Servicer to fulfill its obligations under Section ______ of the
Receivables Acquisition Agreement and to carry out its servicing and
administration duties under the Receivables Acquisition Agreement.
SECTION 7.15. Power of Attorney.
The Issuer hereby grants to the Indenture Trustee the power as
its attorney-in-fact to file Financing Statements in the appropriate offices
evidencing the conveyance of the Contracts and related Vehicles, and proceeds
thereof, to the Indenture Trustee for the benefit of the Noteholders, and to do
any and all other acts as may be necessary or appropriate to effect the
transaction contemplated herein and in the Receivables Acquisition Agreement and
the Note Agreement. The Issuer will execute any document or instrument deemed
necessary by the Indenture Trustee to effect or to evidence this power of
attorney. All costs associated with such filing or instructions shall be paid by
the Issuer.
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ARTICLE VIII
COVENANTS
SECTION 8.01. Payment of Principal and Interest.
The Issuer will duly and punctually pay the principal of and
interest and premium, if any, on the Notes in accordance with the terms of the
Notes and this Indenture.
SECTION 8.02. Maintenance of Office or Agency; Chief Executive
Office.
(a) The Issuer will maintain in the State of _________________
an office or agency where notices and demands to or upon the Issuer in respect
of the Notes and this Indenture may be served.
(b) The chief executive office of the Issuer, and the office
at which the Issuer maintains its records with respect to the Contracts, the
Vehicles, and the transactions contemplated hereby, is located in
____________________. The Issuer will not change the location of such office
without giving the Indenture Trustee and each Noteholder at least 60 days' prior
written notice thereof.
SECTION 8.03. Money for Payments to Noteholders to be Held in
Trust.
(a) All payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection
Account, the Reserve Account, the Pre-Funding Account or the Capitalized
Interest Account pursuant to Section 3.04(b) or Section 6.06 shall be made on
behalf of the Issuer by the Indenture Trustee, and no amounts so withdrawn from
the Collection Account, the Reserve Account, the Pre-Funding Account or the
Capitalized Interest Account for payments of Notes shall be paid over to the
Issuer under any circumstances except as provided in this Section 8.03 or in
Sections 3.04, 3.05, 3.06, 3.07 or 6.06.
(b) In making payments hereunder, the Indenture Trustee will:
(i) allocate all sums received for payment to the
Noteholders on each Payment Date among such Noteholders in accordance
with Section 3.04(b) hereof;
(ii) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as
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herein provided and pay such sums to such Persons as herein provided;
and
(iii) comply with all requirements of the Internal Revenue
Code of 1986, as amended (or any successor statutes), and all
regulations thereunder, with respect to the withholding from any
payments made by it on any Notes of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
(c) Except as required by applicable law, any money held by
the Indenture Trustee in trust for the payment of any amount due with respect to
any Note and remaining unclaimed for three years after such amount has become
due and payable to the Noteholder shall be discharged from such trust and,
subject to applicable escheat laws, paid to the Issuer upon request; and such
Noteholder shall thereafter, as an unsecured general creditor, look only to the
Issuer for payment thereof, and all liability of the Indenture Trustee with
respect to such trust money shall thereupon cease.
SECTION 8.04. Corporate Existence; Merger; Consolidation, etc.
(a) The Issuer will keep in full effect its existence, rights,
and franchises as a corporation under the laws of the State of [Delaware], and
will obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes, or any of the Contracts.
(b) The Issuer shall at all times observe and comply in all
material respects with (i) all laws, regulations and court orders applicable to
it, (ii) all requirements of law in the declaration and payment of dividends on
its Capital Stock, and (iii) all requisite and appropriate corporate and other
formalities (including, without limitation, annual and all other appropriate
meetings of the Issuer's board of directors and, if required by law, its charter
or otherwise, meetings and votes of shareholders to authorize corporate action)
in the management of its business and affairs and the conduct of the
transactions contemplated hereby and by the Note Agreement and the Receivables
Acquisition Agreement.
(c) The Issuer shall not issue or register the transfer of any
of its Capital Stock to any Person other than the Originator.
(d) The Issuer shall not (i) consolidate or merge with or into
any other Person or convey or transfer its properties and assets substantially
as an entirety to any
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other Person except under or in compliance with this Indenture or (ii) commingle
any of its funds or other assets with those of any other Person.
(e) The Issuer will, at all times, (i) maintain (A) corporate
and financial books and records separate from those of any other Person and (B)
minutes of the meetings and other proceedings of its shareholders and board of
directors; (ii) continuously maintain the resolutions, agreements and other
instruments underlying the transactions contemplated hereby and by the Note
Agreement and the Receivables Acquisition Agreement as official records of the
Issuer; (iii) act solely in its corporate name and through its duly authorized
officers or agents to maintain an arm's-length relationship with the Originator
and its Affiliates; (iv) pay all of its operating expenses and liabilities from
its own funds; (v) maintain an office separate from that of the Originator on
the premises currently rented by the Originator; and (vi) transact the majority
of its business with entities that are not Affiliates of the Originator.
(f) The Issuer shall conduct its business solely in its own
name so as to not mislead others as to the identity of the corporation with
which those others are concerned, and particularly will avoid the appearance of
conducting business on behalf of the Originator or any of its Affiliates or that
the assets of the Issuer are available to pay the creditors of the Originator or
any of its Affiliates. Without limiting the generality of the foregoing, all
oral and written communications, including without limitation, letters,
invoices, purchase orders, contracts, statements and loan applications, will be
made solely in the name of the Issuer.
(g) The Issuer will be operated so as not to be substantively
consolidated with the Originator.
SECTION 8.05. Protection of Trust Estate; Further Assurances.
The Issuer will from time to time execute and deliver all such
supplements and amendments hereto and all such Financing Statements,
continuation statements, instruments of further assurance, and other
instruments, and will take such other action as may be necessary or advisable
to:
(i) Grant more effectively all or any portion of the Trust
Estate;
(ii) maintain or preserve the lien of this Indenture or
carry out more effectively the purposes hereof;
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(iii) publish notice of, or protect the validity of, any Grant
made or to be made by this Indenture and perfect the security interest
contemplated hereby in favor of the Indenture Trustee in the Trust
Estate; provided, that the Issuer shall not be required to file
Financing Statements with respect to the Vehicles in addition to those
contemplated by Section _____ of the Note Agreement and Section _____
of the Receivables Acquisition Agreement;
(iv) enforce or cause the Servicer to enforce any of the
Contracts; or
(v) preserve and defend title to any Contract (including the
right to receive all payments due or to become due thereunder),
Vehicles, or other property included in the Trust Estate and preserve
and defend the rights of the Indenture Trustee and the Noteholders in
such Contract (including the right to receive all payments due or to
become due thereunder), Vehicles and other property against the claims
of all persons and parties.
The Issuer, upon the Issuer's failure to do so, hereby designates the Indenture
Trustee its agent and attorney-in-fact to execute any Financing Statement or
continuation statement required pursuant to this Section 8.05; provided,
however, that such designation shall not be deemed to create a duty in the
Indenture Trustee to monitor the compliance of the Issuer with the foregoing
covenants, and provided, further, that the duty of the Indenture Trustee to
execute any instrument required pursuant to this Section 8.05 shall arise only
if a Responsible Officer of the Indenture Trustee has actual knowledge of any
failure of the Issuer to comply with the provisions of this Section 8.05.
SECTION 8.06. Reserved.
SECTION 8.07. Performance of Obligations; Receivables
Acquisition Agreement.
(a) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, any Supplement, the
Notes, the Note Agreement and the Receivables Acquisition Agreement.
(b) The Issuer will not take any action or permit any action
to be taken by others which would release any Person from any of such Person's
covenants or obligations under any Contract or any other instrument included in
the Trust Estate other than any such release occasioned by the early termination
of a Contract after receipt of the
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Prepayment Amount, or which would result in the amendment, hypothecation,
subordination, termination, or discharge of, or impair the validity or
effectiveness of, any Contract or such other instrument, except as expressly
provided in this Indenture or the Receivables Acquisition Agreement.
(c) The Issuer will clearly mark its books and records to
reflect each assignment and transfer of a Contract and the Vehicle subject
thereto from the Originator.
(d) The Issuer will reply to all inquiries by third parties
with respect to the transactions contemplated by the Receivables Acquisition
Agreement by indicating that the Originator has assigned and transferred to it
the Contracts and the Originator's right, title and interest in and to the
related Vehicles.
(e) If any Authorized Officer shall have knowledge of the
occurrence of a default under the Receivables Acquisition Agreement, the Issuer
shall promptly notify the Indenture Trustee and the Noteholders thereof, and
shall specify in such notice the action, if any, the Issuer is taking in respect
of such default. Unless consented to by the Indenture Trustee, the Issuer may
not waive any default under or amend the Receivables Acquisition Agreement.
SECTION 8.08. Negative Covenants.
The Issuer will not:
(i) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate except as expressly permitted by this
Indenture or any Supplement;
(ii) claim any credit on, or make any deduction from, the
principal of, or interest on, any of the Notes by reason of the payment
of any taxes levied or assessed upon any portion of the Trust Estate;
(iii) engage in any business or activity other than in
connection with, or relating to the ownership of, the Contracts and the
Vehicles, the issuance of the Notes, and the specific transactions
contemplated hereby;
(iv) become liable for, issue, incur, assume, or allow to
remain outstanding any indebtedness, or guaranty any indebtedness of
any Person, other than the Notes, except as contemplated by this
Indenture, any Supplement, the Receivables Acquisition Agreement and
the Note
Agreement;
(v) seek dissolution or liquidation in whole or in part or
reorganization of its business or affairs;
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(vi) (A) permit the validity or effectiveness of this
Indenture or any Grant hereby to be impaired, or permit the lien of
this Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or
obligations under this Indenture, except as may be expressly permitted
hereby, (B) permit any lien, charge, security interest, mortgage or
other encumbrance to be created on or to extend to or otherwise arise
upon or burden the Trust Estate or any part thereof or any interest
therein or the proceeds thereof other than the lien of this Indenture
and the rights of Obligors, or (C) permit the lien of this Indenture
not to constitute a valid first priority security interest in the Trust
Estate; or
(vii) conduct its business or engage in any activity in
violation of the provisions contained in its Articles of Incorporation.
SECTION 8.09. Information as to the Issuer.
The Issuer shall deliver to the Indenture Trustee and each
institutional holder of Outstanding Notes (and, upon the request of any
Noteholder, to any prospective transferee of any Notes):
(a) Annual Statements - within [90] days after the end of each
fiscal year of the Issuer, three copies of:
(i) a balance sheet of the Issuer, at the end of that
year, and
(ii) statements of income, retained earnings and cash
flows of the Issuer for that year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and accompanied by an
opinion of a firm of independent certified public accountants of
recognized national standing stating that such financial statements
present fairly the financial condition of the Issuer and have been
prepared in accordance with generally accepted accounting principles
consistently applied (except for changes in application in which such
accountants concur and footnote), and that the examination of such
accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards, and
accordingly included such tests of the accounting records and such
other auditing procedures as were considered necessary in the
circumstances;
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(b) Officers' Certificate - with each set of financial
statements delivered pursuant to Section 8.09(a), the Issuer will
deliver a certificate from an Authorized Officer stating that such
Authorized Officer has reviewed the relevant terms of this Indenture,
any Supplement, the Note Agreement and the Receivables Acquisition
Agreement (including, without limitation, Section 8.04 hereof) and has
made, or caused to be made, under such officer's supervision, a review
of the transactions and conditions of the Issuer during the period
covered by the income statements then being furnished and that the
review has not disclosed the existence of any Indenture Event of
Default or, if an Indenture Event of Default exists, describing its
nature;
(c) Notice of Indenture Event of Default immediately upon
becoming aware of the existence of any condition or event which
constitutes a Default or an Indenture Event of Default, a written
notice describing its nature and period of existence and what action
the Issuer is taking or proposes to take with respect thereto;
(d) Report on Proceedings - promptly upon the Issuer's
becoming aware of:
(i) any proposed or pending investigation of it by
any governmental authority or agency, or
(ii) any pending or proposed court or administrative
proceeding which involves or may involve the possibility,
individually or in the aggregate, of materially and adversely
affecting the properties, business, prospects, profits or
condition (financial or otherwise) of the Issuer, a written
notice specifying the nature of such investigation or
proceeding and what action the Issuer is taking or proposes to
take with respect thereto and evaluating its merits; and
(e) Requested Information - with reasonable promptness, any
other data and information which may be reasonably requested from time
to time.
SECTION 8.10. Taxes.
The Issuer shall pay all taxes when due and payable or levied
against its assets, properties or income, including any property that is part of
the Trust Estate, except to the extent the Issuer is contesting the same in good
faith and has set aside adequate reserves in accordance with generally accepted
accounting principles for the payment thereof. The
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Issuer shall be included as a consolidated entity in the federal tax returns
filed by the Originator.
SECTION 8.11. Indemnification.
The Issuer agrees to indemnify and hold harmless the Indenture
Trustee and each Noteholder (each an "Indemnified Party") against any and all
liabilities, losses, damages, penalties, costs and expenses (including costs of
defense and legal fees and expenses) which may be incurred or suffered by such
Indemnified Party without negligence or willful misconduct on its part as a
result of claims, actions, suits or judgments asserted or imposed against it and
arising out of the transactions contemplated hereby or by the Note Agreement or
the Receivables Acquisition Agreement, including, without limitation, any claims
resulting from any use, operation, maintenance, repair, storage or
transportation of any Vehicle, whether or not in the Issuer's possession or
under its control, and any tort claims and any fines or penalties arising from
any violation of the laws or regulations of the United States or any state or
local government or governmental authority; provided that, all amounts payable
pursuant to this Section 8.11 shall be fully subordinated to amounts payable
under the Notes, shall be without recourse to the Issuer except to the extent
that all amounts otherwise due and payable under the terms of this Indenture
have been fully paid and shall not, to the extent that such amounts are unpaid,
constitute a claim against the Issuer except to the extent that all amounts
otherwise due and payable under the terms of this Indenture have been fully
paid. The provisions of this Section 8.11 shall survive the termination of this
Indenture.
SECTION 8.12. Certificates of Title.
For any Vehicle for which a certificate of title is pending or
for which the Issuer has requested, but has not yet received, an application to
change its certificate of title, the Issuer shall apply to have the Indenture
Trustee named as a lienholder on such Vehicle immediately upon receiving such
certificate of title or application, respectively. The Issuer shall furnish to
the Indenture Trustee copies of all applications for changes to certificates of
title prepared by it and all changed certificates of title received by it.
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ARTICLE IX
AMENDMENTS AND SUPPLEMENTAL INDENTURES
SECTION 9.01. Amendments and Supplemental Indentures.
With the consent of the holders of Notes evidencing not less
than [66-2/3%] of Voting Rights, by Act of said Noteholders delivered to the
Issuer and the Indenture Trustee, and with the consent of the Issuer, by an
Issuer Order, and the Indenture Trustee may enter into an amendment to this
Indenture or an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Noteholders under this Indenture. Without the consent of Noteholders, amendments
may be made by the Issuer and the Indenture Trustee to cure any ambiguity, to
correct or supplement any provision that is inconsistent with another provision
or to add or amend any provision with respect to matters or questions arising
under this Indenture; provided, however, that no amendment to this Indenture or
any supplemental indenture may modify the amount of, or the timing of payment
of, any amount due any Noteholder without the consent of such Noteholder, or any
other rights of the holders of a class of Notes, without the consent of
[66-2/3%] of the Outstanding Note Balance of the Notes of such class; and
provided, further, that no supplemental indenture may (i) modify any provision
of this Indenture requiring the consent of all Noteholders or (ii) release any
of the Trust Estate from the lien hereof or modify Sections 2.05 or 6.06 hereof
without the consent of all Noteholders.
SECTION 9.02. Execution of Amendments and Supplemental
Indentures.
In executing any amendment to this Indenture or any
supplemental indenture pursuant to Section 9.01 of this Indenture, the Indenture
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon, an Opinion of Counsel stating that the
execution of such amendment to this Indenture or any supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any supplemental indenture which affects the
Indenture Trustee's own rights, duties, protections, or immunities under this
Indenture or otherwise.
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SECTION 9.03. Effect of Amendments and Supplemental
Indentures.
Upon the execution of any amendment to this Indenture or any
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith, and such amendment or supplemental indenture shall form a
part of this Indenture for all purposes, and every Noteholder of Notes
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 9.04. Reference in Notes to Amendments and
Supplemental Indentures.
Notes authenticated and delivered after the execution of any
amendment to this Indenture or any supplemental indenture pursuant to this
Article may, and shall if required by the Indenture Trustee, bear a notation in
form approved by the Indenture Trustee as to any matter provided for in such
amendment or supplemental indenture. If the Issuer shall so determine, new Notes
so modified as to conform, in the opinion of the Indenture Trustee and the
Issuer, to any such amendment or supplemental indenture may be prepared and
executed by the Issuer and authenticated and delivered by the Indenture Trustee
in exchange for Outstanding Notes.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. Optional Redemption; Election to Redeem.
The Notes may be redeemed by the Issuer, in whole but not in
part, as to the then Outstanding Offered Notes, on any Payment Date when (i) the
Outstanding [Class A] Note Balance is less than or equal to ___% of the initial
[Class A] Note Balance and (ii) the Outstanding [Class B] Note Balance is less
than or equal to ___% of the initial [Class B] Note Balance, at the Redemption
Price.
The Issuer, by an Authorized Officer, shall set the Redemption
Date and the Redemption Record Date and give notice thereof to the Indenture
Trustee pursuant to Section 10.02.
Installments of interest and principal due on or prior to a
Redemption Date shall continue to be payable to the Holders of Offered Notes
called for redemption as of the relevant Record Dates according to their terms
and the provisions of Section 2.06. The election of the Issuer to redeem any
Offered Notes pursuant to this Section shall be
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evidenced in writing by an Authorized Officer directing the Indenture Trustee to
make the payment of the Redemption Price on all of the Offered Notes to be
redeemed from monies deposited with the Indenture Trustee pursuant to Section
10.04.
SECTION 10.02. Notice to Indenture Trustee.
In the case of any redemption pursuant to Section 10.01, the
Issuer shall, at least [15] days prior to the Redemption Date (unless a shorter
notice shall be satisfactory to the Indenture Trustee), notify the Indenture
Trustee of such Redemption Date.
SECTION 10.03. Notice of Redemption by the Issuer.
Notice of redemption pursuant to Section 10.01 shall be given
by first class mail, postage prepaid, mailed not less than [15] days prior to
the applicable Redemption Date, to each Noteholder, at his address in the Note
Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price; and
(3) that on the Redemption Date, the Redemption Price
will become due and payable upon each such Note, and
that interest thereon shall cease to accrue on such
date.
Notice of redemption of Offered Notes shall be given by the
Issuer, by an Authorized Officer, or, at the request of such Authorized Officer,
by the Indenture Trustee in the name and at the expense of the Issuer. Failure
to give notice of redemption, or any defect therein, to any Noteholder selected
for redemption shall not impair or affect the validity of the redemption of any
other Note.
SECTION 10.04. Deposit of the Redemption Price.
On or before the Business Day next preceding any Redemption
Date, the Issuer shall deposit with the Indenture Trustee an amount of monies
sufficient to pay the Redemption Price of all Offered Notes Outstanding on such
Redemption Date (less any portion of such payment to be made from monies in the
Collection Account).
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SECTION 10.05. Notes Payable on Redemption Date.
Notice of redemption having been given as provided in Section
10.03, the Note shall, on the applicable Redemption Date, become due and payable
at the Redemption Price and on such Redemption Date (unless the Issuer shall
default in the payment of the Redemption Price) such Notes shall cease to bear
interest. The Noteholders shall be paid the Redemption Price by the Indenture
Trustee on behalf of the Issuer; provided, however, that installments of
principal and interest which are due on or prior to the Redemption Date shall be
payable to the Noteholders registered as such on the relevant Record Dates
according to their terms and the provisions of Section 2.06.
If the Holders of any Offered Note called for redemption shall
not be so paid, the principal and premium, if any, shall, until paid, bear
interest from the Redemption Date at the related Note Rate.
ARTICLE XI
SATISFACTION AND DISCHARGE
SECTION 11.01. Satisfaction and Discharge of Indenture.
(a) This Indenture shall cease to be of further effect (except
as to any surviving rights herein expressly provided for), and the Indenture
Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when:
(i) either:
(A) all Notes theretofore authenticated and
delivered (other than (x) Notes which have been
destroyed, lost, or stolen and which have been
replaced or paid as provided in Section 2.04 and (y)
Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by
the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section
8.03(c)) have been irrevocably paid and delivered to
the Indenture Trustee for cancellation; or
(B) the final installments of principal on
all such Notes not theretofore delivered to the
Indenture Trustee for cancellation:
79
<PAGE> 85
(1) have become due and payable, or
(2) will become due and payable at
their Stated Maturity Date within one year,
and the Issuer has deposited or caused to be
deposited with the Indenture Trustee as trust funds
in trust for the purpose an amount sufficient to pay
and discharge the entire indebtedness on such Notes
not theretofore delivered to the Indenture Trustee
for cancellation, for principal and interest to the
date of such deposit (in the case of Notes which have
become due and payable) or to the Stated Maturity
Date thereof;
(ii) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer for the benefit of the Noteholders; and
(iii) the Issuer has delivered to the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
At such time, the Indenture Trustee shall deliver to the Issuer or, upon Issuer
Order, its assignee, all cash, securities and other property held by it as part
of the Trust Estate other than funds deposited with the Indenture Trustee
pursuant to Section 11.01(a)(i)(B) for the payment and discharge of the Notes.
(b) Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Issuer under Sections 7.06 and 8.11, and, if
money shall have been deposited with the Indenture Trustee pursuant to Section
11.01(a)(i)(B), the obligations of the Indenture Trustee under Section 11.02 and
Section 8.03(c) shall survive.
SECTION 11.02. Application of Trust Money. Subject to the
provisions of Section 8.03(c), all money deposited with the Indenture Trustee
pursuant to Sections 11.01 and 8.03 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment
to the Persons entitled thereto of the principal and interest for whose payment
such money has been deposited with the Indenture Trustee.
80
<PAGE> 86
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and witnessed, all as of the day and year first above written.
Attest: ACC CONSUMER FINANCE CORPORATION
_________________________________ By:______________________________________
Name: Name:
Title: Title:
Attest: ________________________________________,
___________________________, as Indenture
Trustee
_________________________________ By:______________________________________
Name: Name:
Title: Title:
81
<PAGE> 87
EXHIBIT A
TO INDENTURE
[FORM OF [CLASS A] NOTES]
_____% AUTO RECEIVABLES-BACKED NOTE, [CLASS A]
No. [A-__________] $______________
ACC CONSUMER FINANCE CORPORATION, a Delaware corporation (the
"Issuer"), for value received, hereby promises to pay to ___________________ or
registered assigns, the principal sum of _____________________ Dollars
($____________) in monthly installments equal to the [Class A] Monthly
Principal, if any, on the [twentieth] day of each month commencing ________,
199_ and ending not later than _________ __, 199__, when all remaining principal
and interest are due and payable in their entirety (each, a "Payment Date"); to
pay interest (computed on the basis of a 360-day year of twelve 30-day months)
on each Payment Date on the unpaid principal amount of this [Class A Note] from
the Accrual Date or such later date to which interest has been paid or duly
provided for, to such Payment Date, at the rate of _____% per annum; to the
extent provided in the Indenture referred to below, to pay the Prepayment
Premium with respect to the [Class A Notes]; and (to the extent permitted by
applicable law) to pay interest on any overdue installments of interest,
premium, if any, and principal at the rate of _____% per annum. Capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Indenture.
Payments of principal, premium, if any, and interest on this
Note shall be made on each Payment Date in such coin or currency of the United
States of America as at such time is legal tender for payment of public and
private debts to the Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on the Record Date for such
Payment Date, which shall be the [fifth] Business Day preceding such Payment
Date, by wire transfer of federal funds to the account and number specified in
the Note Register on such Record Date for such Person or, if no such account or
number is so specified, then by check mailed to such Person's address as it
appears in the Note Register on such Record Date. Within 10 Business Days
following receipt of the final installment of principal of this Note, the holder
hereof shall surrender this Note at the principal Corporate Trust Office of the
Indenture Trustee.
This Note is one of a duly authorized issue of [Class A Notes]
of the Issuer designated as its ____% Auto Receivables-Backed Notes, [Class A]
with aggregate principal
A-1
<PAGE> 88
amount of $____________ and to be issued under an Indenture dated as of
__________, 199_ (herein called the "Indenture"), between the Issuer and
______________________, as trustee (herein called the "Indenture Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties, and immunities thereunder
of the Issuer, the Indenture Trustee, and the holders of the Notes and of the
terms upon which the Notes are, and are to be, authenticated and delivered. The
Trust Estate secures the Notes equally and ratably without prejudice, priority,
or distinction between any Note of the same class and any other Note of the same
class by reason of difference in time of issuance or otherwise, and also secures
the payment of certain other amounts and certain other obligations as set forth
in the Indenture.
As provided in the Indenture, the aggregate amount of
principal due and payable on the [Class A Notes] on each Payment Date is equal
to the [Class A] Monthly Principal with respect to such Payment Date. All such
payments shall be made pro rata among the Outstanding [Class A Notes], without
preference or priority of any kind.
If an Indenture Event of Default as defined in the Indenture
shall occur and be continuing, the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in the Indenture and subject to the limitations
set forth therein and above, the transfer of this Note is registrable in the
Note Register, upon surrender of this Note for registration of transfer at the
office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Indenture Trustee duly executed by, the
holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes, of authorized denominations and for the same original aggregate
principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons
in denominations as provided in the Indenture and subject to certain limitations
therein set forth. No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Indenture Trustee
A-2
<PAGE> 89
and any agent of the Issuer or the Trustee may treat the Person in whose name
this Note is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and neither the Issuer, the Indenture Trustee nor any such
agent shall be affected by notice to the contrary.
By accepting this Note, the holder hereof irrevocably appoints
the Indenture Trustee under the Indenture as the special attorney-in-fact for
the holder vested with full power on behalf of the holder to effect and enforce
the rights of such holder and the provisions of the Indenture for the benefit of
the holder. The preceding provision in no way shall limit the right of the
holder hereof to demand payment hereunder or bring an action to enforce payment
hereof.
All terms used in this Note which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
As provided in the Indenture, this Note and the Indenture
shall be governed by, and construed in accordance with, the laws of the State of
[New York], except that any provision of the Indenture which relates to, or
provides for, the rights, duties and obligations of the Indenture Trustee shall
be governed by, and construed in accordance with, the laws of the State of
____________.
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee by manual signature, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed in its name by the manual signature of its President or one of
its Vice Presidents.
ACC CONSUMER FINANCE CORPORATION
By:_________________________________
Name:
Title:
A-3
<PAGE> 90
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
_____________________, as Indenture
Trustee
Dated: ________ __, 19__ By:________________________________
Authorized Signatory
A-4
<PAGE> 91
EXHIBIT B
TO INDENTURE
[FORM OF [CLASS B] NOTES]
_____% AUTO RECEIVABLES-BACKED NOTE, [CLASS B]
No. [B-__________] $______________
ACC CONSUMER FINANCE CORPORATION, a Delaware corporation (the
"Issuer"), for value received, hereby promises to pay to ___________________ or
registered assigns, the principal sum of _____________________ Dollars
($____________) in monthly installments equal to the [Class B] Monthly
Principal, if any, on the [twentieth] day of each month commencing ________,
199_ and ending not later than _________ __, 199__, when all remaining principal
and interest are due and payable in their entirety (each, a "Payment Date"); to
pay interest (computed on the basis of a 360-day year of twelve 30-day months)
on each Payment Date on the unpaid principal amount of this [Class B Note] from
the Accrual Date or such later date to which interest has been paid or duly
provided for, to such Payment Date, at the rate of _____% per annum; to the
extent provided in the Indenture referred to below, to pay the Prepayment
Premium with respect to the [Class B Notes]; and (to the extent permitted by
applicable law) to pay interest on any overdue installments of interest,
premium, if any, and principal at the rate of _____% per annum. Capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Indenture.
THE RIGHTS TO RECEIVE PAYMENTS WITH RESPECT TO THIS [CLASS B]
NOTE ARE SUBORDINATE TO THE PRIOR PAYMENT IN FULL OF ALL AMOUNTS OF PRINCIPAL
AND INTEREST DUE AND PAYABLE ON THE [CLASS A] NOTES ON EACH PAYMENT DATE.
Payments of principal, premium, if any, and interest on this
Note shall be made on each Payment Date in such coin or currency of the United
States of America as at such time is legal tender for payment of public and
private debts to the Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on the Record Date for such
Payment Date, which shall be the [fifth] Business Day preceding such Payment
Date, by wire transfer of federal funds to the account and number specified in
the Note Register on such Record Date for such Person or, if no such account or
number is so specified, then by check mailed to such Person's address as it
appears in the Note Register on such Record Date. Within 10 Business Days
following receipt of the final installment of principal of this Note, the holder
B-1
<PAGE> 92
hereof shall surrender this Note at the principal Corporate Trust Office of the
Indenture Trustee.
This Note is one of a duly authorized issue of [Class B Notes]
of the Issuer designated as its ____% Auto Receivables-Backed Notes, [Class B]
with aggregate principal amount of $____________ and to be issued under an
Indenture dated as of __________, 199_ (herein called the "Indenture"), between
the Issuer and ______________________, as trustee (herein called the "Indenture
Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties, and
immunities thereunder of the Issuer, the Indenture Trustee, and the holders of
the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered. The Trust Estate secures the Notes equally and
ratably without prejudice, priority, or distinction between any Note of the same
class and any other Note of the same class by reason of difference in time of
issuance or otherwise, and also secures the payment of certain other amounts and
certain other obligations as set forth in the Indenture.
As provided in the Indenture, the aggregate amount of
principal due and payable on the [Class B Notes] on each Payment Date is equal
to the [Class B] Monthly Principal with respect to such Payment Date. All such
payments shall be made pro rata among the Outstanding [Class B Notes], without
preference or priority of any kind.
If an Indenture Event of Default as defined in the Indenture
shall occur and be continuing, the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in the Indenture and subject to the limitations
set forth therein and above, the transfer of this Note is registrable in the
Note Register, upon surrender of this Note for registration of transfer at the
office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Indenture Trustee duly executed by, the
holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes, of authorized denominations and for the same original aggregate
principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons
in denominations as provided in the Indenture and subject to certain limitations
therein set forth. No service charge shall be made for any such registration of
B-2
<PAGE> 93
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name this Note is registered as the owner
hereof for all purposes, whether or not this Note be overdue, and neither the
Issuer, the Indenture Trustee nor any such agent shall be affected by notice to
the contrary.
By accepting this Note, the holder hereof irrevocably appoints
the Indenture Trustee under the Indenture as the special attorney-in-fact for
the holder vested with full power on behalf of the holder to effect and enforce
the rights of such holder and the provisions of the Indenture for the benefit of
the holder. The preceding provision in no way shall limit the right of the
holder hereof to demand payment hereunder or bring an action to enforce payment
hereof.
All terms used in this Note which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
As provided in the Indenture, this Note and the Indenture
shall be governed by, and construed in accordance with, the laws of the State of
[New York], except that any provision of the Indenture which relates to, or
provides for, the rights, duties and obligations of the Indenture Trustee shall
be governed by, and construed in accordance with, the laws of the State of
____________.
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee by manual signature, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed in its name by the manual signature of its President or one of
its Vice Presidents.
ACC CONSUMER FINANCE CORPORATION
By:_________________________________
Name:
Title:
B-3
<PAGE> 94
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
_______________________, as Indenture
Trustee
Dated: ________ __, 19__ By:__________________________________
Authorized Signatory
B-4
<PAGE> 95
EXHIBIT C
TO INDENTURE
[FORM OF [CLASS C] NOTES]
_____% AUTO RECEIVABLES-BACKED NOTE, [CLASS C]
No. [C-__________] $______________
ACC CONSUMER FINANCE CORPORATION, a Delaware corporation (the
"Issuer"), for value received, hereby promises to pay to ___________________ or
registered assigns, the principal sum of _____________________ Dollars
($____________) in monthly installments equal to the [Class C] Monthly
Principal, if any, on the [twentieth] day of each month commencing ________,
199_ and ending not later than _________ __, 199__, when all remaining principal
and interest are due and payable in their entirety (each, a "Payment Date"); to
pay interest (computed on the basis of a 360-day year of twelve 30-day months)
on each Payment Date on the unpaid principal amount of this [Class C Note] from
the Accrual Date or such later date to which interest has been paid or duly
provided for, to such Payment Date, at the rate of _____% per annum; to the
extent provided in the Indenture referred to below, to pay the Prepayment
Premium with respect to the [Class C Notes]; and (to the extent permitted by
applicable law) to pay interest on any overdue installments of interest,
premium, if any, and principal at the rate of _____% per annum. Capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Indenture.
THE RIGHTS TO RECEIVE PAYMENTS WITH RESPECT TO THIS [CLASS C]
NOTE ARE SUBORDINATE TO THE PRIOR PAYMENT IN FULL OF ALL AMOUNTS OF PRINCIPAL
AND INTEREST DUE AND PAYABLE ON THE [CLASS A] AND THE [CLASS B] NOTES ON EACH
PAYMENT DATE.
Payments of principal, premium, if any, and interest on this
Note shall be made on each Payment Date in such coin or currency of the United
States of America as at such time is legal tender for payment of public and
private debts to the Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on the Record Date for such
Payment Date, which shall be the [fifth] Business Day preceding such Payment
Date, by wire transfer of federal funds to the account and number specified in
the Note Register on such Record Date for such Person or, if no such account or
number is so specified, then by check mailed to such Person's address as it
appears in the Note Register on such Record Date. Within 10 Business Days
following receipt of the final installment of principal of this Note, the holder
C-1
<PAGE> 96
hereof shall surrender this Note at the principal Corporate Trust Office of the
Indenture Trustee.
This Note is one of a duly authorized issue of [Class C Notes]
of the Issuer designated as its ____% Auto Receivables-Backed Notes, [Class C]
with aggregate principal amount of $____________ and to be issued under an
Indenture dated as of __________, 199_ (herein called the "Indenture"), between
the Issuer and ______________________, as trustee (herein called the "Indenture
Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties, and
immunities thereunder of the Issuer, the Indenture Trustee, and the holders of
the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered. The Trust Estate secures the Notes equally and
ratably without prejudice, priority, or distinction between any Note of the same
class and any other Note of the same class by reason of difference in time of
issuance or otherwise, and also secures the payment of certain other amounts and
certain other obligations as set forth in the Indenture.
As provided in the Indenture, the aggregate amount of
principal due and payable on the [Class C Notes] on each Payment Date is equal
to the [Class C] Monthly Principal with respect to such Payment Date. All such
payments shall be made pro rata among the Outstanding [Class C Notes], without
preference or priority of any kind.
If an Indenture Event of Default as defined in the Indenture
shall occur and be continuing, the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in the Indenture and subject to the limitations
set forth therein and above, the transfer of this Note is registrable in the
Note Register, upon surrender of this Note for registration of transfer at the
office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Indenture Trustee duly executed by, the
holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes, of authorized denominations and for the same original aggregate
principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons
in denominations as provided in the Indenture and subject to certain limitations
therein set forth. No service charge shall be made for any such registration of
C-2
<PAGE> 97
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name this Note is registered as the owner
hereof for all purposes, whether or not this Note be overdue, and neither the
Issuer, the Indenture Trustee nor any such agent shall be affected by notice to
the contrary.
By accepting this Note, the holder hereof irrevocably appoints
the Indenture Trustee under the Indenture as the special attorney-in-fact for
the holder vested with full power on behalf of the holder to effect and enforce
the rights of such holder and the provisions of the Indenture for the benefit of
the holder. The preceding provision in no way shall limit the right of the
holder hereof to demand payment hereunder or bring an action to enforce payment
hereof.
All terms used in this Note which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
As provided in the Indenture, this Note and the Indenture
shall be governed by, and construed in accordance with, the laws of the State of
[New York], except that any provision of the Indenture which relates to, or
provides for, the rights, duties and obligations of the Indenture Trustee shall
be governed by, and construed in accordance with, the laws of the State of
____________.
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee by manual signature, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed in its name by the manual signature of [the Trustee] [its
President or one of its Vice Presidents].
ACC CONSUMER FINANCE CORPORATION
By:_________________________________
Name:
Title:
C-3
<PAGE> 98
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
______________________, as Indenture
Trustee
Dated: ________ __, 19__ By:_________________________________
Authorized Signatory
C-4
<PAGE> 1
Exhibit 4.3
- --------------------------------------------------------------------------------
POOLING AND SERVICING AGREEMENT
among
ACC CONSUMER FINANCE CORPORATION
as Sponsor and Servicer
------------------------------,
as [Master Administrator]
------------------------------------,
as [Master Servicer]
--------------------------,
as Originator and Servicer
and
--------------------,
as Trustee
Dated as of , 199
------------- -
[ACC AUTOMOBILE RECEIVABLES TRUST]
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Provisions of General Application . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.03. Calculation of Quarterly Interest . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE II
TRANSFER OF TRUST ASSETS
SECTION 2.01. Conveyance of Transferred Assets . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.02. Acceptance by Trustee and Appointment of the [Master Servicer] as Custodian 19
SECTION 2.03. Additional Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.04. Conditions Precedent to All Purchases . . . . . . . . . . . . . . . . . . . 21
SECTION 2.05. Grant of Security Interest; Tax Treatment. . . . . . . . . . . . . . . . . 22
SECTION 2.06. Further Action Evidencing Assignments. . . . . . . . . . . . . . . . . . . 23
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Sponsor . . . . . . . . . . . . . . . 24
SECTION 3.02. Representations and Warranties as to Each Auto Loan and the other
Transferred Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.03. Repurchases and Purchases . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IV
SERVICING OF TRUST ASSETS
SECTION 4.01. [Appointment of [Master Servicer] . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.02. Subservicing Agreements Between Servicer and Subservicer. . . . . . . . . . 31
SECTION 4.03. Representations and Warranties of the Servicer and the [Master Servicer] . 32
SECTION 4.04. Duties and Responsibilities of the Servicer . . . . . . . . . . . . . . . . 33
SECTION 4.05. Fidelity Bond, Errors and Omissions Insurance . . . . . . . . . . . . . . . 36
SECTION 4.06. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.07. Trustee to Cooperate . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 4.08. Servicing Fee; Servicing Expenses . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.09. [Master Servicer] To Maintain Computer Link . . . . . . . . . . . . . . . . 38
SECTION 4.10. [Master Servicer] and Servicer Not to Resign . . . . . . . . . . . . . . . 39
SECTION 4.11. Change in Business of the [Master Servicer] or the Servicer . . . . . . . . 39
SECTION 4.12. Events of Master Servicing Termination . . . . . . . . . . . . . . . . . . 40
SECTION 4.13. Appointment of the Successor Master Servicer . . . . . . . . . . . . . . . 41
SECTION 4.14. Events of Servicing Termination . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.15. Appointment of the Successor Servicer . . . . . . . . . . . . . . . . . . . 44
SECTION 4.16. Effect of Service Transfer . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.17. Annual Reports; Statements as to Compliance . . . . . . . . . . . . . . . . 46
SECTION 4.18. Annual Independent Public Accountants' Servicing Report. . . . . . . . . . 47
SECTION 4.19. Servicer Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
[ARTICLE V]
[THE [MASTER ADMINISTRATOR]]
SECTION 5.01. Appointment of [Master Administrator]. . . . . . . . . . . . . . . . . . . 49
SECTION 5.02. Subcontracting Agreements Between Master Administrator and Subcontractor. . 49
SECTION 5.03. Duties and Responsibilities of the Master Administrator . . . . . . . . . . 50
SECTION 5.04. Representations and Warranties of the [Master Administrator] . . . . . . . 51
SECTION 5.05. Monthly Administrator Fee; Administrator Expenses . . . . . . . . . . . . . 52
SECTION 5.06. [Master Administrator] Not to Resign . . . . . . . . . . . . . . . . . . . 52
SECTION 5.07. Events of Administrator Termination . . . . . . . . . . . . . . . . . . . . 52
SECTION 5.08. Appointment of the Successor Master Administrator . . . . . . . . . . . . . 54
SECTION 5.09. Annual Reports; Annual Statement as to Compliance . . . . . . . . . . . . . 55
SECTION 5.10. Other Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 5.11. Reports of the [Master Administrator] . . . . . . . . . . . . . . . . . . . 56
ARTICLE VI
THE CERTIFICATES
SECTION 6.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 6.02. Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 6.03. Registration of Transfer and Exchange of Certificates . . . . . . . . . . . 61
SECTION 6.04 Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . 62
</TABLE>
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SECTION 6.05. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . 63
SECTION 6.06. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.07. Access to List of Certificateholders' Names and Addresses . . . . . . . . . 64
SECTION 6.08. Acts of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 6.09 Notices to Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE VII
DEPOSITS AND DISTRIBUTIONS
SECTION 7.01. Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 7.02. Establishment and Administration of the Collection Account . . . . . . . . 66
SECTION 7.03. Establishment and Administration of the Cash Reserve Account . . . . . . . 67
SECTION 7.04. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 7.05. Reports to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE VIII
REMEDIES
SECTION 8.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 8.02. Declaration of Principal Amortization Event . . . . . . . . . . . . . . . . 73
SECTION 8.03. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . 73
SECTION 8.04. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . 73
SECTION 8.05. Trustee May Enforce Claims Without Possession of Investor Certificates . . 74
SECTION 8.06. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 8.07. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 8.08. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . 75
SECTION 8.09. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 8.10. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 8.11. Control by Certificateholders . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 8.12. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 8.13. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 8.14. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . 77
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ARTICLE IX
LIMITATION ON LIABILITY; INDEMNITIES
SECTION 9.01. Liabilities of Obligors and Insurers . . . . . . . . . . . . . . . . . . . 77
SECTION 9.02. Limitation on Liability of the Sponsor, the [Master Servicer], Servicer
and the [Master Administrator] . . . . . . . . . . . . . . . . . . . . . 78
SECTION 9.03. Indemnities of the [Master Servicer], the Servicer and the [Master Administrator] 78
ARTICLE X
THE TRUSTEE
SECTION 10.01. Certain Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 10.02. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 10.03. Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . 81
SECTION 10.04. Trustee Not Liable for Certificates or Auto Loans . . . . . . . . . . . . . 83
SECTION 10.05. Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 10.06. The [Master Administrator] to Pay Trustee's Fees and Expenses . . . . . . . 84
SECTION 10.07. Eligibility Requirements for Trustee . . . . . . . . . . . . . . . . . . . 84
SECTION 10.08. Resignation or Removal of Trustee . . . . . . . . . . . . . . . . . . . . . 84
SECTION 10.09. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.10. Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . . . . . 86
SECTION 10.11. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Agreement; Optional Repurchase. . . . . . . . . . . . . . . 86
SECTION 11.02. Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 11.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 11.04. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 11.05. Notices and Reports to be Delivered to the Rating Agency . . . . . . . . . 91
SECTION 11.06. Merger and Integration . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 11.07. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 11.08. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . 92
SECTION 11.09. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 11.10. No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 11.11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL . . . . . . . 92
SECTION 11.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
</TABLE>
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<TABLE>
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EXHIBITS
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Exhibit A Form of Purchase Agreement
Exhibit B Auto Loan Protection Policy
Exhibit C Blanket Collateral Protection Policy
Exhibit D Form of Assignment
Exhibit E Form of Release and Assignment
Exhibit F Form of Servicer Report
Exhibit G Form of Master Administrator Report
Exhibit H Form of Investor Certificate
Exhibit I Form of Seller Certificate
Exhibit J Form of Depository Agreement
Exhibit K Form of Issuance Supplement
SCHEDULES
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Schedule 1 List of Auto Loans
</TABLE>
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POOLING AND SERVICING AGREEMENT, dated as of ___________,
199_, among ACC CONSUMER FINANCE CORPORATION, a Delaware corporation, its
successors and permitted assigns, as Sponsor and as Servicer (the "Sponsor" and
the "Servicer" respectively), __________________________________, a __________
corporation, its successors and permitted assigns as [Master Administrator]
(the "[Master Administrator]"), _____________________________________ a
_________ corporation, its successors and permitted assigns, as [Master
Servicer] (the "[Master Servicer]"), _______________, a ____________
corporation, its successors and permitted assigns, as Originator (the
"Originator") and _________________________, a _______________ corporation, its
successors and permitted assigns, as trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Sponsor is a bankruptcy-remote corporation formed
for the purpose of acting as the issuer of certain certificates representing
undivided beneficial interests in trusts, including the trust to be established
pursuant to this Agreement of consumer automobile loans and certain other
rights and properties pertaining to the Automobile Receivables Trust] (the
"Trust");
WHEREAS, the Sponsor will acquire from time to time consumer
automobile loans financing the purchase of automobiles and light trucks, which
loans create a lien or security interest in the automobile financed thereunder
in favor of the loan holder (the "Auto Loans");
WHEREAS, the Sponsor intends that the Trust will purchase the
Auto Loans from the Sponsor simultaneously with the acquisition of such Auto
Loans by the Sponsor;
[WHEREAS, the [Master Administrator] has been requested and is
willing to direct the Trustee to make certain distributions of funds in
connection with amounts received as proceeds from the Auto Loans, investment
income, and payment of principal of and interest on, the Certificates and to
otherwise perform certain administrative functions in connection with the
transactions contemplated hereby;]
WHEREAS, in order to effectuate the purposes of this
Agreement, the Sponsor, the [Master Administrator] and the Trustee desire that
[a master servicer and] a servicer be appointed to perform certain servicing
and collection functions in respect of the Auto Loans to be acquired by the
Trust for the benefit of the Certificateholders as their interests appear
herein; and
<PAGE> 8
WHEREAS, ACC Consumer Finance Corporation and ___ have been
requested and [each] is willing to act as [the [Master Servicer] and] the
Servicer[, respectively,] hereunder.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used herein, the
following terms shall have the following meanings:
"ACTUARIAL LOAN" means any Auto Loan in which the method of
allocating payments of principal and interest is the Actuarial Method.
"ACTUARIAL METHOD" means the method of allocating a fixed
level monthly payment on an Auto Loan between principal and interest, pursuant
to which the portion of such payment that is allocated to interest is the
product of one-twelfth of the APR multiplied by the Principal Balance.
"ADMINISTRATOR TRANSFER" has the meaning specified in Section
5.07.
"ADVERSE CLAIM" means any claim of ownership or any lien,
security interest, title retention, trust or other charge or encumbrance, or
other type of preferential arrangement having the effect or purpose of creating
a lien or security interest, other than the security interest created under
this Agreement.
"AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AGGREGATE EXCESS INTEREST" means, with respect to any
Distribution Date, an amount not less than zero, equal to the total of (a) the
aggregate amount of interest collected on all of the Auto Loans during the
immediately preceding Due Period minus (b) the amount of interest on the
Investor Certificates calculated pursuant to Section 7.04(c)(i)(A) in respect
of such Distribution Date minus (c) the amount of interest on the Originator
Certificate calculated pursuant to Section 7.04(c)(iii) in respect of such
Distribution Date minus (d) the Trust Operating Expenses with respect to the
immediately preceding Due Period.
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"AGREEMENT" means this Pooling and Servicing Agreement, as
amended or supplemented from time to time including all exhibits and schedules
hereto and thereto.
"APPLICANTS" has the meaning specified in Section 6.07.
"APR" means the annual percentage rate of an Auto Loan as
determined according to the related contractual documents with the Obligor
thereof.
"ASSIGNMENT" means collectively, with respect to any Auto
Loan, the related Sale Assignment and Purchase Assignment.
"AUTHORIZED OFFICER" means, with respect to any corporation or
partnership, the Chairman of the Board, the President, any Vice President, the
Secretary, the Treasurer, any Assistant Secretary, any Assistant Treasurer and
each other officer of such corporation or the general partner of such
partnership specifically authorized in resolutions of the Board of Directors of
such corporation to sign agreements, instruments or other documents in
connection with this Agreement on behalf of such corporation or partnership, as
the case may be.
"AUTO LOAN" means a consumer loan arising from the sale of an
Automobile and conveyed to the Trust by the Sponsor as part of the Trust
Assets, and includes, without limitation, (a) the related Assignment, (b) all
security interests or liens and property subject thereto from time to time
purporting to secure payment by the Obligor thereunder, (c) all guarantees,
indemnities and warranties, insurance policies (but not including the Insurance
Policies), certificates of title or other title documentation and other
agreements or arrangements of whatever character from time to time supporting
or securing payment of such Auto Loan, (d) all collections and records with
respect to the foregoing, and (e) all proceeds of any of the foregoing.
"AUTO LOAN PROTECTION POLICY" means one of the Insurance
Policies a copy of which is attached hereto as Exhibit B insuring against loss
in the amount of the difference between (a) the unpaid balance of an Auto Loan
and accrued or earned interest thereon (after certain refundable items,
repossession expenses and applicable deductible have been subtracted) and (b)
the liquidated value of the repossessed Automobile.
"AUTOMOBILES" means new and used automobiles and light trucks,
the purchase of which the Obligors financed by the Auto Loans.
"AVAILABLE CASH RESERVE AMOUNT" means, on any date of
determination, the amount on deposit in the Cash Reserve Account.
"AVAILABLE DISTRIBUTION AMOUNT" means, on any Distribution
Date, the amount of Available Funds remaining after
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the payment of the Trust Operating Expenses with respect to the immediately
preceding Due Period.
"AVAILABLE FUNDS" means for any Monthly Fee Date or
Distribution Date, (a) all amounts representing Payments collected during the
immediately preceding month or Due Period, as the case may be, (b) all
Recoveries on Defaulted Auto Loans received during such month or Due Period,
and (c) all amounts retained in the Collection Account pursuant to Section
7.04(c)(vi) and 7.04(d)(vii) (net of investment earnings on such amounts).
"AVAILABLE PURCHASE AMOUNT" means, on any date of
determination, an amount equal to the sum of (a) $__________ minus (b) the then
aggregate Principal Balance of Auto Loans previously purchased by the Trust.
"AVAILABLE SUBORDINATION AMOUNT" means for any Distribution
Date, the sum of (a) the then applicable Maximum Subordination Amount minus (b)
the Cumulative Subordination Payments.
"BLANKET COLLATERAL PROTECTION POLICY" means one of the
Insurance Policies, a copy of which is attached hereto as Exhibit C, insuring
against loss or damages to an Automobile.
"BOOK-ENTRY CERTIFICATES" has the meaning specified in Section
6.01(b).
"BUSINESS DAY" means any day other than a Saturday or a
Sunday, or another day on which banks in the State of New York generally, or
the City of New York, the State of _______ generally, (or such other cities and
states in which the Corporate Trust Office, the principal administrative
offices of the [Master Administrator], Certificate Registrar and Transfer
Agent, and Paying Agent or the principal offices of the [Master Servicer] or
the Servicer are subsequently located, as specified in writing by such party to
the other parties hereto) are required, or authorized by law, to close.
"CASH RESERVE ACCOUNT" means the account described in Section
7.03(a).
"CERTIFICATE RATE" means the rate per annum specified in the
Issuance Supplement as the rate per annum at which interest accrues in respect
of the Investor Certificates and the Originator Certificate.
"CERTIFICATES" means on any date the Originator Certificate
and the Investor Certificates issued and outstanding on such date.
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"CERTIFICATEHOLDER" means the registered holder of an Investor
Certificate or the Originator Certificate, as the case may be.
"CERTIFICATEHOLDERS' INTEREST" has the meaning specified in
Section 7.01(a).
"CERTIFICATE REGISTRAR AND TRANSFER AGENT" has the meaning
specified in Section 6.03(a).
"CERTIFICATE REGISTER" has the meaning specified in Section
6.03.
"CLOSING DATE" means ___________, 199_.
"CODE" means the Internal Revenue Code of 1986.
"COLLECTION ACCOUNT" means the account described in Section
7.02(a).
"CORPORATE TRUST OFFICE" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of this Agreement is
located at the address set forth in Section 11.03.
"CREDIT AND COLLECTION POLICIES" means written policies
consistent with the requirements of the Pooling and Servicing Agreement in
effect from time to time formulated by the [Master Administrator] in
consultation with the Servicer and agreed to by the [Master Servicer] as to the
requirements of certain servicing matters.
"CUMULATIVE SUBORDINATION PAYMENTS" means, for any
Distribution Date, an amount equal to the sum of (a) all payments made to the
Investor Certificateholders minus (b) amounts attributable to interest on any
Shortfall, calculated at the Certificate Rate, over the term of this Agreement
up to and including such Distribution Date minus (c) the Investor's Share of
the Available Distribution Amount determined for all Distribution Dates up to
and including such Distribution Date.
"DEALER" means each automobile dealer with whom an Originator
has entered into an agreement which provides for, among other things, the
origination of the Auto Loans.
"DEBT" means for any Person, (a) indebtedness of such Person
for borrowed money, (b) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) obligations of such Person
to pay the deferred purchase price of property or services, (d) obligations of
such Person as lessee under leases which have been or should be, in accordance
with GAAP, recorded as capital leases, (e) obligations secured by any lien or
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<PAGE> 12
other charge upon property or assets owned by such Person, even though such
Person has not assumed or become liable for the payment of such obligations,
(f) obligations of such Person under direct or indirect guaranties in respect
of, and obligations (contingent or otherwise) to purchase or otherwise acquire,
or otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (e)
above, and (g) liabilities in respect of unfunded vested benefits under plans
covered by ERISA. For the purposes hereof, the term "guarantee" shall include
any agreement, whether such agreement is on a contingency or otherwise, to
purchase, repurchase or otherwise acquire Debt of any other Person, or to
purchase, sell or lease, as lessee or lessor, property or services, in any such
case primarily for the purpose of enabling another Person to make payment of
Debt, or to make any payment (whether as an advance, capital contribution,
purchase of an equity interest or otherwise) to assure a minimum equity, asset
base, working capital or other balance sheet or financial condition, in
connection with the Debt of another Person, or to supply funds to or in any
manner invest in another Person in connection with Debt of such Person.
"DEFAULTED AUTO LOAN" means, for any Due Period, (a) an Auto
Loan as to which a claim has been submitted under the terms of the Insurance
Policies to the extent such Auto Loan is eligible for coverage thereunder, (b)
an Auto Loan determined to be uncollectible in accordance with the Servicer's
customary practices on or prior to the last day of such Due Period or (c) an
Auto Loan repurchased by the Originator or the Sponsor or purchased by the
[Master Servicer] pursuant to Section 3.03.
"DEFINITIVE CERTIFICATES" has the meaning specified in Section
6.01(b).
"DEPOSIT DATE" means the Business Day immediately preceding
each related Distribution Date or Monthly Fee Date.
"DEPOSITORY" means The Depository Trust Company or a successor
appointed by the [Master Administrator]. Any successor to the Depository shall
be an organization registered as a "clearing agency" pursuant to Section 17A of
the Securities Exchange Act of 1934.
"DEPOSITORY AGREEMENT" means the agreement among the Sponsor,
the Trustee, the [Master Administrator] and the Depository dated on or before
the Issuance Date, substantially in the form of Exhibit J.
"DEPOSITORY PARTICIPANT" means a Person for whom, from time to
time, the Depository effects book-entry transfers and pledges of securities
deposited with the Depository.
"DETERMINATION DATE" means the 15th day of each month (or the
preceding Business Day, if such day is not a Business Day) on
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<PAGE> 13
which the [Master Administrator] will determine, among other things, the
Available Funds.
"DISTRIBUTION DATE" means the 20th day of each month specified
as a month in which a Distribution Date occurs in the Issuance Supplement (or,
if such day is not a Business Day, the next succeeding Business Day).
"DOLLAR" and "$" means lawful currency of the United States of
America.
"DUE PERIOD" means with respect to the first Due Period
following the Issuance Date, the period from the Issuance Date to the last day
of the calendar month immediately preceding the first Distribution Date, and
thereafter, the three consecutive calendar months immediately preceding each
subsequent Distribution Date.
"DUFF & PHELPS" means Duff & Phelps Credit Rating Co., a
nationally recognized statistical rating organization, and any successor
thereto.
"ELECTRONIC LEDGER" means the electronic master record of the
Auto Loans maintained by the Servicer.
"ELIGIBLE ACCOUNT" means a segregated account, which may be an
account maintained with the Trustee, which is either (a) maintained with a
depository institution or trust company whose long term unsecured debt
obligations are rated at least BBB+ by Duff & Phelps (or, if such obligations
are not rated by Duff & Phelps, BBB+ by Standard & Poor's and Baa1 by Moody's,
provided, that if only one such rating agency rates such institution, such
single rating shall suffice), or (b) a segregated trust account or similar
account maintained with a federally or state chartered depository institution
subject to regulations regarding fiduciary funds on deposit substantially
similar to 12 C.F.R. Section 9.10(b).
"ELIGIBLE INVESTMENTS" means any of the following:
(a) obligations of, or guaranteed as to the full and
timely payment of principal and interest by, the United States or obligations
of any agency or instrumentality thereof, when such obligations are backed by
the full faith and credit of the United States;
(b) repurchase agreements on obligations specified in
clause (a); provided, that the short-term debt obligations of the party
agreeing to repurchase are rated no less than Duff-1 by Duff & Phelps or, if
not rated by Duff & Phelps, no less than A-1 by Standard & Poor's and P-1 by
Moody's (provided, that if only one such rating agency rates such party, such
single rating shall suffice);
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<PAGE> 14
(c) federal funds, certificates of deposit, time deposits
and bankers' acceptances (which shall each have an original maturity of not
more than 90 days and, in the case of bankers' acceptances, shall in no event
have an original maturity of more than 365 days) of any United States
depository institution or trust company incorporated under the laws of the
United States or any state; provided, that the short-term obligations of such
depository institution or trust company are rated no less than Duff-1 by Duff &
Phelps or, if not rated by Duff & Phelps, no less than A-1 by Standard & Poor's
and P-1 by Moody's (provided, that if only one such rating agency rates such
party, such single rating shall suffice);
(d) commercial paper (having original maturities of not
more than 30 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition are rated no less
than Duff-1 by Duff & Phelps or, if not rated by Duff & Phelps, no less than
A-1 by Standard & Poor's and P-1 by Moody's (provided, that if only one such
rating agency rates such party, such single rating shall suffice);
(e) securities of money market funds rated AAm or better
by Standard & Poor's and Aa by Moody's (provided, that if only one such rating
agency rates such fund, such single rating shall suffice); and
(f) such other investment grade investments as shall be
acceptable to the Rating Agency.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
"EVENT OF ADMINISTRATOR TERMINATION" has the meaning specified
in Section 5.07.
"EVENT OF DEFAULT" has the meaning specified in Section 8.01.
"EVENT OF MASTER SERVICING TERMINATION" has the meaning
specified in Section 4.12.
"EVENT OF SERVICING TERMINATION" has the meaning specified in
Section 4.14.
"EXPECTED FINAL PAYMENT DATE" means the date specified as such
in the Issuance Supplement.
"FRACTIONAL UNDIVIDED INTEREST" means the fractional undivided
interest in the Investor Certificate Principal Balance that is evidenced by an
Investor Certificate and that is set forth on the face of such Investor
Certificate; provided, however, that the Trust shall only issue Investor
Certificates evidencing in the
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<PAGE> 15
aggregate Fractional Undivided Interests totalling 100% of the Investor
Certificate Principal Balance.
"GAAP" means generally accepted accounting principles as in
effect in the United States, consistently applied, as of the date of such
application.
"GOVERNMENTAL AUTHORITY" means the United States of America,
any state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions thereof or pertaining thereto.
"INDEPENDENT PUBLIC ACCOUNTANT" means any of (a) Arthur
Andersen & Co., (b) Deloitte & Touche, (c) Coopers & Lybrand, (d) Ernst & Young
(e) KMPG Peat Marwick and (f) Price Waterhouse (and any successors thereof);
provided, that such firm is independent with respect to the [Master Servicer],
the Servicer, or any Subservicer, as the case may be, within the meaning of the
Securities Act of 1933.
"INDIVIDUAL SOLD BALANCE" means (a) with respect to any
Actuarial Auto Loan and any Precomputed Auto Loan, the present value of all
Scheduled Payments for such Auto Loan due on or after the effective date of its
transfer to the Trust (calculated based on the assumption that each such
Scheduled Payment is paid on its due date), discounted monthly at one-twelfth
of the related APR and (b) with respect to any Simple Interest Auto Loan, the
principal balance thereof as of the effective date of its transfer to the
Trust.
"INITIAL PRINCIPAL AMOUNT" means the initial principal amount
of the Investor Certificates authenticated and delivered on the Issuance Date.
"INSURANCE COMPANIES" means _________________________.
"INSURANCE POLICIES" means the Auto Loan Protection Policy and
the Blanket Collateral Protection Policy issued by _____ at the request of the
Sponsor in the name of the Trust and attached hereto as Exhibits B and C,
respectively.
"INSURER" means _________________________.
"INTENDED TAX CHARACTERIZATION" has the meaning specified in
Section 2.05(b).
"INTEREST-ONLY PERIOD" means the period commencing on the
Issuance Date until the first day of the Principal Amortization Period.
"INVESTOR CERTIFICATE PRINCIPAL BALANCE" means, for any
Distribution Date, the Initial Principal Amount reduced by all
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prior payments to the Investor Certificateholders allocable to principal.
"INVESTOR CERTIFICATES" means the Certificates issued pursuant
hereto.
"INVESTOR CERTIFICATEHOLDER" means the holder of record of an
Investor Certificate.
"INVESTOR'S SHARE" means, with respect to any Distribution
Date, the percentage, which shall not be greater than ____%, specified as the
"Investor's Share" in the Issuance Supplement.
"ISSUANCE DATE" means the date specified as such in the
Issuance Supplement on which the Investor Certificates will be authenticated
and delivered by the Trustee in accordance with the provisions of Section
6.02(b).
"ISSUANCE NOTICE" has the meaning specified in Section
6.02(b)(i).
"ISSUANCE SUPPLEMENT" means a supplement to this Agreement
complying with the terms of Section 6.02(b)(vi) and executed in conjunction
with the issuance of the Investor Certificates.
"LIST OF AUTO LOANS" means a list containing the Required
Information with respect to each Auto Loan delivered to the Trustee and
certified by a duly authorized officer of the Sponsor which is attached hereto
as Schedule 1.
"LOAN FILE" means, with respect to any Auto Loan, the original
loan and security agreement evidencing the Auto Loan and originals or copies of
such other documents and instruments relating to each Auto Loan and the
security interest on the selected Automobile as specified in the Credit and
Collection Policies.
"[MASTER ADMINISTRATOR] DUTIES" has the meaning specified in
Section 5.01(b).
"[MASTER ADMINISTRATOR]'S REPORT" has the meaning specified in
Section 5.11.
"MAXIMUM SUBORDINATION AMOUNT" means, on any Distribution
Date, an amount equal to the product of (a) the Originator's Share and (b) the
aggregate Principal Balance of the Auto Loans specified in the Issuance
Supplement.
"MONTHLY ADMINISTRATOR FEE" means, with respect to any Monthly
Fee Date, a fee equal to the sum of (a) all late payment penalties paid by
Obligors on Auto Loans not paid to the [Master
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Servicer] pursuant to Section 4.08 during the immediately preceding calendar
month, (b) any prepayment penalties paid by Obligors in connection with any
prepayment of any Auto Loan (such penalties to include the excess of the amount
received from and not rebated to the Obligor in connection with a prepayment in
full of a Precomputed Auto Loan or an Actuarial Loan over the outstanding
Principal Balance plus accrued interest, determined in accordance with the
Actuarial Method) during the immediately preceding calendar month; and (c) all
net investment earnings on Eligible Investments in respect of the Collection
Account and the Cash Reserve Account during the period from the second
preceding Deposit Date to the immediately preceding Deposit Date.
"MONTHLY FEE DATE" means the 20th day of each calendar month
(or, if such day is not a Business Day, the next succeeding Business Day)
commencing __________ 20, 199_.
"MONTHLY SERVICING FEE" means, with respect to any Monthly Fee
Date, a fee equal to (a) the product of (i) ____% and (ii) the aggregate
Principal Balance of the Auto Loans as of the end of the month immediately
preceding such Monthly Fee Date, plus (b) the Reimbursable Servicer Expenses,
plus (c) the Servicer Penalty Payment Amount, plus (d) the Servicer Variable
Amount.
"MONTHLY SUBROGATION AMOUNT" means, with respect to any
Monthly Fee Date, amounts determined by the [Master Administrator] to be
payable to the Insurer in respect of claims paid under the Insurance Policies
in connection with the Insurer's subrogation rights thereunder during the
immediately preceding calendar month.
"MOODY'S" means Moody's Investors Service, Inc., a nationally
recognized statistical rating organization, and any successor thereto.
"OBLIGOR" means, with respect to any Auto Loan, the Person
primarily obligated to make payments in respect thereto.
"OFFICER'S CERTIFICATE" means, with respect to any Person, a
certificate signed by the Chairman of the Board, Vice Chairman of the Board,
the President, a Vice President, the Treasurer, the Secretary, an Assistant
Secretary, or the manager of such Person.
"OPINION OF COUNSEL" means a written opinion of counsel (who
may be counsel to the Sponsor, the [Master Administrator], the [Master
Servicer] or the Servicer), which opinion is acceptable to the Trustee.
"ORIGINATOR CERTIFICATE" means the Certificate authenticated
by the Trustee pursuant to Section 6.02.
"ORIGINATOR CERTIFICATE PRINCIPAL BALANCE" means, on any date
of determination, (a) prior to the Issuance Date, the sum of
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(i) the initial principal amount of the Originator Certificate plus (ii) any
additions to the Originator Certificate Principal Balance pursuant to Section
2.03(a) and (b) on and after the Issuance Date, the sum of (i) the Originator
Certificate Principal Balance determined on the Issuance Date plus (ii) any
additions to the Originator Certificate Principal Balance pursuant to Section
2.03(a) minus (iii) all prior payments to the Originator Certificateholder in
reduction of principal pursuant to Section 7.04(c)(ii) and Section 7.04(d)(iv).
"ORIGINATOR'S INTEREST" means the residual undivided ownership
interest in the Auto Loans owned by the Sponsor equal to the aggregate
Principal Balance of the Auto Loans less the Investor Certificate Principal
Balance.
"ORIGINATOR'S SHARE" means, with respect to any Distribution
Date, the percentage, which shall not be less than ___%, specified as the
"Originator's Share" in the Issuance Supplement.
"PARTIAL PAYMENT AMOUNT" means any payment of principal on an
Auto Loan which is received in advance of its scheduled due date, but excluding
any prepayment in full by an Obligor or Recoveries on Defaulted Auto Loans.
"PAYMENTS" for any Auto Loan for any Due Period means all
amounts received with respect to such Auto Loan during such Due Period on or
after the effective date of the transfer of such Auto Loan to the Trust,
including, without limitation, proceeds from any insurance policy including the
Insurance Policies (other than proceeds applied to the restoration or repair,
or in certain circumstances, replacement, of the related Automobile), but not
including amounts which constitute Recoveries on Defaulted Auto Loans, the
Repurchase Price of any Auto Loan and withdrawals from the Cash Reserve
Account.
"PERCENTAGE" means the Fractional Undivided Interest owned by
a particular Investor Certificateholder, expressed as the percentage obtained
by dividing the denomination representing the initial principal amount of the
related Investor Certificate by the Initial Principal Amount.
"PERSON" means an individual, partnership, corporation
(including a business trust), joint stock company, limited liability company,
trust, association, joint venture, Governmental Authority or any other entity
of whatever nature.
"POOL FACTOR" means an eight-digit decimal computed as of any
Distribution Date by dividing the Investor Certificate Principal Balance (after
giving effect to any payments to Investor Certificateholders allocable to
principal on such Distribution Date) by the Initial Principal Amount.
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"PRECOMPUTED AUTO LOAN" means any Auto Loan under which earned
interest (which may be referred to in the Auto Loan as the add-on finance
charge) and principal is determined according to the sum of periodic balances
or the sum of monthly balances or any equivalent method commonly referred to as
the "Rule of 78s".
"PRINCIPAL AMORTIZATION EVENT" means an Event of Default
declared as such pursuant to the requirements of Section 8.02.
"PRINCIPAL AMORTIZATION PERIOD" means the period (a) beginning
on the earlier to occur of (i) the first Distribution Date following the sixth
monthly anniversary of the Issuance Date, and (ii) the Distribution Date
immediately following the occurrence of a Principal Amortization Event and (b)
ending on the Trust Termination Date.
"PRINCIPAL BALANCE" of an Auto Loan means, on any date of
determination, (a) with respect to a Simple Interest Auto Loan, the Individual
Sold Balance thereof reduced by that portion of all prior Payments received by
the Servicer with respect to such Auto Loan allocable to principal as reflected
on the records maintained by the Servicer (in accordance with the Credit and
Collection Policies) other than amounts allocable to the Partial Prepayment
Amount and (b) with respect to a Precomputed Auto Loan or an Actuarial Auto
Loan, the Individual Sold Balance minus that portion of all Scheduled Payments
received on or prior to such date allocable to principal using the Actuarial
Method other than amounts allocable to the Partial Prepayment Amount; provided
that, for the purpose of determining principal allocable to the
Certificateholders, for every Due Period following the Due Period with respect
to which an Auto Loan is repurchased or purchased by the [Master Servicer], an
Originator or the Sponsor in accordance with the provisions of Section 3.03 or
in which such Auto Loan becomes a Defaulted Auto Loan or is prepaid in full,
the Principal Balance of such Auto Loan shall be deemed to be zero.
"PURCHASE" has the meaning specified in Section 2.03(a).
"PURCHASE ASSIGNMENT" means a certificate of assignment by the
Sponsor to the Trustee substantially in the form of Exhibit A giving notice of,
and evidencing, the transfer of ownership of the Transferred Assets by the
Sponsor to the Trustee for the benefit of the Certificateholders.
"PURCHASE DATE" means the Closing Date and each day on which a
Purchase is made by the Trust.
"PURCHASE NOTICE" has the meaning specified in Section
2.03(b).
"RATING AGENCY" means any nationally recognized statistical
organization rating the Investor Certificates at the request of the Sponsor; as
of the date hereof, Duff & Phelps.
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"RECORDS" means all documents, books, records and other
information (including, without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and rights) prepared
and maintained by the Originator, the [Master Servicer], the Servicer or by or
on behalf of the Sponsor with respect to Auto Loans and the related Obligors.
"RECORD DATE" means the last Business Day of the calendar
month preceding the month in which a Distribution Date occurs.
"RECOVERIES ON DEFAULTED AUTO LOANS" means, for any Due
Period, all amounts received by the Servicer during such Due Period with
respect to Defaulted Auto Loans from any source including without limitation
proceeds of insurance (including insurance maintained by Obligor and the
Insurance Policies), and the Repurchase Price of Auto Loans repurchased by the
Originator or the Sponsor or purchased by the [Master Servicer] pursuant to
Section 3.03.
"REIMBURSABLE SERVICER EXPENSES" means, with respect to any
Monthly Fee Date, all reasonable and customary fees and expenses of third
parties incurred by the [Master Servicer] or the Servicer (including fees and
expenses of the Trustee, to the extent not reimbursable by the [Master
Administrator] pursuant to Section 10.06, and expenses related to financing
statements and titles) in connection with their respective repossession and
remarketing activities hereunder including without limitation fees of
attorneys, appraisers, third party collateral managers and others (who shall
have been retained by the [Master Servicer] or the Servicer, as applicable, in
accordance with the servicing standard set forth in Section 4.01) for the month
immediately preceding such Monthly Fee Date.
"RELATED DOCUMENTS" means each Assignment, each Sale
Agreement, the Insurance Policies, the Issuance Supplement and all documents
and instruments required to be delivered thereunder.
"REPURCHASE PRICE" means for any Due Period, (a) with respect
to any Auto Loan which the Sponsor is obligated to repurchase, or the [Master
Servicer] is required to purchase in accordance with the provisions of Section
3.03, the sum of (i) the Principal Balance of such Auto Loan plus (ii) an
amount equal to the amount of interest accrued on such Principal Balance at the
related APR from the last day to which interest has been paid with respect to
such Auto Loan through the last day of the Due Period preceding the Deposit
Date on which such Auto Loan is repurchased and (b) with respect to any Auto
Loan an Originator is required to repurchase in accordance with the provisions
of Sections 3.03 and the related Sale Agreement, the amount specified in such
Sale Agreement as the "Repurchase Price" for such Auto Loan.
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"REQUIRED CASH RESERVE AMOUNT" means, on any day, the amount
specified as such in the Issuance Supplement but not more than the Available
Subordination Amount.
"REQUIRED INFORMATION" means, with respect to an Auto Loan (a)
the name of the Obligor, (b) the Individual Sold Balance, (c) the Principal
Balance, (d) the maturity date, (e) the APR and (f) the state of origination.
"RESPONSIBLE OFFICER" shall mean any Vice President, any
Assistant Vice President, any Assistant Secretary, any Assistant Treasurer or
any other officer of the Trustee customarily performing functions similar to
those performed by any of the above-designated officers and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"SALE AGREEMENT" means any purchase agreement between and
among the Originator and the Sponsor, providing for the sale of the Auto Loans
to the Sponsor.
"SALE ASSIGNMENT" means, with respect to any Auto Loan, the
assignment conveying such Auto Loan to the Sponsor under all applicable law in
the state in which the related Automobiles are located to permit the assignee
or its agents to exercise all rights granted by the Obligor under such Auto
Loan and such other documents and all rights available under applicable law to
the obligee under such Auto Loan and which, in each case, may, to the extent
permitted by the laws of the state in which the related Automobiles are
located, be a blanket instrument of assignment covering other Auto Loans as
well.
"SCHEDULED PAYMENT" means a payment due on an Auto Loan in
accordance with its terms.
"SERVICE TRANSFER" has the meaning specified in Section 4.14.
"SERVICER DUTIES" has the meaning specified in Section
4.04(a).
"SERVICER PENALTY PAYMENT AMOUNT" means, with respect to any
Monthly Fee Date, all penalties or reimbursement charges paid by Obligors on
account of payments returned for insufficient funds by their paying banks and
__% of all late payment penalties paid by Obligors on Auto Loans during the
immediately preceding calendar month.
"SERVICER REPORT" has the meaning specified in Section 4.19.
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"SERVICER VARIABLE AMOUNT" means, with respect to any Monthly
Fee Date, an amount not less than zero, equal to the excess of (a) the
aggregate interest accrued on all of the Auto Loans at the actual interest rate
of each Auto Loan during the immediately preceding calendar month calculated
using the Actuarial Method over (b) the aggregate interest accrued on all of
the Auto Loans at an annual interest rate of __% during the immediately
preceding calendar month calculated using the Actuarial Method.
"SERVICING OFFICER" means any officer or employee of the
[Master Servicer] or the Servicer involved in, or responsible for, the
administration and servicing of Auto Loans whose name appears on a list of
servicing officers attached to Officer's Certificates furnished to the Trustee
and the [Master Administrator] by the [Master Servicer] and the Servicer,
respectively, as such lists may be amended from time to time.
"SHORTFALL" means, on any Distribution Date, an amount equal
to the excess, if any, of the amount of the interest calculated pursuant to
Section 7.04(c)(i)(A) or Section 7.04(d)(i)(A), as the case may be, on any
prior Distribution Date over the amount of interest actually distributed to the
Investor Certificateholders on such Distribution Dates pursuant to Section
7.04(c)(i) or Section 7.04(d)(i), as the case may be.
"SIMPLE INTEREST AUTO LOAN" means any Auto Loan under which
the portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"SIMPLE INTEREST METHOD" means the method of allocating fixed
level monthly payments on an Auto Loan between interest and principal whereby
the amount allocable to interest is equal to daily interest on the Principal
Balance thereof at the stated APR for the actual number of days elapsed since
the preceding payment was made, which is computed on the basis of either 360
days or 365 days as required by applicable state law, and by application of
amounts received first to interest accrued on a daily basis and then to
principal.
"STANDARD & POOR'S" means Standard & Poor's Corporation, a
nationally recognized statistical rating organization, and any successor
thereto.
"SUBCONTRACTOR" means any Person with whom the [Master
Administrator] enters into a Subcontracting Agreement.
"SUBCONTRACTING AGREEMENT" means any written contract between
the [Master Administrator] and any Subcontractor, relating to the
administration of the Trust Assets.
"SUBSERVICER" means any Person with whom the Servicer enters
into a Subservicing Agreement.
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"SUBSERVICING AGREEMENT" means any written contract between
the Servicer and any Subservicer, relating to servicing, and collection of Auto
Loans, in such form as has been approved by the Servicer and the [Master
Administrator].
"SUBSIDIARY" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the Board of Directors or other Persons performing
similar functions are at the time directly or indirectly owned by such Person.
"SUCCESSOR [MASTER ADMINISTRATOR]" has the meaning specified
in Section 5.08(a).
"SUCCESSOR [MASTER SERVICER]" has the meaning specified in
Section 4.13(a).
"SUCCESSOR SERVICER" has the meaning specified in Section
4.15(a).
"TAX" or "TAXES" shall mean all taxes, charges, fees, levies
or other assessments including, without limitation, income, gross receipts,
profits, withholding, excise, property, sales, use, occupation and franchise
taxes (including, in each such case, any interest, penalties or additions
attributable to or imposed on or with respect to any such taxes, charges, fees
or other assessments) imposed by the United States, any state or political
subdivision thereof, any foreign government or any other jurisdiction or taxing
authority.
"TITLE DOCUMENT" means, with respect to any Auto Loan and the
related Automobile, either (a) the certificate of title for, or other evidence
of a security interest in (including, without limitation, proof of application
for notice of lien), such Automobile or (b) with respect to any jurisdiction in
which the certificate of title or other evidence of ownership is not issued to
the holder of a lien, evidence of the security interest in the Automobile, in
each case issued by the department of motor vehicles or other appropriate
Governmental Authority in the jurisdiction in which such Automobile or the
Obligor is located.
"TRANSFERRED ASSETS" means the Auto Loans, the Insurance
Policies (other than any obligation to make any payment thereunder to the
Insurance Companies and taxes on premiums paid or payable thereon, which shall
be obligations of the [Master Administrator] during such time as _____ is the
[Master Administrator], and at any time thereafter, the Originator), all rights
of the Sponsor under each Sale Agreement, all monies due or to become due and
all amounts received with respect thereto and all proceeds thereof.
"TRUST" has the meaning ascribed thereto in the recitals to
this Agreement.
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"TRUST ASSETS" has the meaning specified in Section 2.01.
"TRUST OPERATING EXPENSES" means, with respect to each
Distribution Date, the amounts payable under Section 7.04(a) on such date, and,
without duplication, the immediately preceding two Monthly Fee Dates.
"TRUST TERMINATION DATE" has the meaning specified in Section
11.01.
"UCC" means the Uniform Commercial Code as in effect in the
relevant state.
"U.S. PERSON" means a citizen or resident of the United
States, a corporation or partnership organized in or under the laws of the
United States or any state thereof, or an estate or trust, the income of which
is subject to United States Federal income taxation regardless of its source.
SECTION 1.02. Provisions of General Application. For all
purposes of this Agreement, except as otherwise expressly provided or unless
the context otherwise requires:
(a) All accounting terms not specifically defined herein
shall be construed in accordance with GAAP.
(b) All terms used in Article 9 of the UCC, and not
specifically defined herein, are used herein as defined in such Article 9.
(c) The terms defined in this Article include the plural
as well as the singular.
(d) The words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole. All
references to Articles and Sections shall be deemed to refer to Articles and
Sections of this Agreement.
(e) References to statutes are to be construed as
including all statutory provisions consolidating, amending or replacing the
statute to which reference is made and all regulations promulgated pursuant to
such statutes.
(f) For purposes of any calculations referred to in this
Agreement (unless otherwise specified), (a) all percentages resulting from such
calculations will be rounded up, if necessary, to the nearest one
ten-thousandth of a percentage point (e.g., 9.87654% (or .0987654) being
rounded up to 9.8766% (or .098766)) and (b) all Dollar amounts used in or
resulting from such calculations will be rounded up to the nearest cent (e.g.,
$1,234.373 being rounded up to $1,234.38).
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SECTION 1.03. Calculation of Quarterly Interest. The
calculation of the amount of interest to be paid to Certificateholders on each
Distribution Date shall be made by the [Master Administrator] and shall be made
on the basis of a year consisting of 12 months each assumed to consist of 30
days; provided, that in connection with any Due Period the duration of which is
other than three complete calendar months, interest for each completed calendar
month shall be computed at the monthly rate and any period since the last
completed calendar month shall be computed at the daily rate.
ARTICLE II
TRANSFER OF TRUST ASSETS
SECTION 2.01. Conveyance of Transferred Assets. On
the Closing Date, the Sponsor with the execution and delivery of this Agreement
does hereby, and on each Purchase Date, the Sponsor with the execution and
delivery of each Purchase Assignment will thereby, sell, grant, transfer,
assign, set over and otherwise convey to the Trustee, on behalf of the Trust,
for the benefit of the Certificateholders, without recourse, all right, title
and interest of the Sponsor in, to and under the Transferred Assets specified
herein or therein, as the case may be. Such property together with all funds
on deposit in the Collection Account and all funds on deposit in the Cash
Reserve Account shall constitute the assets of the Trust (the "Trust Assets").
SECTION 2.02. Acceptance by Trustee and Appointment of the
[Master Servicer] as Custodian. (a) The Trustee hereby acknowledges the
conveyance of the Transferred Assets and the receipt of the Loan Files and the
other Transferred Assets conveyed by the Sponsor hereunder and declares that
the Trustee, through a custodian, will hold such Auto Loans, the Loan Files,
all other Transferred Assets conveyed by the Sponsor and all other Trust Assets
in trust, for the use and benefit of all Certificateholders subject to the
terms and provisions hereof.
(b) The [Master Servicer] shall hold and acknowledges
that it is holding the Loan Files and all other Transferred Assets that it may
from time to time receive hereunder as custodian for the Trustee. The [Master
Servicer] has subcontracted the custodial duties hereunder to the Servicer;
provided, that the [Master Servicer] shall remain obligated and be liable to
the Trustee on behalf of the Certificateholders for the performance of such
custodial duties without diminution of such obligation and liability by virtue
of the appointment of the Servicer and to the same extent and under the same
terms and conditions as if the [Master Servicer] alone were the custodian of
the Transferred Assets.
(c) The Servicer shall perform its duties under this
Section 2.02 in accordance with the standard set forth in Section
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4.01 as such standard applies to servicers acting as custodial agents. The
Servicer shall promptly report to the [Master Administrator], the [Master
Servicer] and the Trustee any failure by it to hold the complete Loan Files as
herein provided and shall promptly take appropriate action to remedy any such
failure but only to the extent (i) any such failure is caused by the acts or
omissions of the Servicer and (ii) such remedial action is otherwise within its
capabilities or control. As custodian, the Servicer shall have and perform the
following powers and duties:
(i) hold the Loan Files on behalf of the Trustee
for the benefit of the Trust, maintain accurate records pertaining to
each Auto Loan to enable it to comply with the terms and conditions of
this Agreement, and maintain a current inventory thereof;
(ii) implement policies and procedures in
accordance with the Servicer's normal business practices with respect
to the handling and custody of the Loan Files so that the integrity
and physical possession of the Loan Files will be maintained; and
(iii) attend to all details in connection with
maintaining custody of the Loan Files on behalf of the Trustee on
behalf of the Trust.
(d) In acting as custodian of the Loan Files, the
Servicer agrees further that it does not and will not have or assert any
beneficial ownership interest in the Auto Loans or the Loan Files. Promptly
upon the Trust's acquisition thereof and the Servicer's receipt thereof, the
Servicer on behalf of the Trust shall mark conspicuously each original
contractual document with an Obligor, and its master data processing records
evidencing each Auto Loan with a legend, acceptable to the [Master
Administrator] and the Trustee, evidencing that the Trust has purchased the
Auto Loans and all right and title thereto and interest therein as provided
herein and in the related Purchase Assignment.
(e) The Servicer agrees to maintain the related Loan
Files at its office located in _______________ or at such other offices of the
Servicer as shall from time to time be identified by prior written notice to
the [Master Administrator], the [Master Servicer] and the Trustee. Subject to
the foregoing, the Servicer may temporarily move individual Loan Files or any
portion thereof without notice as necessary to conduct collection and other
servicing activities.
SECTION 2.03. Additional Purchases. (a) Prior to
the commencement of the Principal Amortization Period, the Trust shall, upon
the written request of the Sponsor, purchase additional Auto Loans (each, a
"Purchase") from the Sponsor on the terms and subject to the conditions of this
Agreement, in an aggregate principal amount such that at any one time after
giving effect to
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such Purchase, the total Principal Balance of Auto Loans acquired by the Trust
(determined as of the close of business on the last Business Day of the
immediately preceding Due Period) is up to, but not exceeding, the Available
Purchase Amount.
(b) On any Business Day which is a Purchase Date, the
Sponsor shall give the [Master Administrator] and the Servicer written notice
of each Purchase (in each case, a "Purchase Notice") (a) specifying the
Individual Sold Balance of each Auto Loan sold thereby to the Trust on such
Purchase Date and (b) including a representation by the Sponsor that the
Purchase requested shall not be greater than the Available Purchase Amount.
The [Master Administrator] and the Servicer may without any duty to make any
independent investigation with respect thereto, rely on the facts set forth in
such Purchase Notice.
(c) On each Purchase Date, following its delivery of a
Purchase Notice, the Sponsor will complete, execute and deliver a Purchase
Assignment to the [Master Administrator]. The [Master Administrator] and the
Servicer, as custodian for and on behalf of the Trustee shall thereupon execute
such Purchase Assignment and deliver executed copies thereof to each other and
to the Sponsor. The Servicer shall, on the Closing Date and on each monthly
anniversary thereof until the beginning of the Principal Amortization Period,
deliver to, or accept as custodian for, the Trustee on behalf of the Trust all
Assignments and Sale Agreements delivered to it since the last such delivery to
the Trustee (including, any Assignments and Sale Agreements delivered to it
pursuant to Section 2.04).
(d) Following delivery of a duly executed Purchase
Assignment, subject to the satisfaction of the conditions set forth in Section
2.04, (i) the Dollar amount of the Originator Certificate Principal Balance
represented by the Originator Certificate will increase in the amount of the
aggregate Principal Balance of the Auto Loans conveyed to the Trust on such
Purchase Date and (ii) the ownership of all Transferred Assets specified in
such Purchase Assignment (including Auto Loans transferred prior to the related
Purchase Date) will be vested in the Trustee for the benefit of the
Certificateholders and such Transferred Assets shall become part of the Trust
Assets.
SECTION 2.04. Conditions Precedent to All Purchases. Each
Purchase shall be subject to the conditions precedent that:
(a) On the related Purchase Date, the Sponsor shall have
certified in the related Purchase Assignment that:
(i) the representations and warranties of the
Sponsor, and, to the best of its knowledge, the [Master
Administrator], the [Master Servicer] and the Servicer set forth in
Sections 3.01, 3.02, 4.03 and 5.04 are true and
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correct on and as of such date, before and after giving effect to such
Purchase, as though made on and as of such date;
(ii) to the best of its knowledge, no event has
occurred, or would result from such Purchase or from the application
of the proceeds therefrom, which constitutes an Event of Default or
would constitute an Event of Default but for the requirement that
notice be given or time elapse or both;
(iii) the Sponsor is in compliance with each of its
covenants set forth herein;
(iv) to the best of its knowledge, no event has
occurred which constitutes an Event of Master Servicing Termination or
would constitute an Event of Master Servicing Termination but for the
requirement that notice be given or time elapse or both;
(v) to the best of its knowledge, no event has
occurred which constitutes an Event of Servicing Termination or would
constitute an Event of Servicing Termination but for the requirement
that notice be given or time elapse or both;
(vi) no event has occurred which constitutes an
Event of Administrator Termination or would constitute an Event of
Administrator Termination but for the requirement that notice be given
or time elapse or both;
(b) The Principal Amortization Period shall not have
begun;
(c) The Sponsor shall have delivered to the Servicer as
custodian for and on behalf of the Trustee an executed copy of the related Sale
Agreement (if such Sale Agreement has not been previously delivered to the
Trustee) and Sale Assignment and an Officer's Certificate stating that all
conditions precedent to the effectiveness thereof shall have been satisfied to
the extent that the failure to do so would have a material adverse effect on
the Certificateholders;
(d) Each of the Sponsor, the [Master Administrator], the
[Master Servicer], the Originator and the Servicer shall have taken such other
action, including delivery of approvals, consents, opinions, documents and
instruments as may be reasonably requested by each of them, the Trustee or the
Rating Agency with respect to the transactions contemplated by this Agreement
or such Purchase Assignment.
SECTION 2.05. Grant of Security Interest; Tax Treatment. (a)
Except with respect to the Intended Tax Characterization, it is the intention
of the parties hereto that the conveyance by the Sponsor of the Transferred
Assets to the Trustee on behalf of the
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Trust on the Closing Date and each Purchase to be made hereunder shall
constitute a purchase and sale of such Transferred Assets and not a loan. In
the event, however, that a court of competent jurisdiction were to hold that
the transaction evidenced hereby constitutes a loan and not a purchase and
sale, it is the intention of the parties hereto that this Agreement and each
related Purchase Assignment shall constitute a security agreement under
applicable law, and that the Sponsor shall be deemed to have granted to the
Trustee, on behalf of the Trust, a first priority perfected security interest
in all of the Sponsor's right, title and interest in, to and under the
Transferred Assets and the other Trust Assets. The conveyance by the Sponsor of
the Transferred Assets to the Trustee on behalf of the Trust on the Closing
Date and the Purchases shall not constitute and are not intended to result in
an assumption by the Trustee or any Certificateholder of any obligation of the
Sponsor to the Obligors, the Originator, the insurers under any insurance
policies including the Insurance Policies, or any other Person in connection
with the Transferred Assets.
(b) It is the intention of the Sponsor that, with respect
to all Taxes, the Investor Certificates will be treated as indebtedness of the
Sponsor to the Investor Certificateholders secured by the Transferred Assets
(the "Intended Tax Characterization"). The Sponsor and the Trustee, by
entering into this Agreement, and each Investor Certificateholder by the
purchase of an Investor Certificate, agree to report such transactions for
purposes of all Taxes in a manner consistent with the Intended Tax
Characterization.
(c) The Sponsor shall take no action inconsistent with
the Trust's ownership of the Transferred Assets and shall indicate or shall
cause to be indicated in its records and records held on its behalf that
ownership of each Auto Loan and the other Transferred Assets is held by the
Trustee on behalf of the Trust. In addition, the Sponsor shall respond to any
inquiries from third parties with respect to ownership of an Auto Loan or any
other Transferred Asset by stating that it is not the owner of such Auto Loan
and that ownership of such Auto Loan or other Transferred Asset is held by the
Trustee on behalf of the Trust.
SECTION 2.06. Further Action Evidencing Assignments. (a) The
Sponsor agrees that, from time to time, at its expense, it will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or appropriate, or that the [Master
Administrator], the [Master Servicer], the Servicer or the Trustee may
reasonably request, in order to perfect, protect or more fully evidence the
transfer of ownership of the Transferred Assets or to enable the Trustee to
exercise or enforce any of its rights hereunder, and under any Purchase
Assignment. Without limiting the generality of the foregoing, the Sponsor
will, upon the request of the [Master Administrator] on its behalf or on behalf
of the [Master Servicer],
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the Servicer or the Trustee execute and file (or cause to be executed and
filed) such financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be necessary
or appropriate including, without limitation, recording and filing UCC-1
financing statements, amendments or continuation statements with the office of
the Secretary of State of the state of the location of chief executive office
of the Sponsor (and other locations): (i) on or prior to the Closing Date; and
(ii) not more than five days after the effective date of any change of the
name, identity or structure or relocation of its chief executive office or any
change that would make any UCC-1 or continuation statement previously filed
pursuant to this Agreement seriously misleading within the meaning of
applicable provisions of the UCC.
(b) The Sponsor hereby grants to the [Master
Administrator] a power of attorney to execute all documents on behalf of the
Sponsor as may be necessary or desirable to effectuate the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the
Sponsor. The Sponsor represents and warrants to the [Master Administrator],
the [Master Servicer], the Servicer and the Trustee, as of the Closing Date and
on each day until the Trust Termination Date, as follows:
(a) The Sponsor is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware and is
duly qualified to do business, and is in good standing in each jurisdiction in
which the nature of its business requires it to be so qualified and which
permits such qualification;
(b) The Sponsor has the power and authority to own and
convey all of its properties and to execute and deliver this Agreement and the
Related Documents and to perform the transactions contemplated hereby and
thereby;
(c) The Sponsor is operated in such a manner that it
would not be substantively consolidated in the bankruptcy trust estate of any
Affiliate, such that the separate existence of the Sponsor and any Affiliate
would be disregarded;
(d) The Sponsor has not engaged, and does not presently
engage and shall not engage, in any activity other than the activities
substantially similar to those undertaken pursuant to this Agreement and the
Related Documents and activities ancillary or incident thereto;
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(e) The Sponsor has not entered into any agreement or
arrangement including the Interim Financing (i) pursuant to which it grants
rights in any of the Trust Assets to any Person and (ii) which does not include
a provision in form and substance similar to Section 11.10;
(f) The execution, delivery and performance by the
Sponsor of this Agreement, the Related Documents and the transactions
contemplated hereby and thereby, (i) have been duly authorized by all necessary
partnership or other action on the part of the Sponsor, (ii) do not contravene
or cause the Sponsor to be in default under (A) the Sponsor's certificate of
incorporation (B) any contractual restriction contained in any indenture, loan
or credit agreement, lease, mortgage, security agreement, bond, note, or other
agreement or instrument binding on or affecting the Sponsor or its property,
(C) any law, rule, regulation, order, writ, judgment, award, injunction, or
decree applicable to, binding on or affecting the Sponsor or its property, and
(iii) do not result in or require the creation of any Adverse Claim upon or
with respect to any of the property of the Sponsor;
(g) This Agreement and the Related Documents have each
been duly executed and delivered on behalf of the Sponsor;
(h) No consent of, or other action by, and no notice to
or filing with, any Governmental Authority or any other party, is required for
the due execution, delivery and performance by the Sponsor of this Agreement or
any of the Related Documents or for the perfection of or the exercise by the
Trustee of any of its rights or remedies thereunder which have not been
obtained;
(i) Each of this Agreement, and each other Related
Document is the legal, valid and binding obligation of the Sponsor enforceable
against the Sponsor in accordance with its respective terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights of
creditors generally, and by general principles of equity (regardless of whether
such enforcement is consideration in a proceeding in law or in equity);
(j) There is no pending or threatened action, suit or
proceeding, nor any injunction, writ, restraining order or other order of any
nature against or affecting the Sponsor, its officers or directors, or the
property of the Sponsor, in any court or tribunal, or before any arbitrator of
any kind or before or by any Governmental Authority (i) asserting the
invalidity of this Agreement or any of the Related Documents, (ii) seeking to
prevent the sale and assignment of any Auto Loan or the consummation of any of
the transactions contemplated thereby, (iii) seeking any determination or
ruling that might materially and adversely affect (A) the performance by the
Sponsor of this Agreement or any of the Related Documents, (B) the validity or
enforceability of this Agreement or any of the Related Documents, (C) any Auto
Loan,
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(D) the federal income tax attributes of the Investor Certificates, or (iv)
asserting a claim for payment of money adverse to the Sponsor or the conduct of
its business or which is inconsistent with the due consummation of the
transactions contemplated by this Agreement or any of the Related Documents;
(k) The principal place of business and chief executive
office of the Sponsor are located at the address indicated in Section 11.04 and
there are now no, and there have not been any, other locations where the
Sponsor is located (as that term is used in the UCC) or keeps Records except,
after the date of this Agreement, as disclosed in writing to the Trustee and
the [Master Administrator];
(l) The legal name of the Sponsor is as set forth in the
beginning of this Agreement and the Sponsor does not use any tradenames,
fictitious names, assumed names or "doing business as" names;
(m) The Sponsor does not have any Subsidiary;
(n) The Sponsor is solvent and will not become insolvent
after giving effect to the transactions contemplated by this Agreement and each
of the Related Documents; and the Sponsor's transfers of Transferred Assets to
the Trust have been and will be made for reasonably equivalent value and fair
consideration; and
(o) The Sponsor has complied in all material respects
with all applicable laws, rules, regulations, and orders with respect to it,
its business and properties and all of the Transferred Assets.
SECTION 3.02. Representations and Warranties as to Each
Auto Loan and the other Transferred Assets. (a) The Sponsor represents and
warrants, as to each Auto Loan, that, to the best of its knowledge, as of the
Purchase Date of such Auto Loan:
(i) such Auto Loan is eligible for coverage under
and is covered by the Insurance Policies;
(ii) the Required Information in respect of such
Auto Loan on the List of Auto Loans delivered pursuant to Section
5.03(a)(iii) is true and correct in all material respects as of the
date of delivery thereof, and such Auto Loan is denominated in and
payable in Dollars;
(iii) such Auto Loan (A) includes a validly
perfected first priority security interest in the Automobile in favor
of the Trustee or the Originator (and if perfected in the name of the
Originator, assigned pursuant to the Sale Agreement to the Trustee on
behalf of the Trust), as provided in the related Sale Agreement, as
secured party and has not been released from such lien in whole or in
part, and (B) is
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subject to a physical damage/collision insurance policy on the
Automobile with a maximum deductible of no more than $___, which
security interest and insurance are assignable and have been so
assigned to the Trust;
(iv) such Auto Loan has not been satisfied,
subordinated or rescinded; and no provision of the Auto Loan has been
waived, altered or modified in any respect, except by instruments or
documents identified in the Loan File;
(v) such Auto Loan is not and will not be subject
to any right of rescission, set-off, recoupment, counterclaim or
defense, whether arising out of transactions concerning the Auto Loan
or otherwise and no such right has been asserted with respect thereto;
(vi) the Sponsor has conveyed to the Trust good
and marketable title to the Auto Loan, free and clear of any Adverse
Claim;
(vii) there is no default, breach, violation, or
event permitting acceleration under the Auto Loan, and no event has
occurred which, with notice and the expiration of any grace or cure
period or both, would constitute a default, breach, violation, or
event permitting acceleration under such Auto Loan; and
(viii) such Auto Loan constitutes the legal, valid
and binding obligation of the Obligor thereunder enforceable against
the Obligor in accordance with their respective terms (except as may
be limited by laws affecting creditors' rights in similar transactions
generally) and the documents evidencing such Auto Loan contain
enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the collateral
for the benefit of the security afforded thereby.
(b) With respect to each Auto Loan sold to the Sponsor
pursuant to each Sale Agreement, a true and complete copy of which has been
delivered to the Trustee and the [Master Administrator], on the date of such
sale the Originator made the additional representations and warranties as set
forth in the related Sale Agreement. The Sponsor hereby assigns to the Trustee
on behalf of the Trust such benefits and its rights under the Sale Agreements
to cause the Originator to repurchase an Auto Loan as to which there has
occurred an uncured breach of a representation or warranty in respect of the
representations and warranties set forth in the related Sale Agreement. The
Trustee hereby acknowledges such assignment.
(c) The Sponsor hereby certifies that the representations
and warranties described in this Section 3.02 shall survive the sale of the
Auto Loans to the Trust.
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SECTION 3.03. Repurchases and Purchases. (a) Upon
discovery by any of the Sponsor, the [Master Administrator], the [Master
Servicer] or the Servicer, or actual knowledge of a Responsible Officer of the
Trustee, of (i) a breach of any of the representations and warranties set forth
in Sections 3.01 and 3.02, without regard to any limitation set forth in such
representation or warranty concerning the knowledge of the Sponsor as to the
facts stated therein, which materially and adversely affects the interests of
the Trust in any Auto Loan, (ii) a failure of any Loan File to contain original
documents as set forth in Sections 2.02 and 4.04(a)(i), if the Trust is unable
to enforce the obligations of the related Obligor by reason of not having
possession of such original documentation, or (iii) a failure to make any
filing referred to in Section 2.06, which materially and adversely affects the
interest of the Certificateholders in any Auto Loan or which results in a loss,
the party discovering such breach shall give prompt written notice to the
others. If, on the Deposit Date in the month following the expiration of a 90
day period since the date of such notice referred to in the immediately
preceding sentence, such breach or failure shall remain uncured, the Auto Loan
as to which the breach or failure relates shall be repurchased or purchased for
the Repurchase Price as follows:
(i) in respect of matters set forth in Sections
2.06, 3.01, and 3.02(a), by the Sponsor;
(ii) in respect of the matters set forth in
Section 3.02(b), the [Master Administrator] shall enforce the
Trust's right to effect a repurchase of such Auto Loan against
the Originator; and
(iii) in respect of matters set forth in Sections
2.02 and 4.04(a)(i), by the [Master Servicer];
provided, that (A) none of the foregoing shall relieve the Servicer of its
obligations to make claims under the Insurance Policies within the time period
required by the Insurance Policies and (B) receipt of any payment under the
Insurance Policies shall not lower the Repurchase Price nor result in any
refund in respect thereof as to any party purchasing or repurchasing an Auto
Loan under this Section 3.03.
(b) Upon receipt by the Trustee of written certification
of the [Master Administrator] to the effect that the Repurchase Price has been
deposited in the Collection Account, the Trustee on behalf of the Trust shall
order the Servicer to release such Auto Loan and the related Loan File to the
Sponsor, the Originator or the [Master Servicer], as the case may be, and the
Trustee on behalf of the Trust shall assign to the Sponsor, the Originator or
the [Master Servicer], as the case may be, all of the Trust's and the
Certificateholders' right, title and interest in such purchased or repurchased
Auto Loan, and all property and rights conveyed to the Trustee relating thereto
(excluding, however, payments
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previously received under the Insurance Policies), and the Assignments to the
extent such payments relate to such repurchased or purchased Auto Loans,
without recourse, representation or warranty, except as to the absence of
liens, charges or encumbrances created by or arising as a result of actions of
the Trustee except as to liens, charges or encumbrances created or arising out
of this Agreement. The Trustee and the Sponsor shall execute and deliver to
the Sponsor, the Originator, or the [Master Servicer], as the case may be, an
assignment substantially in the form of Exhibit D to vest ownership of the
repurchased Auto Loan in such party. The repurchase and purchase obligations
pursuant to this Section 3.03 constitute the sole remedy available to the
Trustee and the Certificateholders for a breach of a representation or warranty
or agreement of the Sponsor, set forth in Sections 2.06, 3.01 and 3.02 or the
agreements of the [Master Servicer] and the Servicer, as the case may be, set
forth in Section 2.02 and 4.04(a)(i); provided, that the foregoing limitation
shall not be construed to limit in any manner the right of the [Master
Administrator], the Trustee or the Investor Certificateholders to declare a
Principal Amortization Event to have occurred or to terminate the
responsibilities of the [Master Servicer] or the Servicer hereunder to the
extent such breaches also constitute or contribute to the determination of a
Principal Amortization Event or an Event of Master Servicing Termination or an
Event of Servicing Termination. For the purposes of this Agreement, an Auto
Loan has not been "repurchased" or "purchased" by the Sponsor, the Originator
or the [Master Servicer], as the case may be, pursuant to this Section 3.03
unless the Repurchase Price therefor has been deposited into the Collection
Account.
ARTICLE IV
SERVICING OF TRUST ASSETS
SECTION 4.01. [Appointment of [Master Servicer]. (a) ___
agrees to act as the [Master Servicer] to perform all servicing duties under
this Agreement subject to the terms hereof.
(b) Except as specifically identified herein as duties
of the [Master Servicer], the [Master Servicer] hereby subcontracts all
servicing duties hereunder to the Servicer; provided, that the [Master
Servicer] shall remain obligated and be liable to the Trust and the Trustee for
the servicing and administration of the Auto Loans in accordance with the
provisions hereof without diminution of such obligation and liability by virtue
of the appointment of the Servicer and to the same extent and under the same
terms and conditions as if the [Master Servicer] alone were servicing and
administrating the Auto Loans.
(c) Each of the [Master Servicer] and the Servicer shall
perform its respective obligations pursuant to this Agreement on behalf of and
for the benefit of the Trust in accordance with the
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terms of this Agreement, the respective Auto Loans and applicable law and, to
the extent consistent with such terms, in the same manner in which, and with
the same care, skill, prudence and diligence with which, it services and
administers Auto Loans of similar credit quality for other portfolios, if any,
giving due consideration to customary and usual standards of practice of
prudent institutional automobile and loan servicers and, in each case, taking
into account its other obligations hereunder, but without regard to:
(i) any relationship that the [Master Servicer]
or the Servicer, any Subservicer or any Affiliate of the [Master
Servicer] or the Servicer or any Subservicer may have with the related
Obligor;
(ii) the ownership of any Certificate by the
[Master Servicer] or the Servicer or any Affiliate of the [Master
Servicer] or the Servicer;
(iii) the [Master Servicer]'s, the Servicer's or
any Subservicer's right to receive compensation for its services
hereunder or with respect to any particular transaction; or
(iv) the ownership, or servicing for others, by
the [Master Servicer] or the Servicer or any Subservicer, of any other
automobile loans or property.
In the event that the [Master Servicer] or the Servicer believes that it is
unable to comply with the requirements of this Section 4.01(c) with respect to
any particular Auto Loan as a result of one or more of the factors described in
the foregoing clauses (i) through (iv), it may enter into a Subservicing
Agreement pursuant to Section 4.02 pursuant to which a Subservicer shall
perform its duties with respect to such Auto Loan. In such event, so long as
such Subservicer performs such duties on behalf of the [Master Servicer] or the
Servicer, as applicable, in accordance with the requirements of this Section
4.01, then the [Master Servicer] or the Servicer shall be deemed to be in
compliance therewith. Subject to any express limitations set forth in this
Agreement, the [Master Servicer] and the Servicer shall also seek to maximize
the timely and complete recovery of principal and interest on Auto Loans;
provided, however, that nothing herein contained shall be construed as an
express or implied guarantee by the [Master Servicer] or the Servicer of the
collectibility of the Auto Loans. Notwithstanding any other provision of this
Agreement, the Servicer shall at all times service the Auto Loans in a manner
consistent with maintaining their eligibility for coverage under the Insurance
Policies.
(d) The [Master Servicer] and the Servicer are authorized
and empowered by the Trustee to execute and deliver, on behalf of themselves,
the Trust, the Certificateholders, or the Trustee or any of them, any and all
instruments of satisfaction or
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cancellation, or partial or full release or discharge, and all other comparable
instruments, with respect to the Auto Loans or the related Automobiles.
Without limiting the generality of the foregoing, the Trustee shall, upon the
receipt of a written request of a Servicing Officer, execute and deliver to the
[Master Servicer] or the Servicer any limited powers of attorney and other
documents prepared by the Servicer and necessary or appropriate (as certified
in such written request) to enable the [Master Servicer] or the Servicer, as
applicable, to carry out its servicing duties hereunder (including without
limitation matters relating to the Insurance Policies and certificates of title
with respect to the Automobiles), and the Trustee shall not be held responsible
for any negligence by the [Master Servicer] or the Servicer, as applicable, in
its use of such limited powers of attorney.]
SECTION 4.02. Subservicing Agreements Between Servicer and
Subservicer. (a) The Servicer may, with the prior written consent of the
[Master Servicer] and the [Master Administrator], enter into Subservicing
Agreements with a Subservicer for the performance of all or a part of the
Servicer Duties. References in this Agreement to actions taken or to be taken
by the Servicer in performance of the Servicer Duties include actions taken or
to be taken by a Subservicer on behalf of the Servicer. Each Subservicing
Agreement will be upon such terms and conditions as are not inconsistent with
this Agreement. The Servicer shall provide notice to the [Master
Administrator], the [Master Servicer], the Trustee and the Rating Agency in
writing promptly upon the appointment of any Subservicer. For purposes of this
Agreement, the receipt by the Subservicer of any amount with respect to an Auto
Loan (other than amounts representing servicing compensation or reimbursement
or an advance) shall be treated as the receipt by the Servicer of such amount.
(b) Except as provided in Section 4.02(e), the Servicer
shall be entitled to terminate any Subservicing Agreement that may exist in
accordance with the terms and conditions of such Subservicing Agreement and
without any limitation by virtue of this Agreement.
(c) Notwithstanding any Subservicing Agreement, any of
the provisions of this Agreement relating to agreements or arrangements between
the Servicer or a Subservicer or reference to actions taken through a
Subservicer or otherwise, the [Master Servicer] and the Servicer shall remain
obligated and liable to the Trustee, the Trust and the [Master Administrator]
for the servicing and administering of the Auto Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
(including their respective indemnity of obligations under Section 9.03) by
virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer or the Servicer and to the same extent and
under the same terms and conditions as if the [Master Servicer] and the
Servicer alone were servicing and administering the Auto Loans. The [Master
Servicer]
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and the Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the [Master Servicer] and the Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
(d) Any Subservicing Agreement that may be entered into
and any other transaction or services relating to the Auto Loans involving a
Subservicer in its capacity as such and not as an Originator shall be deemed to
be between the Subservicer and the Servicer alone and the [Master
Administrator], the [Master Servicer], the Trustee and the Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer.
(e) If the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of any Event of Servicing Termination),
the Servicer, upon prior written notice to the [Master Administrator] and the
Trustee, shall thereupon terminate each Subservicing Agreement that may have
been entered into, and the [Master Administrator], the Trustee and the
successor Servicer shall not be deemed to have assumed any of the Servicer's
interest therein or to have replaced the Servicer as a party to any such
Subservicing Agreement.
SECTION 4.03. Representations and Warranties of the
Servicer and the [Master Servicer]. Each of the [Master Servicer] and the
Servicer, with respect to itself, represents and warrants to the Sponsor, the
[Master Administrator] and the Trustee, as follows, as of the date hereof:
(a) It is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation and is duly
qualified to do business, and is in good standing in every jurisdiction in
which the nature of its business requires it to be so qualified, it is or will
be in compliance with the laws of each state to the extent necessary to ensure
the enforceability of each Auto Loan and the servicing of the Auto Loans under
this Agreement and has obtained all necessary licenses with respect to it
required by law to enable it to perform its duties herein;
(b) It has the power and authority to execute, deliver
and perform this Agreement and the transactions contemplated hereby;
(c) The execution, delivery and performance by it of this
Agreement, and all other agreements, instruments and documents which may be
delivered by it pursuant hereto, and the transactions contemplated thereby, (i)
have been duly authorized by all necessary corporate or other action, on the
part of it, (ii) do not contravene or cause it to be in default under (A) its
charter or by-laws, (B) any contractual restriction with respect to any Debt of
it or contained in any indenture, loan or credit agreement, lease, mortgage,
security agreement, bond, note, or other agreement
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or instrument binding on or affecting it or its property or (C) any law, rule,
regulation, order, writ, judgment, award, injunction or decree applicable to or
binding on or affecting it or its property, and (iii) do not result in or
require the creation of any Adverse Claim upon or with respect to any of its
properties;
(d) This Agreement has been duly executed and delivered
on behalf of it;
(e) No consent of, or other action by, and no notice to
or filing with, any Governmental Authority or any other party is required for
the due execution, delivery and performance by it of this Agreement or any
other agreement, document or instrument to be delivered hereunder;
(f) This Agreement is its legal, valid and binding
obligation enforceable against it in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights of
creditors generally, and by general principles of equity (regardless of whether
such enforcement is consideration in a proceeding in law or in equity);
(g) There is no pending or threatened action, suit or
proceeding, nor any injunction, writ, restraining order or other order of a
material nature against or affecting it, its officers or directors, or its
property, in any court or tribunal, or before any arbitrator of any kind or
before or by any Governmental Authority (i) asserting the invalidity of this
Agreement or any document to be delivered by it hereunder or (ii) seeking any
determination or ruling that might materially and adversely affect (A) the
performance by it of its obligations under this Agreement, or (B) the validity
or enforceability of this Agreement or any document to be delivered by it
hereunder or (iii) which is inconsistent with the due consummation by it of the
transactions contemplated by this Agreement; and
(h) Its servicing facilities, plant, personnel, records
and products are adequate for the performance of its duties hereunder,
including, in the case of the [Master Servicer], the duties of the Servicer
hereunder.
SECTION 4.04. Duties and Responsibilities of the Servicer.
(a) The Servicer shall service and make collections on the Auto Loans and
otherwise enforce the rights of the Trust in the Auto Loans and the other Trust
Assets, in conformity with Section 4.01 and as more specifically described in
the Credit and Collection Policies, as such Credit and Collection Policies are
amended from time to time (the "Servicer Duties"). The Servicer Duties shall
include at all times:
(i) certifying to the Sponsor and the Trustee on
behalf of the Trust prior to the Sponsor's purchase of an Auto
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Loan that it has received (A) the related Loan File containing each
item under the related Sale Agreement and (B) an executed Sale
Assignment;
(ii) monitoring and tracking Automobile titles and
insurance;
(iii) billing, collection and recording of Payments
including sending each Obligor a letter notifying it to send payments
to the Eligible Account maintained by the Servicer for such purpose;
(provided that the Servicer shall not make any change in its
instructions to any Obligor regarding payments to be made in respect
of the Auto Loans other than pursuant to Sections 4.04(d), 4.04(e) and
4.15(c));
(iv) communicating with and providing billing
records to Obligors;
(v) depositing of all Payments and other monies
received in respect of the Auto Loans (without offset or deduction)
into an account maintained by the Servicer in the name of the Trust
(which account shall be an Eligible Account), and thereafter (A)
depositing all such sums into the Collection Account in accordance
with Section 7.02(b) and (B) paying all investment earnings, if any,
on sums in such account to the [Master Administrator] on each
Distribution Date;
(vi) administering and enforcing all rights and
responsibilities of the holder of the Auto Loans provided for in the
Assignments and Insurance Policies;
(vii) submitting information on the Auto Loans to
the Insurance Companies or their designated agents (as specified in
the Credit and Collection Policies) for coverage under the Insurance
Policies; receiving Payments as the Trust's agent on the Insurance
Policies as well as on the insurance policies maintained by the
Obligors, filing claims with the Insurance Companies with respect
thereto and working with the [Master Administrator] to resolve any
disputes in respect thereto;
(viii) issuance of the reports to the [Master
Administrator], the Trustee and the Rating Agency required by this
Agreement;
(ix) providing the [Master Administrator] with
such assistance as it may require for the preparation and timely
delivery of the List of Auto Loans pursuant to Section 5.03(a)(iii),
and furnishing, on request of the [Master Administrator], the Trustee
or the Rating Agency, such reasonably pertinent underlying data as can
be generated by the Servicer's existing data processing systems
without, in the opinion of the Servicer, undue modification or
expense;
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(x) repossessing and remarketing of Automobiles
following Obligor defaults;
(xi) maintaining such books of account and other
records as will enable the [Master Administrator] and the Trustee to
determine the status of each Auto Loan;
(xii) providing the Obligors with any reports
required by applicable law; and
(xiii) making payments in respect of certain Auto
Loan origination reimbursement obligations of the Sponsor arising in
connection with the acquisition of the Auto Loans, as directed by the
Sponsor, but in no event shall the Servicer be required to make such a
payment such that the aggregate payments made by it exceed the
aggregate Servicer Interest Amount received by it unless the Sponsor
shall have provided such funds to it.
(b) The Servicer may sue to enforce or collect upon the
Auto Loans in its own name, or as agent for the Trust. If the Servicer elects
to commence a legal proceeding to enforce an Auto Loan in its own name, the act
of commencement shall be deemed to be an automatic assignment of the Auto Loan
by the Trustee to the Servicer for purposes of collection only. If in any
enforcement suit or legal proceeding it is held that the Servicer may not
enforce an Auto Loan on the grounds that it is not a real party in interest or
a holder entitled to enforce the Auto Loan, the Trustee, on behalf of the
Trust, and with the consent of the Servicer, shall take such steps as the
Servicer deems necessary to assign to the Servicer the Auto Loan solely for the
purpose of permitting the Servicer to enforce the Auto Loan.
(c) The Servicer shall exercise any rights of recourse
against third Persons that exist with respect to any Auto Loan (except with
respect to any repurchase obligation of the Originator, which shall be enforced
by the [Master Administrator] pursuant to Section 3.03) or otherwise in
accordance with the Servicer's usual practice and the standard of care required
by Section 4.01.
(d) In accordance with the standard of care in Section
4.01 the Servicer may grant to the Obligor on any Auto Loan any rebate, refund
or adjustment that the Servicer in good faith believes is required under the
Auto Loan or applicable law in connection with a prepayment in full of the Auto
Loan, and may deduct the amount of any such rebate, refund or adjustment from
the amount otherwise payable by the Servicer into the Collection Account. The
Servicer may not permit any rescission or cancellation of any Auto Loan nor may
it take any action with respect to any Auto Loan, Insurance Policy or
Assignment which would materially impair the rights of the Trust or the
Certificateholders therein or in the proceeds thereof.
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(e) The Automobile securing an Auto Loan shall not be
released by or on behalf of the Sponsor or the Servicer from the security
interest granted by such Auto Loan in whole or in part, except:
(i) when such Auto Loan has been paid in full;
(ii) immediately upon any exchange or substitution
of such Automobile by the Dealer or manufacturer thereof in settlement of
claims as to defects, breach of warranties, and similar matters, with an
Automobile of equal or greater collateral value as of the date of such exchange
in the reasonable judgment of the Servicer (subject to all the terms hereof
including the recordation of the Trustee's lien thereon and the requirements of
the Insurance Policies); or
(iii) as otherwise contemplated in Section 3.03;
provided, however, that the Servicer may extend any Auto Loan for credit
related reasons, consistent with the servicing standard in Section 4.01,
subject to the limitations on extensions and modifications on Auto Loans set
forth in the Insurance Policies.
(f) Except as expressly provided herein, neither the
[Master Servicer] nor the Servicer shall sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create any Adverse Claim upon or with
respect to, any Auto Loan (or any right to income in respect thereof), or any
account in which any Payments are deposited, or assign any right to receive
income in respect of any Auto Loan
SECTION 4.05. Fidelity Bond, Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, with broad coverage with responsible
companies on all officers, employees or other Persons acting on behalf of the
Servicer in any capacity with regard to the Trust Assets to handle funds,
money, documents and papers relating to the Trust Assets. Any such fidelity
bond and errors and omissions insurance shall protect and insure the Servicer
against losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such Persons and shall be maintained in a form
and amount that would meet the requirements of prudent institutional auto loan
servicers. No provision of this Section 4.05 requiring such fidelity bond and
errors and omissions insurance shall diminish or relieve the Servicer from its
duties and obligations as set forth in this Agreement. The Servicer shall be
deemed to have complied with this provision if one of its respective Affiliates
has such fidelity bond and errors and omissions policy coverage and, by the
terms of such fidelity bond and errors and omissions policy, the coverage
afforded thereunder extends to the Servicer. The Servicer shall cause each and
every Subservicer for it to maintain a policy of insurance covering errors and
omissions and a fidelity bond which would meet such requirements. Upon request
of the [Master
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Administrator], the [Master Servicer] or the Trustee, the Servicer shall cause
to be delivered to the [Master Administrator] or the Trustee a certification
evidencing coverage under such fidelity bond and insurance policy. Any such
fidelity bond or insurance policy shall not be cancelled or modified in a
materially adverse manner without ten days' prior written notice to the [Master
Administrator] and the Rating Agency.
SECTION 4.06. Inspection. (a) At all times during the
term hereof, each of the [Master Servicer] and the Servicer shall afford the
[Master Administrator] and the Trustee and its authorized agents, upon
reasonable notice, reasonable access (subject to the security rules and
regulations of the [Master Servicer] or the Servicer, as the case may be)
during normal business hours to their respective records relating to the Auto
Loans and the other Trust Assets conveyed pursuant to Section 2.01 and Section
2.05 and will cause their respective personnel to assist in any examination of
such records by the Trustee, provided, that the foregoing shall not require the
[Master Administrator] or Trustee to conduct any inspection. The examination
referred to in this Section 4.06 will be conducted in a manner which does not
unreasonably interfere with the [Master Servicer]'s or the Servicer's normal
operations or customer or employee relations or require the [Master Servicer]
or the Servicer to disclose or expose confidential information related to its
services to their other clients. Without otherwise limiting the scope of the
examination, the [Master Administrator] and the Trustee may, using generally
accepted auditing standards, verify the status of each Auto Loan and review the
Loan Files, Electronic Ledger and records relating thereto for conformity to
reports prepared pursuant to Section 4.19 and compliance with the standards
represented to exist as to each Auto Loan in this Agreement.
(b) All information obtained by the [Master
Administrator] regarding the Obligors and the Auto Loans, whether upon exercise
of its rights under this Section 4.06 or otherwise, shall be maintained by the
[Master Administrator] in confidence and shall not be disclosed to any other
Person, except as otherwise required by applicable law or regulation.
SECTION 4.07. Trustee to Cooperate. Upon payment in full
on any Auto Loan, the Servicer shall notify the Trustee in writing on the next
succeeding Deposit Date (which notification shall include a statement to the
effect that all amounts received in connection with such payment in full which
are required to be deposited in the Collection Account pursuant to Section
7.02(b) have been so deposited) and if the related Loan File is not at the time
held by the Servicer as the custodian of the Trustee, shall request delivery of
the Auto Loan and Loan File to the Servicer. Upon receipt of such request, the
Trustee shall promptly release or cause to be released such Auto Loan and the
related Loan File if appropriate to the Servicer by executing a release and
assignment
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in the form of Exhibit E hereto, which assignment shall be without recourse to
the Trustee (except as to the absence of liens, charges or encumbrances created
by or arising as a result of actions taken by the Trustee other than those
created by or arising from this Agreement). Upon receipt of such Auto Loan and
Loan File, the Servicer shall be authorized to execute an instrument in
satisfaction of such Auto Loan and to take such other actions and execute such
other documents as it deems necessary to discharge the Obligor thereunder and
eliminate the security interest in the Automobile related thereto. The
Servicer shall determine when an Auto Loan has been paid in full. Upon request
of a Servicing Officer, the Trustee shall perform such other acts as reasonably
requested by the Servicer and otherwise cooperate with the Servicer in
enforcement of the Certificateholder's rights and remedies with respect to the
Auto Loans, the Assignments and the Insurance Policies; provided, however, the
Trustee shall not be required to take any action in breach of its fiduciary
duties, and nothing herein shall require the Trustee to advance its own funds.
SECTION 4.08. Servicing Fee; Servicing Expenses. The
[Master Servicer] shall be paid the Monthly Servicing Fee in accordance with
the provisions of Section 7.04(a). No later than ten Business Days prior to
the next Monthly Fee Date, the Servicer shall provide the [Master
Administrator] with a list of items eligible for reimbursement under the
Monthly Servicing Fee, in such reasonable detail as the [Master Administrator]
may request, together with its certification by a Servicing Officer that all
such items are eligible for inclusion within the Monthly Servicing Fee. The
[Master Administrator] may rely on such certification without independent
investigation of the matters set forth therein. Except to the extent of the
Monthly Servicing Fee, the [Master Servicer] shall be required to pay for all
expenses incurred by it and by the Servicer in connection with their respective
activities hereunder (including any payments to accountants, counsel,
Subservicers, or any other Person) and shall not be entitled to any payment or
reimbursement therefor. In the event that no [Master Servicer] is appointed
pursuant to Section 4.13(a), the Monthly Servicing Fee shall be paid in
accordance with the provisions of Section 7.04 to the Servicer.
SECTION 4.09. [Master Servicer] To Maintain Computer Link.
Without limitation of its obligations in respect of the other provisions of
this Agreement, and in addition to the duties of the Servicer, the [Master
Servicer] has provided and will maintain on-line computer linkage capability
with the Servicer so as to enable the [Master Servicer] to convert and use the
Servicer's files in a form suitable for immediate assumption of its duties as
Servicer pursuant to Section 4.15.
SECTION 4.10. [Master Servicer] and Servicer Not to Resign.
Neither the [Master Servicer] nor the Servicer, as the case may be, shall
resign from the obligations and duties hereby
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imposed on it except upon its determination that (a) the performance of its
duties hereunder has become impermissible under applicable law and (b) there is
no reasonable action which the [Master Servicer] or the Servicer, as the case
may be, could take to make the performance of its duties hereunder permissible
under applicable law. Any such determination permitting the resignation of the
[Master Servicer] or the Servicer, as the case may be, shall be evidenced as to
clause (a) above by an Opinion of Counsel to such effect delivered to the
[Master Administrator] and the Trustee and as to clause (b) by on Officer's
Certificate to such effect delivered to the [Master Administrator] and the
Trustee. The action referred to in clause (b) above will not be considered
reasonable if it requires the payment of extraordinary fees or costs for which
the [Master Servicer] or the Servicer, as the case may be, are not eligible for
reimbursement under Section 4.08. Promptly upon any resignation pursuant to
this Section 4.10, the [Master Administrator] shall notify the Rating Agency
thereof.
SECTION 4.11. Change in Business of the [Master Servicer]
or the Servicer. The Sponsor, the [Master Administrator] and the Trustee on
behalf of the Certificateholders have entered into this Agreement with the
[Master Servicer] and the Servicer, respectively as to each, in reliance upon
its ability to perform the servicing duties, if necessary, without any
delegation thereof; the adequacy of its plant, personnel, records and
procedures; its integrity, reputation and financial standing and the
continuance of each of the foregoing. Neither the [Master Servicer] nor the
Servicer shall, without prior written consent of the [Master Administrator] (a)
make any material change in the character of its business; or (b) merge with or
into or consolidate with or into, or convey, transfer, lease or otherwise
dispose of all or substantially all of its assets (whether now owned or
hereafter acquired), or acquire all or substantially all of the assets or
capital stock or other ownership interest of, any other corporation; provided,
however, that the sole remedy of the Trustee on behalf of the
Certificateholders and the [Master Administrator] shall have in respect of the
Servicer's noncompliance with the provisions of the preceding clauses (a) and
(b) shall be to terminate the Servicer's rights and responsibilities pursuant
to Section 4.14. The [Master Administrator] shall consent to the changes
referred to in the preceding clauses (a) and (b) if, but only if, the Rating
Agency indicates in writing to the [Master Administrator] and the Trustee that
such changes would not result in a review with negative implications,
suspension, downgrade, withdrawal or other adverse effect on the rating of the
Investor Certificates.
SECTION 4.12. Events of Master Servicing Termination. If
any of the following events (each, an "Event of Master Servicing Termination")
shall occur and be continuing:
(a) Failure on the part of the [Master Servicer] to
observe or perform any term, covenant or agreement in this
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Agreement, including the [Master Servicer] duties under Section 4.09, which
materially affects the rights of the Certificateholders and which continues
unremedied for five Business Days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
[Master Servicer] by the [Master Administrator] or the Trustee; or
(b) Any proceeding shall be instituted against the
[Master Servicer] (or, if the [Master Servicer] is actively contesting the
merits thereof, such proceeding is not dismissed within 90 days) seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or any of its Debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property, or any of the
actions sought in such proceeding (including, without limitation, the entry of
an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or
(c) The commencement by the [Master Servicer] of a
voluntary case or proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to
the entry of a decree or order for relief in respect of the [Master Servicer]
in an involuntary case or proceeding under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking reorganization or
relief under any applicable Federal or state law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of the [Master Servicer] or of any substantial part of its property,
or the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its Debts generally as they
become due, or the taking of corporate action by the [Master Servicer] in
furtherance of any such action; or
(d) There is at any time a material breach of any of the
representations and warranties of the [Master Servicer] set forth in Section
4.03; or
(e) The short term unsecured debt obligations of the
[Master Servicer] shall be rated no less than Duff-2 by Duff & Phelps (or if
not at such time rated by Duff & Phelps, (i) no less than A-2 by Standard &
Poor's and P-2 by Moody's (provided, that if only one such rating agency rates
such party, such single rating
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shall suffice) and (ii) the [Master Servicer] shall give prompt notice of any
downgrade by Standard & Poor's or Moody's to Duff & Phelps); and provided,
further, that an Event of Master Servicing Termination shall not be deemed to
have occurred if, following the occurrence of the [Master Servicer]'s
short-term unsecured debt rating falling below the foregoing ratings, the
Rating Agency confirms in writing to the [Master Administrator] and the Trustee
that such decline will not result in a review with negative implications,
suspension, downgrade, withdrawal or other adverse effect on the rating of the
Certificates, at which point such new rating shall be substituted in place of
the ratings provided above, subject to the same conditions as to any further
downgrade;
then, and in any such event, either the [Master Administrator] or the Trustee
may by delivery to the [Master Servicer] of a written notice specifying the
occurrence of any of the foregoing events terminate the servicing and custodial
responsibilities of the [Master Servicer] hereunder, without demand, protest or
further notice of any kind, all of which are hereby waived by the [Master
Servicer]; provided, that, in the event any of the events described in
subsections (b) or (c) shall have occurred, termination of the duties and
responsibilities of the [Master Servicer] shall automatically occur, without,
demand, protest, or further notice of any kind, all of which are expressly
waived by the [Master Servicer]. The Trustee or the [Master Administrator], as
the case may be, shall simultaneously with any declaration of any Event of
Master Servicing Termination, give notice thereof to the Rating Agency, the
[Master Administrator], the [Master Servicer], the Servicer and the Trustee.
SECTION 4.13. Appointment of the Successor Master Servicer.
(a) Upon termination of the [Master Servicer]'s responsibilities under this
Agreement pursuant to Section 4.10 or Section 4.12, the [Master Administrator]
may, but shall not be obligated to unless the Rating Agency indicates by
written notice to the [Master Administrator] that such failure would result in
a suspension, downgrade, or withdrawal of the then current rating assigned to
the Investor Certificates, appoint a successor [Master Servicer] acceptable to
the Trustee and the Rating Agency (a "Successor [Master Servicer]"). Such
Successor [Master Servicer] shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the [Master Servicer] under this
Agreement; provided, that such Successor [Master Servicer] and the Trustee
shall have no responsibility for any actions of the [Master Servicer] prior to
the date of the appointment of such Successor [Master Servicer] as [Master
Servicer]. Prior to the appointment of such Successor [Master Servicer], the
Trustee shall be authorized and empowered to execute and deliver, on behalf of
the [Master Servicer], as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do any and all acts or things necessary or
appropriate to effect the purposes of such notice of termination and to perform
the duties of the [Master Servicer] hereunder
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(including its duties as Successor Servicer hereunder but excluding its duty to
indemnify pursuant to Article IX). The standard of care, representations and
warranties, covenants, liabilities, rights of indemnification, and all other
rights and obligations of the Trustee under this Agreement shall also be
applicable to the Trustee in its capacity hereunder. In the event no Successor
[Master Servicer] has been appointed within 60 days of the removal of a [Master
Servicer] and the Trustee has received written notice from the Rating Agency to
the effect that failure to appoint a successor [Master Servicer] will or has
resulted in suspension, downgrade or withdrawal of the rating assigned to the
Investor Certificates, the Trustee may petition a court of competent
jurisdiction to appoint a Successor [Master Servicer].
(b) Any Successor [Master Servicer] appointed hereunder
(including the Trustee during such time as it functions as the Successor
[Master Servicer]) shall be entitled to reasonable compensation (including the
estimated costs of such servicing and a reasonable profit) which shall be
determined by the [Master Administrator]; provided, that if the [Master
Administrator] or any of its Affiliates is the Successor [Master Servicer], the
Trustee shall agree to the amount of such compensation. The amount of such
compensation may result in an increase or decrease in the Monthly Servicing
Fee.
(c) The outgoing [Master Servicer], the [Master
Administrator], the Trustee and the Successor [Master Servicer] shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession, including, without limitation, the express assumption by such
Successor [Master Servicer] of the duties and obligations of the outgoing
[Master Servicer] hereunder.
(d) Upon appointment, any Successor [Master Servicer]
shall be successor in all respects to the outgoing [Master Servicer] under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all responsibilities, duties and liabilities relating thereto placed
upon the [Master Servicer] by the terms and provisions hereof (subject to the
same limitations as are contained in this Section 4.13 with respect to a
succession to the outgoing [Master Servicer] by the Trustee).
SECTION 4.14. Events of Servicing Termination. If any of
the following events (each, an "Event of Servicing Termination") shall occur
and be continuing:
(a) Any failure by the Servicer to make any payment or
deposit required to be made by it hereunder and the continuance of such failure
for a period of one Business Day after the date upon which written notice of
such failure shall have been given to the Servicer by the [Master
Administrator] or the Trustee; or
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(b) Failure on the part of the Servicer to observe or
perform any term, covenant or agreement in this Agreement which materially
adversely affects the rights of the Certificateholders and which continues
unremedied for 30 Business Days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the [Master Administrator] or Trustee; or
(c) Any proceeding shall be instituted against the
Servicer (or, if the Servicer is actively contesting the merits thereof, such
proceeding is not dismissed within 90 days) seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or any of its Debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur; or
(d) The commencement by the Servicer of a voluntary case
or proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Servicer in an involuntary case or
proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable Federal
or state law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Servicer or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its inability to pay
its Debts generally as they become due, or the taking of corporate action by
the Servicer in furtherance of any such action; or
(e) The Servicer shall fail to deliver a report expressly
required by this Agreement, and the continuance of such failure for a period of
five Business Days after the date upon which written notice of such failure
shall have been given to the Servicer by the [Master Administrator] or the
Trustee (except that such five day period shall be deemed not to run as to any
portion of such report during such time as the Servicer's failure to provide
such information is for cause or inability beyond its control; or
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(f) There is at any time a material breach of any of the
representations and warranties of the Servicer set forth in Section 4.03; or
(g) An Event of Master Servicing Termination has occurred
and the [Master Administrator] or the Trustee has terminated the servicing and
custodial responsibilities of the [Master Servicer] pursuant to Section 4.12
and is required to appoint a Successor [Master Servicer] pursuant to Section
4.13(a);
then, and in any such event, either the [Master Administrator] or the Trustee
may by delivery to the Servicer of a written notice specifying the occurrence
of any of the foregoing events terminate the servicing and custodial
responsibilities of the Servicer hereunder, without demand, protest or further
notice of any kind, all of which are hereby waived by the Servicer (such
termination being herein called a "Service Transfer"); provided, that, in the
event any of the events described in subsections (c) or (d) shall have
occurred, termination of the duties and responsibilities of the Servicer shall
automatically occur, without, demand, protest, or further notice of any kind,
all of which are expressly waived by the Servicer. The Trustee or the [Master
Administrator], as the case may be, shall simultaneously with any declaration
of any Event of Servicing Termination, give notice thereof to the Rating
Agency, the [Master Administrator], the [Master Servicer], the Servicer and the
Trustee.
SECTION 4.15. Appointment of the Successor Servicer. (a)
Upon termination of the Servicer's responsibilities under this Agreement
pursuant to Section 4.10 or Section 4.14 the [Master Servicer] shall
immediately assume all of the Servicer's responsibilities, duties and
obligations as Servicer. On or at any time after the date of such assumption,
the [Master Servicer] may appoint a successor Servicer acceptable to the
[Master Administrator], the Trustee and the Rating Agency (a "Successor
Servicer"). Such Successor Servicer shall succeed to all rights and assume all
of the responsibilities, duties and liabilities of the Servicer under this
Agreement; provided, that such Successor Servicer shall have no responsibility
for any actions of the Servicer prior to the date of the appointment of such
Successor Servicer as Servicer. In the event the [Master Servicer] fails to
assume the duties of the Servicer or appoint a Successor Servicer pursuant to
the terms of this Agreement, the Trustee shall be authorized and empowered to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do any and all
acts or things necessary or appropriate to effect the purposes of such notice
of termination or perform the duties of the Servicer hereunder (excluding its
duty to indemnify pursuant to Article IX). The standard of care,
representations and warranties, covenants, liabilities, rights of
indemnification, and all other rights and obligations of the Trustee under this
Agreement shall also be applicable to the Trustee in its capacity hereunder.
The Trustee
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may petition a court of competent jurisdiction to appoint a Successor Servicer
if the [Master Servicer] fails to assume the duties of the Servicer or appoint
a Successor Servicer within 60 days of the removal of a Servicer.
(b) Any Successor Servicer appointed hereunder (including
the Trustee, during such time as it functions as the successor Servicer) shall
be entitled to reasonable compensation (including the estimated costs of its
servicing and a reasonable profit) which shall be determined by the [Master
Administrator], provided that if the [Master Administrator] or any of its
Affiliates is the Successor Servicer, the Trustee shall agree to the amount of
such compensation. The amount of such compensation may result in an increase
or decrease in the Monthly Servicing Fee.
(c) The outgoing Servicer, the [Master Servicer], the
[Master Administrator], the Trustee and the Successor Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession, including, without limitation, (i) the express assumption by
such Successor Servicer of the duties and obligations of the outgoing Servicer
hereunder, (ii) notifying Obligors in writing to make payments under the Auto
Loans to the Successor Servicer, and (iii) providing such Successor Servicer
with all Records maintained or held by it as Servicer hereunder.
(d) Upon appointment, any Successor Servicer shall be
successor in all respects to the outgoing Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all
responsibilities, duties and liabilities relating thereto placed upon the
Servicer by the terms and provisions hereof (subject to the same limitations as
are contained in this Section 4.15 with respect to a succession to the outgoing
Servicer by the Trustee).
SECTION 4.16. Effect of Service Transfer. (a) After any
Service Transfer, the Successor Servicer shall notify (or, to the extent that
the Servicer provided such notice pursuant to Section 4.15(c), confirm the
instructions to) Obligors to make payments under the Auto Loans directly to the
Successor Servicer.
(b) After any Service Transfer, the outgoing Servicer
shall have no further obligations with respect to the management, servicing,
custody or collection of the Auto Loans and the Successor Servicer shall have
all of such obligations, except that the outgoing Servicer will transmit or
cause to be transmitted directly to the Successor Servicer for its own account,
promptly on receipt and in the same form in which received, any amounts held by
the outgoing Servicer (properly endorsed where required for the Successor
Servicer to collect them) received as Payments upon or otherwise in connection
with the Auto Loans.
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(c) A Service Transfer shall not affect the rights and
duties of the parties hereunder (including, but not limited to, the obligations
and indemnities of the outgoing Servicer or the Sponsor pursuant to Section
9.02 and Section 9.03) other than those relating to the management, servicing,
custody or collection of the Auto Loans.
SECTION 4.17. Annual Reports; Statements as to Compliance.
(a) The [Master Servicer] and the Servicer shall each deliver to the [Master
Administrator] and the Trustee as soon as available, but in any event within
120 days after the end of each of its fiscal years, a consolidated and
consolidating balance sheet of it and its Subsidiaries, if any, as at such last
day of the fiscal year, a consolidated and consolidating statements of income
and retained earnings and statements of cash flow, for each such fiscal year,
each prepared in accordance with GAAP, in reasonable detail, and as to the
consolidated statements, certified without qualification by an Independent
Public Accountant, who may also render other services to the [Master Servicer],
the Servicer, or any of their Affiliates and certified, as to the consolidating
statements by the chief financial officer of the [Master Servicer] or the
Servicer, as the case may be, as fairly presenting the financial position and
the results of operations of the [Master Servicer] or the Servicer,
respectively, as at and for the year ending on its date and as having been
prepared in accordance with GAAP.
(b) The [Master Servicer] and the Servicer shall each, and
shall cause any Subservicer (to the extent (a) such Person is in any manner
receiving Payments or (b) required by the [Master Administrator] or the Rating
Agency by written notice to the [Master Administrator] and the Trustee)
hereunder to, deliver to the [Master Administrator] and the Trustee on or
before __________ of each year, beginning with _________, 199_ an Officer's
Certificate stating, as to each signer thereof, that (a) a review of the
activities of the [Master Servicer], the Servicer, or the Subservicer, as the
case may be, during the preceding calendar year and of performance under this
Agreement has been made under such officer's supervision and (b) to the best of
such officer's knowledge, based on such review, the [Master Servicer], the
Servicer or Subservicer, as the case may be, has fulfilled all its respective
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof and remedies therefor
being pursued.
(c) The [Master Servicer] and the Servicer shall promptly
(but in any event within five Business Days) notify the Trustee and the [Master
Administrator] upon receiving actual knowledge of any event which constitutes
an Event of Master Servicing Termination or and Event of Servicing Termination
or would constitute an Event of Master Servicing Termination or an
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Event of Servicing Termination but for the requirement that notice be given or
time elapse or both.
SECTION 4.18. Annual Independent Public Accountants'
Servicing Report. On or before __________ of each year, beginning with
________, 199_ each of the [Master Servicer] (during such time that it directly
performs the duties of the Servicer hereunder), the Servicer and any
Subservicer (to the extent (a) in any manner receiving Payments or (b) required
by the [Master Administrator] or the Rating Agency by written notice to the
[Master Administrator] and the Trustee) hereunder, at its expense shall cause
an Independent Public Accountant to furnish a statement to the [Master
Administrator] and the Trustee to the effect that such firm has examined
certain documents and records relating to the servicing of the Auto Loans and
the reporting requirements with respect thereto and that, on the basis of such
examination, such servicing and reporting requirements applicable to each of
the foregoing entities have been conducted in compliance with this Agreement,
except for (a) such exceptions as such firm shall believe to be immaterial and
(b) such other exceptions as shall be set forth in such statement.
SECTION 4.19. Servicer Reports. (a) The Servicer shall
furnish by the 13th day of each month in which a Distribution Date occurs (or,
if such day is not a Business Day, the next succeeding Business Day), to the
[Master Administrator] and the Trustee, an Officer's Certificate, substantially
in the form attached hereto as Exhibit F (the "Servicer Report") which shall
include the following information with respect to the Due Period prior to the
related Distribution Date:
(i) the aggregate Principal Balance of the Auto
Loans and the number of Auto Loans at the beginning of such Due Period
(and, by period of delinquency, current, 30-59 days, 60-89 days,
90-119 days and over 120 days delinquent);
(ii) the aggregate Principal Balance of the Auto
Loans at the end of the such Due Period (and, by period of
delinquency, current, 30-59 days, 60-89 days, 90-119 days and over 120
days delinquent);
(iii) the amount of Payments collected by the
Servicer and deposited into the Collection Account during such Due
Period (identifying the components of such amount (e.g., interest
payments, scheduled principal payments, prepayments, etc.));
(iv) the amount and computation of the Monthly
Servicing Fees paid and to be paid to the [Master Servicer] in respect
of such Due Period;
(v) the number of Auto Loans and their aggregate
Principal Balances which (A) became Defaulted Auto Loans during the
such Due Period and (B) have their payment
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schedules extended or modified in accordance with the provisions of
Section 4.04(e);
(vi) the number and the aggregate Repurchase Price
of all Auto Loans to be repurchased by the Sponsor, the Originator, or
the [Master Servicer] pursuant to Section 3.03 during such Due Period
(including on the Deposit Date immediately preceding the Distribution
Date with respect to such Due Period);
(vii) Recoveries on Defaulted Auto Loans received
by the Servicer during such Due Period;
(viii) the number of Automobiles repossessed during
such Due Period, the aggregate Principal Balances of the related Auto
Loans, and the number of Automobiles disposed of following
repossession during such Due Period;
(ix) an Auto Loan by Auto Loan schedule of claims
filed and payments received under each of the Insurance Policies
during such Due Period, including the date and amount of claims filed
and received and identifying the components thereof as to principal
and interest; and
(x) the total amount of net losses incurred
during such Due Period identifying the components of such loss (e.g.,
aggregate outstanding Principal Balance written-off, deductibles on
insurance claims and uninsured claims).
(b) The Servicer shall furnish by the 13th day of each
calendar month in which a Distribution Date does not occur (or, if such day is
not a Business Day the next succeeding Business Day), to the [Master
Administrator], a certificate of a Servicing Officer, substantially in the form
attached hereto as Exhibit F (the "Servicer Report") which shall include the
following information with respect to the immediately preceding calendar month:
(i) the information and schedules referred to in
Section 4.19(a) determined with respect to such calendar month;
(ii) an Auto Loan by Auto Loan schedule of monthly
amortization of unearned interest on Actuarial Loans and Precomputed
Loans with respect to such calendar month;
(iii) an Auto Loan by Auto Loan schedule of
interest accruals of Simple Interest Loans, as of the end of such
calendar month; and
(iv) reports with respect to the Originator
including (A) generation of Auto Loans by the Originator and (B)
Delinquency Reports with respect to Auto Loans originated
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by the Originator (computed as to the delinquency periods specified in
Section 4.19(a)(i)).
(c) Each Servicer Report shall include a certification
that the information contained in such certificate is accurate and that no
Event of Servicing Termination, or event that with notice or lapse of time or
both would become an Event of Servicing Termination, has occurred, or if an
Event of Servicing Termination or such event has occurred and is continuing,
specifying the Event of Servicing Termination or such event and its status.
[ARTICLE V]
[THE [MASTER ADMINISTRATOR]]
[SECTION 5.01. Appointment of [Master Administrator]. (a)
_____ agrees to act as the [Master Administrator] under this Agreement and the
Certificateholders by their acceptance of Certificates consent to _____ acting
as [Master Administrator].
(b) The [Master Administrator] shall conduct the duties
specified in this Agreement as duties of the [Master Administrator] (the
"[Master Administrator] Duties") in accordance with (i) customary and prudent
business practices for the performance of similar activities, all applicable
laws, rules and regulations with respect to it, its business and properties and
all Auto Loans, Insurance Policies, and other Trust Assets with respect thereto
and, (ii) to the extent consistent with the foregoing, in the same manner in
which, and the same care, skill, prudence and diligence with which, it performs
similar management and administrative services for its own account or on behalf
of other Persons giving due consideration to customary and prudent business
practices.
SECTION 5.02. Subcontracting Agreements Between Master
Administrator and Subcontractor. The [Master Administrator] may enter into
Subcontracting Agreements with a Subcontractor for the performance of all or a
part of the duties to be performed by the [Master Administrator] hereunder if
the [Master Administrator] delivers to the Trustee and the Rating Agency an
Officer's Certificate of the [Master Administrator] notifying such parties of
the appointment of the Subcontractor and the entering into of the
Subcontracting Agreement; provided, that the [Master Administrator] shall
remain obligated and be liable to the Trustee and the Certificateholders for
the performance of its duties specified in this Agreement without diminution of
such obligations and liability by virtue of the appointment of a Subcontractor
and to the same extent and under the same terms and conditions as if the
[Master Administrator] alone were performing such duties. References in this
Agreement to actions taken or to be taken by the [Master Administrator] in
performance of the [Master Administrator] Duties include actions taken or to be
taken by a Subcontractor on behalf of the [Master Administrator]. The Servicer
may be a Subcontractor
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and during such time as it is a Subcontractor, its relationship to the [Master
Administrator] shall be separate and apart from its obligations as the
Servicer. Each Subcontracting Agreement will be upon such terms and conditions
as are not inconsistent with this Agreement and as the [Master Administrator]
and the Subcontractor have agreed.
SECTION 5.03. Duties and Responsibilities of the Master
Administrator. (a) In addition to the other duties specified in this
Agreement, the [Master Administrator] Duties shall consist of: (i) filing
periodic requests for confirmation of coverage under the Insurance Policies;
(ii) assisting the Servicer in working with the Insurance Company on claims
which are disputed or not paid in a timely manner to effect their resolution;
(iii) delivering the List of Auto Loans as amended from time to time, on the
Closing Date and each monthly anniversary thereof until the beginning of the
Principal Amortization Period; (iv) furnishing reports on the foregoing matters
in a timely manner as reasonably requested by the Sponsor or the Trustee; and
(v) formulating the Credit and Collection Policies in consultation with the
Servicer, from time to time.
(b) The [Master Administrator] shall not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist any Adverse Claim upon or written respect to, any Auto Loan (or any right
to receive income in respect thereof), or the Collection Account.
(c) The [Master Administrator] covenants and agrees to
enforce the Sale Agreements, the Assignments and the Insurance Policies in
accordance with their respective terms for the benefit of the Trust and the
Certificateholders as agent for the Trust and may sue to enforce or collect
upon such Sale Agreements, Assignments, and Insurance Policies as agent for the
Trust. If, however, in any enforcement suit or legal proceeding it is held
that the [Master Administrator] may not enforce a Sale Agreement or the related
Assignment or Insurance Policy on the grounds that it is not a real party in
interest, the Trustee, on behalf of the Trust, shall take such steps as the
[Master Administrator] deems necessary to assign to the [Master Administrator]
the Sale Agreement, the Assignment, or the Insurance Policy solely for the
purpose of permitting the [Master Administrator] to enforce the Sale Agreement,
Assignment or the Insurance Policy. The Trustee, at the request of an
Authorized Officer of the [Master Administrator], shall furnish the [Master
Administrator] with any limited powers of attorney or other documents prepared
by the [Master Administrator] necessary or appropriate to enable the [Master
Administrator] to carry out such duties.
SECTION 5.04. Representations and Warranties of the [Master
Administrator]. The [Master Administrator] represents and warrants to the
Sponsor, the [Master Servicer], the Servicer and the Trustee as follows, as of
the date hereof:
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(a) The [Master Administrator] is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and is duly qualified to do business, and is in good standing in
every jurisdiction in which the nature of its business requires it to be so
qualified;
(b) The [Master Administrator] has the power and
authority to execute, deliver and perform this Agreement and the transactions
contemplated hereby;
(c) The execution, delivery and performance by the
[Master Administrator] of this Agreement, and all other agreements, instruments
and documents which may be delivered by it pursuant hereto, and the
transactions contemplated thereby, (i) have been duly authorized by all
necessary corporate or other action, on the part of the [Master Administrator],
(ii) do not contravene or cause the [Master Administrator] to be in default
under (A) its charter or by-laws, (B) any contractual restriction with respect
to any Debt of the [Master Administrator] or contained in any indenture, loan
or credit agreement, lease, mortgage, security agreement, bond, note, or other
agreement or instrument binding on or affecting it or its property or (C) any
law, rule, regulation, order, writ, judgment, award, injunction or decree
applicable to or binding on or affecting it or its property, and (iii) do not
result in or require the creation of any Adverse Claim upon or with respect to
any of its properties;
(d) This Agreement has been duly executed and delivered
on behalf of the [Master Administrator];
(e) No consent of, or other action by, and no notice to
or filing with, any Governmental Authority or any other party is required for
the due execution, delivery and performance by the [Master Administrator] of
this Agreement or any other agreement, document or instrument to be delivered
hereunder;
(f) This Agreement is the legal, valid and binding
obligation of the [Master Administrator] enforceable against the [Master
Administrator] in accordance with its terms except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership, moratorium or
other laws relating to or affecting the rights of creditors generally, and by
general principles of equity (regardless of whether such enforcement is
consideration in a proceeding in law or in equity); and
(g) There is no pending or threatened action, suit or
proceeding, nor any injunction, writ, restraining order or other order of a
material nature against or affecting the [Master Administrator], its officers
or directors, or the property of the [Master Administrator], in any court or
tribunal, or before any arbitrator of any kind or before or by any Governmental
Authority (i) asserting the invalidity of this Agreement or any document to be
delivered by the [Master Administrator] hereunder or
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(ii) seeking any determination or ruling that might materially and adversely
affect (A) the performance by the [Master Administrator] of its obligations
under this Agreement, or (B) the validity or enforceability of this Agreement
or any document to be delivered by the [Master Administrator] hereunder or
(iii) which is inconsistent with the due consummation of the transactions
contemplated by this Agreement.
SECTION 5.05. Monthly Administrator Fee; Administrator
Expenses. As compensation for its services hereunder, the Trustee shall remit
to the [Master Administrator] the Monthly Administrator Fee in accordance with
the provisions of Section 7.04(a) and the Servicer shall remit to the [Master
Administrator] the sums specified in Section 4.04(a)(v)(B). The [Master
Administrator] shall be required to pay for all expenses incurred by the
[Master Administrator] in connection with its activities hereunder (including
any payments to accountants, counsel, Subcontractors, or any other Person) and
shall not be entitled to any payment or reimbursement therefor.
SECTION 5.06. [Master Administrator] Not to Resign. The
[Master Administrator] shall not resign from the obligations and duties hereby
imposed on it except upon determination that (a) the performance of its duties
hereunder has become impermissible under applicable law and (b) there is no
reasonable action which the [Master Administrator] could take to make the
performance of its duties hereunder permissible under applicable law. Any such
determination permitting the resignation of the [Master Administrator] shall be
evidenced as to clause (a) above by an Opinion of Counsel to such effect
delivered to the Trustee. No such resignation shall become effective until a
successor to the [Master Administrator] shall have assumed the responsibilities
and obligations of the [Master Administrator] in accordance with Section 5.08.
SECTION 5.07. Events of Administrator Termination. If any
of the following events (each, an "Event of Administrator Termination") shall
occur and be continuing:
(a) Any failure by the [Master Administrator] to make any
payment or deposit required to be made hereunder and the continuance of such
failure for a period of five Business Days after the date upon which written
notice of such failure shall have been given to the [Master Administrator] by
the Trustee, except, in the case of a payment or deposit to be made on the
Deposit Date immediately preceding a Distribution Date, no later than such
Distribution Date; or
(b) Failure on the part of the [Master Administrator] to
observe or perform any term, covenant or agreement in this Agreement which
materially affects the rights of the Certificateholders and which continues
unremedied for five Business Days after the date on which written notice of
such failure, requiring the
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same to be remedied shall have been given to the [Master Administrator] by the
Trustee; or
(c) Any proceeding shall be instituted against the
[Master Administrator] (or, if the [Master Administrator] is actively
contesting the merits thereof, such proceeding is not dismissed within 90 days)
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or any of its Debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property, or any of
the actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or
(d) The commencement by the [Master Administrator] of a
voluntary case or proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to
the entry of a decree or order for relief in respect of the [Master
Administrator] in an involuntary case or proceeding under any applicable
Federal or state bankruptcy, insolvency, reorganization or other similar law or
to the commencement of any bankruptcy or insolvency case or proceeding against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state law, or the
consent by it to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the [Master Administrator] or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its inability to pay
its Debts generally as they become due, or the taking of corporate action by
the [Master Administrator] in furtherance of any such action; or
(e) There is a material breach of any of the
representations and warranties of the [Master Administrator] set forth in
Section 5.04;
then, and in any such event, the Trustee may by delivery to the [Master
Administrator] of a written notice specifying the occurrence of any of the
foregoing events terminate the responsibilities of the [Master Administrator]
hereunder, without demand, protest or further notice of any kind, all of which
are hereby waived by the [Master Administrator]; provided, that, in the event
any of the events described in subsections (c) or (d) shall have occurred,
termination of the duties and responsibilities of the [Master Administrator]
shall automatically occur, without
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demand, protest, or further notice of any kind, all of which are expressly
waived by the [Master Administrator] (such termination being herein called an
"Administrator Transfer"). The Trustee shall simultaneously with any
declaration of any Event of Administrator Termination, give notice thereof to
the Rating Agency, the [Master Administrator], the [Master Servicer], the
Servicer and the Trustee.
SECTION 5.08. Appointment of the Successor Master
Administrator. (a) Upon termination of the [Master Administrator]'s
responsibilities under this Agreement pursuant to Section 5.06 or Section 5.07,
the Trustee shall immediately assume all of the [Master Administrator]'s
responsibilities, duties and obligations as [Master Administrator]. If the
Trustee is unable, or unwilling to act as the successor to the [Master
Administrator], the Trustee may appoint a successor to the [Master
Administrator] acceptable to the Rating Agency (a "Successor [Master
Administrator]"), provided, that the Trustee shall be the successor to the
[Master Administrator] until such Successor [Master Administrator] is
appointed. Such Successor [Master Administrator] shall succeed to all rights
and assume all of the responsibilities, duties and liabilities of the [Master
Administrator] under this Agreement; provided further, that such Successor
[Master Administrator] and the Trustee shall have no responsibility for any
actions of the [Master Administrator] prior to the date of the appointment of
such Successor [Master Administrator] as [Master Administrator]. Prior to the
appointment of such Successor [Master Administrator], the Trustee shall be
authorized and empowered to execute and deliver, on behalf of the [Master
Administrator], as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do any and all acts or things necessary or
appropriate to effect the purposes of such notice of termination, perform the
duties of the [Master Administrator] hereunder. The standard of care,
representations and warranties, covenants, liabilities, rights of
indemnification, and all other rights and obligations of the Trustee under this
Agreement shall also be applicable to the Trustee in its capacity hereunder.
The Trustee may petition a court of competent jurisdiction to appoint a
Successor [Master Administrator] if no Successor [Master Administrator] has
been appointed within 60 days of the removal of the [Master Administrator].
(b) Any successor of the [Master Administrator] appointed
hereunder (including the Trustee as the Successor [Master Administrator] during
such time as it functions as the Successor [Master Administrator]) shall be
entitled to compensation (including the estimated costs of such services and a
reasonable profit). Such compensation will be payable to the successor to the
[Master Administrator] in the manner provided in Section 7.04(a). The amount of
such compensation may result in an increase or decrease in the Monthly
Administrator Fee.
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(c) The outgoing [Master Administrator], the Trustee and
the Successor [Master Administrator] shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession,
including, without limitation, the express assumption by such Successor [Master
Administrator] of the duties and obligations of the outgoing [Master
Administrator] hereunder.
(d) Upon appointment, any Successor [Master
Administrator] shall be successor in all respects to the outgoing [Master
Administrator] this Agreement and the transactions set forth or provided for
herein and shall be subject to all responsibilities, duties and liabilities
relating thereto placed upon the [Master Administrator] by the terms and
provisions hereof (subject to the same limitations as are contained in this
Section 5.08 with respect to a succession to the outgoing [Master
Administrator] by the Trustee).
SECTION 5.09. Annual Reports; Annual Statement as to
Compliance. (a) The [Master Administrator] shall deliver to the Trustee and
the Rating Agency as soon as available, but in any event within 120 days after
the end of each of its fiscal years, a consolidated and consolidating balance
sheet of it and its Subsidiaries, if any, as at such last day of the fiscal
year, a consolidated and consolidating statements of income and retained
earnings and statements of cash flow, for each such fiscal year, each prepared
in accordance with GAAP, in reasonable detail, and as to the consolidated
statements, certified without qualification by an Independent Public
Accountant, who may also render other services to the [Master Administrator] or
its Affiliates or certified, as to the consolidating statements by the chief
financial officer of the [Master Administrator], as fairly presenting the
financial position and the results of operations of the [Master Administrator]
as at and for the year ending on its date and as having been prepared in
accordance with GAAP.
(b) The [Master Administrator] shall, and shall cause any
Subcontractor hereunder having any responsibilities pertaining to the
distribution of funds to, deliver to the Trustee and the Rating Agency on or
before __________ of each year, beginning with _________, 199_, an Officer's
Certificate stating, as to each signer thereof, that (a) a review of the
activities of the [Master Administrator] or Subcontractor, as the case may be,
during the preceding calendar year and of performance under this Agreement has
been made under such officer's supervision and (b) to the best of such
officer's knowledge, based on such review, the [Master Administrator] or
Subcontractor, as the case may be, has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and remedies therefor being pursued.
(c) The [Master Administrator] shall promptly (but in any
event within five Business Days) notify the Trustee and the
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Rating Agency upon receiving actual knowledge of any event which constitutes or
an Event of Default, an Event of Master Servicing Termination, an Event of
Servicing Termination, an Event of Administrator Termination or would
constitute an Event of Default, an Event of Master Servicing Termination, an
Event of Servicing Termination or an Event of Administrator Termination but for
the requirement that notice be given or time elapse or both.
SECTION 5.10. Other Data. In addition to the statements
and reports expressly required to be furnished by the [Master Administrator]
hereunder, the [Master Administrator] shall, on request of the Trustee or the
Rating Agency, furnish such reasonably pertinent underlying data as can be
generated by the [Master Administrator]'s existing data processing systems
without, in the opinion of the [Master Administrator], undue modification or
expense.
SECTION 5.11. Reports of the [Master Administrator]. On
each Determination Date immediately preceding a Distribution Date, the [Master
Administrator] shall furnish to the Trustee an Officer's Certificate,
substantially in the form attached hereto as Exhibit G (the "[Master
Administrator]'s Report"), which shall include the following information with
respect to the related Distribution Date (which may be substantially in the
form of a Form 10-Q filed with the Securities and Exchange Commission for such
period):
(i) the Investor Certificate Principal Balance as
of the end of the second preceding Due Period (after giving effect to
the disbursements of principal, if any, made on the immediately
preceding Distribution Date);
(ii) the Pool Factor with respect to the beginning
of the Due Period;
(iii) the Pool Factor with respect to the ending of
the Due Period;
(iv) the amount (each to be separately set forth)
of Monthly Servicing Fees paid to the [Master Servicer], and the
Monthly Subrogation Amounts and the Monthly Administrator Fees paid to
the [Master Administrator];
(v) the amount of Available Funds with respect to
the related Due Period;
(vi) the amount of the aggregate distribution to
be made on such Distribution Date which constitutes interest on the
Investor Certificates at the Certificate Rate, including any Shortfall
so allocable;
(vii) the amount of the aggregate distribution to
be made on such Distribution Date which constitutes payments in
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reduction of principal with respect to the Investor Certificates;
(viii) the Investor Certificate Principal Balance as
of the end of the immediately preceding Due Period (after giving
effect to the disbursements in reduction of principal on such
Distribution Date);
(ix) the Originator Certificate Principal Balance
as of the end of the second preceding Due Period (after giving effect
to the disbursements in reduction of principal, if any, on the
immediately preceding Distribution Date);
(x) the amount of the aggregate distribution to
be made on such Distribution Date which constitutes interest on the
Originator Certificate at the Certificate Rate;
(xi) the amount of the aggregate distribution to
be made on such Distribution Date which constitutes a reduction of
principal with respect to the Originator Certificate;
(xii) the Originator Certificate Principal Balance
as of the end of the immediately preceding Due Period (after giving
effect to the payments in reduction of principal on such Distribution
Date);
(xiii) the Available Subordination Amount;
(xiv) the Maximum Subordination Amount;
(xv) the Cumulative Subordination Payments;
(xvi) the amount on deposit in the Cash Reserve
Account and available for deposit to the Collection Account for such
Distribution Date;
(xviii) the amount to be withdrawn from or to be
deposited to the Cash Reserve Account with respect to such
Distribution Date; and
(xix) the Required Cash Reserve Amount and the
Available Cash Reserve Amount (assuming all withdrawals or deposits to
be made with respect to the current Distribution Date are made).
Each such certificate will include a certification that the information
contained in such certificate is accurate and that no Event of Administrator
Termination, or event that with notice or lapse of time or both would become an
Event of Administrator Termination, has occurred, or if an Event of
Administrator Termination or such event has occurred and is continuing,
specifying the Event of Administrator Termination or such event and its
status.]
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ARTICLE VI
THE CERTIFICATES
SECTION 6.01. The Certificates. (a) The Investor
Certificates shall be substantially in the form of Exhibit H and the Originator
Certificate shall be substantially in the form of Exhibit I. The Certificates
shall be issuable in denominations of $1,000 of Initial Principal Amount or
integral multiples thereof (except that one Certificate may be issued in a
denomination of less than $1,000).
(b) The Investor Certificates, upon original issuance,
shall be issued in the form of one or more typewritten Certificates
representing the Certificates, to be delivered to the Depository by, or on
behalf of, the Sponsor (the "Book-Entry Certificates"). The Investor
Certificates shall initially be registered on the Certificate Register in the
name of Cede & Co., the nominee of the Depository. No Certificateholder will
receive a definitive certificate representing such Certificateholder's interest
in the Investor Certificates, except as provided in Section 6.01(e). Unless and
until definitive, fully registered Investor Certificates (the "Definitive
Certificates") have been issued to Certificateholders pursuant to Section
6.01(e):
(i) the provision of this Section 6.01(b) shall be in
full force and effect with respect to the Investor
Certificates;
(ii) the Sponsor, the [Master Administrator], the Paying
Agent, the Certificate Registrar and Transfer Agent and the
Trustee may deal with the Depository for all purposes,
including the making of distributions on the Investor
Certificates as the authorized representatives of the
respective Certificateholders;
(iii) to the extent that the provisions of this Section
6.01 conflict with any other provisions of this Agreement, the
provisions of this Section 6.01 shall control; and
(iv) the rights of Certificateholders shall be exercised
only through the Depository and the applicable Depository
Participants and shall be limited to those established by law
and agreements between such Certificateholders and the
Depository and/or the Depository Participants. Pursuant to
the Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 6.01(e), the
Depository will make book-entry transfers among the Depository
Participants and receive and transmit distributions of
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principal and interest on the Investor Certificates to such
Depository Participants.
(c) For purposes of any provision of this Agreement
requiring or permitting actions with the consent of, or at the direction of,
Investor Certificateholders evidencing a specified percentage of the aggregate
unpaid principal amount of Investor Certificates, such direction or consent may
be given by Investor Certificateholders (acting through Depository and the
Depository Participants) owning Investor Certificates evidencing the requisite
percentage of principal amount of Investor Certificates.
(d) Whenever notice or other communication to the
Certificateholders is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Certificateholders pursuant
to Section 6.01(e), the Trustee shall give all such notices and communications
specified herein to be given to holders of the Investor Certificates to the
Depository for distribution to the Certificateholders.
(e) If (i) (A) the [Master Administrator] advises the
Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities, and (B) the [Master Administrator] is
unable to locate a qualified successor, (ii) the Sponsor, at its option,
advises the Trustee in writing that it elects to terminate the book-entry
system through the Depository or (iii) after the occurrence of an Event of
Administrator Termination, Investor Certificateholders with an aggregate
Percentage of 50% advise the Trustee and the applicable Depository through the
applicable Depository Participants in writing that the continuation of a
book-entry system through the applicable Depository is no longer in the best
interests of the Certificateholders, the Trustee shall notify all
Certificateholders through the applicable Depository Participants, of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificateholders requesting the same. Upon surrender to the Trustee of
the Investor Certificates by the applicable Depository, accompanied by
registration instructions from the applicable Depository for registration, the
Trustee shall cause the Definitive Certificates to be issued on behalf of the
Trust. Neither the Sponsor nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the applicable Depository shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates, and the Trustee shall recognize the Certificateholders
of the Definitive Certificates as Certificateholders hereunder.
SECTION 6.02. Authentication of Certificates. (a) The
Trustee shall execute on behalf of the Trust, authenticate and
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deliver the Originator Certificate to the Originator on the Closing Date.
Subject to the terms of Section 6.01(b) and Section 6.02(b), on the Issuance
Date, the Trustee shall authenticate and deliver the Investor Certificates, to
or upon the written order of the Sponsor to the underwriters, for the sale of
the Book-Entry Certificates evidenced by such Investor Certificates in an
aggregate principal amount equal to the Initial Principal Amount to or upon the
order of the Sponsor against payment to the Sponsor of the purchase price
therefor. Upon the receipt of such payment, the Investor Certificates shall be
fully paid and nonassessable.
(b) Upon satisfaction of the conditions set forth in
clauses (i) through (v) below on or before the Issuance Date, the Trustee will
execute on behalf of the Trust, authenticate and deliver the Investor
Certificates and a newly issued Originator Certificate. In connection with the
issuance of the Investor Certificates, the Originator will surrender the
Originator Certificate to the Trustee in exchange for a newly issued Originator
Certificate. The following conditions must be satisfied on or prior to the
Issuance Date:
(i) on or before the fifth Business Day prior to
the Issuance Date, the Sponsor and the [Master Administrator] shall
execute and deliver to the Trustee, a notice (the "Issuance Notice")
specifying (A) the Certificate Rate, (B) the Initial Principal Amount,
(C) the Expected Final Payment Date and (D) the day on which the
Investor Certificates are to be authenticated and delivered by the
Trustee;
(ii) the Originator shall have surrendered the
original Originator Certificate delivered to the Trustee;
(iii) the Rating Agency shall have indicated in
writing that it has assigned the Investor Certificates a rating of at
least __;
(iv) such issuance will not result in an Event of
Default and the Sponsor shall have delivered to the Trustee an
Officer's Certificate, dated the Issuance Date to the effect that (A)
the Rating Agency has not reduced or withdrawn the rating of the
Investor Certificates since the date of its rating letter and (B)
there is no Event of Default which has occurred and is continuing as
of the Issuance Date and the Sponsor reasonably believes that such
issuance is not reasonably expected to result in an Event of Default
at any time in the future;
(v) the Trustee shall have received an Opinion of
Counsel (who may be counsel to the Sponsor and the [Master
Administrator]) with respect to the Intended Tax Characterization; and
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(vi) the parties hereto shall have executed an
Issuance Supplement dated as of the Issuance Date substantially in the
form of Exhibit K, which shall specify certain relevant terms with
respect to the Investor Certificates, including, without limitation:
(A) the manner of determining when a Distribution Date shall occur,
(B) the Expected Final Payment Date, (C) the Initial Principal Amount,
(D) the Certificate Rate, (E) the Investor's Share, (F) the aggregate
Principal Balance of the Auto Loans to be used in the computation of
the Maximum Subordination Amount, (G) the Required Cash Reserve
Amount, (H) the Originator Certificate Principal Balance, (I) the
Originator's Share, (G) the representations and warranties referred to
in Section 3.02(b)(ii) and (H) the List of Auto Loans as of such
Issuance Date.
(c) Subject to the provisions of Section 6.02(b), each
Certificate shall be authenticated by the Trustee by the manual signature of a
duly authorized signatory. Certificates bearing the signatures of individuals
who were at the time the proper officers or authorized signatories of the
Trustee shall bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices or positions prior to the delivery of
such Certificates or did not hold such offices or positions at the date of such
Certificates. All Certificates shall be dated the date of their
authentication. The authentication by the Trustee upon any Certificate shall
be conclusive evidence, and the only evidence, that the Certificate so
authenticated has been duly authenticated and delivered hereunder and is
entitled to the benefit of this Agreement. The authentication certification of
the Trustee may be executed by any Person authorized by the Trustee, but it
shall not be necessary that the same authorized Person sign the authentication
certificates on all of the Certificates.
SECTION 6.03. Registration of Transfer and Exchange of
Certificates. (a) The Trustee shall maintain, or cause to be
maintained by a certificate registrar and transfer agent (the "Certificate
Registrar and Transfer Agent"), in accordance with Section 6.03(b) a
certificate register in which the Trustee shall provide or cause to be provided
for the registration of Investor Certificates and transfers and exchanges of
Investor Certificates as herein provided (the "Certificate Register"). The
Trustee is hereby initially appointed the Certificate Registrar and Transfer
Agent for the purpose of registering Investor Certificates and transfers and
exchanges of Investor Certificates as provided herein. All Investor
Certificates shall be so registered.
(b) The Certificate Registrar and Transfer Agent will
maintain at its expense in the City of __________ an office or offices or an
agency or agencies where Investor Certificates may be surrendered for
registration of transfer or exchange. The Certificate Registrar and Transfer
Agent hereby appoints its office at __________________________________________
____________ for such
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purpose. Subject to the provisions of Section 6.01(b), at the option of an
Investor Certificateholder, Investor Certificates may be exchanged for other
Investor Certificates of authorized denominations, upon surrender of the
Investor Certificates to be exchanged at such office. Upon surrender for
registration or transfer of any Investor Certificate at such office, the
Trustee shall, on behalf of the Trust, authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Investor Certificates
of a like aggregate Percentage and dated the date of authentication by the
Trustee. Whenever any Investor Certificates are so surrendered for exchange,
the Trustee shall execute, on behalf of the Trust, authenticate and deliver the
Investor Certificates which the Certificateholder making the exchange is
entitled to receive. Every certificate presented or surrendered for transfer
or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the holder thereof or his or her attorney duly
authorized in writing.
(c) No service charge shall be made for any transfer or
exchange of Certificates, but the Trustee or Certificate Registrar and Transfer
Agent may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates. All Certificates surrendered for transfer and
exchange shall be disposed of in a manner approved by the Trustee.
(d) Except as provided in Section 6.02, in no event shall
the Originator Certificate or any interest therein be sold hereunder, in whole
or in part, unless the Originator shall have consented in writing to such
transfer and unless the Trustee shall have received (i) confirmation in writing
from the Rating Agency that such transfer will not result in the reduction or
withdrawal of its then-existing rating of the Investor Certificates, (ii) an
Opinion of Counsel that such transfer does not adversely affect the conclusions
reached in the federal income tax opinion dated the Issuance Date and (iii) an
agreement supplemental hereto executed and delivered to the Trustee, in form
and substance satisfactory to the Trustee, in which the transferee of the
Originator Certificate expressly assumes the obligations of the Originator
hereunder provided, however, that this Section 6.03(d) shall not prevent the
Originator from pledging its interest in the Originator Certificate in
connection with any interim financing.
SECTION 6.04 Appointment of Paying Agent. The Paying
Agent shall make distributions to Investor Certificateholders from the
Collection Account pursuant to Section 7.04 and shall report the amounts of
such distributions to the Trustee. Any Paying Agent shall have the revocable
power to withdraw funds from the Collection Account for the purpose of making
the distributions referred to above. The Trustee may revoke such power and
remove the Paying Agent if the Trustee determines in its sole discretion
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that the Paying Agent shall have failed to perform is obligations under this
Agreement in any material respect. The Paying Agent shall initially be _____.
_____ shall be permitted to resign as Paying Agent upon 30 days' written notice
to the Trustee. In the event that _____ shall no longer be the Paying Agent,
the Trustee shall appoint a successor to act as Paying Agent (which shall be a
bank or trust company). The Trust shall cause such successor Paying Agent or
any additional Paying Agent appointed by the Trustee to execute and deliver to
the Trustee an instrument in which such successor Paying Agent or additional
Paying Agent shall agree with the Trustee that as Paying Agent, such successor
Paying Agent or additional Paying Agent will hold all sums, if any, held by it
for payment to the Investor Certificateholders in trust for the benefit of the
Investor Certificateholders entitled thereto until such sums shall be paid to
such Certificateholders. The Paying Agent shall return all unclaimed funds to
the Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Trustee.
SECTION 6.05. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Definitive Certificate is surrendered to
the Certificate Registrar and Transfer Agent, or the Certificate Registrar and
Transfer Agent receives evidence to its satisfaction of the destruction, loss
or theft of any Definitive Certificate, and (b) there is delivered to the
Certificate Registrar and Transfer Agent and the Trustee such security or
indemnity as may be required by each to save it harmless, then in the absence
of notice to the Certificate Registrar and Transfer Agent or the Trustee that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
on behalf of the Trust, execute, authenticate and deliver, in exchange for and
in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and percentage. Upon the issuance of any new
Certificate under this Section 6.05, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expense connected therewith. Any
duplicate Certificate issued pursuant to this Section 6.05 shall constitute
complete and indefeasible evidence of ownership of the Fractional Undivided
Interest represented by the original Certificate, as if originally issued,
whether or not the destroyed, lost or stolen Certificate shall be found at any
time.
SECTION 6.06. Persons Deemed Owners. Prior to due
presentation of a Certificate for registration of transfer, the Sponsor, the
[Master Administrator], the Paying Agent, the Trustee, and the Certificate
Registrar and Transfer Agent may treat the Person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
remittances pursuant to Section 7.04 and for all other purposes whatsoever, and
none of the Sponsor, the [Master Administrator], the Paying Agent, the Trustee,
the Certificate Registrar and Transfer Agent nor any agent of the Sponsor, the
[Master Administrator], the Paying Agent, the
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Trustee, or the Certificate Registrar and Transfer Agent shall be affected by
notice to the contrary. Any action taken by the Trustee pursuant to this
Agreement upon the request or authority or consent of any Person who at the
time of making such request or giving such authority or consent is a
Certificateholder shall be conclusive and binding upon all future holders of
the same Certificate and upon Certificates issued in exchange therefor or in
place thereof.
SECTION 6.07. Access to List of Certificateholders' Names
and Addresses. The Certificate Registrar and Transfer Agent will furnish to
the Trustee, the Paying Agent, the Sponsor, and the [Master Administrator]
promptly upon request therefor from any of them in writing, a list of the names
and addresses of the Certificateholders as of the most recent Record Date.
Upon written application by Investor Certificateholders with an aggregate
Percentage of 10% or more (hereinafter referred to as "Applicants") to the
Trustee stating that the Applicants desire to communicate with other Investor
Certificateholders with respect to their rights under this Agreement or under
the Investor Certificates accompanied by a copy of the communication which such
Applicants propose to transmit, the Trustee shall, within five Business Days
after the receipt of such application, afford such Applicants access during
normal business hours to the most recent list of Investor Certificateholders
held by the Trustee. If such list is as of a date more than 90 days prior to
the date of receipt of such Applicants' request, the Trustee shall promptly
request from the Certificate Registrar and Transfer Agent a current list as
provided above, and shall afford such Applicants access to such list promptly
upon receipt. Every Certificateholder, by receiving and holding an Investor
Certificate, agrees with the Certificate Registrar and Transfer Agent and the
Trustee that none of the Sponsor, the [Master Administrator], the Paying Agent,
the Certificate Registrar and Transfer Agent nor the Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Certificateholders hereunder, regardless of the source
from which such information was obtained.
SECTION 6.08. Acts of Certificateholders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Agreement to be given or taken by Investor Certificateholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Investor Certificateholders in Person or by an
agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and where required, to the Sponsor and
the [Master Administrator]. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Agreement and (subject to Section 10.01) conclusive in favor of the Trustee,
the Sponsor, the
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[Master Administrator], the [Master Servicer] and the Servicer, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Investor
Certificateholders of any such instrument or writing may be provided in any
reasonable manner which the Trustee deems sufficient.
(c) The ownership of Investor Certificates shall be
proved by the Certificate Register.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other act by a Investor Certificateholder shall bind
every holder of every Investor Certificate issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, or omitted to be done by the Trustee, the Sponsor, the [Master
Administrator], the [Master Servicer] or the Servicer in reliance thereon,
whether or not notation of such action is made upon such Certificate.
(e) The Trustee may require such additional proof of any
matter referred to in this Section as it shall deem necessary.
SECTION 6.09 Notices to Depository. Whenever any notice,
report or other communication is required to be given to Certificateholders
with respect to which Book-Entry Certificates have been issued, unless and
until Definitive Certificates shall have been issued to the related Investor
Certificateholders, the Trustee shall give all such notices, reports and
communications to the Depository.
ARTICLE VII
DEPOSITS AND DISTRIBUTIONS
SECTION 7.01. Rights of Certificateholders. (a) The
Investor Certificates and the Originator Certificate shall represent fractional
undivided interests in the Trust, consisting of the right to receive, to the
extent necessary to make the required payments with respect to the Investor
Certificates at the times and in the amounts specified in this Agreement, in,
to and under Trust Assets (the "Certificateholders' Interest").
(b) Amounts held by the Trustee for future distribution
to the Certificateholders, including, without limitation, in the Collection
Account and the Cash Reserve Account, shall not be distributed except in
accordance with the terms of this Agreement. The Originator as holder of the
Originator Certificate is deemed to have granted a security interest in rights
to receive monies from the Collection Account and the Cash Reserve Account to
Investor Certificateholders to secure the rights of the Investor
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Certificateholders to receive distributions in priority over the Originator
Certificate as provided herein. Whenever requested by the Trustee, and without
prejudice to the intent of the parties that the Collection Account and the Cash
Reserve Account be held exclusively in the name of the Trustee for the benefit
of the Trust, the Sponsor or the Originator Certificate, or both, will make,
execute and deliver or cause to be made, executed and delivered any and all
further and other notices instruments and assurances, and will furnish such
information and will make such filings with Governmental Authorities, including
but not limited to financing statements on Form UCC-1, as may be necessary or
appropriate to carry out the intention or to facilitate the performance of the
terms of this Agreement, including without limitation, the foregoing
subordination provisions, to ensure the perfection of the security interest of
the Investor Certificateholders in the Cash Reserve Account, or otherwise to
protect and preserve the rights and remedies hereunder of the Investor
Certificateholders. Amounts properly distributed to the holder of the
Originator Certificate pursuant to Section 7.04 shall be deemed released from
the security interest established by this Section 7.01, and the holder of the
Originator Certificate will not in any event be required to refund any such
distributed amounts.
SECTION 7.02. Establishment and Administration of the
Collection Account. (a) The Trustee, shall cause to be established
and maintained at all times the Collection Account on behalf of and in the name
of the Trustee for the benefit of the Trust. The Collection Account shall be
an Eligible Account initially established at the office of the Trustee, bearing
a designation clearly indicating that the funds deposited therein are held for
the benefit of the Trust. The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Collection Account
and in all proceeds thereof. The Collection Account shall be under the sole
dominion and control of the Trustee for the benefit of the Certificateholders
as their interests appear in the Trust. If, at any time, the Collection
Account ceases to be an Eligible Account, the [Master Administrator], on behalf
of the Trustee, shall within 20 Business Days establish a new Collection
Account which shall be an Eligible Account, transfer any cash and/or any
investments to such new Collection Account and from the date such new
Collection Account is established, it shall be the "Collection Account".
(b) The Servicer shall deposit into the Collection
Account, as soon as practicable, but in no event later than the close of
business on the fifth Business Day after the date of receipt thereof (i) all
amounts representing Payments collected by the Servicer, (ii) all Recoveries on
Defaulted Auto Loans received by the Servicer during such Due Period and (iii)
the Repurchase Price of Auto Loans repurchased by the Sponsor or an Originator
or purchased by the [Master Servicer] pursuant to Section 3.03.
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(c) The [Master Administrator] shall deposit into the
Collection Account, as soon as practicable, but in no event later than the
close of business on the fifth Business Day after receipt thereof the
Repurchase Price of Auto Loans repurchased by an Originator pursuant to the
related Sale Agreement and Section 3.03.
(d) The [Master Administrator] shall direct the Trustee
in writing to invest, and the Trustee shall so invest, the amounts in the
Collection Account in specified Eligible Investments that mature not later than
the next succeeding Deposit Date; provided, that any Eligible Investment as to
which the Trustee is the obligor in its individual capacity may mature not
later than such Distribution Date; and provided further, that all Eligible
Investments shall be held to maturity.
(e) The [Master Administrator] shall instruct the Trustee
to make withdrawals and payments from the Collection Account for the purposes
of carrying out the [Master Administrator]'s or the Trustee's duties hereunder.
SECTION 7.03. Establishment and Administration of the Cash
Reserve Account. (a) On or prior to the Issuance Date, the Trustee shall cause
to be established and maintained at all times the Cash Reserve Account on
behalf of and in the name of the Trustee for the benefit of the Trust. The
Cash Reserve Account shall be an Eligible Account initially established at the
offices of the Trustee, bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trust. The Trustee shall
possess all right, title and interest in all funds on deposit from time to time
in the Cash Reserve Account and in all proceeds thereof. The Cash Reserve
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Trust. If, at any time, the Cash Reserve Account ceases to be an
Eligible Account, the [Master Administrator] on behalf of the Trustee shall
within 20 Business Days establish a new Cash Reserve Account which shall be an
Eligible Account, transfer any cash and/or any investments to such new Cash
Reserve Account and from the date such new Cash Reserve Account is
established, it shall be the "Cash Reserve Account".
(b) The [Master Administrator] shall direct the Trustee
in writing to invest, and the Trustee shall so invest, the amounts in the Cash
Reserve Account in specified Eligible Investments that mature not later than
the Deposit Date preceding the next Distribution Date; provided that any
Eligible Investment as to which the Trustee is the obligor in its individual
capacity may mature not later than such Distribution Date; and provided
further, that all Eligible Investments shall be held to maturity.
(c) If on any Distribution Date the amounts disbursed
pursuant to Sections 7.04(a), 7.04(c) and 7.04(d) are insufficient to pay the
amounts required to be disbursed pursuant to Sections 7.04(a)(i) and (ii),
7.04(c)(i) and 7.04(d)(i)-(ii), the Trustee
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shall withdraw from the Cash Reserve Account and deposit in the Collection
Account the least of (i) the Available Cash Reserve Amount, (ii) the Available
Subordination Amount and (iii) the amount necessary to make up such deficiency
and shall disburse such amounts in accordance with Section 7.04; provided,
however, that in no event will any amount representing net investment earnings
on amounts held in the Cash Reserve Account be remitted or otherwise used in
any manner for the benefit of the Certificateholders.
(d) If the Available Cash Reserve Amount, after giving
effect to the distributions to the Investor Certificateholders on any
Distribution Date, is greater than the Required Cash Reserve Amount on such
Distribution Date, the amount of such excess shall be distributed to the
Servicer. Amounts properly distributed to the Servicer pursuant to this
Section 7.03(d), either directly without deposit in the Cash Reserve Account or
from amounts in excess of the Required Cash Reserve Amount, shall be deemed
released from the security interest established by Section 7.01, and the
Servicer will not in any event be required to refund any such distributed
amounts.
(e) On the first Distribution Date following the earlier
to occur of (i) the Distribution Date on which the Investor Certificateholders
have been paid in full and (ii) the Available Subordination Amount has been
reduced to zero, the Trustee shall disburse all amounts held in the Cash
Reserve Account, if any, to the Servicer.
(f) The [Master Administrator] shall instruct the Trustee
to make withdrawals and payments from the Cash Reserve Account for the purposes
of carrying out the [Master Administrator]'s or the Trustee's duties hereunder.
SECTION 7.04. Distributions.
(a) On each Monthly Fee Date, the Trustee, at the direction
of the [Master Administrator], shall disburse Available Funds, including the
amounts deposited in the Collection Account from the Cash Reserve Account
pursuant to Section 7.03(c) in the following priority (to the extent available)
(and, if such date is also a Distribution Date, in priority to the amounts to
be disbursed pursuant to subsection (b), (c) and (d) below):
(i) to the [Master Servicer] (or the Servicer subject
to the provisions of Section 4.08), the Monthly Servicing Fee plus any
accrued but unpaid Monthly Servicing Fee with respect to any prior
month; and
(ii) to the [Master Administrator], the Monthly
Subrogation Amount plus any accrued but unpaid Monthly Subrogation
Amount with respect to any prior month; and
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(iii) to the [Master Administrator], the Monthly
Administrator Fee plus any accrued but unpaid Monthly Administrator
Fee with respect to any prior month.
(b) On each Monthly Fee Date occurring prior to the
Issuance Date, the Trustee, at the direction of the [Master Administrator],
shall disburse the balance of Available Funds (to the extent available after
making the disbursements under Section 7.04(a) owing on such date) to the
holder of the Originator Certificate.
(c) On each Distribution Date occurring during the
Interest-Only Period, the Trustee, at the direction of the [Master
Administrator], shall disburse the balance of Available Funds (to the extent
available after making the disbursements under Section 7.04(a) owing on such
date) in the following priority:
(i) to the Investor Certificateholders, interest
in an amount equal to the lesser of (A) the sum of (1) one-quarter of
the Certificate Rate times the Investor Certificate Principal Balance
and (2) any Shortfall and (B) the sum of the Investor's Share of the
Available Distribution Amount plus the Available Subordination Amount;
(ii) to the holder of the Originator Certificate,
in reduction of the Originator Certificate Principal Balance, an
amount equal to the excess of (A) the Originator Certificate Principal
Balance over (B) the Originator's Share of the aggregate Principal
Balance of the Auto Loans determined as of the end of the immediately
preceding Due Period;
(iii) to the holder of the Originator Certificate,
interest in an amount equal to one-quarter of the Certificate Rate
times the Originator Certificate Principal Balance;
(iv) to the Cash Reserve Account, an amount equal
to the lesser of (A) the Aggregate Excess Interest on such
Distribution Date and, (B) the Required Cash Reserve Amount minus the
Available Cash Reserve Amount;
(v) to the holder of the Originator Certificate,
an amount equal to the excess, if any, of the Aggregate Excess
Interest over the amount disbursed to the Cash Reserve Account in
accordance with the provisions of 7.04(c)(iv); and
(vi) the remainder of funds held in the Collection
Account following the distributions in clauses (i) - (v) above shall
be retained in the Collection Account.
(d) On each Distribution Date occurring during the
Principal Amortization Period, the Trustee, at the direction of the [Master
Administrator] shall disburse the balance of Available
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Funds (to the extent available after making the disbursements under Section
7.04(a) owing on such date) in the following priority:
(i) to the Investor Certificateholders, interest
in an amount equal to the lesser of (A) the sum of (1) one-quarter of
the Certificate Rate times the Investor Certificate Principal Balance
and (2) any Shortfall and (B) the sum of the Investor's Share of the
Available Distribution Amount plus the Available Subordination Amount;
(ii) to the Investor Certificateholders, in
reduction of the Investor Certificate Principal Balance, an amount
equal to the lesser of (A) principal in an amount equal to the excess
of (1) the Investor Certificate Principal Balance over (2) the
Investor's Share of the aggregate Principal Balance of the Auto Loans
determined as of the end of the immediately preceding Due Period and
(B) the sum of the balance of the Investor's Share of the Available
Distribution Amount plus the Available Subordination Amount;
(iii) to the holder of the Originator Certificate,
interest in an amount equal to one-quarter of the Certificate Rate
times the Originator Certificate Principal Balance;
(iv) to the holder of the Originator Certificate,
in reduction of the Originator Certificate Principal Balance, an
amount equal to the excess of (A) the Originator Certificate Principal
Balance over (B) the Originator's Share of the aggregate Principal
Balance of the Auto Loans determined as of the end of the immediately
preceding Due Period;
(v) to the Cash Reserve Account, an amount equal
to the sum of the (A) the Required Cash Reserve Amount minus (B) the
Available Cash Reserve Amount;
(vi) to the holder of the Originator Certificate,
the balance of Available Funds minus the Partial Prepayment Amount;
and
(vii) the remainder of funds held in the Collection
Account following the distribution in Clauses (i) - (vi) above shall
be retained in the Collection Account.
(e) With respect to each reference in this Section 7.04
as to payments to Certificateholders, the Trustee shall permit the Paying Agent
to disburse such Funds to the Certificateholders pursuant to Section 6.04.
(f) On the first Distribution Date following the
Distribution Date on which the Investor Certificateholders have been paid in
full, all amounts held in the Collection Account and the Cash Reserve Account,
if any, shall be disbursed to the holder of the Originator Certificate and all
interests of the Trust in all
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Auto Loans which have an outstanding balance shall be reconveyed by the Trustee
to, or at the direction of, the Sponsor. Such disbursement and reconveyance
shall constitute the final payment to which the holder of the Originator
Certificate is entitled with respect to its Originator's Interest pursuant to
the terms of this Agreement.
SECTION 7.05. Reports to Certificateholders. On each
Distribution Date, concurrently with the distribution to the
Certificateholders, the Trustee shall furnish, or cause to be furnished by the
Paying Agent to the Certificateholders, a report prepared by the [Master
Administrator] substantially in the form of Exhibit G.
ARTICLE VIII
REMEDIES
SECTION 8.01. Events of Default. "Event of Default",
whenever used herein, means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority):
(a) Default in the payment to the Investor
Certificateholders of any interest or principal due hereunder in accordance
with the provisions of Section 7.04 or Section 11.01 when such payment becomes
due and payable and continuance of such default for a period of three Business
Days; or
(b) Default in the performance, or breach, of any
covenant or agreement of the Sponsor in this Agreement (other than a covenant
or agreement a default in whose performance or whose breach is elsewhere in
this Section 8.01 specifically dealt with), and continuance of such default or
breach for a period of 30 days after there has been given, by registered or
certified mail, to the Sponsor by the [Master Administrator] or the Trustee, or
to the Sponsor, the [Master Administrator] and the Trustee by the
Certificateholders of at least 50% in aggregate principal amount of the
outstanding Investor Certificates a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder, or if, in any such case, the Sponsor shall have
consented in writing that any such event shall be an Event of Default; or
(c) Any proceeding shall be instituted against the
Sponsor (or, if the Sponsor is actively contesting the merits thereof, such
proceeding is not dismissed within 90 days) seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or any of its Debts under
any law
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relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property, or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official for, it
or for any substantial part of its property) shall occur; or
(d) The commencement by the Sponsor of a voluntary case
or proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Sponsor in an involuntary case or
proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable Federal
or state law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Sponsor or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its inability to pay
its Debts generally as they become due, or the taking of corporate action by
the Sponsor in furtherance of any such action; or
(e) Judgments or orders for the payment of money (other
than such judgments or orders in respect of which adequate insurance is
maintained for the payment thereof) against the Sponsor shall remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period of 30
days or more; or
(f) There is a material breach of any of the
representations and warranties of the Sponsor set forth in Section 3.01(a); or
(g) An Event of Master Servicing Termination shall have
occurred and the [Master Administrator] or the Trustee has terminated the
servicing responsibilities of the [Master Servicer] pursuant to Section 4.12;
or
(h) An Event of Servicing Termination shall have occurred
and the [Master Administrator] or the Trustee has terminated the servicing
responsibilities of the Servicer pursuant to Section 4.14; or
(i) Either of the [Master Servicer] or the Servicer shall
have resigned pursuant to Section 4.10; or
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(j) An Event of Administrator Termination shall have
occurred and the Trustee has terminated the administrative responsibilities of
the [Master Administrator] pursuant to Section 5.07.
SECTION 8.02. Declaration of Principal Amortization Event.
(a) If an Event of Default occurs under Sections 8.01(a), (c), or (d), and is
continuing, the Trustee, upon a Responsible Officer receiving written notice
thereof, shall promptly declare that a Principal Amortization Event has
occurred, without demand, protest, or notice of any kind all of which are
expressly waived by the Sponsor; provided, that, in the event any of the events
described in Sections 8.01 (c) or (d) shall have occurred, an Event of Default
shall automatically occur, without demand, protest, or notice of any kind all
of which are expressly waived by the Sponsor. If an Event of Default occurs
and is continuing, other than under Section 8.01(a), (c), or (d), then and in
every such case the Trustee may at any time in the case of any such other Event
of Default, or Investor Certificateholders of an aggregate Percentage of not
less than 50% may instruct the Trustee to and the Trustee shall, declare that a
Principal Amortization Event has occurred by a notice in writing to the
Sponsor. The Trustee shall simultaneously with any declaration of any
Principal Amortization Event, give notice thereof to the Rating Agency, the
[Master Administrator], the [Master Servicer] and the Servicer.
(c) The Sponsor shall promptly (but in any event within
five Business Days) notify the Trustee upon receiving actual knowledge of any
event which constitutes an Event of Default or would constitute an Event of
Default but for the requirement that notice be given or time elapse or both.
SECTION 8.03. Collection of Indebtedness and Suits for
Enforcement by Trustee. If an Event of Default occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its rights and the
rights of the Certificateholders by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Agreement or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy. The Trustee shall notify the Sponsor, the [Master
Administrator], the [Master Servicer], the Servicer and the Rating Agency of
any such action.
SECTION 8.04. Trustee May File Proofs of Claim. (a) In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Sponsor, or any other obligor upon the Investor
Certificates, or the property of the Sponsor, or such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Investor
Certificates shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee
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shall have made any demand on the Sponsor for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(i) to file and prove a claim for the whole
amount of principal and interest owing and unpaid in respect of the
Investor Certificates or any amount owing on the Auto Loans or the
other Trust Assets and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
and any predecessor Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee and
any predecessor Trustee, their agents and counsel) and of the
Certificateholders allowed in such judicial proceeding; and
(ii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Certificateholder to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Certificateholders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee and any
predecessor Trustee, their agents and counsel, and any other amounts due the
Trustee and any predecessor Trustee under Section 10.06.
(b) Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Certificateholder any plan or reorganization, agreement, adjustment or
composition affecting the Investor Certificates or the rights of any
Certificateholder thereof or affecting the Auto Loans or the other Trust Assets
or to authorize the Trustee to vote in respect of the claim of any
Certificateholder in any such proceeding.
SECTION 8.05. Trustee May Enforce Claims Without Possession
of Investor Certificates. All rights of action and claims under this
Agreement, the Investor Certificates, the Auto Loans or the other Trust Assets
may be prosecuted and enforced by the Trustee without the possession of any of
the Investor Certificates or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment
shall, after provisions for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee and any predecessor
Trustee, their agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been recovered.
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SECTION 8.06. Application of Money Collected. Any money
collected by the Trustee pursuant to this Article VIII shall be deposited in
the Collection Account for disbursement in accordance with the provisions of
Article VII.
SECTION 8.07. Limitation on Suits. No Investor
Certificateholder shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:
(a) there is a continuing Event of Default and such
Certificateholder has previously given written notice to the Trustee of a
continuing Event of Default;
(b) the Investor Certificateholders of an aggregate
Percentage of not less than 50% shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Investor Certificateholder or Investor
Certificateholders have offered to the Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request;
(d) the Trustee, for 60 days after its receipt of such
notice, request and offer of indemnity, has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Investor
Certificateholders of a majority in aggregate principal amount of the
outstanding Investor Certificates;
it being understood and intended that no one or more Investor
Certificateholders shall have any right in any manner whatever by virtue of, or
by availing of, any provision of this Agreement to affect, disturb or prejudice
the rights of any other Certificateholders, or to obtain or to seek to obtain
priority or preference over any other Certificateholders or to enforce any
right under this Agreement, except in the manner herein provided and for the
ratable benefit of all the Certificateholders.
SECTION 8.08. Restoration of Rights and Remedies. If the
Trustee or any Certificateholder has instituted any proceeding to enforce any
right or remedy under this Agreement and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Certificateholder, then and in every such case, subject to any
determination in such proceeding, the Sponsor, the Trustee and the
Certificateholders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and
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\remedies of the Trustee and the Certificateholders shall continue as though no
such proceeding had been instituted.
SECTION 8.09. Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Investor Certificates in Section 6.05, no right or
remedy herein conferred upon or reserved to the Trustee or to the
Certificateholders is intended to be exclusive of any other right or remedy and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 8.10. Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Certificateholder to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to the
Certificateholders may be exercised from time to time, and as often as may be
deemed expedient, as permitted under the terms hereof, by the Trustee or by the
Certificateholders, as the case may be.
SECTION 8.11. Control by Certificateholders. Investor
Certificateholders of an aggregate Percentage of not less than 50% shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
on the Trustee, provided, that (a) such direction shall not be in conflict with
any rule of law or with this Agreement, and (b) the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction.
SECTION 8.12. Waiver of Past Defaults. The
Certificate-holders of not less than a majority in aggregate principal amount
of the outstanding Investor Certificates may on behalf of the
Certificateholders of all the Investor Certificates waive any past default
hereunder and its consequences, except a default:
(a) in the payment of the principal of or interest on any
Investor Certificate, or
(b) in respect of a covenant or provision hereof which
under Article XI cannot be modified or amended without the consent of an
aggregate Percentage of [66 2/3%] of the outstanding Investor Certificates
affected, or
(c) described under Section 8.01(c) or (d).
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Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Agreement; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 8.13. Undertaking for Costs. All parties to this
Agreement agree, and each Investor Certificateholder by his acceptance of an
Investor Certificate shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Agreement, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys' fees
and disbursements, against any party litigant in such suit, having due regard
to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 8.13 shall not apply to any suit
instituted by the Sponsor, to any suit instituted by the Trustee, to any suit
instituted by any Certificateholder or group of Certificateholders holding in
the aggregate more than 10% in principal amount of the outstanding Investor
Certificates, or to any suit instituted by any Certificateholder for the
enforcement of the payment of any principal of or interest on any Investor
Certificate.
SECTION 8.14. Waiver of Stay or Extension Laws. The
Sponsor covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Sponsor (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
ARTICLE IX
LIMITATION ON LIABILITY; INDEMNITIES
SECTION 9.01. Liabilities of Obligors and Insurers. No
obligation or liability of any Obligor under any of the Auto Loans or any
insurer under any Insurance Policy is intended to be assumed by the Sponsor,
the [Master Administrator], the [Master Servicer], the Servicer, the Trust, the
Trustee or the Certificateholders under or as a result of this Agreement and
the transactions contemplated hereby and, to the maximum extent permitted and
valid under mandatory provisions of law, the Sponsor, the [Master
Administrator], the [Master Servicer], the Servicer, the Trust, the
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Trustee and the Certificateholders expressly disclaim such assumption.
SECTION 9.02. Limitation on Liability of the Sponsor, the
[Master Servicer], Servicer and the [Master Administrator].
(a) The Sponsor, the [Master Servicer], the Servicer and
the [Master Administrator], shall each be liable in accordance herewith only to
the extent of the obligations specifically imposed by this Agreement.
(b) None of the Sponsor, the [Master Servicer], Servicer,
or the [Master Administrator] nor any of the directors, officers, employees or
agents of the Sponsor, the [Master Servicer], the Servicer, or the [Master
Administrator] shall be under any liability to the Trust or the
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Sponsor,
the [Master Servicer], the Servicer, or the [Master Administrator] or any such
Person against any breach of warranties or representations made herein, or
against any specific liability imposed on each such party pursuant to this
Agreement or against any liability which would otherwise be imposed by reason
of willful misfeasance, bad faith or negligence in the performance of duties or
by reason of reckless disregard of obligations or duties hereunder. The
Sponsor, the [Master Servicer], the Servicer, the [Master Administrator] and
any director, officer, employee or agent of the Sponsor, the [Master Servicer],
the Servicer or the [Master Administrator] may rely in good faith on any
document of any kind which, prima facie, is properly executed and submitted by
any appropriate Person respecting any matters arising hereunder.
SECTION 9.03. Indemnities of the [Master Servicer], the
Servicer and the [Master Administrator].
(a) The [Master Servicer] agrees to indemnify the Trust,
the Trustee, the [Master Administrator] and any of their respective directors,
officers, employees or agents from, and hold them harmless against, any and all
costs, expenses, losses, claims, damages (except for consequential damages) and
liabilities to the extent that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon the Trust, the Trustee or the
[Master Administrator] through:
(i) the [Master Servicer]'s acts or omissions in
violation of this Agreement (subject to the servicing standard set
forth in Section 4.01(c)); and
(ii) the gross negligence, willful misfeasance or bad
faith of the Servicer in the performance of its duties under this
Agreement or by reason of the Servicer's reckless disregard of its
obligations and duties hereunder;
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except (x) as to clause (ii) for any losses, liability, damages, claims or
expenses arising out of the actions or omissions in the performance of
repossession activities in respect of Defaulted Auto Loans, and (y) as to
clauses (i) and (ii), to the extent the Trustee's or the [Master
Administrator]'s, as the case may be, own bad faith, willful misconduct, or
negligence contributes to the cost, expense, loss, claim, damage or liability.
(b) The Servicer agrees to indemnify the Trust, the
Trustee, and any of its directors, officers, employees or agents and the
[Master Administrator], and any of its directors, officers and employees, from,
and hold them harmless against, any and all losses, liabilities, damages
(except for consequential damages), claims or expenses (including reasonable
attorneys' fees of counsel reasonably acceptable to the Servicer) arising as a
result of the Servicer's acts or omissions (subject to the servicing standard
set forth in Section 4.01(c)) in violation of this Agreement except to the
extent the Trustee's or the [Master Administrator]'s, as the case may be, own
bad faith, willful misconduct, or negligence contributes to the loss,
liability, damage, claim or expense.
(c) The [Master Administrator] agrees to indemnify (i)
the Trust from, and hold it harmless against, any and all losses, liabilities,
damages, claims or expenses (including reasonable attorneys' fees of counsel
reasonably acceptable to the [Master Administrator]) arising as a result of the
[Master Administrator]'s acts or omissions (subject to the administration
standard set forth in Section 5.01(b)) in violation of this Agreement and (ii)
the Trustee, its directors, officers, employees or agents from, and hold it
harmless against, any and all losses, liabilities, damages, claims, expenses
(including attorneys fees and disbursements), fines or penalties, or judgments
arising out of or in connection with the performance by the Trustee of its
duties hereunder or in connection with the Trust, or the issuance by the Trust
of the Certificates except to the extent the Trustee's own bad faith, willful
misconduct or gross negligence contributes to the loss, liability, damage,
claim or expense.
(d) This Section 9.03 shall survive the termination of
this Agreement or the resignation or removal of the Trustee in respect of
rights accrued prior to such resignation or removal.
ARTICLE X
THE TRUSTEE
SECTION 10.01. Certain Duties. (a) The Trustee undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read into this
Agreement against the Trustee (including, without limitation the duties
referred to in Section 4.13, 4.15 and 5.08 during the continuance of an Event
of Master Servicing Termination, an Event of Servicing Termination or
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an Event of Administrator Termination resulting in the appointment of the
Trustee as Successor [Master Servicer], Successor Servicer or Successor [Master
Administrator], respectively).
(b) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement; but in the case
of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Agreement.
(c) In case an Event of Default, an Event of Master
Servicing Termination (resulting in the appointment of the Trustee as Successor
[Master Servicer]), an Event of Servicing Termination (resulting in the
appointment of the Trustee as Successor Servicer) or an Event of Administrator
Termination (resulting in the appointment of the Trustee as Successor [Master
Administrator]) has occurred and is continuing, the Trustee shall exercise such
of the rights and powers vested in it by this Agreement, and use the same
degree of care and skill in their exercise, as a prudent Person would exercise
or use under the circumstances in the conduct of such Person's own affairs,
provided, however, that no provision in this Indenture shall be construed to
limit the obligations of the Trustee to provide notices under Section 10.02.
(d) No provision of this Agreement shall be construed to
relieve the Trustee of any obligation to exercise any of its duties under the
Agreement in any case in which the Trustee has not been offered reasonable
security or indemnity against the costs, expenses and liabilities which might
be incurred by it in the exercise of such duty.
(e) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) this Section shall not be construed to limit
the effect of Section 10.01(a) and (b);
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer;
(iii) the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the written direction of the Certificateholders of a
majority (or such lesser percentage as may be specified by certain
provisions hereunder) in principal amount of the outstanding Investor
Certificates relating to the time, method and place of conducting any
proceeding for
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any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement; and
(iv) no provision of this Agreement shall require
the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(f) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section 10.01.
(g) The Trustee shall have no liability in connection
with compliance of the [Master Administrator], the [Master Servicer], the
Servicer or the Sponsor with statutory or regulatory requirements related to
the Trust Assets. The Trustee makes no representations or warranties with
respect to the Trust Assets or the validity or sufficiency of any assignment of
the Auto Loans to the Sponsor or to the Trustee.
SECTION 10.02. Notice of Defaults. The Trustee shall
promptly (but in any event within 10 Business Days) notify the Rating Agency
upon a Responsible Officer obtaining actual knowledge of any event which
constitutes an Event of Default, an Event of Master Servicing Termination, an
Event of Servicing Termination, or an Event of Administrator Termination or
would constitute an Event of Default, an Event of Master Servicing Termination,
an Event of Servicing Termination, or an Event of Administrator Termination but
for the requirement that notice be given or time elapse or both. In addition,
the Trustee shall, within 10 Business Days following a Responsible Officer
receiving actual knowledge of any Event of Default, Event of Master Servicing
Termination, Event of Servicing Termination or Event of Administrator
Termination specified in the immediately preceding sentence, transmit to all
Certificateholders, as their names and addresses appear in the Certificate
Register notice of such event known to the Trustee, unless such default shall
have been cured or waived; provided further, that this Section 10.02 shall not
limit the obligations of the Trustee to provide notices expressly required by
this Agreement.
SECTION 10.03. Certain Matters Affecting the Trustee.
Subject to the provisions of Section 10.01:
(a) The Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be
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genuine and to have been signed or presented by the proper party or parties;
(b) Any request or direction of any Certificateholders,
the [Master Administrator], the Sponsor, the [Master Servicer] or the Servicer
mentioned herein shall be in writing;
(c) Whenever in the performance of its duties hereunder
the Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the absence
of bad faith on its part, rely upon an Officer's Certificate or Opinion of
Counsel;
(d) The Trustee may consult with counsel and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered, or
omitted by it hereunder in good faith and in reliance thereon;
(e) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement at the request or
direction of any of the Certificateholders pursuant to this Agreement, unless
such Certificateholders shall have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) Prior to the occurrence of an Event of Default, an
Event of Master Servicing Termination, an Event of Servicing Termination, or an
Event of Administrator Termination, or after the curing of all Events of
Default, Events of Master Servicing Termination, Events of Servicing
Termination or Events of Administrator Termination which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper document, unless
requested in writing so to do by Certificateholders with an aggregate
Percentage of 50% or more; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it
by the terms of this Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to so proceeding. The
reasonable expense of every such examination shall be paid by the [Master
Administrator] or, if paid by the Trustee, shall be reimbursed by the [Master
Administrator] upon demand; and
(g) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian (which may be Affiliates
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of the Trustee) and the Trustee shall not be liable for any acts or omissions
of such agents, attorneys or custodians (i) appointed with due care by it
hereunder and (ii) in respect of the Servicer as custodian of the Loan Files
hereunder.
SECTION 10.04. Trustee Not Liable for Certificates or Auto
Loans. (a) The Trustee makes no representations as to the validity or
sufficiency of this Agreement or any Related Document, the Certificates (other
than the execution and authentication thereof) or of any Auto Loan. The
Trustee shall not be accountable for the use or application by the Sponsor of
funds paid to the Sponsor in consideration of conveyance of the Auto Loans to
the Trust.
(b) Except with respect to the Trustee in its capacity as
Successor [Master Servicer] or Successor Servicer pursuant to Article IV or
Successor [Master Administrator] pursuant to Article V, the Trustee shall have
no responsibility or liability for or with respect to: the validity of any
security interest in any Automobile; the perfection of any such security
interest (whether as of the date hereof or at any future time) or the
maintenance of or the taking of any action to maintain such perfection; the
existence or validity of any Auto Loan, the validity of the assignment of any
Auto Loan to the Trust or of any intervening assignment; the review of any Auto
Loan, any Loan File or the Electronic Ledger, the completeness of any Loan
File, the receipt by it or its custodian of any Auto Loan or Loan File or (it
being understood that the Trustee has not reviewed and does not intend to
review such matters); the performance or enforcement of any Auto Loan; the
compliance by the [Master Administrator], the Sponsor or the Servicer with any
covenant or the breach by the [Master Administrator], the Sponsor or the
Servicer of any warranty or representation made hereunder or in any related
document or the accuracy of any such warranty or representation; any investment
of monies in the Collection Account and the Cash Reserve Account (except as
specified in this Agreement) or any loss resulting therefrom; the acts or
omissions of the [Master Administrator], the [Master Servicer], the Servicer or
any Obligor or Dealer; any action of the [Master Administrator], the [Master
Servicer] or the Servicer taken in the name of the Trustee; any action by the
Trustee taken at the instruction of the [Master Administrator]. Except as
provided in Article IX hereof, no recourse shall be had for any claim based on
any provision of this Agreement, the Certificates or any Auto Loan or
Assignment thereof against the Trustee in its individual capacity, and the
Trustee shall not have any personal obligation, liability or duty whatsoever to
any Certificateholder or any other Person with respect to any such claim, and
any such claim shall be asserted solely against the Trust or any indemnitor who
shall furnish indemnity as provided herein.
SECTION 10.05. Trustee May Own Certificates. The Trustee in
its individual or any other capacity may become the
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<PAGE> 90
owner or pledgee of Investor Certificates with the same rights as it would have
if it were not Trustee.
SECTION 10.06. The [Master Administrator] to Pay Trustee's
Fees and Expenses. The [Master Administrator] agrees:
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it as Trustee hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust); and
(b) to reimburse the Trustee upon its request for all
reasonable third-party expenses, disbursements and advances incurred or made by
the Trustee in its capacity as such in accordance with any provision of this
Agreement (including the reasonable compensation and the expenses and
disbursement of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith.
The obligations of the [Master Administrator] under this Section 10.06 shall
survive the termination of this Agreement.
SECTION 10.07. Eligibility Requirements for Trustee. The
Trustee hereunder shall at all times (a) be a corporation, depository
institution, or trust company organized and doing business under the laws of
the United States of America or any state thereof authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000, (b) be subject to supervision or examination by federal or
state authority, (c) be capable of maintaining an Eligible Account and (d) have
a long-term unsecured debt rating of not less than BBB from a nationally
recognized statistical rating organization or such other rating as may be
acceptable to the Rating Agency. If such institution publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 10.07, the combined capital and surplus of such institution shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 10.07, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 10.08.
SECTION 10.08. Resignation or Removal of Trustee. (a) The
Trustee may at any time resign and be discharged from the Trust hereby created
by giving 30 days' written notice thereof to the [Master Administrator], the
[Master Servicer], the Servicer, the Sponsor and the Rating Agency. Upon
receiving such notice of resignation, the [Master Administrator] shall promptly
appoint a successor Trustee by written instrument, in quintuplicate, one
counterpart of which instrument shall be delivered to each of the Sponsor, the
[Master Servicer], the Servicer, the successor Trustee
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<PAGE> 91
and the predecessor Trustee. A copy of such instrument shall be delivered to
the Rating Agency. If no successor Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible
in accordance with the provisions of Section 10.07 and shall fail to resign
after written request therefor by the [Master Administrator], or if at any time
the Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the [Master Administrator] may remove the Trustee. If it
removes the Trustee under the authority of the immediately preceding sentence,
the [Master Administrator] shall promptly appoint a successor Trustee by
written instrument, in quintuplicate, one counterpart of which instrument shall
be delivered to each of the Sponsor, the [Master Servicer], the Servicer, the
successor Trustee and the predecessor Trustee. Copies of such instrument shall
also be delivered by the [Master Administrator] to the Rating Agency.
(c) Any resignation or removal of the Trustee and
appointment of a successor Trustee pursuant to any of the provisions of this
Section 10.08 shall not become effective until acceptance of appointment by the
successor Trustee as provided in Section 10.09.
SECTION 10.09. Successor Trustee. (a) Any successor Trustee
appointed as provided in Section 10.08 shall execute, acknowledge and deliver
to each of the [Master Administrator], the Sponsor, the [Master Servicer], the
Servicer, and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder with like
effect as if originally named a Trustee. The predecessor Trustee shall deliver
or cause to be delivered to the successor Trustee or its custodian and any
related documents and statements held by it or its custodian hereunder
(provided, that so long as no Event of Servicing Termination shall have
occurred, the Servicer shall continue as custodian of the Loan Files
hereunder); and the [Master Administrator], the Sponsor, the [Master Servicer],
the Servicer and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for the full
and certain vesting and confirmation in the successor Trustee of all such
rights, powers, duties and obligations.
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<PAGE> 92
(b) No successor Trustee shall accept appointment as
provided in this Section 10.09 unless at the time of such acceptance such
successor Trustee shall be eligible under the provisions of Section 10.07.
(c) Upon acceptance of appointment by a successor Trustee
as provided in this Section 10.09, the Servicer shall mail notice of the
succession of such Trustee hereunder to each Certificateholder at its address
as shown in the Certificate Register and to the Rating Agency. If the [Master
Administrator] fails to mail such notice within 10 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Sponsor.
SECTION 10.10. Merger or Consolidation of Trustee. Any
corporation into which the Trustee may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be eligible
under the provisions of Section 10.07, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
SECTION 10.11. Tax Matters. (a) The [Master Administrator]
shall prepare all tax returns and any other information, returns or reports, if
any, that need to be filed for the Trust. The Trustee shall thereupon execute
and file all such tax returns and other information, returns or reports.
(b) The [Master Administrator], shall take all action
reasonably necessary to assure compliance with the provisions of the Code
relating to (i) certain withholding requirements applicable to non-U.S. Person
taxpayers; (ii) backup withholding requirements and (iii) certain taxpayer
certification requirements relating to clauses (i) and (ii) above.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Agreement; Optional Repurchase.
(a) This Agreement and the respective obligations and responsibilities of the
Sponsor, the [Master Administrator], the [Master Servicer], the Servicer and
the Trustee created hereby (other than the obligation of the Trustee to make
payments to Certificateholders as hereinafter set forth) shall terminate on the
date (the "Trust Termination Date") which is the earlier to occur of:
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<PAGE> 93
(i) the day after the day on which the
Certificateholders are paid in full; and
(ii) December 31, 20__.
(b) Upon at least 15 days' written notice to the Trustee
(and to Investor Certificateholders) prior to a Distribution Date, provided the
Investor Certificate Principal Balance on such Distribution Date is 10% or less
of the Initial Principal Amount, the [Master Administrator] may, but is not
required to, purchase as of the last day of the preceding Due Period all, but
not less than all, outstanding Auto Loans at a price equal to the aggregate
Principal Balances of all Auto Loans on the next preceding Distribution Date
plus accrued and unpaid interest thereon at the sum of the weighted average APR
through the last day of such preceding Due Period. Such price shall be
deposited to the Collection Account in immediately available funds by 10:00
a.m., New York City time, on the relevant Distribution Date and the Trustee
shall release (or cause its custodian to release) the Auto Loans and, if at
such time the [Master Administrator] does not have possession of the Loan
Files, the Loan Files to the [Master Administrator], whereupon the Investor
Certificates shall no longer evidence any right or interest in the Auto Loans
or the Loan Files, the Assignments, or any Insurance Policies or any proceeds
of the foregoing. Upon the request of the [Master Administrator], the Trustee
shall perform such other acts as reasonably requested by the [Master
Administrator] and otherwise cooperate with the [Master Administrator] in
connection with the transfer of the Transferred Assets pursuant to this Section
11.01(b) including, but not limited to, the execution of any Title Document to
the extent necessary to effectuate the termination of such Auto Loan and the
disposition of the related Automobile.
(c) If by the Expected Final Payment Date, the Investor
Certificate Principal Balance (after giving effect to any distributions to be
made on such date) is greater than zero, the Trustee on behalf of the Trust, or
the [Master Administrator] on behalf of the Trustee, will use its best efforts
to sell, dispose of or otherwise liquidate the Transferred Assets in a
commercially reasonable manner and on commercially reasonable terms, which
shall include the solicitation of competitive bids. The proceeds of any such
sale, disposition or liquidation of the Transferred Assets will be treated as
Payments and will be immediately deposited in the Collection Account and such
proceeds, in addition to the Available Funds on deposit in the Collection
Account, shall be disbursed in accordance with the provisions of Section 7.04.
(d) The [Master Administrator] shall give the Trustee,
the [Master Servicer], and the Servicer at least 30 days prior written notice
of the date on which the Trust is expected to terminate in accordance with
subsection 11.01(a). Such notice shall be accompanied by an Officer's
Certificate setting forth the information specified in Section 4.19 covering
the period during
87
<PAGE> 94
the then-current calendar year through the date of such notice. Not later than
the fifth Business Day in the Due Period in which the final distribution in
respect to the Investor Certificates is payable to the Investor
Certificateholders, the Trustee shall mail to the Certificateholders a notice
specifying the procedures with respect to such final distribution. The Trustee
shall give a copy of such notice to the Rating Agency at the time such notice
is given to Certificateholders.
SECTION 11.02. Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders
and their respective successors and permitted assigns. No other Person will
have any right or obligation hereunder.
SECTION 11.03. Amendment. (a) This Agreement may be amended
from time to time by the Sponsor, the [Master Administrator], the [Master
Servicer], the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity or defect of, to correct or
supplement any provisions herein which may be inconsistent with any other
provisions herein or to add any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Trustee, adversely affect
in any material respect the interests of any Certificateholder. Such Opinion
of Counsel shall be at the expense of the party requesting such amendment or,
if such Amendment is required by any Rating Agency to maintain the rating
issued by it on the Investor Certificates or requested by the Trustee in order
to clarify any ambiguity or resolve any inconsistency, then the related Opinion
of Counsel shall be at the expense of the [Master Administrator].
(b) This Agreement may also be amended from time to time
by the Sponsor, the [Master Administrator], the [Master Servicer], the Servicer
and the Trustee, with the consent of the Certificateholders of not less than an
aggregate Percentage of [66 2/3%] of outstanding Investor Certificates, 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 Certificateholders; provided, however, that no such amendment
shall (a) reduce in any manner the amount of, or delay the timing of,
collections of payments on the Auto Loans or distributions which are required
to be made on any Certificate then outstanding, (b) reduce the aforesaid
percentage required to consent to any such amendment or (c) modify this Section
11.03(b) without the consent of the holders of all Certificates then
outstanding. The [Master Administrator] may set a record date for purposes of
determining the holders entitled to give a written consent or waive compliance
as authorized or permitted by this Section 11.03(b). Such record date shall not
be more than 30 days prior to the first solicitation to such consent or waiver.
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<PAGE> 95
(c) Promptly after the execution of any amendment or
consent pursuant to this Section 11.03, the Trustee shall furnish such
amendment to each Investor Certificateholder or a written summary of such
amendment prepared by the [Master Administrator] and, not later than the tenth
Business Day preceding the effectiveness of any such amendment, the Rating
Agency.
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section 11.03 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Investor
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
(e) The Trustee may, but shall not be obligated to, enter
into any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.
(f) In connection with any amendment pursuant to this
Section 11.03, the Trustee shall be entitled to receive an Opinion of Counsel
to the effect that such amendment is authorized or permitted by the Agreement.
SECTION 11.04. Notices. (a) All communications and notices
to the parties hereto shall be in writing and delivered or mailed first class
mail, postage prepaid to it at the following address:
If to the Sponsor:
ACC Consumer Finance Corporation
12750 High Bluff Drive
Suite 320
San Diego, Claifornia 92130
Facsimile Number:
Telephone Number: (619) 793-6300
If to the [Master Administrator] or the Paying Agent:
------------------------------------
------------------------------------
Attention:
-----------------------------------
Facsimile Number: ( )
--------
Telephone Number: ( )
--------
If to the [Master Servicer]:
89
<PAGE> 96
--------------------------
--------------------------
--------------------------
Attention:
------------------------
Facsimile Number: ( )
--------
Telephone Number: ( )
--------
If to the Servicer:
ACC Consumer Finance Corporation
12750 High Bluff Drive
Suite 320
San Diego, California 92130
Attention:
--------------
Facsimile Number:
Telephone Number: (619) 793-6300
If to the Trustee:
------------------------
------------------------
------------------------
Attention:
-----------------------
Facsimile Number: ( )
--------
Telephone Number: ( )
--------
If to the Rating Agency:
-------------------------
-------------------------
-------------------------
Attention:
Facsimile Number:
Telephone Number:
or at such other address as the party may designate by notice to the other
parties hereto, which shall be effective when received.
(b) All communications and notices pursuant hereto to a
Certificateholder shall be in writing and delivered or mailed first class mail,
postage prepaid at the address shown in the Certificate Register.
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<PAGE> 97
SECTION 11.05. Notices and Reports to be Delivered to the
Rating Agency. On or before the later to occur of each Distribution Date and,
the Business Day following its receipt thereof, the [Master Administrator]
shall promptly deliver to the Rating Agency the notices, reports and
certificates referred to in Sections 4.10, 4.17, 4.18, 4.19 and 7.05 which
notices, reports and certificates are required to be delivered to the [Master
Administrator] by the [Master Servicer] and the Servicer. Each report or
certificate specified in Sections 4.17(b), 4.18 and 4.19 shall be accompanied
by a certificate of the [Master Administrator] certifying that (a) the [Master
Administrator] has reviewed such report and that nothing came to its attention
based on such review which would lead it to believe that such report or
certificate was not accurate or in compliance with the terms of this Agreement
governing the content and preparation of such report or certificate except as
specified therein or as to which it shall believe to be immaterial and (b) that
the [Master Administrator] has no actual knowledge of any event that has
occurred and is continuing which constitutes an Event of Default, an Event of
Master Servicing Termination, an Event of Servicing Termination, or an Event of
Administrator Termination or would constitute such an event but for the
requirement that notice be given or time elapse or both.
SECTION 11.06. Merger and Integration. Except as
specifically stated otherwise herein, this Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement. This
Agreement may not be modified, amended, waived, or supplemented except as
provided herein.
SECTION 11.07. Headings. The headings herein are for
purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
SECTION 11.08. Certificates Nonassessable and Fully Paid.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon
authentication thereof by the Trustee pursuant to Section 6.01 and 6.02, each
Certificate shall be deemed fully paid.
SECTION 11.09. Severability of Provisions. If any one or
more of the covenants, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, provisions or terms shall
be deemed severable from the remaining covenants, provisions or terms of this
Agreement, and shall in no way affect the validity or enforceability of the
other provisions of this Agreement, of the Certificates or the rights of the
Certificateholders.
SECTION 11.10. No Proceedings. The [Master Servicer], the
Servicer, the [Master Administrator] and the Trustee each hereby agrees that it
will not, directly or indirectly institute,
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<PAGE> 98
or cause to be instituted, against the Sponsor or the Trust any proceeding of
the type referred to in Section 8.01(c) so long as there shall not have elapsed
one year plus one day since the Trust Termination Date.
SECTION 11.11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.
(b) THE Sponsor, THE [MASTER SERVICER], THE ORIGINATOR, THE
SERVICER, THE [MASTER ADMINISTRATOR], THE CERTIFICATE REGISTRAR AND TRANSFER
AGENT, THE PAYING AGENT, AND THE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET
FORTH IN SECTION 11.04 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS,
POSTAGE PREPAID. THE Sponsor, THE [MASTER SERVICER], THE ORIGINATOR, THE
SERVICER, THE [MASTER ADMINISTRATOR], THE CERTIFICATE REGISTRAR AND TRANSFER
AGENT, THE PAYING AGENT, AND THE TRUSTEE EACH HEREBY WAIVE ANY OBJECTION BASED
ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED
HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION SHALL AFFECT THE
RIGHT OF THE Sponsor, THE [MASTER SERVICER], THE ORIGINATOR, THE SERVICER, THE
[MASTER ADMINISTRATOR], THE CERTIFICATE REGISTRAR AND TRANSFER AGENT, THE
PAYING AGENT, AND THE TRUSTEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO BRING ANY ACTION OR PROCEEDING IN
THE COURTS OF ANY OTHER JURISDICTION.
(c) THE Sponsor, THE [MASTER SERVICER], THE ORIGINATOR, THE
SERVICER, THE [MASTER ADMINISTRATOR], THE CERTIFICATE REGISTRAR AND TRANSFER
AGENT, THE PAYING AGENT, AND THE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A
BENCH TRIAL WITHOUT A JURY.
SECTION 11.12. Counterparts. This Agreement may be executed
in counterparts each of which shall be an original, but all of which together
shall constitute one and the same instrument.
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<PAGE> 99
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
this ____ day of ________, 199_.
ACC CONSUMER FINANCE CORPORATION
as Sponsor
By
--------------------------------
Name:
Title:
ACC CONSUMER FINANCE CORPORATION
----------------------------------
as Servicer
--------------------------------,
as [Master Administrator]
By
------------------------------
Name:
Title:
--------------------------------,
as [Master Servicer]
By
-----------------------------
Name:
Title:
--------------------------------,
as Originator
By
----------------------------
Name:
Title:
-------------------------------,
as Trustee
By
------------------------------
Name:
Title:
<PAGE> 100
EXHIBIT A
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ACC AUTOMOBILE RECEIVABLES TRUST]
[FORM OF PURCHASE ASSIGNMENT]
PURCHASE ASSIGNMENT, dated as of __________, 199_ between ACC Consumer
Finance Corporation (the "Sponsor") and ____________________, as Trustee (the
"Trustee").
1. We refer to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of ___________, 199_, by and among the Sponsor;
_________________________________, as [Master Administrator];
_____________________________________, as [Master Servicer]; ______________, as
Originator and Servicer; and the Trustee. All provisions of such Pooling and
Servicing Agreement are incorporated by reference. All capitalized terms shall
have the meanings set forth in the Pooling and Servicing Agreement.
2. The Sponsor does hereby sell, transfer, assign, set over and
convey to the Trustee on behalf of the Trust, without recourse, and the Trust
does hereby purchase, all right, title and interest of the Sponsor in, to and
under the Transferred Assets listed on Schedule 1 hereto.
3. The Sponsor does hereby certify:
(i) the representations and warranties of the Sponsor,
the [Master Administrator], and to its best knowledge, the [Master
Servicer] and the Servicer set forth in Sections 3.01, 3.02, 4.03 and
5.04 of the Pooling and Servicing Agreement, are true and correct on
and as of the date hereof, before and after giving effect to the
Purchase evidenced hereby and to the application of the proceeds
therefrom, as though made on and as of such date;
(ii) no event has occurred, or would result from such
Purchase or from the application of the proceeds therefrom, which
constitutes an Event of Default or would constitute an Event of
Default but for the requirement that notice be given or time elapse or
both;
(iii) the Sponsor is in compliance with each of its
covenants set forth in the Pooling and Servicing Agreement;
(iv) to the best of its knowledge, no event has occurred
which constitutes an Event of Master Servicing Termination or would
constitute an Event of Master
<PAGE> 101
Servicing Termination but for the requirement that notice be given or
time elapse or both;
(v) to the best of its knowledge, no event has occurred
which constitutes an Event of Servicing Termination or would
constitute an Event of Servicing Termination but for the requirement
that notice be given or time elapse or both;
(vi) no event has occurred which constitutes an Event of
Administrator Termination or would constitute an Event of
Administrator Termination but for the requirement that notice be given
or time elapse or both; and
(vii) the aggregate Individual Sold Balance of the Auto
Loans listed on Schedule 1 hereto to be purchased by the Trust
pursuant to this Purchase Assignment is $______ which amount does not
exceed the Available Purchase Amount.
4. In consideration of the Transferred Assets sold and purchased
hereby the Originator Certificate Principal Balance is increased by
$__________.
A-2
<PAGE> 102
IN WITNESS WHEREOF, the parties have caused this Purchase
Assignment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
ACC CONSUMER FINANCE CORPORATION
as Sponsor
By:
-----------------------------
Name:
Title:
ACKNOWLEDGED:
ACC CONSUMER FINANCE CORPORATION
in its capacity as Servicer
and in its capacity as custodian
for and on behalf of the Trustee
By:
-----------------------------
Name:
Title:
- ---------------------------------,
as [Master Administrator]
By:
-----------------------------
Name:
Title:
A-3
<PAGE> 103
EXHIBIT B
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ACC AUTOMOBILE RECEIVABLES TRUST]
AUTO LOAN PROTECTION POLICY
<PAGE> 104
EXHIBIT C
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ____________, 199_
[ACC AUTOMOBILE RECEIVABLES TRUST]
BLANKET COLLATERAL PROTECTION POLICY
<PAGE> 105
EXHIBIT D
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ____________, 199_
[ACC AUTOMOBILE RECEIVABLES TRUST]
[FORM OF ASSIGNMENT]
ASSIGNMENT, dated as of __________, 199_ between ___________ Company,
as Trustee (the "Trustee") and _________________________ [ORIGINATOR]
_________________________________.
1. We refer to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of ___________, 199_, by and among ACC Consumer
Finance Corporation as Sponsor and as Servicer; ___________________________, as
[Master Administrator]; _________________________, as [Master Servicer];
________________, as Originator; and the Trustee. All provisions of such
Pooling and Servicing Agreement are incorporated by reference. All capitalized
terms shall have the meanings set forth in the Pooling and Servicing Agreement.
2. Pursuant to Section 3.03 of the Pooling and Servicing Agreement,
the Trust does hereby, transfer, assign, set over and convey to
[Originator] , without recourse or warranty, express or
implied, all right, title and interest of the Trust in, to and under the Auto
Loans listed on Schedule 1 hereto (each, a "Repurchased Auto Loan") and
[Originator] does hereby purchase such Auto Loans.
3. The aggregate Repurchase Price for such [repurchased]
[purchased] Auto Loan(s) is $___________.
<PAGE> 106
IN WITNESS WHEREOF, the parties have caused this Assignment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
-------------------------,
as Trustee
By:
-----------------------------
Name:
Title:
[ORIGINATOR]
By:
-----------------------------
Name:
Title:
ACKNOWLEDGED:
- ----------------------------,
as Originator
By:
-----------------------------
Name:
Title:
- --------------------------------,
as [Master Administrator]
By:
-----------------------------
Name:
Title:
D-2
<PAGE> 107
EXHIBIT E
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ACC AUTOMOBILE RECEIVABLES TRUST]
[FORM OF RELEASE AND ASSIGNMENT]
RELEASE AND ASSIGNMENT, dated as of __________, 199_ between
_________________, as Trustee (the "Trustee") and _______________, as Servicer
(the "Servicer").
1. We refer to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of _________, 199_ by and among ACC Consumer
Finance Corporation, as Sponsor and as Servicer; ____________________________,
as [Master Administrator]; _________________________, as [Master Servicer];
________________, as Originator; and the Trustee. All provisions of such
Pooling and Servicing Agreement are incorporated by reference. All capitalized
terms shall have the meanings set forth in the Pooling and Servicing Agreement.
2. Pursuant to Section 4.07 of the Pooling and Servicing
Agreement, the Trustee does hereby transfer, assign, set over and convey to the
Servicer without recourse or warranty, express or implied, all right, title and
interest, in, to and under the Auto Loans (and the related Loan Files) listed
on Schedule 1 hereto.
<PAGE> 108
IN WITNESS WHEREOF, the parties have caused this Release and
Assignment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
-------------------------,
as Trustee
By:
-----------------------------
Name:
Title:
ACKNOWLEDGED:
- ----------------------------,
as Servicer
By:
-----------------------------
Name:
Title:
- -------------------------------,
as [Master Administrator]
By:
-----------------------------
Name:
Title:
E-2
<PAGE> 109
EXHIBIT F
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ACC AUTOMOBILE RECEIVABLES TRUST]
[FORM OF SERVICER REPORT]
<PAGE> 110
EXHIBIT G
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ____________, 199_
[ACC AUTOMOBILE RECEIVABLES TRUST]
[FORM OF [Master Administrator] REPORT]
(To be delivered pursuant to Section 5.11 of the
Pooling and Servicing Agreement on each
Determination Date immediately
preceding a Distribution Date to the
Trustee and the Rating Agency and pursuant
to Section 7.05 to the Certificateholders)
G-1
<PAGE> 111
EXHIBIT H
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ACC AUTOMOBILE RECEIVABLES TRUST]
[FORM OF INVESTOR CERTIFICATE]
INVESTOR CERTIFICATE
[ACC Receivables Corp.]
_____% Certificates
No. CUSIP No.
---------- --------
Original Principal
Amount: $_________
UNLESS THIS INVESTOR CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE SPONSOR TRUST COMPANY TO THE CERTIFICATE REGISTRAR AND
TRANSFER AGENT OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE SPONSOR TRUST
COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
This certifies that Cede & Co. (the "Investor
Certificateholder") is the registered owner of a fractional undivided interest
in a trust (the "Trust") created pursuant to a Pooling and Servicing Agreement
(the "Agreement"), dated as of ___________, 199_, among ACC Consumer Finance
Corporation, as Sponsor and as Servicer (the "Sponsor"), ___________________,
as [Master Administrator] (the "[Master Administrator]"),
______________________________________, as [Master Servicer] (the "[Master
Servicer]"), ______________, as Originator (the "Originator") and
___________________, as Trustee (the "Trustee"). The Trust includes among its
assets the Auto Loans, the Insurance Policies, all rights of the Sponsor under
each Sale Agreement, all monies due or to become due and all amounts received
with respect thereto and all proceeds thereof (the "Transferred Assets")
together with all funds on deposit in the Collection Account and all funds on
deposit in the Cash Reserve Account (collectively the "Trust Assets"). This
Investor Certificate is described in the Agreement and is issued pursuant and
subject to the Agreement and the Investor Certificateholder acknowledges and
agrees to be bound by the terms and conditions of the Agreement to the same
extent as if the Investor Certificateholder were a party thereto. By
acceptance of this Investor Certificate the Investor Certificateholder assents
to and becomes bound by the Agreement.
<PAGE> 112
To the extent not defined herein, all capitalized terms have the meanings
assigned in the Agreement.
Under the Agreement, on each Distribution Date the Trustee at
the direction of the [Master Administrator] shall disburse Available Funds (to
the extent available after making the disbursements of the Monthly Servicing
Fee, the Monthly Subrogation Amounts and the Monthly Administrator Fee owing to
the [Master Servicer] and the [Master Administrator] respectively, as the case
may be on such day) in the following priority: (a) during the Interest-Only
Period: (i) to the Investor Certificateholders, interest in an amount equal
to the lesser of (A) the sum of (1) one-quarter of the Certificate Rate times
the Investor Certificate Principal Balance and (2) any Shortfall and (B) the
sum of the Investor's Share of the Available Distribution Amount plus the
Available Subordination Amount ("Investor Interest"); (ii) to the holder of
the Originator Certificate, in reduction of the Originator Certificate
Principal Balance, an amount equal to the excess of (A) the Originator
Certificate Principal Balance over (B) Originator's Share of the aggregate
Principal Balance of the Auto Loans determined as of the end of the immediately
preceding Due Period ("Originator Certificate Principal"); (iii) to the holder
of the Originator Certificate, interest in an amount equal to one-quarter of
the Certificate Rate times the Originator Certificate Principal Balance
("Originator Certificate Interest"); (iv) to the Cash Reserve Account, an
amount equal to the lesser of (A) the Aggregate Excess Interest on such
Distribution Date and (B) the Required Cash Reserve Amount minus the Available
Cash Reserve Amount; (v) to the Originator Certificateholder, an amount equal
to the excess, if any, of the Aggregate Excess Interest over the amount
disbursed to the Cash Reserve Account in accordance with the provisions of
clause (iv); and (vi) the remainder of funds held in the Collection Account
following the distributions in clauses (i) - (v) above shall be retained in the
Collection Account and (b) during the Principal Amortization Period: (i) to
the Investor Certificateholders, Investor Interest; (ii) to the Investor
Certificateholders, in reduction of the Investor Certificate Principal Balance,
an amount equal to the lesser of (A) principal in an amount equal to the excess
of (1) the Investor Certificate Principal Balance over (2) the Investor's
Share of the aggregate Principal Balance of the Auto Loans determined as of the
end of the immediately preceding Due Period and (B) the sum of the balance of
the Investor's Share of the Available Distribution Amount plus the Available
Subordination Amount; (iii) to the holder of the Originator Certificate,
Originator Certificate Interest; (iv) to the holder of the Originator
Certificate, in reduction of the Originator Certificate Principal Balance,
Originator Certificate Principal; (v) to the Cash Reserve Account, an amount
equal to the sum of (A) the Required Cash Reserve Amount minus (B) the
Available Cash Reserve Amount; and (vi) to the holder of the Originator
Certificate, the balance. The Available Subordination Amount equals
$___________ less all payments made to the Investor
H-2
<PAGE> 113
Certificateholders in excess of the Investor's Share of the Available
Distribution Amount for all Distribution Dates.
On the first Distribution Date following the Distribution Date
on which the Investor Certificateholders have been paid in full, all amounts
held in the Collection Account and the Cash Reserve Account, if any, shall be
disbursed to the holder of the Originator Certificate and all interests of the
Trust in all Auto Loans which have an outstanding balance shall be reconveyed
by the Trustee to, or at the direction of, the Sponsor. Such disbursement and
reconveyance shall constitute the final payment to which the holder of the
Originator Certificate is entitled with respect to its Originator's Interest
pursuant to the terms of this Agreement.
Distributions on this Investor Certificate will be made by
same day funds to the Investor Certificateholder at the address for such
Investor Certificateholder appearing on the Certificate Register on the
relevant Distribution Date without the presentation or surrender of this
Investor Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Investor Certificate will be made upon satisfaction of the procedures
indicated in the notice mailed to the Certificateholders as stated in the
Agreement.
The Investor Certificateholder will have the benefit of a Cash
Reserve Account to compensate them to the limited extent described in the
Agreement for losses and delinquencies on the Trust Assets to the extent of the
lesser of the amount on deposit in the Cash Reserve Account (after giving
effect to any withdrawals made in respect of the Monthly Servicing Fee and the
Monthly Subrogation Amount) and the Available Subordination Amount. The amount
initially on deposit in the Cash Reserve Account is $____________. In addition
to withdrawals as a result of losses and delinquencies on the Auto Loans the
amount required to be on deposit in the Cash Reserve Account may be reduced
from time to time upon satisfaction of certain conditions set forth in the
Agreement. On the first Distribution Date following the earlier to occur of
(a) payment in full of the Investor Certificates and (b) the reduction to zero
of the Available Subordination Amount, the Trustee shall disburse all amounts
held in the Cash Reserve Account to the Servicer.
The Agreement may be amended from time to time by the Sponsor,
the [Master Administrator], the [Master Servicer], the Servicer and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity or defect of, to correct or supplement any provisions herein which
may be inconsistent with any other provisions herein or to add any other
provisions with respect to matters or questions arising under the Agreement
which shall not be inconsistent with the provisions of the Agreement; provided,
however, that such action shall not, as evidenced by an
H-3
<PAGE> 114
Opinion of Counsel, adversely affect in any material respect the interests of
any Certificateholder.
The Agreement may also be amended from time to time by the
Sponsor, the [Master Administrator], the [Master Servicer], the Servicer and
the Trustee, with the consent of Investor Certificateholders of not less than
an aggregate Percentage of [66 2/3%], for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Agreement or of modifying in any manner the rights of the Certificateholders;
provided, however, that no such amendment shall (a) reduce in any manner the
amount of, or delay the timing of, collections of payments on the Auto Loans or
distributions which are required to be made on any Certificate then
outstanding, (b) reduce the aforesaid percentage required to consent to any
such amendment or (c) modify Section 11.03(b) of the Agreement without the
consent of the holders of all Investor Certificates then outstanding. The
[Master Administrator] may set a record date for purposes of determining the
holders entitled to give a written consent or waive compliance as authorized or
permitted by this Section 11.03(b) of the Agreement. Such record date shall
not be more than 30 days prior to the first solicitation to such consent or
waiver. Promptly after the execution of any amendment or consent pursuant to
Section 11.03 of the Agreement, the Trustee shall furnish such amendment to
each Investor Certificateholder or a written summary of such amendment prepared
by the [Master Administrator] and, not later than the tenth Business Day
preceding the effectiveness of any such amendment, the Rating Agency. It shall
not be necessary for the consent of Investor Certificateholders under Section
11.03 of the Agreement to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe. In
connection with any amendment pursuant to Section 11.03 of the Agreement, the
Trustee shall be entitled to receive an Opinion of Counsel to the effect that
such amendment is authorized or permitted by the Agreement.
No sale, transfer or other disposition of this Investor
Certificate shall be permitted other than in accordance with the provisions of
Sections 6.03 or 6.09 of the Agreement.
The Agreement and the respective obligations and
responsibilities of the Sponsor, the Certificateholders, the [Master
Administrator], the [Master Servicer], the Servicer and the Trustee created
hereby (other than the obligation of the Trustee to make payments to
Certificateholders as hereinafter set forth) shall terminate on the earlier of:
(i) the day after the day on which the
Certificateholders are paid in full; and
H-4
<PAGE> 115
(ii) December 31, 20__.
Upon at least 15 days' written notice to the Trustee (and to
Investor Certificateholder) prior to a Distribution Date, provided the Investor
Certificate Principal Balance on such Distribution Date is 10% or less of the
Initial Principal Amount, the [Master Administrator] may, but is not required
to, purchase as of the last day of the preceding Due Period all, but not less
than all, outstanding Auto Loans at a price equal to the aggregate Principal
Balances of all Auto Loans the next preceding Distribution Date plus accrued
and unpaid interest thereon at the sum of the weighted average APR through the
last day of such preceding Due Period. Such price shall be deposited to the
Collection Account in immediately available funds by 10:00 a.m., New York City
time, on the relevant Distribution Date and the Trustee shall release (or cause
its custodian to release) the Auto Loans and, if at such time the [Master
Administrator] does not have possession of the Loan Files, the Trustee shall
release the Loan Files, to the [Master Administrator], whereupon the Investor
Certificate shall no longer evidence any right or interest in the Auto Loans or
the Loan Files, the Assignments, or any Insurance Policies or any proceeds of
the foregoing. Upon the request of the [Master Administrator], the Trustee
shall perform such other acts as reasonably requested by the [Master
Administrator] and otherwise cooperate with the [Master Administrator] in
connection with the transfer of the Transferred Assets pursuant to Section
11.01(b) of the Agreement including, but not limited to, the execution of (any
Title Document to the extent necessary to effectuate the termination of such
Auto Loan and the disposition of the related Automobile.
It is the intention of the Sponsor that, with respect to all
Taxes, the Investor Certificates will be treated as indebtedness of the Sponsor
to the Investor Certificateholders secured by the Transferred Assets (the
"Intended Tax Characterization"). The Sponsor and the Trustee, by entering
into the Pooling and Servicing Agreement, and each Investor Certificateholder
by the purchase of this Investor Certificate, agree to report such transactions
for purposes of all Taxes in a manner consistent with the Intended Tax
Characterization.
This Investor Certificate does not represent an obligation of,
or an interest in the Servicer, the Originator or the Sponsor or any Affiliate
thereof. This Investor Certificate is limited in right of payment to certain
collections respecting the Trust Assets, all as more specifically set forth
herein and in the Agreement.
The holder hereof, by its acceptance of this Investor
Certificate, agrees to look solely to the funds in the Collection Account to
the extent available for distribution to the holder hereof as provided in the
Agreement for payment hereunder and that the Trustee in its individual capacity
is not personally liable to
H-5
<PAGE> 116
the holder hereof for any amounts payable under this Investor Certificate or
the Agreement.
This Investor Certificate does not purport to summarize the
Agreement and is qualified in its entirety by the Agreement. Reference is made
to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be made available for review and inspection by any
Investor Certificateholder during normal business hours at the office of the
Trustee, ____________________________________________upon the prior written
request of the Investor Certificateholder.
H-6
<PAGE> 117
IN WITNESS WHEREOF, [ACC Receivables Corp. has caused this
Investor Certificate to be duly executed by the manual or facsimile signature
of the duly authorized officer of the Trustee.
[ACC AUTOMOBILE RECEIVABLES TRUST]
By [TRUSTEE], not in its
individual capacity, but solely as
Trustee
By
----------------------------
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within
mentioned Agreement.
[TRUSTEE], as Trustee
By
----------------------------
Authorized Officer
Dated: , 199
----------- -
H-7
<PAGE> 118
ASSIGNMENT
Social Security or other identifying number of assignee _______________.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
___________________________________________________________________
(name and address of assignee)
the written certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________________, attorney, to transfer
said certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:
--------------------
<TABLE>
<S> <C> <C> <C>
(1) A Non U.S. Person as defined in the Code must Note: The signature(s) to this
certify to the Trustee in writing as to its Assignment must correspond with
Non U.S. Person status and such further the name(s) as written on the
information as may be required under the Code face of the within certificate in
or reasonably requested by the Trustee every particular without
alteration or enlargement or any
change whatsoever
</TABLE>
H-8
<PAGE> 119
EXHIBIT I
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ACC AUTOMOBILE RECEIVABLES TRUST]
[FORM OF ORIGINATOR CERTIFICATE]
ORIGINATOR CERTIFICATE
[ACC Receivables Corp.]
_____% Interest Rate
No. CUSIP No.
---------- --------
Original Principal
Amount: $
---------
THIS ORIGINATOR CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS ORIGINATOR CERTIFICATE NOR
ANY PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
SUCH REGISTRATION PROVISIONS.
THIS ORIGINATOR CERTIFICATE IS NOT PERMITTED TO BE
TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN
COMPLIANCE WITH THE TERMS OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
This certifies that _____________________ (the "Originator
Certificateholder") is the registered owner of a fractional undivided interest
in a trust (the "Trust") created pursuant to a Pooling and Servicing Agreement
(the "Agreement"), dated as of ___________, 1993, among ACC Consumer Finance
Corporation, as Sponsor and as Servicer (the "Sponsor"), ___________, as [Master
Administrator] (the "[Master Administrator]"), _____________________________, as
[Master Servicer] (the "[Master Servicer]"), __________________, as Originator
(the "Originator") and , as Trustee (the "Trustee"). The
Trust includes among its assets the Auto Loans, the Insurance Policies (other
than any obligation to make any payment thereunder to the Insurance Companies
and taxes on premiums paid or payable thereon which shall be obligations of the
[Master Administrator] during such time as _________ is the [Master
Administrator], and at any time thereafter, the Sponsor), all rights of the
Sponsor under each Sale Agreement, all monies due or to become due and all
amounts received with respect thereto and all proceeds thereof (the "Transferred
Assets") together with all funds on deposit in the Collection Account and all
funds on deposit in the Cash Reserve Account (collectively the "Trust Assets").
This Originator Certificate is described in the Agreement and is issued pursuant
and subject to the Agreement and the Originator Certificateholder acknowledges
and agrees to be bound by the terms and conditions of the Agreement to the same
extent as if the
<PAGE> 120
Originator Certificateholder were a party thereto. By acceptance of this
Originator Certificate the Originator Certificateholder assents to and becomes
bound by the Agreement. To the extent not defined herein, all capitalized
terms have the meanings assigned in the Agreement.
Upon the satisfaction of the requirements contained in Section
6.02(b) of the Agreement, the Originator Certificateholder may surrender the
Originator Certificate to the Trustee, and the Trustee will execute on behalf
of the Trust, authenticate and deliver the Investor Certificates and a newly
issued Originator Certificate.
On the 20th day of each month (or, if such day is not a
Business Day, the following Business Day) the Trustee, at the direction of the
[Master Administrator], shall disburse the balance of Available Funds (to the
extent available after making the disbursements of the Monthly Servicing Fee,
the Monthly Subrogation Amounts and the Monthly Administrator Fee owing to the
[Master Servicer] and the [Master Administrator] respectively, as the case may
be on such day) to the Originator Certificateholder. Under the Agreement, on
each Distribution Date the Trustee at the direction of the [Master
Administrator] shall disburse Available Funds (to the extent available after
making the disbursements of the Monthly Servicing Fee, the Monthly Subrogation
Amounts and the Monthly Administrator Fee owing to the [Master Servicer] and
the [Master Administrator] respectively, as the case may be on such day) in the
following priority: (a) during the Interest-Only Period: (i) to the Investor
Certificateholders, interest in an amount equal to the lesser of (A) the sum of
(1) one-quarter of the Certificate Rate times the Investor Certificate
Principal Balance and (2) any Shortfall and (B) the sum of the Investor's Share
of the Available Distribution Amount plus the Available Subordination Amount
("Investor Interest"); (ii) to the Originator Certificateholder, in reduction
of the Originator Certificate Principal Balance, an amount equal to the excess
of (A) the Originator Certificate Principal Balance over (B) Originator's Share
of the aggregate Principal Balance of the Auto Loans determined as of the end
of the immediately preceding Due Period ("Originator Certificate Principal");
(iii) to the Originator Certificateholder, interest in an amount equal to
one-quarter of the Certificate Rate times the Originator Certificate Principal
Balance ("Originator Certificate Interest"); (iv) to the Cash Reserve Account,
an amount equal to the least of (A) the Aggregate Excess Interest on such
Distribution Date, (B) the Required Cash Reserve Amount minus the Available
Cash Reserve Amount and (C) the Available Subordination Amount; (v) to the
Originator Certificateholder, an amount equal to the excess, if any, of the
Aggregate Excess Interest over the amount disbursed to the Cash Reserve Account
in accordance with the provisions of clause (iv); and (vi) the remainder of
funds held in the Collection Account following the distributions in clauses (i)
- - (v) above shall be retained in the Collection Account and (b) during the
Principal Amortization Period: (i) to the Investor
I-2
<PAGE> 121
Certificateholders, Investor Interest; (ii) to the Investor
Certificateholders, in reduction of the Investor Certificate Principal Balance,
an amount equal to the lesser of (A) principal in an amount equal to the excess
of (1) the Investor Certificate Principal Balance over (2) the Investor's
Share of the aggregate Principal Balance of the Auto Loans determined as of the
end of the immediately preceding Due Period and (B) the sum of the balance of
the Investor's Share of the Available Distribution Amount plus the Available
Subordination Amount; (iii) to the Originator Certificateholder, Originator
Certificate Interest; (iv) to the Originator Certificateholder, in reduction of
the Originator Certificate Principal Balance, Originator Certificate Principal;
(v) to the Cash Reserve Account, an amount equal to the sum of the lesser of
(A) the Required Cash Reserve Amount minus the Available Cash Reserve Amount
and (B) the Available Subordination Amount; and (vi) to the Originator
Certificateholder, the balance. The Available Subordination Amount equals
$___________ less all payments made to the Investor Certificateholders in
excess of the Investor's Share of the Available Distribution Amount for all
Distribution Dates.
On the first Distribution Date following the Distribution Date
on which the Investor Certificateholders have been paid in full, all amounts
held in the Collection Account and the Cash Reserve Account, if any, shall be
disbursed to the Originator Certificateholder and all interests of the Trust in
all Auto Loans which have an outstanding balance shall be reconveyed by the
Trustee to, or at the direction of, the Sponsor. Such disbursement and
reconveyance shall constitute the final payment to which the Originator
Certificateholder is entitled with respect to its Originator's Interest
pursuant to the terms of this Agreement.
Distributions on this Originator Certificate will be made by
wire transfer in immediately available funds to the account specified by the
Originator Certificateholder in writing, on the relevant Distribution Date
without the presentation or surrender of this Originator Certificate or the
making of any notation hereon. Except as otherwise provided in the Agreement
and notwithstanding the above, the final distribution on this Originator
Certificate will be made upon satisfaction of the procedures indicated in the
notice mailed to the Certificateholders as stated in the Agreement.
The Agreement may be amended from time to time by the Sponsor,
the [Master Administrator], the [Master Servicer], the Servicer and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity or defect of, to correct or supplement any provisions herein which
may be inconsistent with any other provisions herein or to add any other
provisions with respect to matters or questions arising under the Agreement
which shall not be inconsistent with the provisions of the Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any
Certificateholder.
I-3
<PAGE> 122
The Agreement may also be amended from time to time by the
Sponsor, the [Master Administrator], the [Master Servicer], the Servicer and
the Trustee, with the consent of Investor Certificateholders of not less than
an aggregate Percentage of 66 2/3%, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Agreement
or of modifying in any manner the rights of the Certificateholders; provided,
however, that no such amendment shall (a) reduce in any manner the amount of,
or delay the timing of, collections of payments on the Auto Loans or
distributions which are required to be made on any Certificate then
outstanding, (b) reduce the aforesaid percentage required to consent to any
such amendment or (c) modify Section 11.03(b) of the Agreement without the
consent of the holders of all Investor Certificates then outstanding. The
[Master Administrator] may set a record date for purposes of determining the
holders entitled to give a written consent or waive compliance as authorized or
permitted by this Section 11.03(b) of the Agreement. Such record date shall
not be more than 30 days prior to the first solicitation to such consent or
waiver. Promptly after the execution of any amendment or consent pursuant to
Section 11.03 of the Agreement, the Trustee shall furnish such amendment to
each Originator Certificateholder or a written summary of such amendment
prepared by the [Master Administrator] and, not later than the tenth Business
Day preceding the effectiveness of any such amendment, the Rating Agency. It
shall not be necessary for the consent of Investor Certificateholders under
Section 11.03 of the Agreement to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe. In
connection with any amendment pursuant to Section 11.03 of the Agreement, the
Trustee shall be entitled to receive an Opinion of Counsel to the effect that
such amendment is authorized or permitted by the Agreement.
No sale, transfer or other disposition of this Originator
Certificate shall be permitted other than in accordance with the provisions of
Sections 6.03 or 6.09 of the Agreement.
The Agreement and the respective obligations and
responsibilities of the Sponsor, the Certificateholders, the [Master
Administrator], the [Master Servicer], the Servicer and the Trustee created
hereby (other than the obligation of the Trustee to make payments to
Certificateholders as hereinafter set forth) shall terminate on the earlier of:
(i) the day after the day on which the
Certificateholders are paid in full; and
(ii) December __, ____.
I-4
<PAGE> 123
Upon at least __ days' written notice to the Trustee (and to
Investor Certificateholder) prior to a Distribution Date, provided the Investor
Certificate Principal Balance on such Distribution Date is __% or less of the
Initial Principal Amount, the [Master Administrator] may, but is not required
to, purchase as of the last day of the preceding Due Period all, but not less
than all, outstanding Auto Loans at a price equal to the aggregate Principal
Balances of all Auto Loans the next preceding Distribution Date plus accrued
and unpaid interest thereon at the sum of the weighted average APR through the
last day of such preceding Due Period. Such price shall be deposited to the
Collection Account in immediately available funds by 10:00 a.m., New York City
time, on the relevant Distribution Date and the Trustee shall release (or cause
its custodian to release) the Auto Loans and, if at such time the [Master
Administrator] does not have possession of the Loan Files, the Trustee shall
release the Loan Files, to the [Master Administrator], whereupon the Investor
Certificate shall no longer evidence any right or interest in the Auto Loans or
the Loan Files, the Assignments, or any Insurance Policies or any proceeds of
the foregoing. Upon the request of the [Master Administrator], the Trustee
shall perform such other acts as reasonably requested by the [Master
Administrator] and otherwise cooperate with the [Master Administrator] in
connection with the transfer of the Transferred Assets pursuant to Section
11.01(b) of the Agreement including, but not limited to, the execution of (any
Title Document to the extent necessary to effectuate the termination of such
Auto Loan and the disposition of the related Automobile.
This Originator Certificate does not represent an obligation
of, or an interest in the Servicer, the Originator or the Sponsor or any
Affiliate thereof. This Originator Certificate is limited in right of payment
to certain collections respecting the Trust Assets, all as more specifically
set forth herein and in the Agreement.
The holder hereof, by its acceptance of this Originator
Certificate, agrees to look solely to the funds in the Collection Account to
the extent available for distribution to the holder hereof as provided in the
Agreement for payment hereunder and that the Trustee in its individual capacity
is not personally liable to the holder hereof for any amounts payable under
this Originator Certificate or the Agreement.
This Originator Certificate does not purport to summarize the
Agreement and is qualified in its entirety by the Agreement. Reference is made
to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be made available for review and inspection by any
Originator Certificateholder during normal business hours at the office of the
I-5
<PAGE> 124
Trustee, _________________________________________ upon the prior written
request of the holder of the Originator Certificate.
I-6
<PAGE> 125
IN WITNESS WHEREOF, [ACC Receivables Corp. has caused this
Originator Certificate to be duly executed by the manual or facsimile signature
of the duly authorized officer of the Trustee.
[ACC AUTOMOBILE RECEIVABLES TRUST]
By [TRUSTEE], not in its
individual capacity, but solely as
Trustee
By
----------------------------
CERTIFICATE OF AUTHENTICATION
This is one of the Originator Certificate referred to in the
within mentioned Agreement.
[TRUSTEE], as Trustee
By
-----------------------------
Authorized Officer
Dated: , 199
----------- -
I-7
<PAGE> 126
ASSIGNMENT
Social Security or other identifying number of assignee _______________.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
___________________________________________________________________
(name and address of assignee)
the written certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________________, attorney, to transfer
said certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:
--------------------
<TABLE>
<S> <C> <C> <C>
(1) A Non U.S. Person as defined in the Code must Note: The signature(s) to this
certify to the Trustee in writing as to its Assignment must correspond with
Non U.S. Person status and such further the name(s) as written on the
information as may be required under the Code face of the within certificate in
or reasonably requested by the Trustee every particular without
alteration or enlargement or any
change whatsoever
</TABLE>
I-8
<PAGE> 127
EXHIBIT J
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ACC Receivables Corp.]
[FORM OF SPONSOR AGREEMENT]
<PAGE> 128
EXHIBIT K
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ACC AUTOMOBILE RECEIVABLES TRUST]
[FORM OF ISSUANCE SUPPLEMENT]
ISSUANCE SUPPLEMENT, dated as of _______, 199_, among ACC
CONSUMER FINANCE CORPORATION, a Delaware corporation, its successors and
permitted assigns, as Sponsor and as Servicer (the "Sponsor" and "Servicer"
respectively), ________________________________, a ________ corporation, its
successors and permitted assigns as [Master Administrator] (the "[Master
Administrator]"), _________________, a ________ corporation, its successors and
permitted assigns, as [Master Servicer] (the "[Master Servicer]"),
_________________, a ___________ corporation, its successors and permitted
assigns, as Originator (the "Original"), and __________________, a
______________________ corporation, its successors and permitted assigns, as
trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, Section 6.02(b) of the Agreement provides that the
parties hereto shall execute and deliver an Issuance Supplement in connection
with the issuance, authentication and delivery of the Investor Certificates.
NOW, THEREFORE, the parties agree as follows:
SECTION 1. (a) Certain Defined Terms. As used herein, the
following terms shall have the following meanings:
"CERTIFICATE RATE" means interest paid at the rate per annum
equal to ___%.
"DISTRIBUTION DATE" means the 20th day of each [month],
[month], [month] and [month] (or, if such day is not a Business Day, the next
succeeding Business Day).
"EXPECTED FINAL PAYMENT DATE" means ____________, 199_.
"INITIAL PRINCIPAL AMOUNT" means $_____________.
"INVESTOR'S SHARE" means ___%.
"ISSUANCE DATE" means __________________, 199_.
<PAGE> 129
"MAXIMUM SUBORDINATION AMOUNT" means, on any Distribution
Date, an amount equal to $__________________ [the product of (a) the
Originator's Share and (b) the aggregate Principal Balance of the Auto Loans
determined as of the end of the calendar month immediately preceding the
Issuance Date].
"REQUIRED CASH RESERVE AMOUNT" means _______.
"ORIGINATOR CERTIFICATE PRINCIPAL BALANCE" means, as of the
Issuance Date, $________.
"ORIGINATOR'S SHARE" means ___%.
(b) All capitalized terms used and not defined herein, shall
have the meaning specified in the Pooling and Servicing Agreement.
(c) The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Issuance Supplement as a whole. All
references to Articles and Sections shall be deemed to refer to Articles and
Sections of this Issuance Supplement or the Pooling and Servicing Agreement, as
the context requires.
Section 2. Representations, Warranties and Covenants of the
Sponsor. (a) Pursuant to this Issuance Supplement, as of the Issuance Date,
the Sponsor makes the following representations and warranties:
(i) the representations and warranties set forth in Section
3.01 and Section 3.02(a) of the Pooling and Servicing Agreement (such
representations and warranties are incorporated by reference in this Section 2
and may be relied on as if such representations and warranties were fully set
forth herein as of the Issuance Date);
(ii) pursuant to Section 3.02(b) of the Pooling and Servicing
Agreement, with respect to each Auto Loan sold to the Sponsor pursuant to each
Sale Agreement, on the date of such sale the Originator made the
representations and warranties to the Sponsor as set forth in its respective
Sale Agreement, copies of which have been delivered to the Trustee, the [Master
Servicer] and the Servicer.
(iii) no event has occurred and is continuing, or would
result from the execution, delivery or performance of this Issuance Supplement
by the Sponsor,or from the application of the proceeds therefrom, which
constitutes an Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both; and
(iv) the Sponsor is in compliance with each of its covenants
set forth herein.
K-2
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Section 3. Representations, Warranties and Covenants of the
[Master Servicer] and the Servicer. (a) Pursuant to this Issuance Supplement,
as of the Issuance Date, each of the [Master Servicer] and the Servicer makes
the representations and warranties set forth in Section 4.03 of the Pooling and
Servicing Agreement. Such representations and warranties are incorporated by
reference in this Section 3 and may be relied on by the [Master Administrator]
and the Trustee as if such representations and warranties were fully set forth
herein as of the Issuance Date.
(b) Each of the [Master Servicer] and the Servicer also
represents, warrants and covenants as of the Issuance Date that no event has
occurred and is continuing which constitutes an Event of Master Servicing
Termination or an Event of Servicing Termination, as the case may be, or would
constitute an Event of Master Servicing Termination or an Event of Servicing
Termination, as the case may be, but for the requirement that notice be given
or time elapse or both.
Section 4. Representations, Warranties and Covenants of the
[Master Administrator]. (a) Pursuant to this Issuance Supplement, as of the
Issuance Date, the [Master Administrator] makes the representations and
warranties set forth in Section 5.04 of the Pooling and Servicing Agreement.
Such representations and warranties are incorporated by reference in this
Section 4 and may be relied on by the Sponsor, the [Master Servicer], the
Servicer and the Trustee as if such representations and warranties were fully
set forth herein as of the Issuance Date.
(b) The [Master Administrator] also represents, warrants and
covenants as of the Issuance Date that no event has occurred and is continuing
which constitutes an Event of Administrator Termination or would constitute an
Event of Administrator Termination but for the requirement that notice be given
or time elapse or both.
Section 5. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL. (A) THIS ISSUANCE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF NEW YORK.
(B) THE Sponsor, THE [MASTER SERVICER], THE SERVICER, THE
[MASTER ADMINISTRATOR], THE CERTIFICATE REGISTRAR AND TRANSFER AGENT, THE
PAYING AGENT, AND THE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT
LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION
11.04 OF THE POOLING AND SERVICING AGREEMENT AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN
THE U.S. MAILS, POSTAGE PREPAID.
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THE Sponsor, THE [MASTER SERVICER], THE [MASTER ADMINISTRATOR], THE CERTIFICATE
REGISTRAR AND TRANSFER AGENT, THE PAYING AGENT, AND THE TRUSTEE EACH HEREBY
WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE
OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL
OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS
SECTION SHALL AFFECT THE RIGHT OF THE Sponsor, THE [MASTER SERVICER], THE
SERVICER, THE [MASTER ADMINISTRATOR], THE CERTIFICATE REGISTRAR AND TRANSFER
AGENT, THE PAYING AGENT, AND THE TRUSTEE TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO BRING ANY ACTION OR
PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(C) THE Sponsor, THE [MASTER SERVICER], THE SERVICER, THE
[MASTER ADMINISTRATOR], THE CERTIFICATE REGISTRAR AND TRANSFER AGENT, THE
PAYING AGENT, AND THE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH
THIS ISSUANCE SUPPLEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
Section 8. Counterparts. This Issuance Supplement may be
executed in counterparts each of which shall be an original, but all of which
together shall constitute one and the same instrument.
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<PAGE> 132
IN WITNESS WHEREOF, the parties hereto have caused this
Issuance Supplement to be executed by their respective officers thereunto duly
authorized this ____ day of __________, 199_.
ACC CONSUMER FINANCE CORPORATION
as Sponsor and as Servicer
By:
-----------------------------
Name:
Title:
-------------------------------,
as [Master Administrator],
By:
-----------------------------
Name:
Title:
-------------------------------,
as [Master Servicer]
By:
-----------------------------
Name:
Title:
-------------------------------,
as Originator
By:
-----------------------------
Name:
Title:
-------------------------------,
as Trustee
By:
-----------------------------
Name:
Title:
K-5
<PAGE> 1
Exhibit 4.4
================================================================================
TRUST AGREEMENT
among
ACC CONSUMER FINANCE CORPORATION
_________________________,
not in its individual capacity but solely as Owner Trustee,
and
_________________________,
as Servicer
Dated as of __________, 199__
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1 Capitalized Terms . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Other Definitional Provisions . . . . . . . . . . . . . 4
ARTICLE II ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.3 Purposes and Powers . . . . . . . . . . . . . . . . . . 5
SECTION 2.4 Appointment of Owner Trustee . . . . . . . . . . . . . . 6
SECTION 2.5 Organizational Expenses . . . . . . . . . . . . . . . . 6
SECTION 2.6 Declaration of Trust . . . . . . . . . . . . . . . . . . 6
SECTION 2.7 Liability of the Certificateholders . . . . . . . . . . 7
SECTION 2.8 Title to Trust Property . . . . . . . . . . . . . . . . 7
SECTION 2.9 Situs of Trust . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.10 Representations and Warranties of the Sponsor . . . . . 7
SECTION 2.11 Books and Records; Tax Returns . . . . . . . . . . . . . 8
SECTION 2.12 Authorized Representative . . . . . . . . . . . . . . . 9
ARTICLE III THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.1 The Certificates . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.2 Registration of Transfer and Exchange of Certificates . 9
SECTION 3.3 No Charge; Destruction of Void Certificates . . . . . . 10
SECTION 3.4 Mutilated, Destroyed, Lost or Stolen Certificates . . . 10
SECTION 3.5 Persons Deemed Certificateholders . . . . . . . . . . . 11
SECTION 3.6 Access to List of Certificateholders' Names and
Addresses . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.7 Acts of Certificateholders . . . . . . . . . . . . . . . 11
SECTION 3.8 Limitation on Transfer and Exchange . . . . . . . . . . 12
SECTION 3.9 Payments to Certificateholders . . . . . . . . . . . . . 13
ARTICLE IV ACTIONS BY THE OWNER TRUSTEE . . . . . . . . . . . . . . . . 13
SECTION 4.1 Prior Notice to Certificateholders with Respect
to Certain Matters . . . . . . . . . . . . . . . . . 13
SECTION 4.2 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.3 Rights of Certificateholders to Direct Owner Trustee . . 13
SECTION 4.4 Suits for Enforcement . . . . . . . . . . . . . . . . . 14
</TABLE>
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<TABLE>
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SECTION 4.5 Owner Trustee May Enforce Claims without
Possession of Certificates . . . . . . . . . . . . . 14
SECTION 4.6 Limitation on Rights of Certificateholders . . . . . . . 14
ARTICLE V AUTHORITY AND DUTIES OF THE OWNER TRUSTEE . . . . . . . . . . 15
SECTION 5.1 General Authority . . . . . . . . . . . . . . . . . . . 15
SECTION 5.2 General Duties . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.3 Action upon Instruction . . . . . . . . . . . . . . . . 16
SECTION 5.4 No Duties Except as Specified in this Agreement
or in Instructions . . . . . . . . . . . . . . . . . 16
SECTION 5.5 No Action Except Under Specified
Documents or Instructions . . . . . . . . . . . . . . 17
SECTION 5.6 Restrictions . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI CONCERNING THE OWNER TRUSTEE . . . . . . . . . . . . . . . . 17
SECTION 6.1 Acceptance of Trusts and Duties . . . . . . . . . . . . 17
SECTION 6.2 Furnishing of Documents . . . . . . . . . . . . . . . . 18
SECTION 6.3 Representations and Warranties . . . . . . . . . . . . . 19
SECTION 6.4 Reliance; Advice of Counsel . . . . . . . . . . . . . . 19
SECTION 6.5 Owner Trustee Not Liable for Certificates or Contracts . 20
SECTION 6.6 Not Acting in Individual Capacity . . . . . . . . . . . 21
SECTION 6.7 Interpretation of Trust Agreement . . . . . . . . . . . 21
ARTICLE VII COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE . . . 21
SECTION 7.1 Owner Trustee's Fees and Expenses . . . . . . . . . . . 21
SECTION 7.2 Indemnification . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES . 22
SECTION 8.1 Eligibility Requirements for Owner Trustee . . . . . . . 22
SECTION 8.2 Resignation or Removal of Owner Trustee . . . . . . . . 23
SECTION 8.3 Successor Owner Trustee . . . . . . . . . . . . . . . . 23
SECTION 8.4 Merger or Consolidation of Owner Trustee . . . . . . . . 24
SECTION 8.5 Appointment of Co-Owner Trustee or
Separate Owner Trustee . . . . . . . . . . . . . . . 24
</TABLE>
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<TABLE>
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ARTICLE IX TERMINATION OF TRUST AGREEMENT . . . . . . . . . . . . . . . 26
SECTION 9.1 Termination of Trust Agreement . . . . . . . . . . . . . 26
SECTION 9.2 Dissolution upon Bankruptcy of the Sponsor . . . . . . . 27
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 10.1 Supplements and Amendments . . . . . . . . . . . . . . . 28
SECTION 10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 10.3 Merger and Integration . . . . . . . . . . . . . . . . . 30
SECTION 10.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 10.5 Governing Law . . . . . . . . . . . . . . . . . . . . . 30
SECTION 10.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 10.7 No Legal Title to Trust Estate in Certificateholder . . 30
SECTION 10.8 Limitation on Rights of Others . . . . . . . . . . . . . 31
SECTION 10.9 Severability . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 10.10 Successors and Assigns . . . . . . . . . . . . . . . . . 31
SECTION 10.11 No Implied Waiver . . . . . . . . . . . . . . . . . . . 31
SECTION 10.12 No Petition . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 10.13 No Recourse . . . . . . . . . . . . . . . . . . . . . . 32
Exhibit A Form of Certificate . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B Investment Letter . . . . . . . . . . . . . . . . . . . . . . B-1
</TABLE>
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<PAGE> 5
THIS TRUST AGREEMENT, dated as of ____________, 199_ (the "Trust
Agreement"), among ACC CONSUMER FINANCE Corporation, a Delaware corporation
(the "Sponsor"), _________________, a _____________ banking corporation, not in
its individual capacity but solely as trustee (together with its permitted
successors in the trusts hereunder, the "Owner Trustee") of the [ACC Automobile
Receivables Trust Corp.] (the "Trust"), ____________________, as Servicer (the
"Servicer") and the holders (the "Certificateholders") of undivided percentage
interests in the Trust.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
agreements, covenants and undertakings herein contained, the parties intending
to be legally bound, hereby agree as follows:
PRELIMINARY STATEMENTS
In the regular course of its business, ____________________, a __________
corporation (the "Originator"), has acquired the Receivables. All capitalized
terms used in these Preliminary Statements which are not defined shall have the
meanings ascribed to such terms in Article I.
Pursuant to the Receivables Acquisition Agreement, dated ______, 199__,
between the Originator and the Sponsor, the Originator assigned the Contracts
and the Vehicles to the Sponsor.
The Sponsor will immediately thereafter transfer and assign the Contracts
and grant a security interest in the related Vehicles to the Trust. The
Receivables will be serviced by the Servicer, pursuant to a Servicing
Agreement, dated as of the date hereof (the "Servicing Agreement"), among the
Servicer, the Sponsor, ___________________, not in its individual capacity but
solely as Collateral Trustee (the "Collateral Trustee"), ______________, and
the Trust.
Each Certificateholder by accepting its Certificate shall be deemed to
have agreed to the terms of this Agreement and to have authorized the Trust to
acquire the Contracts from the Sponsor and hold such Contracts and other assets
described in the Receivables Acquisition Agreement in trust for the use and
benefit of the Certificateholders. Subject to the terms and conditions set
forth in this Agreement, the Owner Trustee will issue auto receivables backed
certificates (the "Certificates") to the Certificateholders.
<PAGE> 6
ARTICLE I
DEFINITIONS
SECTION 1.1 Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Agreement" means this Trust Agreement as originally executed and, if from
time to time supplemented or amended by one or more amendments entered into
pursuant to the applicable provisions hereof, as so supplemented or amended.
"Applicants" has the meaning ascribed to such term in Section 3.6.
"Basic Documents" means this Agreement, the Servicing Agreement, the
Indenture, the Receivables Acquisition Agreement, and the other documents and
certificates delivered in connection therewith.
"Certificate" means a Certificate evidencing a Percentage Interest in the
Trust, executed and delivered by the Owner Trustee to an investor substantially
in the form of Exhibit A.
"Certificateholder" means the Person in whose name a Certificate is
registered in the Certificate Register, other than the Sponsor.
"Certificate Register" means the register maintained pursuant to Section
3.2.
"Certificate Registrar" or "Registrar" means the registrar appointed
pursuant to Section 3.2.
"Closing Date" means __________, 199___.
"Code" means the Internal Revenue Code of /1986, as amended.
"Collateral Trustee" has the meaning ascribed to such term in the
Preliminary Statements.
"Contracts" means the installment sale contracts for new and used
automobiles and light duty trucks described in the List of Contracts and
includes, without limitation: the originally, manually executed counterpart of
each Contract, including all amendments thereto, and all rights to receive the
Scheduled Payments which are due pursuant thereto; any and all security
interests and any and
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all rights to enforce the monetary and non-monetary covenants of each Obligor
thereunder; and all proceeds of the any of the foregoing.
"Corporate Trust Office" means the office of the Owner Trustee located at
_________________________________; or at such other address as the Owner
Trustee may designate by notice to the Certificateholders and the Sponsor, or
the principal trust office of any successor Owner Trustee.
"Sponsor" means ACC Consumer Finance Corporation, a Delaware corporation.
"Eligible Bank" means [Trustee], so long as such bank continues to act as
Owner Trustee hereunder; thereafter, Eligible Bank means any depository
institution with trust powers organized under the laws of the United States or
any state having capital and surplus in excess of $50,000,000, the deposits of
which are insured to the full extent permitted by law by the Federal Deposit
Insurance Corporation and which is subject to supervision and examination by
federal or state authorities. If such depository institution publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
"Expenses" has the meaning ascribed to such term in Section 7.2.
"Indenture" means the Indenture, dated as of the date hereof, between
_____________, not in its individual capacity but solely as Indenture Trustee,
and the Trust, as such agreement may be further amended, modified or
supplemented from time to time.
"Note" means a debt instrument issued by the Trust pursuant to the
Indenture and secured by the assets of the Trust, executed and delivered by the
Owner Trustee to an investor.
"Noteholders" means any Person in whose name a Note is registered, other
than the Sponsor.
"Obligor" means the obligor under each Contract, its successors and
assigns and any other person who owes or has guaranteed payment under a
Contract.
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<PAGE> 8
"Owner Trustee" means _____________, not in its individual capacity but
solely as trustee under this Agreement, until a successor Owner Trustee shall
have been appointed pursuant to the applicable provisions of this Agreement,
and thereafter such successor Owner Trustee.
"Percentage" or "Percentage Interest", means the undivided interest in the
Trust expressed as a percentage owned by the holder of a particular
Certificate.
"Person" means any legal person, including any individual, corporation,
limited liability company, partnership, joint venture, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Receivables Acquisition Agreement" has the meaning ascribed to such term
in the Preliminary Statements.
"Servicer" has the meaning ascribed to such term in the first paragraph
hereof.
"Servicing Agreement" has the meaning ascribed to such term in the
Preliminary Statements.
"Trust Estate" means all right, title and interest of the Trust in and to
the property and rights assigned to the Trust pursuant to the Receivables
Acquisition Agreement, and all other property of the Trust from time to time,
including any rights of the Owner Trustee and the Trust pursuant to the
Servicing Agreement.
"Vehicles" means the new and used automobiles and light duty trucks sold
to Obligors as described in the Contracts.
SECTION 1.2 Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined have the meanings assigned to them in the
Servicing Agreement or, if not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not
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<PAGE> 9
defined, shall have the respective meanings given to them under generally
accepted accounting principles in effect on the date hereof. To the extent
that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other documents shall control.
(d) The words "hereof", "herein", "hereunder", and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name. The Trust created hereby shall be known as ["ACC
Automobile Receivables Trust"], in which name the Owner Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.2 Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address as the
Owner Trustee may designate by written notice to the Certificateholders and the
Sponsor.
SECTION 2.3 Purposes and Powers. (a) The purpose of the Trust is to
engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the Certificates
pursuant to this Agreement and to sell the Notes and/or Certificates in one
or more transactions;
(ii) with the proceeds of the sale of the Notes and the Certificates, to
pay such proceeds to, or as directed in writing by, the Sponsor;
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(iii) to assign, grant, transfer, pledge, mortgage and convey the Trust
Estate pursuant to the Indenture and to hold, manage and distribute to the
Certificateholders pursuant to the terms of the Servicing Agreement any
portion of the Trust Estate released from the lien of, and remitted to the
Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic Documents
to which it is to be a party;
(v) to engage in those activities, including entering into agreements,
that are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage in such
other activities as may be required in connection with conservation of the
Trust Estate and the making of distributions to the Certificateholders and
the Noteholders.
The Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Basic Documents.
SECTION 2.4 Appointment of Owner Trustee. The Seller hereby appoints the
Owner Trustee as trustee of the Trust effective as of the date hereof, to have
all the rights, powers and duties set forth herein.
SECTION 2.5 Organizational Expenses. The Sponsor shall pay
organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Trust Estate in trust upon and subject to the condition set
forth herein for the use and benefit of the Certificateholders, subject to the
obligations of the Trust under the Basic Documents. It is the intention of the
parties hereto that the Trust constitute a trust and that this Agreement
constitute the governing instrument of such trust. It is the intention of the
parties hereto that, solely for income and franchise tax purposes, the Trust
shall be treated as a partnership, with the assets of the partnership being the
Receivables and other assets held by the Trust, the partners of the partnership
being the Certificateholders and the Notes being
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the debt of the partnership. The parties agree that, unless otherwise required
by appropriate tax authorities, the Trust will file or cause to be filed annual
or other necessary returns, reports and other forms consistent with the
characterization of the Trust as a partnership for such tax purposes.
Effective as of the date hereof, the Servicer and the Owner Trustee (subject to
the provisions hereof) shall have all rights, powers and duties set forth
herein with respect to accomplishing the purposes of the Trust.
SECTION 2.7 Liability of the Certificateholders. (a) The Sponsor shall
be liable directly to and will indemnify the Certificateholders, Noteholders or
any other injured party for all losses, claims, damages, liabilities and
expenses of the Trust (including expenses, to the extent not paid out of the
Trust Estate) to the extent that the Sponsor would be liable if the Trust were
a ___________ limited partnership in which the Sponsor were a general partner;
provided, however, that the Sponsor shall not be liable (i) to any
Certificateholder or Noteholder for any losses incurred by such
Certificateholder in the capacity of an investor in the Certificates or such
Noteholder in the capacity of an investor in the Notes or (ii) to any Person
for any losses incurred by such Person as a result of the fraudulent actions,
misrepresentations or willful misconduct of such Person.
(b) No Certificateholder (other than to the extent set forth in paragraph
(a) above) shall have any personal liability for any liability or obligation of
the Trust.
SECTION 2.8 Title to Trust Property. Legal title to all the Trust Estate
shall be vested at all times in the Trust as a separate legal entity except
where applicable law in any jurisdiction requires title to any part of the
Trust Estate to be vested in a trustee or trustees, in which case title shall
be deemed to be vested in the Owner Trustee, a co-trustee and/or a separate
trustee, as the case may be.
SECTION 2.9 Situs of Trust. The Trust will be located and administered
in the State of _________. All bank accounts maintained by the Owner Trustee
on behalf of the Trust shall be located in the State of _____________. The
Trust shall not have any employees in any state other than _______; provided,
however, that nothing herein shall restrict or prohibit the Owner Trustee from
having employees within or without the State of ________. The only office of
the Trust will be at the Corporate Trust Office in _______.
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SECTION 2.10 Representations and Warranties of the Sponsor. The Sponsor
hereby represents and warrants to the Owner Trustee that:
(a) The Sponsor is duly organized and validly existing as a corporation
in good standing under the laws of the State of Delaware, with corporate
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
(b) The Sponsor is duly qualified to do business as a foreign limited
liability company in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such qualifications.
(c) The Sponsor has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms; the Sponsor has full power
and authority to sell and assign the property to be sold and assigned to and
deposited with the Trust and the Sponsor shall have duly authorized such sale
and assignment and deposit to the Trust by all necessary corporate action;
and the execution, delivery and performance of this Agreement has been duly
authorized by the Sponsor by all necessary corporate action.
(d) The consummation of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof do not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the Articles of Incorporation of
the Sponsor, or any indenture, agreement or other instrument to which the
Sponsor is a party or by which it is bound; nor result in the creation or
imposition of any lien upon any of its properties pursuant to the terms of
any such indenture, agreement or other instrument (other than pursuant to the
Basic Documents); nor violate any law or, to the best of the Sponsor's
knowledge, any order, rule or regulation applicable to the Sponsor of any
court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Sponsor or
its properties.
SECTION 2.11 Books and Records; Tax Returns. Except as otherwise
expressly provided in this Agreement, the Owner Trustee shall be responsible
for the keeping of all appropriate books and records relating to the receipt
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and disbursement by the Owner Trustee of all monies under this Agreement or any
agreement contemplated hereby. The Owner Trustee agrees to file an application
prepared by the Servicer with the Internal Revenue Service for a taxpayer
identification number with respect to the trust created hereby. The Sponsor
shall cause to be timely prepared and the Sponsor shall cause to be timely
filed at the expense of the Sponsor the federal fiduciary tax return for the
Trust created hereby and, upon the request of the Sponsor, such other tax
returns as are required to be executed by the Owner Trustee. The Owner Trustee
and the Sponsor, upon request, will furnish each other with all such
information as may reasonably be requested and shall otherwise cooperate with
each other in connection with the preparation of such income tax returns. The
Owner Trustee shall keep copies of all returns delivered to or filed by it.
The Owner Trustee will give to the Sponsor, upon request, periodic information
concerning receipts and disbursements by it with respect to the Trust created
by this Agreement.
SECTION 2.12 Authorized Representative. Any officer of the Servicer will
be authorized to act as an authorized representative ("Authorized
Representative") for the Trust in matters relating to the Trust and must be
identified on a list of Authorized Representatives delivered by the Servicer to
the Indenture Trustee on the Closing Date and such list may be modified or
supplemented from time to time thereafter. The Servicer agrees to cause its
Authorized Representatives to execute and deliver all documents and to perform
all acts required by the Basic Documents to be executed, delivered and
performed by such Authorized Representatives.
ARTICLE III
THE CERTIFICATES
SECTION 3.1 The Certificates. The Certificates shall be substantially in
the form of Exhibit A. The Certificates shall be issuable only as registered
Certificates representing undivided interests in the Trust. The rights to
receive payments with respect to the Certificates are subordinated to the prior
payment in full of all amounts of principal and interest on the Notes. The
Certificates shall be executed by the Owner Trustee on behalf of the Trust by
the manual signature of a duly authorized officer of the Owner Trustee under
the seal of and attested by the manual signature of the Secretary or an
Assistant Secretary or other authorized officer of the Owner Trustee.
Certificates bearing the signatures of individuals who were at the time the
proper officers or authorized
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signatories of the Owner Trustee shall bind the Owner Trustee, notwithstanding
that such individuals or any of them have ceased to hold such offices or
positions prior to the delivery of such Certificates or did not hold such
offices or positions at the date of such Certificates. All Certificates shall
be dated the date of their execution.
SECTION 3.2 Registration of Transfer and Exchange of Certificates. (a)
The Owner Trustee shall maintain, or cause to be maintained, at the Corporate
Trust Office a Certificate Register in which the Owner Trustee shall provide or
cause to be provided the registration of Certificates and transfers and
exchanges of Certificates as herein provided. The Owner Trustee is hereby
initially appointed the "Certificate Registrar" and transfer agent for the
purpose of registering Certificates and transfers and exchanges of Certificates
as provided herein.
(b) Subject to Section 3.3 and subject to the conditions set forth in
Section 3.8 hereof, upon surrender for registration or transfer of any
Certificate at such office, the Owner Trustee shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of a like aggregate Percentage Interest and dated the date of execution by the
Owner Trustee.
(c) At the option of a Certificateholder, Certificates may be exchanged
for other Certificates representing undivided interests in the Trust and of a
like aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Owner Trustee shall execute and deliver the Certificates which
the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall be duly
endorsed by, or be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar, duly executed
by the holder thereof or his or her attorney duly authorized in writing.
SECTION 3.3 No Charge; Destruction of Void Certificates. No service
charge shall be made to the Certificateholder for any transfer or exchange of
Certificates, but the Owner Trustee or Certificate Registrar may require
payment or a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for transfer and exchange shall be disposed of in
a manner approved by the Owner Trustee. All Certificates surrendered to the
Paying Agent for payment,
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shall be delivered by the Paying Agent to the Owner Trustee for disposition as
aforesaid.
SECTION 3.4 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate is surrendered to the Certificate Registrar, or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and (b) there is delivered to the Certificate
Registrar and the Owner Trustee such security or indemnity as may be required
by each to save it harmless, then in the absence of notice to the Certificate
Registrar or the Owner Trustee that such Certificate has been acquired by a
bona fide purchaser, the Owner Trustee shall execute and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a
new Certificate of like tenor and Percentage. Upon the issuance of any new
Certificate under this Section 3.4, the Owner Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses connected therewith. Any
duplicate Certificate issued pursuant to this Section 3.4 shall constitute
complete and indefeasible evidence of ownership of the Percentage Interest
evidenced thereby, as if originally issued, whether or not the mutilated,
destroyed, lost or stolen Certificate shall be found at any time.
SECTION 3.5 Persons Deemed Certificateholders. Prior to due presentation
of a Certificate for registration of transfer, the Owner Trustee and the
Certificate Registrar may treat the person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
remittances pursuant to Section 3.3(e) of the Servicing Agreement and for all
other purposes whatsoever, and neither the Owner Trustee, the Certificate
Registrar nor any agent of the Owner Trustee or the Certificate Registrar shall
be affected by notice to the contrary.
SECTION 3.6 Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar will furnish to the Sponsor and the Servicer, within
five days after receipt by the Certificate Registrar of a request therefor from
the Sponsor or the Servicer in writing, a list, in such form as the Owner
Trustee may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If Certificateholders
with an aggregate Percentage of 25% or more (hereinafter referred to as
"Applicants") apply in writing to the Owner Trustee, and such application
states that the Applicants desire to communicate with other Certificateholders
with respect to their rights under this
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Agreement or under the Certificates and is accompanied by a copy of the
communication which such Applicants propose to transmit, then the Owner Trustee
shall, within five Business Days after the receipt of such application, afford
such Applicants access during normal business hours to the most recent list of
Certificateholders held by the Owner Trustee. If such list is as of a date more
than 90 days prior to the date of receipt of such Applicants' request, the
Owner Trustee shall promptly request from the Certificate Registrar a current
list as provided above, and shall afford such Applicants access to such list
promptly upon receipt. Every Certificateholder, by receiving and holding a
Certificate, agrees with the Certificate Registrar and the Owner Trustee that
neither the Sponsor, the Servicer, the Certificate Registrar nor the Owner
Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Certificateholders hereunder,
regardless of the source from which such information was derived.
SECTION 3.7 Acts of Certificateholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders or Noteholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders or Noteholders in person or by agent
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Owner Trustee. Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Agreement and conclusive in favor of the Owner Trustee, the Sponsor and
the Servicer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Certificateholder or
Noteholder of any such instrument or writing may be proved in any reasonable
manner which the Owner Trustee deems sufficient.
(c) The ownership of Certificates and Notes shall be proved by the
Certificate Register and the Note Register, respectively.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder or a Noteholder shall bind every
holder of every Certificate or Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof, in respect of anything
done, or omitted to be done by the Owner Trustee or the Servicer in reliance
thereon, whether
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or not notation of such action is made upon such Certificate or Note.
(e) The Owner Trustee may require such additional proof of any matter
referred to in this Section as it shall deem necessary.
SECTION 3.8 Limitation on Transfer and Exchange. (a) No
Certificateholder may sell or transfer any Certificate (whether voluntarily,
involuntarily or by operation of law) except with the prior written consent of
the other Certificateholders, which consent shall not be unreasonably withheld
or delayed. Any sale or transfer without the prior written consent of the
Certificateholders shall be null and void and confer no rights on the purchaser
or transferee with respect to the Trust, this Agreement or the Owner Trustee.
(b) No Certificate may be transferred to the Owner Trustee, the
Collateral Trustee or the Indenture Trustee.
(c) The Owner Trustee shall have no liability to the Trust Estate or any
Certificateholder arising from a transfer of any such Certificate in reliance
upon a certification described in this Section 3.8. No transfer or exchange of
a Certificate shall be made unless the transferee delivers to the Owner Trustee
the Investment Letter required by this Section 3.8.
SECTION 3.9 Payments to Certificateholders. The Owner Trustee, by
executing this Agreement, is deemed to have instructed the Collateral Trustee
to distribute to the Certificateholders on each applicable Payment Date, in
accordance with their respective Percentage Interests, amounts due and payable
to the Certificateholders on deposit in the Certificate Account pursuant to
Section 3.3(e) of the Servicing Agreement.
ARTICLE IV
ACTIONS BY THE OWNER TRUSTEE
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not
take action unless, at least 30 days before the taking of such action, the
Owner Trustee shall have notified the Certificateholders in writing of the
proposed action and the Certificateholders shall not have notified the Owner
Trustee in writing prior to the 30th day after such notice is given
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that such Certificateholders have withheld consent or provided alternative
direction:
(a) the initiation of any claim or lawsuit by the Trust (except claims
or lawsuits brought in connection with the collection of the Contracts) and
the compromise of any action, claim or lawsuit brought by or against the
Trust (except with respect to the aforementioned claims or lawsuits for
collection of Receivables);
(b) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required; and
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the
Certificateholders.
SECTION 4.2 Bankruptcy. The Owner Trustee shall not have the power to
commence a voluntary proceeding in bankruptcy relating to the Trust without the
unanimous prior approval of all Certificateholders and the delivery to the
Owner Trustee by each such Certificateholder of a certificate certifying that
such Certificateholder reasonably believes that the Trust is insolvent.
SECTION 4.3 Rights of Certificateholders to Direct Owner Trustee.
Certificateholders with aggregate Percentage Interests representing [51%] or
more shall have the right to direct the time, method, and place of conducting
any proceeding for any remedy available to the Owner Trustee, or exercising any
trust or power conferred on the Owner Trustee; provided, however, that, the
Owner Trustee shall have the right to decline to follow any such direction if
the Owner Trustee, being advised by counsel, determines that the action so
directed may not lawfully be taken, or if the Owner Trustee in good faith
determines that the action so directed would be illegal or involve it in
personal liability or be unduly prejudicial to the rights of Certificateholders
not parties to such direction; and provided, further that nothing in this
Agreement shall impair the right of the Owner Trustee to take any action deemed
proper by the Owner Trustee and which is not inconsistent with such direction
by the Certificateholders.
SECTION 4.4 Suits for Enforcement. The Owner Trustee, in its discretion
may, subject to the provisions of this Article IV, proceed to protect and
enforce its rights
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and the rights of the Certificateholders under this Agreement by a suit, action
or proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Owner Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the
rights of the Owner Trustee or the Certificateholders.
SECTION 4.5 Owner Trustee May Enforce Claims without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Owner Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceedings instituted by the Owner
Trustee shall be brought in its own name or in its capacity as Owner Trustee.
Any recovery of judgment shall, after provision of or the payment of the
reasonable compensation, expenses, disbursements and advances of the Owner
Trustee, its agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been recovered.
SECTION 4.6 Limitation on Rights of Certificateholders. (a) The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any
obligation of the Trust or the Owner Trustee under this Agreement or any of the
Basic Documents or would be contrary to Section 2.3, nor shall the Owner
Trustee be obligated to follow any such direction, if given.
(b) Except as provided herein, no Certificateholder shall have any right
to vote or in any manner otherwise control the operation and management of the
Certificateholders' interest or the obligations of the parties hereto.
(c) No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action, or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Certificateholder previously shall have given to the Owner Trustee
a written notice of default and of the continuance thereof as hereinbefore
provided, and unless also the holders of Certificates evidencing a Percentage
of 51% or more shall have made written request upon the Owner Trustee to
institute such action, suit or proceeding in its own name as Owner Trustee
hereunder and
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shall have offered to the Owner Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred therein or
thereby, and the Owner Trustee, for 30 days after its receipt of such notice,
request, and offer of indemnity, shall have neglected or refused to institute
any such actions, suit, or proceeding; it being understood and intended, and
being expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner Trustee, that no one or more Certificateholders
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb, or prejudice
the rights of any other Certificateholders, or to obtain or seek to obtain
priority over or preference to any other such Certificateholder, or to enforce
any right under this Agreement, except in the manner herein provided and for
the equal, ratable, and common benefit of all Certificateholders. For the
protection and enforcement of the provisions of this Section, each and every
Certificateholder and the Owner Trustee shall be entitled to such relief as can
be given either at law or in equity.
ARTICLE V
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE
SECTION 5.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is to be
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party, in
each case, in such form as the Sponsor shall have approved as evidenced
conclusively by the Owner Trustee's execution thereof. In addition to the
foregoing, the Owner Trustee is authorized, but shall not be obligated, to take
all actions required of the Trust pursuant to the Basic Documents.
SECTION 5.2 General Duties. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the Basic Documents to which the Trust is a
party and to administer the Trust in the interest of the Certificateholders,
subject to the Basic Documents and in accordance with the provisions of this
Agreement.
SECTION 5.3 Action upon Instruction. (a) Subject to Article IV, the
Certificateholders may by written instruction direct the Owner Trustee in the
management of the Trust (except with respect to any actions to be taken by the
Servicer pursuant to the terms of the Servicing
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Agreement or under any other Basic Document). Such direction may be exercised
at any time by written instruction of the Certificateholders pursuant to
Article IV.
(b) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any Basic Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Certificateholders
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction of the Certificateholders with aggregate Percentage Interests of
51% or more received, the Owner Trustee shall not be liable on account of such
action to any Person. If the Owner Trustee shall not have received appropriate
instruction from the Certificateholders with aggregate Percentage Interests of
51% or more within 10 days of such notice (or within such shorter period of
time as reasonably may be specified in such notice or may be necessary under
the circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Basic
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action
or inaction.
SECTION 5.4 No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligations to
manage, make any payment with respect to, register, record, sell, dispose of,
or otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated
hereby to which the Owner Trustee is a party, except as expressly provided by
the terms of this Agreement or in any document or written instruction received
by the Owner Trustee pursuant to Section 5.3; and no implied duties or
obligations shall be read into this Agreement or any Basic Document against the
Owner Trustee. The Owner Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to record this Agreement or any Basic Document. The
Owner Trustee nevertheless agrees that it will, at its own cost and expense,
promptly take all action as may be necessary to discharge any liens on any part
of the Owner Trustee Estate that result from actions by, or claims against, the
Owner Trustee that are not related to the ownership or the administration of
the Trust Estate.
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SECTION 5.5 No Action Except Under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Trust Estate except (i) in accordance with the powers
granted to and the authority conferred upon the Owner Trustee pursuant to this
Agreement, (ii) in accordance with the Basic Documents and (iii) in accordance
with any document or instruction delivered to the Owner Trustee pursuant to
Section 5.3.
SECTION 5.6 Restrictions. The Owner Trustee shall not take any action
that is inconsistent with the purposes of the Trust set forth in Section 2.3.
ARTICLE VI
CONCERNING THE OWNER TRUSTEE
SECTION 6.1 Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the express terms of this Agreement. The
Owner Trustee also agrees to disburse all moneys actually received by it
constituting part of the Trust Estate upon the terms of the Basic Documents and
this Agreement. The Owner Trustee shall not be answerable or accountable
hereunder or under any Basic Document under any circumstances, except (i) for
its own willful misconduct or gross negligence or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 6.3 expressly
made by the Owner Trustee. In particular, but not by way of limitation (and
subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment made
by an officer of the Owner Trustee absent willful misconduct or gross
negligence by such officer;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Servicer or any Certificateholder;
(c) no provision of this Agreement or any Basic Document shall require
the Owner Trustee to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or
under any Basic Document, if the Owner Trustee shall have reasonable grounds
for believing that repayment of such funds or adequate
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indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes, or for any amounts due
with respect to the Certificates;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiently of this Agreement or for the due execution hereof by
the Sponsor or for the form, character, genuineness, sufficiency, value or
validity of any of the Trust Estate or for or in respect of the validity or
sufficiency of the Basic Documents, other than the certificate of
authentication on the Certificates, and the Owner Trustee shall in no event
assume or incur any liability, duty, or obligation to any Noteholder or to
any Certificateholder, other than is expressly provided for herein and in the
Basic Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct
of the Sponsor, the Indenture Trustee, the Collateral Trustee or the Servicer
under any of the Basic Documents or otherwise; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation under this Agreement or otherwise or in relation to
this Agreement or any Basic Document, at the request, order or direction of
the Certificateholders with aggregate Percentage Interests of [51%] or more,
unless such Certificateholders have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right of the
Owner Trustee to perform any discretionary act enumerated in this Agreement
or in any Basic Document shall not be construed as a duty, and the Owner
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of any such act.
SECTION 6.2 Furnishing of Documents. The Owner Trustee shall furnish to
the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other
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instruments furnished to the Owner Trustee under the Basic Documents.
SECTION 6.3 Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Sponsor, for the benefit of the
Certificateholders, that:
(a) It is a banking corporation duly organized and validly existing in
good standing under the laws of the State of ___________ _. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the other Basic Documents to which it is
a party.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement and such other Basic Documents
to which it is a party, and this Agreement and such other documents will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement and such other documents on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement and
the other Basic Documents to which it is a party, nor the consummation by it
of the transactions contemplated hereby or thereby nor compliance by it with
any of the terms or provisions hereof or thereof will contravene any federal
or _______ law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws.
SECTION 6.4 Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond, or
other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a
certified copy of a resolution of the board of directors or other governing
body of any corporate party as conclusive evidence that such resolution has
been duly adopted by such body and that the same is in full force and effect.
As to any fact or matter the method of the determination of which is not
specifically prescribed herein, the Owner Trustee may, for all purposes hereof,
rely on a certificate, signed by the President or any Vice President or by the
Treasurer or other authorized officer of the relevant party, as to such fact of
matter and such certificate shall constitute full protection to the Owner
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Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants
and other skilled persons to be selected with reasonable care and employed by
it. The Owner Trustee shall not be liable for anything done, suffered or
omitted in good faith by it in accordance with the written opinion or advice of
any such counsel, accountants or other such persons and not contrary to this
Agreement or any Basic Document.
SECTION 6.5 Owner Trustee Not Liable for Certificates or Contracts. (a)
Without limiting the representations and warranties of the Owner Trustee set
forth in Section 6.3, the Owner Trustee makes no representations as to the
validity or sufficiency of this Agreement, any other Basic Document or of the
Certificates (other than its execution thereof) or of any Contract or related
document.
(b) The Owner Trustee shall have no responsibility for or with respect
to the validity of any security interest in any Contract or Vehicle, the
perfection of any such security interest (whether as of the date hereof or at
any future time), the maintenance of or the taking of any action to maintain
such perfection, the existence or validity of any Contract, the validity of the
assignment of any Contract to the Trust or of any intervening assignment, the
review of any Contract, the completeness of any Contract, the receipt by it or
the Collateral Trustee of any Contract, the performance or enforcement of any
Contract, the existence, condition and ownership of any Vehicle, the existence
and enforceability of any insurance thereon, the compliance by the Servicer,
the Sponsor, the Indenture Trustee or the Collateral Trustee with any covenant,
warranty or representation made under any Basic Document or in any related
document or the accuracy of any such warranty or representation, the acts or
omissions of the Servicer, the Sponsor, the Collateral Trustee, the Indenture
Trustee or any Obligor, any action of the Servicer or the Collateral Trustee
taken in the name of the Owner Trustee or the Trust, any action by the Owner
Trustee taken at the instruction of the Servicer or the preparation and filing
of tax returns
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for the Trust. No recourse shall be had for any claim based on any provision
of this Agreement, the Basic Documents, the Certificates or any Contract or
assignment thereof against [Trustee] in its individual capacity, and [Trustee]
shall not have any personal obligation, liability or duty whatsoever to any
Certificateholder or any other Person with respect to any such claim, and any
such claim shall be asserted solely against the Trust or any indemnitor who
shall furnish indemnity as provided herein, except for such liability as is
finally determined to have resulted from its own gross negligence or willful
misconduct.
SECTION 6.6 Not Acting in Individual Capacity. In accepting the trusts
hereby created, the Owner Trustee acts in its individual capacity, but in the
performance of its duties as Owner Trustee hereunder and under any document
authorized hereby, the Owner Trustee acts solely as trustee hereunder and not
in its individual capacity, except to the extent expressly agreed otherwise,
and all Persons, other than the Certificateholders as provided herein, having
any claim against the Owner Trustee by reason of the transactions contemplated
hereby shall look only to the Trust Estate for payment or satisfaction thereof,
except to the extent the Owner Trustee shall expressly agree otherwise in any
Basic Document to which it is a party.
SECTION 6.7 Interpretation of Trust Agreement. In the event that the
Owner Trustee is uncertain as to the application of any provision of this
Agreement or any other agreement relating to the transactions contemplated
hereby, or such provision is ambiguous as to its application or is, or appears
to be, in conflict with any other applicable provision hereof or any other
agreement relating to the transactions contemplated hereby, or in the event
that this Agreement or any other agreement relating to the transactions
contemplated hereby permits any determination by the Owner Trustee or is silent
or incomplete as to the course of action which the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may seek
instructions from the Certificateholders and shall not be liable to any person
to the extent that it acts in good faith in accordance with the instructions of
the Certificateholders.
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<PAGE> 27
ARTICLE VII
COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE
SECTION 7.1 Owner Trustee's Fees and Expenses. Until the Trust has been
terminated in accordance with Section 9.1, as compensation for its services
hereunder, the Owner Trustee shall be entitled to receive the Owner Trustee's
Fee pursuant to Section _ _ of the Servicing Agreement, payable in advance on
the Closing Date and on each [January] Payment Date. The following fees and
expenses of the Owner Trustee (in addition to the Owner Trustee's Fee) shall be
payable from the Trust Estate:
(a) except as otherwise expressly provided herein, all reasonable
expenses, disbursements and advances incurred or made by the Owner Trustee in
accordance with any provision of this Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and counsel)
except any such expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(b) any loss, liability or expense incurred by the Owner Trustee without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of this Trust and its duties hereunder and under
any Basic Documents, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder.
SECTION 7.2 Indemnification. The Servicer shall be liable as primary
obligor for, and shall indemnify the Owner Trustee and its successors, assigns,
agents and servants (collectively, the "Indemnified Parties") from and against
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature
whatsoever (collectively "Expenses") which may at any time be imposed on,
incurred by, or asserted against the Owner Trustee or any Indemnified Party in
any way relating to or arising out of this Agreement, the Basic Documents, the
Trust Estate, the administration of the Trust Estate or the action or inaction
of the Owner Trustee hereunder, except only that the Servicer shall not be
liable for or required to indemnify an Indemnified Party from and against
Expenses arising or resulting from (i) its own willful misconduct or gross
negligence or (ii) with respect to the Owner Trustee, the inaccuracy of any
representation or warranty contained
23
<PAGE> 28
in Section 6.3 expressly made by the Owner Trustee. The indemnities contained
in this Section shall survive the resignation or termination of the Owner
Trustee or the termination of this Agreement. In the event of any claim,
action or proceeding for which indemnity will be sought pursuant to this
Section, the Owner Trustee's choice of legal counsel shall be subject to the
approval of the Servicer, which approval shall not be unreasonably withheld.
ARTICLE VIII
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 8.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee hereunder shall at all times be an Eligible Bank. In case at any time
the Owner Trustee shall cease to be eligible in accordance with the provisions
of this Section 8.1, the Owner Trustee shall resign immediately in the manner
and with the effect specified in Section 8.2.
SECTION 8.2 Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Sponsor. Upon receiving such notice of
resignation, the Sponsor shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Sponsor and one copy to the successor Owner Trustee. If no
successor Owner Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Owner Trustee may petition any court of competent jurisdiction for
the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 8.1 and shall fail to resign after written
request therefor by the Sponsor, or if at any time the Owner Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Sponsor or any Certificateholder on behalf of itself and
all others similarly situated may petition any court of competent jurisdiction
for the removal of the Owner Trustee and the appointment of a successor Owner
Trustee.
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<PAGE> 29
Any resignation or removal of the Owner Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.2 shall
not become effective until acceptance of appointment by the successor trustee
as provided in Section 8.3.
SECTION 8.3 Successor Owner Trustee. Any successor Owner Trustee
appointed as provided in Section 8.2 shall execute, acknowledge and deliver to
the Sponsor, and to its predecessor Owner Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall, upon payment of its charges, deliver or cause
to be delivered to the successor Owner Trustee the Contracts and any related
documents and statements held by it hereunder; and the Sponsor and the
predecessor Owner Trustee shall execute and deliver such instruments and do
such other things as may reasonably be requested by the successor Owner Trustee
for fully and certain vesting and confirming in the successor Owner Trustee all
such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section 8.3 unless, at the time of such acceptance, such successor Owner
Trustee shall be eligible under the provisions of Section 8.1.
Upon acceptance of appointment by a successor Owner Trustee as provided in
this Section 8.3, the successor Owner Trustee shall mail notice of such
succession to each Certificateholder at their addresses as shown in the
Certificate Register.
SECTION 8.4 Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Owner Trustee, shall be the
successor for the Owner Trustee hereunder, provided such corporation shall be
eligible under the provisions of Section 8.1 without the execution or filing of
any paper or any further act on the party of any of the parties hereto,
anything herein to the contrary notwithstanding.
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<PAGE> 30
SECTION 8.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust may at the time be located, the Sponsor and the Owner Trustee
acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Owner Trustee to act
as co-trustee, jointly with the Owner Trustee, or separate trustee or separate
trustees, of all or any part of the Trust Estate, and to vest in such Person,
in such capacity, such title to the Trust Estate, or any part thereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Sponsor and the Owner Trustee may
consider necessary or desirable. If the Sponsor shall not have joined in such
appointment within [15] days after receipt by it of a request so to do, the
Owner Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor trustee pursuant to Section 8.1 and no
notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 8.3.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed by
the Owner Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Owner Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act or
acts are to be performed, the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties, and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, solely at the direction of the
Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement; and
26
<PAGE> 31
(iii) the Sponsor and the Owner Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee and a copy thereof given to the Sponsor.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Owner Trustee, to the extent permitted by law, without the appointment
of a new or successor trustee.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1 Termination of Trust Agreement. (a) This Agreement (other
than Article VII) and the Trust shall terminate and be of no further force or
effect, (i) upon the final distribution by the Paying Agent or the Servicer, as
the case may be, of all moneys or other property or proceeds of the Trust
Estate in accordance with Section ___ of the Servicing Agreement or (ii) at the
time provided in Section ___. The bankruptcy, liquidation, dissolution, death
or incapacity of any Certificateholder, other than the Sponsor as described in
Section _____, shall not (i) operate to terminate this Agreement or the Trust,
nor (ii) entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Trust Estate
27
<PAGE> 32
nor (iii) otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b) Except as provided in Section 9.1(a), neither the Sponsor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Payment Date
upon which the Certificateholders shall surrender their Certificates to the
Paying Agent for payment of the final distribution and cancellation, shall be
given promptly by the Owner Trustee by letter to Certificateholders mailed
within five Business Days of receipt of notice of termination of the Servicing
Agreement from the Servicer given pursuant to Section ____ of the Servicing
Agreement stating (i) the Payment Date upon which final payment of the
Certificates shall be made upon presentation and surrender of the Certificates
at the office of the Paying Agent therein designated, (ii) the amount of any
such final payment and (iii) that the Record Date otherwise applicable to such
Payment Date is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office of the Paying Agent therein
specified. The Owner Trustee shall give such notice to the Certificate
Registrar (if other than the Owner Trustee) and the Paying Agent at the time
such notice is given to Certificateholders.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Owner Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If
within one year after the second notice all the Certificates shall not have
been surrendered for cancellation, the Owner Trustee may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed by the Owner Trustee to the
Sponsor.
(d) In no event shall the Trust established pursuant to this Agreement
remain in existence for more than 10 years from ________ ___, 199__.
SECTION 9.2 Dissolution upon Bankruptcy of the Sponsor. In the event
that any bankruptcy,
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<PAGE> 33
reorganization, arrangement, insolvency or liquidation proceeding or other
proceeding, voluntary or involuntary, under any federal or state bankruptcy or
similar law (each, an "Insolvency Event") shall occur with respect to the
Sponsor, this Agreement shall be terminated in accordance with Section 9.1 60
days after the date of such Insolvency Event, unless, before the end of such
60-day period the Owner Trustee shall have received written instructions from
each of the Certificateholders (other than the Sponsor) and each of the
Noteholders, to the effect that each such party disapproves of the liquidation
of the Contracts and termination of the Trust. Promptly after the occurrence
of any Insolvency Event with respect to the Sponsor, (i) the Sponsor shall give
the Indenture Trustee and the Owner Trustee written notice of such Insolvency
Event, (ii) the Owner Trustee shall, upon the receipt of such written notice
from the Sponsor, give prompt written notice to the Certificateholders of the
occurrence of such event and (iii) the Indenture Trustee shall, upon receipt of
written notice of such Insolvency Event from the Owner Trustee or the Sponsor,
give prompt written notice to the Noteholders of the occurrence of such event;
provided, however, that any failure to give a notice required by this sentence
shall not prevent or delay, in any manner, a termination of the Trust pursuant
to the first sentence of this Section 9.2. Upon a termination pursuant to this
Section, the Owner Trustee shall direct the Collateral Trustee promptly to sell
the assets of the Trust in a commercially reasonable manner and on commercially
reasonable terms. The proceeds of such a sale of the assets of the Trust shall
be treated as collections under the Servicing Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Supplements and Amendments. (a) This Agreement may be
amended from time to time by the Owner Trustee and the Sponsor, without the
consent of any of the Certificateholders or Noteholders, to cure any ambiguity,
to correct or supplement any provisions herein or therein which may be
inconsistent with any other provisions herein or therein, as the case may be,
or to add any other provisions with respect to matters or questions arising
under this Agreement which shall not be inconsistent with the provisions of
this Agreement; provided, however, that such action shall not, as evidenced by
an opinion of counsel for the Sponsor or the Servicer, adversely affect in any
material respect the interests of any Certificateholder or any Noteholder.
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<PAGE> 34
(b) This Agreement may also be amended from time to time by the Sponsor
and the Owner Trustee, with the consent of (x) Noteholders owning a majority in
principal amount of the Notes outstanding and (y) Certificateholders with an
aggregate Percentage Interest of [51%] or more, 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
Certificateholders; provided, however, that no such amendment shall (a) reduce
in any manner the amount of, or delay the timing of, collections of Receivables
or distributions which are required to be made on any Note or any Certificate
or (b) reduce the aforesaid percentage of Note principal balance or Certificate
Percentage Interest required to consent to any such amendment, without the
unanimous consent of the Noteholders and the Certificateholders.
(c) Promptly after the execution of any amendment or consent pursuant to
this Section 10.1, the Owner Trustee shall furnish written notification of the
substance of such amendment to each Certificateholder.
(d) It shall not be necessary for the consent of Certificateholders or
Noteholders under this Section 10.1 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders or Noteholders
shall be subject to such reasonable requirements as the Owner Trustee may
prescribe.
(e) The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
(f) Upon the execution of any amendment to this Agreement, this
Agreement shall be modified in accordance therewith, and such amendment shall
form a part of this Agreement for all purposes; and every holder of a
Certificate theretofore or thereafter executed and delivered hereunder shall be
bound thereby.
(g) In connection with any amendment pursuant to this Section 10.1 the
Owner Trustee shall be entitled to receive an opinion of counsel to the Sponsor
or the Servicer acceptable to the Owner Trustee to the effect that such
amendment is authorized or permitted by the Agreement.
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<PAGE> 35
SECTION 10.2 Notices. All communications and notices pursuant hereto to
the Sponsor, the Servicer, the Owner Trustee or the Certificate Registrar or
the Indenture Trustee shall be in writing and delivered or mailed to it at the
following address:
If to the Sponsor:
ACC Consumer Finance Corporation
12750 High Bluff Drive
Suite 320
San Diego, California 92130
Attention:
Telecopy Number:
If to the Servicer:
--------------
--------------
--------------
Attention:
Telecopy Number:
If to the Owner Trustee:
--------------
--------------
--------------
Attention:
Telecopy Number:
If to the Certificate Registrar:
--------------
--------------
--------------
Attention:
Telecopy Number:
If to the Indenture Trustee or to the Noteholders:
--------------
--------------
--------------
Attention:
Telecopy Number:
or at such other address as the party may designate by notice to the other
parties hereto, which shall be effective when received.
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<PAGE> 36
All communications and notices pursuant hereto to a Certificateholder
shall be in writing and delivered or mailed at the address shown in the
Certificate Register.
SECTION 10.3 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
SECTION 10.4 Headings. The headings of the various Articles and Sections
herein and the Table of Contents are for convenience of reference only and
shall not define or limit any of the terms or provisions hereof.
SECTION 10.5 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of
____________.
SECTION 10.6 Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
SECTION 10.7 No Legal Title to Trust Estate in Certificateholder. The
Certificateholders shall not have legal title to any part of the Trust Estate.
The Certificateholders shall be entitled to receive distributions with respect
to their undivided ownership interest only in accordance with Section 3.9 and
Article IX. No transfer, by operation of law or otherwise, of any right, title
or interest of the Certificateholders to and in their ownership interest in the
Trust Estate shall operate to terminate this Agreement or the trusts hereunder
or entitle any transferee to an accounting or to the transfer to it of legal
title to any part of the Trust Estate.
SECTION 10.8 Limitation on Rights of Others. Except for the terms of
Section 2.7, nothing in this Agreement, whether express or implied, shall be
construed to give to any Person other than the Owner Trustee and the Sponsor
any legal or equitable right, remedy or claim under or in respect of this Trust
Agreement or any covenants, conditions or provisions contained herein. Such
covenants, conditions and provisions are, and shall be held to be, for the sole
and exclusive benefit of the Owner Trustee and the Sponsor.
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<PAGE> 37
SECTION 10.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or of any provision in any other
Basic Document, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The provisions of this Agreement shall remain valid and
enforceable notwithstanding the invalidity, unenforceability, impossibility or
illegality of performance of any Basic Document.
SECTION 10.10 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee, the Sponsor and each Certificateholder and their respective successors
and assigns. Any request, notice, direction, consent, waiver or other
instrument or action by a Certificateholder shall bind its successors and
assigns.
SECTION 10.11 No Implied Waiver. No term or provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing entered into as provided in Section 10.1 hereof; and any
such waiver of the terms hereof shall be effective only in the specific
instance and for the specific purpose given.
SECTION 10.12 No Petition. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Indenture Trustee and
each Noteholder by accepting the benefits of this Agreement, hereby covenant
and agree that they will not at any time institute against the Sponsor or the
Trust, or join in any institution against the Sponsor or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law in
connection with any obligations relating to the Certificates, the Notes, this
Agreement or any of the Basic Documents.
SECTION 10.13 No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Sponsor, the Servicer, the Owner Trustee, the Indenture
Trustee, the Collateral Trustee or any Affiliate thereof and no recourse may be
had against such parties or their assets, except as may be expressly set forth
or contemplated in this Agreement, the Certificates or the Basic Documents.
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<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized this ____ day
of ____________, 199_.
ACC CONSUMER FINANCE CORPORATION
By:
-------------------------------
Name:
Title:
---------------------,
not in its individual capacity
but solely as Owner Trustee of
[ACC Automobile Receivables Trust CORP.]
By:
-------------------------------
Name:
Title:
----------------------------------
as Servicer
By:
-------------------------------
Name:
Title:
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<PAGE> 39
EXHIBIT A
[Form of Face Certificate]
FORM OF CERTIFICATE
[ACC Automobile Receivables Trust CORP.]
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN ACC
CONSUMER FINANCE CORPORATION, [TRUSTEE] OR ANY AFFILIATES THEREOF, AND NEITHER
THIS CERTIFICATE NOR THE CONTRACTS NOR THE RECEIVABLES ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
No. R _________ ____% Percentage Interest
This certifies that ___________________________ is the registered owner of
an undivided _____ Percentage Interest in the [ACC Automobile Receivables Trust
Corp.] (the "Trust"). The Trust Estate held by the Trust includes among its
assets a pool of installment sale contracts for new and used automobiles and
light duty trucks (the "Contracts") [and a security interest in the related
vehicles (the "Vehicles")], including, without limitation, and any and all
rights to receive payments thereunder after the close of business on
___________, 199__. The Trust has been created pursuant to a Trust Agreement
dated as of _____________, 199_ among ACC Consumer Finance Corporation, a
Delaware corporation (the "Sponsor"), _______________, a __________ banking
corporation, not in its individual capacity but solely as Owner Trustee
(herein, together with its permitted successors in the trusts hereunder, called
the "Owner Trustee") of the Trust, ____________________, a __________
corporation, as servicer (the "Servicer") and the holders (the
"Certificateholders") of undivided percentage interests in the Trust, as
amended and restated as of ______, 199_ (the "Agreement").
This Certificate is one of the Certificates described in the Agreement and
is issued pursuant and subject to the Agreement. By acceptance of this
Certificate, the holder assents to and becomes bound by the Agreement. To the
extent not defined herein, all capitalized terms have the meanings assigned to
them in the Agreement.
THE RIGHTS TO RECEIVE PAYMENTS WITH RESPECT TO THIS CERTIFICATE ARE
SUBORDINATED TO THE PRIOR PAYMENT IN FULL OF ALL AMOUNTS OF PRINCIPAL AND
INTEREST ON THE NOTES.
A-1
<PAGE> 40
Distributions on this Certificate will be made in accordance with the
terms of the Servicing Agreement by wire transfer to a bank account previously
identified by each Certificateholder of record and appearing on the Certificate
Register, without the presentation or surrender of this Certificate or the
making of any notation hereon. Except as otherwise provided in the Agreement
and notwithstanding the above, the final distribution on this Certificate will
be made after due notice by the Owner Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at
the office of the Collateral Trustee maintained for that purpose at __________
_______________________.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall have the same
effect as if set forth at this place.
The holder hereof, by its acceptance of this Certificate, agrees that it
will look solely to the funds in the Trust Estate to the extent available for
distribution to the holder hereof as provided in the Servicing Agreement for
payment hereunder and that the Owner Trustee in its individual capacity is not
personally liable to the holder hereof for any amounts payable under this
Certificate, the Agreement or the Servicing Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement or any
Basic Document.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Owner Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge
upon a written request to the Owner Trustee.
A-2
<PAGE> 41
IN WITNESS WHEREOF, [ACC Automobile Receivables Trust CORP.] has caused
this Certificate to be duly executed by an authorized officer of the Owner
Trustee and attested by one of the Owner Trustee's authorized officers and has
caused the Owner Trustee's corporate seal to be impressed thereon.
Date: _____________ [ACC Automobile Receivables Trust CORP.]
By: [Trustee], not in its individual capacity but solely
as Owner Trustee
[Seal] By:
---------------------------
Authorized Officer
Attest:
- -------------------------
Authorized Officer
A-3
<PAGE> 42
[Form of Reverse of Certificate]
This Certificate represents a fractional undivided interest in the Trust.
This Certificate is limited in right of payment to certain collections
respecting the Contracts, all as more specifically set forth herein and in the
Agreement. This Certificate is not insured or guaranteed by any person or
governmental agency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Certificateholders under the Agreement at any time by the Sponsor and the Owner
Trustee with the consent of the holders of Certificates evidencing [51%] of the
aggregate Percentage Interests and Noteholders owning a majority in principal
amount of the Notes outstanding. Any such consent by the holder of this
Certificate shall be conclusive and binding on such holder and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of any
of the Certificateholders or Noteholders.
As provided in the Agreement and subject to the limitations set forth in
the following paragraph, the transfer of this Certificate is registerable in
the Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the offices or agencies maintained
by the Owner Trustee at ___________________________________, accompanied by a
written instrument of transfer in form satisfactory to the Owner Trustee and
the Certificate Registrar duly executed by the holder thereof or his or her
attorney duly authorized in writing, and thereupon one or more new Certificates
evidencing the same aggregate Percentage Interest will be issued to the
designated transferee or transferees.
As provided in the Agreement and subject to certain limitations therein
set forth, Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same Percentage Interest as requested by the
holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Certificate Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
A-4
<PAGE> 43
The Owner Trustee and the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Owner Trustee, the Certificate Registrar nor any such agent shall be affected
by any notice to the contrary.
The obligations and responsibilities created by the Agreement (other than
Article VII) and the Trust created thereby shall terminate on the Payment Date
next succeeding the Due Period during which the last Contract shall have been
liquidated (but not later than six months after completion of all collection
efforts).
ASSIGNMENT
For value received, the undersigned, subject to the provisions of Sections
3.2 and 3.8 of the Agreement, sells, assigns and transfers unto (name and
address, including zip code and taxpayer I.D. or social security number of
assignee) _____________________________________ the within Certificate and does
hereby irrevocably constitute and appoint _______________________ attorney to
transfer the said Certificate on the books kept for registration thereof with
full power of subscription on the premises.
Dated:
----------------------
Signature Guaranteed:
NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Certificate in every
particular, without alteration, enlargement or any change whatsoever. Such
signature must be guaranteed by a member of the New York Stock Exchange or a
commercial bank or trust company.
A-5
<PAGE> 1
Exhibit 5.1
[On Dewey Ballantine Letterhead]
July 24, 1997
ACC Consumer Finance Corporation
12750 High Bluff Drive
Suite 320
San Diego, California 92130
Re: ACC Consumer Finance Corporation
Auto Receivables-Backed Securities
----------------------------------
Gentlemen:
We have acted as counsel to ACC Consumer Finance Corporation
(the "Registrant") in connection with the preparation and filing of the
registration statement on Form S-3 (such registration statement, the
"Registration Statement") filed on June 25,1997 with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), in respect of Auto Receivables-Backed Securities, ("Securities") which
the Registrant plans to offer in series, each series to be issued under a
separate Pooling and Servicing Agreement or Indenture (a "Pooling and Servicing
Agreement" or "Indenture"), as the case may be, in substantially one of the
forms incorporated by reference as Exhibits to the Registration Statement.
We have examined and relied on the originals or copies
certified or otherwise identified to our satisfaction of all such documents and
records of the Company and such other instruments and other certificates of
public officials, officers and representatives of the Company and such other
persons, and we have made such investigations of law, as we have deemed
appropriate as a basis for the opinions expressed below.
The opinions expressed below are subject to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and to general equity principles.
<PAGE> 2
We are admitted to the Bar of the State of New York and we
express no opinion as to the laws of any other jurisdiction except as to
matters that are governed by Federal law or the laws of the State of New York.
All opinions expressed herein are based on laws, regulations and policy
guidelines currently in force and may be affected by future regulations.
Based upon the foregoing, we are of the opinion that:
1. When, in respect of a series of Securities, a Pooling
and Servicing Agreement or Indenture has been duly authorized by all
necessary action and duly executed and delivered by the Company, the
issuer, the seller, the back-up servicer and the Trustee for such
series, such Pooling and Servicing Agreement or Indenture will be a
valid and legally binding obligation of the Company; and
2. When a Pooling and Servicing Agreement or Indenture
for a series of Securities has been duly authorized by all necessary
action and duly executed and delivered by the Company, the issuer,
the seller, the back-up servicer and the Trustee for such series, and
when the Securities of such series have been duly executed and
authenticated in accordance with the provisions of the Pooling and
Servicing Agreement or Indenture, and issued and sold as contemplated
in the Registration Statement and the prospectus, as amended or
supplemented and delivered pursuant to Section 5 of the Act in
connection therewith, such Securities will be legally and validly
issued, fully paid and nonassessable, and the holders of such
Securities will be entitled to the benefits of such Pooling and
Servicing Agreement or Indenture.
This opinion is furnished by us as counsel to the Registrant.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to Dewey Ballantine in the
Registration Statement and the related prospectus under the heading "Legal
Matters."
Very truly yours,
/s/ Dewey Ballantine
<PAGE> 1
Exhibit 8.1
[ON DEWEY BALLANTINE LETTERHEAD]
_____________ __, 199__
ACC Consumer Finance Corporation
12750 High Bluff Drive
Suite 320
San Diego, CA 92130
Re: ACC Consumer Finance Corporation
Auto Receivables-Backed Securities
Gentlemen:
We have acted as counsel to ACC Consumer Finance Corporation
in connection with the preparation and filing of a registration statement on
Form S-3 (the "Registration Statement") being filed today with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), in respect of Auto Receivables-Backed Securities, ("Securities") which
the Registrant plans to offer in series.
We have reviewed the disclosures set forth under the caption
"Federal Income Tax Consequences" in the Prospectus. We are of the opinion
that such disclosure fully and fairly discloses all material federal tax risks
that are associated with the purchase, ownership and disposition of the Notes
and Certificates.
We hereby consent to the filing of this letter as an Exhibit
to the Registration Statement and to the reference to Dewey Ballantine in the
Registration Statement and related prospectus under the heading "Federal Income
Tax Consequences."
Very truly yours,
<PAGE> 1
Exhibit 10.1
- --------------------------------------------------------------------------------
,
--------------------------
ORIGINATOR
AND
ACC CONSUMER FINANCE CORPORATION
----------------------------------
RECEIVABLES ACQUISITION AGREEMENT
Dated as of ________ __, 199__
------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALL RIGHTS, TITLE AND INTEREST IN AND TO THIS AGREEMENT ON THE PART OF ADVANTA
AUTO FINANCE CORPORATION HAVE BEEN ASSIGNED TO AND ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF _________________________, AS TRUSTEE, UNDER [A [POOLING
AND SERVICING AGREEMENT] [A TRUST AGREEMENT]] [AN INDENTURE] DATED AS OF
_____________, 199__ FOR THE BENEFIT OF THE PERSONS REFERRED TO THEREIN.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TRANSFER OF RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.01. Transfer of Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.02. The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.03. The Funding Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.01. Representations and Warranties of the Depositor . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.02. Representations and Warranties of the Originator . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.01. Conditions to Obligation of the Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.02. Conditions to Obligation of the Originator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ORIGINATOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.01. Protection of Right, Title and Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.02. Other Liens or Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.03. Principal Executive Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.04. Trustee as Additional Insured. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.05. Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.06. No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.07. Location of Servicer Files. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.08. Transfer of Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.09. Originator's Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.10. Transfer of Additional Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.11. No Bankruptcy Petition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.12. Covenants Regarding Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VI
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VII
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.01. Obligations of Originator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.02. Reacquisition Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.03. The Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.04. Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.05. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.06. Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.07. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.08. Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.09. Representations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.10. Confidential Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.11. Headings and Cross-References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.12. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.13. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
EXHIBIT A ASSIGNMENT
EXHIBIT B SCHEDULE OF RECEIVABLES
</TABLE>
<PAGE> 4
RECEIVABLES ACQUISITION AGREEMENT
This RECEIVABLES ACQUISITION AGREEMENT is made as of this __th
day of ____, 199__, by and between ________________, a ___________
[corporation], having its principal executive office at _______________________
(the "Originator") and ACC Consumer Finance Corporation, a Delaware
corporation, having its principal place of business at 12750 High Bluff Drive,
Suite 320, San Diego, California, 92130 (the "Depositor").
WHEREAS, the Originator and the Depositor wish to set forth
the terms pursuant to which (i) the Receivables (as hereinafter defined) are to
be pledged, transferred, assigned and otherwise conveyed by the Originator to
the Depositor, which Receivables will be transferred and assigned by the
Depositor, pursuant to the [[Pooling and Servicing Agreement] [Trust
Agreement]] (as hereinafter defined), to ACC Automobile Receivables Trust (the
"Trust") to be created thereunder, which Trust will issue [certificates as
security for the loan from the securityholders to the Originator (the "Class __
[Certificates] [Notes]"); and (ii) additional Receivables will from time to
time be pledged, transferred, assigned and otherwise conveyed by the Originator
to the Depositor, which Receivables will then be transferred and assigned by
the Depositor to the Trust on Funding Dates (as hereinafter defined); and
WHEREAS, all Receivables transferred pursuant to this
Agreement shall constitute Eligible Receivables (as hereinafter defined) as of
the Closing Date or the Funding Date, as the case may be, on which they are
transferred hereunder.
NOW, THEREFORE, in consideration of the foregoing, other good
and valuable consideration, and the mutual terms and covenants contained
herein, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Terms not defined in this Agreement shall have the meaning set
forth in the [[Pooling and Servicing Agreement] [Trust Agreement]] dated as of
_______, 199__ among the Depositor, the Originator, and _________________, as
trustee ("[Pooling and Servicing Agreement] [Trust Agreement]"). As used in
this Agreement, the following terms shall, unless the context otherwise
requires, have the following meanings (such meanings to be equally applicable
to the singular and plural forms of the terms defined):
"Agreement" shall mean this Receivables Acquisition Agreement
and all amendments hereof and supplements hereto.
<PAGE> 5
"Assignment" shall mean the document of assignment attached to
this Agreement as Exhibit A.
"Class __ [Certificate] [Note]" shall have the meaning
specified in the [Pooling and Servicing Agreement] [Trust Agreement].
"Closing Date" shall mean ________, 199__.
"Closing Date Receivables" shall mean the Receivables acquired
by the Depositor from the Originator pursuant to the Agreement on the Closing
Date.
"Collections" shall mean all amounts collected by the [Master
Servicer] or any Servicer or Subservicer (as defined in the [Pooling and
Servicing Agreement] [Trust Agreement]) (from whatever source) on or with
respect to the Receivables.
"Custodian Files" shall have the meaning specified in the
[Pooling and Servicing Agreement] [Trust Agreement].
"Cutoff Date" shall mean __________, 199__ with respect to the
Closing Date and the last Business Day of each calendar week preceding the
calendar week of a Funding Date, with respect to each Funding Date.
"Eligible Receivable" means any Receivable as to which all of
the representations set forth in Section 3.02(b) hereof are true.
"Funding Date" shall mean each date occurring no more than
once per calendar week during the period beginning on the Closing Date and
ending on _________, 199__.
"Funding Date Receivables" means, with respect to a Funding
Date, the Eligible Receivables to be pledged, transferred, assigned and
otherwise conveyed by the Originator to the Depositor on such date and
identified on Schedule I attached to an Assignment substantially in the form of
Exhibit A hereto delivered on such Funding Date.
"Funding Event" shall mean, with respect to a Funding Date,
the occurrence of the events described in the definition of Funding Date.
"[Master Servicer]" shall mean ___________________, a
_________ [corporation], its successors and assigns.
"Obligor" shall have the meaning specified in the [Pooling and
Servicing Agreement] [Trust Agreement].
"Originator" shall mean _____________, a ___________
[corporation], its successors and assigns.
2
<PAGE> 6
"Person" shall have the meaning specified in the [Pooling and
Servicing Agreement] [Trust Agreement].
"[Pooling and Servicing Agreement] [Trust Agreement]" shall
mean the [Pooling and Servicing Agreement] [Trust Agreement] by and among the
Originator; the Depositor; and ___________, as trustee, dated as of _________,
199__.
["Pre-Funding Review" means a review conducted by the Review
Firm prior to the Closing Date and each Funding Date with respect to
Receivables to be included in the Trust Fund as of such date and prior to the
Closing Date with respect to certain historical data included in the Prospectus
Supplement dated ____________, 199__ (the "Prospectus Supplement"). The Review
Firm will review the Receivable files to determine:
(A) with respect to a randomly selected,
statistically valid sample of such Receivables, whether such
Receivables constitute Eligible Receivables;
(B) with respect to each Receivable, the
existence and delivery to the Trustee of:
(1) the original retail installment sale
contract evidencing such Receivable,
(2) an original certificate or an
original or copy of a guarantee of title or a copy of
dealer guarantee of title, and
(3) a copy of an application for, or an
instrument certificate issued by the Risk Default
Insurer; and
(C) with respect to the Receivables to be
included in the Trust Fund as of the Closing Date or a Funding
Date, as the case may be, confirmation of certain figures
stated on a report substantially in the form of Exhibit to the
[Pooling and Servicing Agreement] [Trust Agreement].]
"Rating Agency" shall mean ___________________ or any
successors thereto.
"Receivable" shall mean any retail installment sale contract
and installment loan identified on Exhibit B hereto which shall be amended from
time to time on Funding Dates.
"Receivables Cash Purchase Price" with respect to each
Eligible Receivable pledged, transferred, assigned and otherwise conveyed on
the Closing Date, and each Eligible Receivable pledged, transferred, assigned
and otherwise
3
<PAGE> 7
conveyed on a Funding Date, shall mean __% of the Principal Amount thereof plus
accrued interest from the respective Cutoff Date to the Closing Date or the
Funding Date, as the case may be.
"Replacement Receivable" shall mean a Receivable which (i)
previously secured a receivable originated by the Originator and (ii) was
repossessed due to a default on such prior receivable or a voluntary return of
such vehicle by the Obligor.
"Reacquisition Event" shall have the meaning specified in
Section 7.02 hereof.
["Review Firm" shall mean ________________, its successors and
assigns or another firm of independent certified public accountants selected by
the Depositor]
"Risk Default Insurance Policy" or "Risk Default Policy" means
auto loan protection insurance naming the Trustee as an insured, which covers
the Receivables, and which insurance is currently issued by
_______________________________.
"Risk Default Insurer" means _____________________, its
successors and assigns.
"Schedule of Receivables" shall mean the list of Receivables
annexed hereto as Exhibit B.
"Servicer Files" shall have the meaning specified in the
[Pooling and Servicing Agreement] [Trust Agreement].
"Trust" shall mean the ACC Automobile Receivables Trust.
"Trustee" shall mean ______________________, its successors
and assigns.
"UCC" shall mean the Uniform Commercial Code, as in effect
from time to time in the relevant jurisdictions.
"Underwriter" shall mean _______________, its successors and
assigns.
ARTICLE II
TRANSFER OF RECEIVABLES
Section 2.01. TRANSFER OF RECEIVABLES. On the Closing Date
and on each Funding Date, subject to the terms and conditions of this
Agreement, the Originator agrees to pledge, transfer, assign and otherwise
convey to the
4
<PAGE> 8
Depositor, and the Depositor agrees to acquire from the Originator, Eligible
Receivables and the other Trust Property relating thereto (as defined in
Section 2.01(a) below). The Receivables transferred on the Closing Date are
identified in an exhibit substantially in the form of Exhibit B hereto and
shall be covered by an Assignment substantially in the form of Exhibit A
hereto. The Receivables pledged, transferred, assigned and otherwise conveyed
on each Funding Date shall be identified on Schedule I to Exhibit B attached to
an Assignment substantially in the form of Exhibit A hereto.
(a) Initial Transfer of Receivables and Trust Property. On
the Closing Date and simultaneously with the transactions pursuant to
the [Pooling and Servicing Agreement] [Trust Agreement], the
Originator shall pledge, transfer, assign and otherwise convey to the
Depositor, without recourse, a 100% interest in (i) all right, title
and interest of the Originator in and to the Closing Date Receivables,
and all moneys due thereon (with respect to Precomputed Receivables),
on and after the Cutoff Date (ii) the security interest of the
Originator in the security interests in the Financed Vehicles granted
by the Obligors pursuant to the Closing Date Receivables and all
certificates of title to such Financed Vehicles; (iii) the interest of
the Originator in any proceeds from claims on any physical damage,
credit life, risk default or disability insurance policies covering
the Financed Vehicles or the Obligors from the Cutoff Date; and (iv)
the proceeds of any and all of the foregoing and any recourse in
equity or by contract against the Originator. (All of the property
identified in this subsection (a) and the following subsection (c)
shall constitute the "Trust Property.")
(b) Receivables Cash Purchase Price--Closing Date. In
consideration for the Receivables and Trust Property described in
Section 2.01(a), the Depositor shall, on the Closing Date, pay to the
Originator 100% of the Receivables Cash Purchase Price in cash by
federal wire transfer (same day) funds.
(c) Transfer of Receivables and Trust Property on Funding
Dates. On each Funding Date, the Originator shall pledge, transfer,
assign and otherwise convey to the Depositor, without recourse, a 100%
interest in (i) all right, title and interest of the Originator in and
to the Funding Date Receivables identified on an Exhibit substantially
in the form of Schedule I to Exhibit B hereto delivered on such
Funding Date, and all moneys received thereon subsequent to the
respective Cutoff Date; (ii) the security interest of the Originator
in the Financed Vehicles granted by the Obligors pursuant to such
Receivables and the certificates of title to such Financed Vehicles;
(iii) the interest of the Originator
5
<PAGE> 9
in any proceeds from claims on any physical damage, credit life, risk
default or disability insurance policies covering such Financed
Vehicles or such Obligors from the related Cutoff Date; and (iv) the
proceeds of any and all of the foregoing; provided, however, that (A)
the minimum amount of Receivables pledged, transferred, assigned or
otherwise conveyed to the Depositor on any Funding Date, other than
the Final Funding Date, shall be not less than $____________, (B) the
Depositor shall comply with the requirements specified in Section ___
of the [Pooling and Servicing Agreement] [Trust Agreement] as a
condition to any such pledge, transfer, assignment or other conveyance
and (C) the Pre-Funding Account shall contain available funds in an
amount at least equal to the Receivables Cash Purchase Price for such
Funding Date Receivables immediately prior to the Funding Event.
(d) Receivables Cash Purchase Price--Funding Date. In
consideration for the Funding Date Receivables and other Trust
Property relating thereto described in Section 2.1(c), upon one
Business Days' prior notice given by the Depositor to the Trustee, the
Depositor shall cause the Trustee, on each Funding Date, to pay to the
Originator an amount equal to 100% of the Receivables Cash Purchase
Price in cash by federal wire transfer funds. The Originator
acknowledges that the funds to effect the transfer of the Funding Date
Receivables and other Trust Property relating thereto on each Funding
Date shall be disbursed by the Trustee solely from the Pre-Funding
Account pursuant to Section ______ of the [Pooling and Servicing
Agreement] [Trust Agreement].
(e) Assignment by the Depositor In addition, concurrently
with the transfer by the Depositor of the Receivables to the Trust, on
the Closing Date, the Depositor shall assign to the Originator all of
the Depositor's remaining rights to the Trust Fund and all rights of
the Depositor under the [Pooling and Servicing Agreement] [Trust
Agreement].
Section 2.02. THE CLOSING. The transfer of the Receivables
shall take place at a closing (the "Closing") at the offices of Dewey
Ballantine, 1301 Avenue of the Americas, New York, New York 10019 on the
Closing Date, simultaneously with the closings under: (a) the [Pooling and
Servicing Agreement] [Trust Agreement] pursuant to which (i) the Depositor will
assign all of its right, title and interest in and to the Receivables and other
Trust Property to the Trustee for the benefit of the [Certificateholders]
[Noteholders]; and (ii) the Trustee will deposit the foregoing into the Trust
in exchange for the Class __ [Certificates] [Notes]; and (b) the purchase of
the [Certificates] [Notes] by the Class __ [Certificateholders] [Noteholders].
6
<PAGE> 10
Section 2.03. THE FUNDING EVENTS. The transfer of the
Funding Date Receivables on each Funding Date shall take place at the offices
of the Trustee or at such other location as the Depositor and the Originator
may reasonably agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents and warrants to the Originator and for the
benefit of the Trustee, the [Certificateholders] [Noteholders] and the Trust as
of the date hereof and as of the Closing Date and as of each Funding Date:
(a) Organization, Etc. The Depositor is a corporation duly
organized under the laws of the State of Delaware pursuant to its
Articles of Incorporation and is validly existing as a corporation and
in good standing under the laws of the State of Delaware, and has full
power and authority to execute and deliver this Agreement and to
perform the terms and provisions hereof and thereof.
(b) Due Authorization. The execution, delivery and
performance by the Depositor of this Agreement have been duly
authorized by all necessary corporate action, do not require any
approval or consent of any governmental agency or authority, do not
and will not conflict with any material provision of the Articles of
Incorporation or Bylaws of the Depositor, and do not and will not
conflict with or result in a breach which would constitute a material
default under any agreement for borrowed money binding upon or
applicable to it or such of its property which is material to it, or
to the best of the Depositor's knowledge, any law or governmental
regulation or court decree applicable to it or such material property,
and this Agreement is the legal, valid and binding obligation of the
Depositor enforceable in accordance with its terms except as the same
may be limited by insolvency, bankruptcy, reorganization or other laws
relating to or affecting the enforcement of creditors' rights or by
general equity principles.
(c) No Litigation. No litigation or administrative
proceeding of or before any court, tribunal or governmental body is
presently pending, or to the knowledge of the Depositor threatened,
against the Depositor or its properties or with respect to this
Agreement, which, if adversely determined would, in the
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opinion of the Depositor, have a material adverse effect on the
transactions contemplated by this Agreement.
(d) Business Purpose. The Depositor will acquire and
transfer the Receivables for a bona fide business purpose.
Section 3.02. REPRESENTATIONS AND WARRANTIES OF THE
ORIGINATOR.
(a) The Originator hereby represents and warrants to the
Depositor and its successors and assigns and for the benefit of the
Trustee, the [Certificateholders] [Noteholders] and the Trust as of
the date hereof and as of each Funding Date:
(i) Organization, Etc. The Originator has been duly
organized and is validly existing as a _______________ in good
standing under the laws of the State of __________, with power
and authority to own its properties and to conduct its
business as such properties are currently owned and such
business is presently conducted and had at all relevant times,
and shall have, the power, authority and legal right to
acquire and own the Receivables.
(ii) Due Qualification. The Originator is duly
qualified to do business as a foreign entity in good standing,
and has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of property or
the conduct of its business shall require such qualifications.
(iii) Power and Authority. The Originator has the
power and authority to execute and deliver this Agreement and
to carry out its terms; the Originator has full power and
authority to pledge, transfer, assign and otherwise convey the
property pledged, transferred, assigned and otherwise conveyed
to the Depositor and has duly authorized such pledge and
assignment to the Depositor by all necessary corporate action;
and the execution, delivery, and performance of this Agreement
have been duly authorized by all necessary corporate action
and the Agreement is the legal, valid and binding obligation
of the Originator enforceable in accordance with its terms
except as the same may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting the
enforcement of creditor's rights or by general equity
principles. The Originator has delivered this Agreement and
any other agreements and
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documents necessary to effectuate the transfer contemplated
hereby.
(iv) No Violation. The consummation of the
transactions contemplated by this Agreement and the
fulfillment of the terms do not conflict with, result in any
breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the
articles of incorporation or bylaws of the Originator, or any
indenture, agreement or other instrument to which the
Originator is a party or by which it is bound; nor result in
the creation or imposition of any lien upon any of its
properties pursuant to the terms of any such indenture,
agreement or other instrument (other than this Agreement); nor
violate any law or, to the best of the Originator's knowledge,
any order, rule or regulation applicable to the Originator of
any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality
having jurisdiction over the Originator or its properties.
(v) No Proceedings. There are no proceedings or
investigations pending or, to the Originator's best knowledge,
threatened before any court, regulatory body, administrative
agency or other governmental instrumentality having
jurisdiction over the Originator or its properties: (A)
asserting the invalidity of this Agreement; (B) seeking to
prevent the consummation of any of the transactions
contemplated by this Agreement; or (C) seeking any
determination or ruling that might materially and adversely
affect the performance by the Originator of its obligations
under, or the validity or enforceability of, this Agreement.
(vi) No Consents, Approvals. Neither the execution
nor the delivery by the Originator of this Agreement required
the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any governmental authority or agency under any
existing federal or state law governing the Originator, except
such as have been obtained, made or taken. The Originator
complies in all material respects with all applicable laws,
rules and orders with respect to itself, its business and
properties and the Receivables. The Originator maintains all
applicable permits and certifications.
(vii) No Unpaid Taxes. All tax returns required and
due to be filed by the Originator in any
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jurisdiction have in fact been filed, and all taxes,
assessments, fees and other governmental charges upon it or
any subsidiary or upon any of their respective properties,
income or franchises, shown to be due and payable on such
returns have been paid. To the best of the Originator's
knowledge all such tax returns were true and correct. Neither
the Originator nor any subsidiary knows of any proposed
additional tax assessment against it in any material amount or
of any basis therefor.
(viii) Adequate Provisions for Taxes. The provisions
for taxes on the Originator's books are in accordance with
generally accepted accounting principles.
(ix) Pension/Profit Sharing Plans. No contribution
failure has occurred with respect to any pension or profit
sharing plan and all such plans have been fully funded as of
the date of this Agreement.
(x) Trade Names. "________________________" is the
only trade name under which the Originator is currently
operating its business and under which the Originator operated
its business for the six years (or such shorter period of time
during which the Originator was in existence) preceding the
Closing Date.
(xi) Ability to Perform. There is no material
impairment in the ability of Originator to perform its
obligations under this Agreement.
(xii) Valid Business Reasons; No Fraudulent Transfers.
The Originator has valid business reasons to acquire and
pledge, transfer, assign and otherwise convey the Receivables
rather than to obtain a secured loan with the Receivables as
collateral and has undertaken the transaction contemplated
herein as principal rather than as agent of any other person.
At the time of the transfer: (i) the Originator transferred
the Receivables to the Depositor without any intent to hinder,
delay, or defraud any current or future creditor of the
Originator; (ii) the Originator was not insolvent or did not
become insolvent as a result of the transfer; (iii) the
Originator was not engaged and was not about to engage in any
business or transaction for which any property remaining with
the Originator was an unreasonably small capital or for which
the remaining assets of the Originator were unreasonably small
in relation
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to the business of the Originator or the transaction; (iv) the
Originator did not intend to incur, and did not believe or
reasonably should not have believed that it would incur, debts
beyond its ability to pay as they become due; and (v) the
consideration paid by the Depositor to the Originator for the
Receivables was equivalent to the fair market value of such
Receivables.
(xiii) Principal Executive Office. Since its inception
the Originator has maintained, and from the date of this
Agreement shall maintain, its principal executive office in
the State of __________ and there have been no other locations
of the Originator's principal executive office during the four
months preceding the Closing Date.
(b) The Originator makes the following representations and
warranties as to all of the Receivables subject to this Agreement on
which the Depositor relies in accepting the Receivables. Such
representations and warranties speak as of the execution and delivery
of this Agreement and each Funding Date, as the case may be, but shall
survive the pledge, transfer, assignment and other conveyance hereby
of the Receivables to the Depositor and the subsequent assignment and
transfer to the Trustee pursuant to the [Pooling and Servicing
Agreement] [Trust Agreement]. The Originator hereby acknowledges and
expressly agrees that any or all of the Depositor, the Trustee or the
[Certificateholders] [Noteholders] may enforce the Originator's
obligations pursuant to Section 7.02 hereof for any breach of any of
the following representations and warranties:
Eligible Receivables. Each Receivable pledged, transferred,
assigned and otherwise conveyed hereunder shall have all of the following
characteristics (any such Receivable referred to hereinafter as an "Eligible
Receivable") as of the Closing Date or as of the Funding Date on which such
Receivable is pledged, transferred, assigned or otherwise conveyed hereunder,
as the case may be:
(i) Characteristics of Receivables. Each Receivable
(a) shall have been originated in the United States of America
by the Originator or a Dealer for the retail sale of a
Financed Vehicle in the ordinary course of the Originator or
such Dealer's business, has been fully and properly executed
by the parties thereto, and, if originated by a Dealer, has
been purchased by the Originator from such Dealer or has been
financed for such Dealer under an existing agreement with the
Originator, (b) shall have created or shall create a valid,
subsisting, and enforceable first priority
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security interest in favor of the Dealer in the Financed
Vehicle, which security interest has been assigned by the
Dealer to the Originator and which security interest shall be
assigned by the Originator to the Depositor, (c) is covered by
a Risk Default Insurance Policy and by a VSI Insurance Policy,
as evidenced by certificate(s) of the insurer dated as of and
delivered to the Trustee on the Closing Date, (d) shall
contain customary and enforceable provisions such that the
rights and remedies of the holder thereof shall be adequate
for realization against the collateral of the benefits of the
security, (e) shall provide for level monthly payments
(provided that the payment in the first or last month in the
life of the Receivable may be minimally different from the
level payment) that fully amortize the Amount Financed by
maturity and yield interest at the Annual Percentage Rate, and
(f) provides in the case of Precomputed Receivables, in the
event that any such contract is prepaid, for a prepayment that
fully pays the principal amount plus unearned interest to the
next Scheduled Payment.
(ii) Schedule of Receivables. The information set
forth in Exhibit B to this Agreement with respect to the
Receivables acquired on such date shall be true and correct in
all material respects as of the close of business on the
Cutoff Date, and no selection procedures believed to be
adverse to the [Certificateholders] [Noteholders] have been
utilized in selecting the Receivables. The information on the
computer tape regarding the Receivables made available to the
Depositor and its assigns is true and correct in all material
respects.
(iii) Form of Receivables. Each of the Receivables is
substantially in the form of Exhibit C attached hereto.
(iv) Compliance with Law. Each Receivable and the
sale of the Financed Vehicle shall (A) have complied at the
time it was originated or made and at the Closing Date or
Funding Date, as the case may be, shall comply in all material
respects with all requirements of applicable federal, state
and local laws, and regulations thereunder, including, without
limitation, usury laws, the Fair Credit Reporting Act, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity
Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations B and Z, the
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California Consumer Credit Act, State adaptations of the
National Consumer Act and of the Uniform Consumer Credit Code,
and other consumer credit laws and equal credit opportunity
and disclosure laws and (B) does not contravene any applicable
contracts to which the Originator is a party and no party to
such contract is in violation of any applicable law, rule or
regulation which is material to the Receivable or the sale of
the Financed Vehicle.
(v) Binding Obligation. Each Receivable shall
represent the genuine, legal, valid and binding payment
obligation in writing of the Obligor, enforceable by the
holder thereof in accordance with its terms.
(vi) No Government Obligor. None of the Receivables
shall be due from the United States of America or any State or
from any agency, department or instrumentality of the United
States of America or any State.
(vii) Security Interest in Financed Vehicle.
Immediately prior to the pledge, transfer, assignment and
other conveyance thereof, each Receivable shall be secured by
a validly perfected first security interest in the Financed
Vehicle in favor of the Originator as secured party or all
necessary and appropriate actions shall have been commenced
that would result in the valid perfection of a first security
interest in the Financed Vehicle upon completion of processing
by the applicable state agency. The Originator shall cause
each certificate of title to be delivered to the Custodian
pursuant to Section ____ of the [Pooling and Servicing
Agreement] [Trust Agreement], together with a power of
attorney, duly executed by the Originator in favor of the
Trustee, which power of attorney shall be sufficient to grant
a validly perfected first security interest in the Financed
Vehicles in favor of the Trustee, as Secured Party.
(viii) Receivables in Force. No Receivable has been
satisfied, subordinated or rescinded, nor has any Financed
Vehicle been released from the lien granted by the related
Receivable in whole or in part.
(ix) No Waiver. No provision of a Receivable has
been waived, impaired, altered or modified in any respect
except in accordance with the Servicing Agreement, the
substance of which is reflected in
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the Schedule of Receivables as it relates to the information
included thereon.
(x) No Amendments. No Receivable has been amended
such that either the original Scheduled Payment or the number
of the originally scheduled due dates have been increased
except as permitted under the terms of the Risk Default Policy
covering such Receivable.
(xi) No Defenses. No right of rescission,
recoupment, setoff, counterclaim or defense has been asserted
or threatened with respect to any Receivable.
(xii) No Liens. No liens or claims shall have been
filed for work, labor or materials relating to any Financed
Vehicle that would be Liens prior to, or equal or coordinate
with, the security interest in a Financed Vehicle granted by
the related Obligor pursuant to a Receivable, nor has any
Receivable been satisfied, subordinated or rescinded.
(xiii) No Default. Except for payment delinquencies
continuing for a period of not more than 30 days as of the
Cutoff Date, no default, breach, violation or event permitting
acceleration under the terms of any Receivable has occurred;
and no continuing condition that with notice or the lapse of
time would constitute a default, breach, violation or event
permitting acceleration under the terms of any Receivable has
arisen, and the Originator has not waived any of the
foregoing. There has not been any other default or
delinquency under the terms of the Receivable that remained
uncured for more than thirty (30) days after notice to the
Obligor. As of such date, the Originator has no knowledge of
any reason why any Receivable would not be paid in full.
(xiv) Insurance. The Originator, in accordance with
its customary procedures, has (A) required that each Obligor
obtain, and has determined that each Obligor has obtained,
physical damage insurance covering the Financed Vehicle as of
the execution of the Receivable insuring repair or replacement
of such Financed Vehicle subject to a deductibility not in
excess of $1,000; and (B) obtained a Risk Default Policy and a
VSI Policy covering each of the Receivables as of the Closing
Date or Funding Date, as the case may be, and until each
Receivable has been paid in full.
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(xv) Title. Immediately prior to the transfer and
assignment herein contemplated, the Originator had good and
marketable title to each Receivable free and clear of all
Liens and rights of others and, immediately upon the transfer
thereof, the Depositor will have good and marketable title to
each Receivable, free and clear of all Liens and rights of
others except for certain Originator investors' liens or liens
of certain financial institutions, all of which will be
released prior to conveyance hereunder, and the security
interest in the Financed Vehicle and other underlying
collateral has been validly perfected under the UCC and other
applicable law, if any.
(xvi) Lawful Assignment. No Receivable shall have
been originated in, or is subject to the laws of, any
jurisdiction under which the pledge, transfer, assignment or
other conveyance of such Receivable under this Agreement or
pursuant to transfers of the [Certificates] [Notes] would be
unlawful, void or voidable.
(xvii) All Filings Made. All filings (including,
without limitation, UCC filings) necessary in any jurisdiction
to give the Depositor a first perfected ownership interest in
the Receivables shall have been made.
(xviii) One Original. There shall be only one original
of the retail installment sale contract evidencing each
Receivable.
(xix) Down Payment. At least __% of the Receivables
included in the Trust Fund may have a down payment of at least
__% of the total purchase price of the related Finance
Vehicle; up to __% of the Receivables included in the Trust
Fund may have a down payment of between __% and __% of the
total purchase of the related Financed Vehicle; provided, that
no Receivable included in the Trust Fund shall have a down
payment of less than __% of the purchase price of the related
Financed Vehicle.
(xx) Maturity of Receivables. Each Receivable shall
have an original maturity of not more than 61 months; the
weighted average original term to maturity of the Receivables
to be acquired on the Closing Date shall be _____ months as of
the Cutoff Date, while the weighted average remaining term to
maturity as of such Cutoff Date for such Receivables is _____
months; the remaining maturity of each Receivable shall be 61
months or less as of the respective Cutoff Date.
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(xxi) Scheduled Payments. Each Receivable which is
acquired on the Closing Date shall have an outstanding
Principal Balance of at least $__________, a next scheduled
payment due date on or prior to _________, 199__ and no
Receivable whenever acquired shall have a payment that is more
than 30 days overdue as of the applicable Cutoff Date; and
shall have a final scheduled payment date no later than the
Final Scheduled Distribution Date.
(xxii) Monthly Payments. Each Receivable shall provide
for level monthly payments (provided that the payment in the
first or last month in the life of the Receivable may be
minimally different from such level payment) which fully
amortize the amount financed over the original term;
[provided, however, that, as permitted by the terms of the
Risk Default Policy, each Receivable may be extended for one
month for each 12 months in the Receivable's term provided,
that extensions are limited to two, one month extensions in
any consecutive 12 month period; provided, further, that a
Receivable cannot be extended unless six consecutive payments
have been made by the Obligor; further provided, however, that
at the time the extension is made, a sufficient amount of
interest due must be collected to forward the due date of the
Receivable.]
(xxiii) Remaining Maturity. Each Receivable shall have
a remaining maturity of __ months or less as of the respective
Cutoff Date, and the latest scheduled maturity of any
Receivable acquired on the final Funding Date is no later than
________, 20__.
(xxiv) Financing. ___% of the Receivables shall
represent Precomputed Receivables.
(xxv) Bankruptcy Proceeding. No Receivable as of the
Cutoff Date shall be noted in the Originator's records as a
dischargeable debt under a bankruptcy proceeding.
(xxvi) Chattel Paper, Valid and Binding. Each
Receivable constitutes "chattel paper" as deemed in the UCC
and is legal, valid and binding in accordance with its terms.
(xxvii) State of Origination. At the time of
origination, each Receivable was originated by the Originator
or a Dealer located in the State of _________; provided,
however, that no more than
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___% of the Principal Balance of the Receivable included in
the Trust Fund on the Closing Date or any Funding Date shall
be Replacement Receivables.
(xxviii) Age of Financed Vehicles. Approximately _____%
of the Receivables acquired on the Closing Date relate to new
Financed Vehicles and approximately ___% related to used
Financed Vehicles.
(xxix) No Future Advances. The full principal amount
of each Receivable has been advanced to each Obligor or
advanced in accordance with the directions of each such
Obligor, and there is no requirement for future advances
thereunder. The Obligor with respect to the Receivable does
not have any options under their Receivable to borrow from any
person additional funds secured by the Financed Vehicle. The
Principal Balance of each Receivable as of the Closing Date is
fully secured by the related Financed Vehicle.
(xxx) Underwriting Guidelines. Each Receivable has
been originated in accordance with the underwriting guidelines
of the Originator, a copy of which has been provided to the
Underwriter, and in accordance with the underwriting
guidelines established by the Risk Default Insurer, which
guidelines include, but are not limited to, the following:
(A) the purchase of the Financed Vehicle by the
Obligor, at the time of funding of the Receivable,
was affordable to the Obligor based upon the
Originator's underwriting guidelines with respect
to discretionary income; and
(B) at the time of funding of the Receivable,
the Financed Vehicle was purchased from, and the
Receivable originated by, the Originator or a
Dealer located in the State of ___________.
(xxxi) Financed Vehicle in Good Repair. Each Financed
Vehicle is in good repair and working order.
(xxxii) Principal Balance. No Receivable has a
Principal Balance which includes capitalized interest,
physical damage insurance and/or late charges.
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(xxxiii) Servicing. At the Closing Date, each Receivable
was being serviced by a Servicer.
(xxxiv) Eligible Loan. Each Receivable constitutes an
"Eligible Loan" as defined in and for purposes for the Risk
Default Policy.
(xxxv) Original Principal Amount. With respect to
Receivables acquired on the Closing Date or a Funding Date, as
the case may be, the original principal amount of each
Receivable was not more than (A) in the case of new Financed
Vehicles, ___% of the manufacturer's suggested retail price
or, (B) in the case of used Financed Vehicles, ___% of the
retail value of the Financed Vehicle at the time of
origination of the Receivable as set forth in the Kelley "Blue
Book" for the appropriate region.
(xxxvi) Agreement. The representations and warranties
of the Originators in this Agreement shall be true.
(xxxvii) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of the
Originator threatened before any court, regulatory body,
administrative agency or other governmental instrumentality
having jurisdiction over the Originator or its properties: (A)
asserting the invalidity of any of the Receivables; (B)
seeking to prevent the enforcement of any of the Receivables;
of (C) seeking any determination or ruling that might
materially and adversely affect the payment on or
enforceability of any Receivable.
(xxxviii) Location of Servicer Files. The Servicer Files
shall be kept at the location listed in Schedule A hereto
provided that the Servicer Files shall not include (A) the
original titles or the original or copies of the dealer
blanket guarantees of title with respect to the Financed
Vehicles, (B) the original retail installment sale contracts
evidencing the Receivables and (C) original instrument
certificates or copies of applications for instrument
certificates under the Risk Default Insurance Policy, which
documents shall be kept at an office of the Custodian.
(xxxix) Balance of Receivables. No Receivable which is
acquired on the Closing Date shall have an outstanding
Principal Balance in excess of $__________ as of the Cutoff
Date with respect to the Closing Date.
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(xl) Insurance Coverage. Each Receivable shall be
covered, as of the Closing Date or as of a Funding Date, as
the case may be, and throughout the shorter of the term of the
Trust or the term of the Receivable, under a Risk Default
Insurance Policy and a VSI Insurance Policy, as evidenced by
copies of applications for, or original instrument
certificates from the Risk Default Insurer delivered to the
Trustee on the Closing Date or a Funding Date, as the case may
be; provided, however, that any original instrument
certificate of Risk Default Insurance not so delivered on the
Closing Date or a Funding Date, as the case may be, shall be
delivered from the Originator to the Trustee within 45 days
after the Closing Date or a Funding Date, as the case may be;
provided, further, that for any original instrument
certificate not so delivered to the Trustee, the Originator
shall be deemed to be in breach of its representations and
warranties contained in this Section 3.02, and, unless such
breach is cured within the cure period defined in Section 7.02
hereof, such occurrence shall cause a Reacquisition Event (as
defined in Section 7.02). Prior to the Closing Date or a
Funding Date, as the case may be, a request shall have been
made to have the Trustee named as an additional insured as of
the Closing Date or as of a Funding Date, as the case may be,
and as of such date, the Trustee shall be an additional named
insured on each such policy of insurance; provided, however,
that the Originator shall assign to the Trustee for the
benefit of the [Certificateholders] [Noteholders] any proceeds
received by the Originator as a named insured under either of
such insurance policies with respect to a Receivable from the
applicable Cutoff Date; provided, further, that the Trustee
shall have no duties or obligations of a named insured on any
such policy of insurance.
(xli) Original Titles. On the Closing Date or a
Funding Date, as the case may be, the Originator shall deliver
or cause to be delivered to the Trustee an original
certificate or a copy of a dealer blanket guarantee of title
for each Financed Vehicle relating to each Receivable pledged,
transferred, assigned and conveyed hereunder; provided,
however, that any original certificate of title not so
delivered on the Closing Date or a Funding Date, as the case
may be, due to the fact that such title has not yet been
issued by a state title registration agency and delivered to
the Originator as of the Closing Date or Funding Date, as the
case may be, shall be delivered by the
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Originator to the Trustee within 135 days after the Closing
Date or a Funding Date, as the case may be; provided, further,
that for any original certificate of title not so delivered to
the Trustee, the Originator shall be obligated to reacquire
such Receivable pursuant to Section 7.02 hereof.
(xlii) Dealer Blanket Guarantee of Title. A dealer
blanket guarantee of title has been executed for each
Receivable conveyed hereunder.
(xliii) Not Previously Past Due. No Receivable has been
more than three times past due over 60 days or more than two
times past due over 90 days, nor has any Receivable been more
than 30 days past due as of the Closing Date or a Funding
Date, as the case may be.
(xliv) No Litigation. No Receivable has been in
litigation or restructured.
(xlv) No Charge Off. No Receivable has been charged
off for accounting purposes by the Originator.
(xlvi) Normal Procedures. Each Receivable has been
administered pursuant to the Originator's normal credit,
administration, collection and charge-off procedures, which
procedures are satisfactory to the Depositor.
(xlvii) No Fraud, Misrepresentation. No Receivable has
been originated with any fraud or misrepresentation.
(xlviii) Payments Received. The Originator has not
received any payment from any payor other than the Obligor.
(xlix) Prepayment. The prepayment from the Obligor
under a related Precomputed Receivable is equal to or greater
than the Principal Balance of such Precomputed Receivable at
the Closing Date or at any date of determination thereafter,
as applicable.
(l) Eligibility Criteria. Each Receivable meets the
eligibility criteria with respect to each of the Risk Default
Insurance Policy and the VSI Insurance Policy, including, but
not limited to, the receipt in full of the applicable down
payment with respect to such Receivable and no deferment with
respect to such down payment has been granted.
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ARTICLE IV
CONDITIONS
Section 4.01. Conditions to Obligation of the Depositor. The
obligation of the Depositor to take receipt of the Receivables under this
Agreement is subject to the satisfaction of the following conditions:
(a) Representations and Warranties True. The
representations and warranties of the Originator hereunder shall be
true and correct on the Closing Date or the Funding Date, as the case
may be, with the same effect as if then made, and the Originator shall
have performed all obligations to be performed by it hereunder on or
prior to the Closing Date or the Funding Date, as the case may be.
(b) Files Marked; Files and Records owned by Trust. The
Originator shall, at its own expense, on or prior to the Closing Date
or the Funding Date, as the case may be, indicate in its files that
receivables created in connection with the Receivables have been
assigned to the Depositor pursuant to this Agreement and the
Originator shall deliver to the Depositor the Schedule of Receivables
certified by the Originator to be true, correct and complete.
Further, the Originator hereby agrees that the computer files and
other physical records of the Receivables maintained by the Originator
will bear an indication reflecting that the Receivables and all
documents held by the Originator pursuant to a certain Servicing
Agreement or otherwise are pledged to the Trust.
(c) Documents to be Delivered by the Originator at the
Closing and on each Funding Date.
(i) The Assignment. At the Closing and on each
Funding Date, the Originator will execute and deliver the
Assignment. The Assignment shall be substantially in the form
of Exhibit A hereto.
(ii) Original Receivables,- Original Titles. At the
Closing and on each Funding Date, the Originator shall deliver
to the Trustee for the benefit of the Depositor and its
assigns (A) the original retail installment sale contracts
evidencing such Receivable, (B) the original certificate or a
copy of dealer blanket guarantee of title for each Financed
Vehicle relating to each such Receivable sold hereunder, and
(C) original or copies of applications for instrument
certificates under the Risk Default Policy, which delivery
shall be accompanied by a Certificate of Delivery
21
<PAGE> 25
substantially in the form of Exhibit E-1 to the Initial
Purchase Agreement; provided, however, that any original
certificate of title not so delivered at Closing due to the
fact that such title has not yet been issued by a state title
registration agency and delivered to the Originator as of the
Closing Date or a Funding Date, as the case may be, shall be
delivered by the Originator to the Depositor, for immediate
delivery to the Trustee, within 135 days of the Closing Date
or a Funding Date, as the case may be; provided, further, that
for any certificate of title not so delivered to the Trustee,
the Originator shall be obligated to reacquire such Receivable
pursuant to Section 7.02 hereof.
(iii) Evidence of UCC Filings. On or prior to the
Closing Date, the Originator shall record and file, at its own
expense, (A) UCC-3 termination statements in each jurisdiction
in which required by applicable law, to release any prior
security interests in the Receivables granted by the
Originator and (B) a UCC financing statement in each
jurisdiction in which required by applicable law, executed by
the Originator, as seller or debtor, and naming the Depositor,
as purchaser or secured party, identifying the Receivables and
the other Trust Property as collateral, meeting the
requirements of the laws of each such jurisdiction and in such
manner as is necessary to perfect the pledge, transfer,
assignment and conveyance of such Receivables to the
Depositor. The Originator shall deliver a file-stamped copy,
or other evidence satisfactory to the Depositor of such
filing, to the Depositor on or prior to the Closing Date.
(iv) Evidence of Insurance and Payment. On the
Closing Date and on each Funding Date, the Originator shall
deliver to the Depositor (i) certificates of the respective
insurance companies indicating that each Receivable is covered
by Risk Default Insurance and VSI Insurance and (ii) evidence
of payment in full of all premiums due under either or both of
the Risk Default Insurance and VSI Insurance Policies with
respect to the Receivables.
(v) Other Documents. Such other documents as the
Depositor may reasonably request.
(d) Other Transactions. The transactions contemplated by
the [Pooling and Servicing Agreement] [Trust Agreement] shall be
consummated on the Closing Date.
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(e) [Review of Receivables. Prior to the Closing Date and
each Funding Date, the Depositor shall have received satisfactory
results from the Review Finn of the Pre-Funding Review. The Depositor
further agrees to give written notice of the results of the
Pre-Funding Review to the Originator.]
Section 4.02. CONDITIONS TO OBLIGATION OF THE ORIGINATOR. The
obligation of the Originator to pledge, transfer, assign or otherwise convey
the Receivables on the Closing Date or a Funding Date, as the case may be, to
the Depositor is subject to the satisfaction of the following conditions:
(a) Representations and Warranties True. The warranties of
the Depositor hereunder shall be true and correct on the Closing Date
or the Funding Date, as the case may be, and the Depositor shall have
performed all obligations to be performed by it hereunder on or prior
to the Closing Date or the Funding Date, as the case may be.
(b) Receivables Cash Purchase Price. At the Closing Date or
the Funding Date, as the case may be, the Depositor will deliver to
the Originator the Receivables Cash Purchase Price, as provided in
Section 2.01(b).
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ORIGINATOR
The Originator agrees with the Depositor as follows; provided,
however, that to the extent that any provision of this Article V conflicts with
any provision of the [Pooling and Servicing Agreement] [Trust Agreement], the
[Pooling and Servicing Agreement] [Trust Agreement] shall govern:
Section 5.01. PROTECTION OF RIGHT, TITLE AND INTEREST.
(a) Filings. The Originator shall cause all financing
statements and continuation statements and any other necessary
documents covering the right, title and interest of the Depositor in
and to the Receivables, and the other Trust Property to be promptly
filed, and at all times to be kept recorded, registered and filed, all
in such manner and in such places as may be required by law fully to
preserve and protect the right, title and interest of the Depositor
hereunder to the Receivables and the other Trust Property. The
Originator shall deliver to the Depositor file-stamped copies of, or
filing receipts for, any document recorded, registered or filed as
provided above, as soon as available following
23
<PAGE> 27
such recordation, registration or filing. The Depositor shall
cooperate fully with the Originator in connection with the obligations
set forth above and will execute any and all documents reasonably
required to fulfill the intent of this Section 5.01(a).
(b) Name Change. Within 15 days after the Originator makes
any change in its name, identity or corporate structure which would
make any financing statement or continuation statement filed in
accordance with paragraph (a) above seriously misleading within the
applicable provisions of the UCC or any title statute, the Originator
shall give the Depositor notice of any such change and no later than
five days after the effective date thereof, shall file such financing
statements or amendments as may be necessary to continue the
perfection of the Depositor's security interest in the Trust Property.
Section 5.02. OTHER LIENS OR INTERESTS. Except for the
conveyances hereunder and pursuant to the [Pooling and Servicing Agreement]
[Trust Agreement], the Originator will not pledge, transfer, assign or
otherwise convey to any other person, or grant, create, incur, assume or suffer
to exist any lien on any interest therein, and the Originator shall defend the
right, title, and interest of the Depositor in, to and under such Receivables
against all claims of third parties claiming through or under the Originator;
provided, however, that the Originator's obligations under this Section 5.02
shall terminate upon the termination of the Trust pursuant to the [Pooling and
Servicing Agreement] [Trust Agreement].
Section 5.03. PRINCIPAL EXECUTIVE OFFICE. Since its
inception, the Originator has maintained, and from the date of this Agreement,
shall maintain, its principal executive office in the State of _____.
Section 5.04. TRUSTEE AS ADDITIONAL INSURED. The Originator
shall cause notice to be given to the insurers under the Risk Default Policy
and the VSI Policy to identify the Trustee as an additional named insured, as
its interest may appear, under each such policy. The Originator hereby assigns
to the Trustee for the benefit of the [Certificateholders] [Noteholders] any
and all proceeds received by the Originator as named insured with respect to a
Receivable under the terms of either of the foregoing insurance policies for
claims made from the Cutoff Date.
Section 5.05. COSTS AND EXPENSES. The Originator agrees to
pay all reasonable costs and disbursements in connection with the perfection,
as against all third parties, of the Depositor's right, title and interest in
and to the Receivables.
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<PAGE> 28
Section 5.06. NO WAIVER. The Originator shall not waive any
default, breach, violation or event permitting acceleration under the terms of
any Receivable.
Section 5.07. LOCATION OF SERVICER FILES. The Servicer Files,
exclusive of the original titles to the Financed Vehicles and exclusive of the
originals of the Receivables, are to be kept at the location listed in Exhibit
D hereto. The original titles and the originals of the Receivables are to be
kept at the principal executive office of the Custodian as specified in the
[Pooling and Servicing Agreement] [Trust Agreement].
Section 5.08. TRANSFER OF RECEIVABLES. The Originator will
take no action inconsistent with the pledge, transfer and assignment of the
Receivables to the Depositor If a third party, including a potential purchaser
of the Receivables, should inquire, the Originator will promptly indicate that
the Receivables have been pledged, transferred and assigned to the Depositor
Section 5.09. ORIGINATOR'S RECORDS. This Agreement and all
related documents describe the transfer of the Receivables from the Originator
as a pledge by the Originator to the Depositor
Section 5.10. TRANSFER OF ADDITIONAL RECEIVABLES. The
Originator shall use its best efforts in good faith to make available for
pledge, transfer, assignment and other conveyance to the Depositor in
accordance with Section 2.01 hereof additional Receivables originated or
acquired by the Originator or its Affiliates which are Eligible Receivables.
This covenant shall be for the benefit of the Depositor, the Trustee and the
[Certificateholders] [Noteholders], and any other such Person may enforce its
legal or eligible rights, remedies or claims hereunder.
Section 5.11. NO BANKRUPTCY PETITION. The Originator
covenants and agrees that prior to the date which is one year and one day after
the payment in full of all securities issued by the Depositor or by a trust for
which the Depositor was the depositor which securities were rated by any
nationally recognized statistical rating organization it will not institute any
bankruptcy procedures, or other proceedings under any federal or state
bankruptcy law.
Section 5.12. COVENANTS REGARDING OPERATIONS.
(a) The Originator shall not engage in any business or
activity other than in connection with or relating to the issuance of
the Class __ [Certificates] [Notes], except as otherwise may be
permitted herein or in the Articles of Incorporation of the
Originator.
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<PAGE> 29
(b) The Originator shall not consolidate or merge with or
into any other entity or convey or transfer its properties and assets
substantially as an entirety to any entity unless (i) the entity (if
other than the Originator) formed or surviving such consolidation or
merger, or that acquires by conveyance or transfer the properties and
assets of the Originator substantially as an entirety, shall be
organized and existing under the laws of the United States of America
or any State thereof or the District of Columbia, and shall expressly
assume in form satisfactory to the Rating Agency, the due and punctual
payment of the Class __ [Certificates] [Notes] then outstanding and
the performance of every covenant on the part of the Originator to be
performed or observed pursuant to this Agreement and the [Pooling and
Servicing Agreement] [Trust Agreement], (ii) immediately after giving
effect to such transaction, no default or event of default under this
Agreement shall have occurred and be continuing and (iii) the
Originator shall have delivered to the Rating Agency and the Trustee
an officer's certificate and an opinion of counsel, each stating that
such consolidation, merger, conveyance or transfer comply with this
Agreement.
(c) So long as any Class A [Certificates] [Notes] are
outstanding, the Originator shall not dissolve or liquidate, in whole
or in part, except (i) as permitted in paragraph (b) above or (ii)
with the prior written consent of the Trustee and prior written
confirmation from the Rating Agency (a copy of which shall be provided
to the Trustee by the Originator) that such dissolution or liquidation
will have no adverse effect on the rating assigned to the Class __
[Certificates] [Notes].
(d) The funds and other assets of the Originator shall not
be commingled with those of any other corporation, entity or Person,
including, but not limited to, the parents or affiliates of the
Originator.
ARTICLE VI
INDEMNIFICATION
The Originator shall indemnify the Depositor for any liability
as a result of the failure of a Receivable to be originated in compliance with
all requirements of law and for any by each of any of its representations and
warranties contained herein. These indemnity obligations shall be in addition
to any obligation that the Originator may otherwise have.
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<PAGE> 30
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. OBLIGATIONS OF ORIGINATOR. The obligations of
the Originator under this Agreement shall not be affected by reason of any
invalidity, illegality or irregularity of any Receivable.
Section 7.02. REACQUISITION EVENTS. The Originator hereby
covenants and agrees with the Depositor for the benefit of the Depositor, the
Trustee and the [Certificateholders] [Noteholders] that upon the occurrence of
(i) a breach of any of the Originator's representations and warranties
contained in Section 3.02(b) hereof with respect to a Receivable or (ii) the
failure of the Originator to deliver original certificates of title pursuant to
Section 4.01(c)(ii), and unless (i) such breach shall have been cured by the
thirtieth day following the discovery or receipt by the Originator of notice
from the Depositor or the Trustee thereof or (ii) such failure to deliver shall
have been cured by the seventh Business Day following receipt by the Originator
of notice from the Depositor or the Trustee of such non-delivery, the
Originator shall be obligated to reacquire such Receivable hereunder from the
Depositor ("Reacquisition Event"), at the Repurchase Price as defined in the
Initial Purchase Agreement on a date which shall be no later than (i) the fifth
Business Day following such 30-day cure period or (ii) relating to the
non-delivery on the fifth Business Day following such seven Business Day cure
period. The reacquisition obligation of the Originator shall constitute the
sole remedy to the [Certificateholders] [Noteholders], or to the Trustee, or to
the Depositor against the Originator with respect to any Reacquisition Event.
The Originator acknowledges that the Trustee and the [Certificateholders]
[Noteholders] are beneficiaries with respect to the rights of the Depositor
hereunder and that the Trustee or the [Certificateholders] [Noteholders] may
enforce the rights of the Depositor with respect thereto.
Section 7.03. THE DEPOSITOR'S ASSIGNMENT OF REACQUIRED
RECEIVABLES. With respect to all Receivables reacquired by the Originator
pursuant to this Agreement, the Depositor shall assign, without recourse,
representation or warranty, to the Originator all the Depositor's right, title
and interest in and to such Receivables, and all security and documents
relating thereto.
Section 7.04. TRUST. The Originator acknowledges that the
Depositor will, pursuant to the [Pooling and Servicing Agreement] [Trust
Agreement], assign the Receivables to the Trust and assign its rights under
this Agreement to the Trustee for the benefit of the [Certificateholder]
[Noteholder]s, and that the
27
<PAGE> 31
representations and warranties contained in this Agreement and the rights of
the Depositor under Section 7.02 hereof are intended to benefit such Trust and
any [Certificateholders] [Noteholders] and the Trustee and any
[Certificateholders] [Noteholders] shall have the right to enforce the same.
The Originator hereby consents to such transfers and assignments.
Section 7.05. AMENDMENT. This Agreement may be amended from
time to time by a written amendment duly executed and delivered by the
Originator and the Depositor; provided, however, that any such amendment that
materially adversely affects the rights of the [Certificateholder] [Noteholder]
under the [Pooling and Servicing Agreement] [Trust Agreement] must be consented
to by the ]Holders of at least 51% of the Class __ [Certificates] [Notes].
Section 7.06. WAIVERS. No failure or delay on the part of the
Depositor in exercising any power, right or remedy under this Agreement or the
Assignment shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other or further
exercise thereof or the exercise of any other power, right or remedy.
Section 7.07. NOTICES. All communications and notices
pursuant hereto to any party shall be in writing or by telegraph or telex and
addressed or delivered to it at its address (or in case of telex, at its telex
number at such address) shown in the opening portion of this Agreement or at
such other address as may be designated by it by notice to the other party and,
if mailed or sent by telegraph or telex, shall be deemed given when mailed,
communicated to the telegraph office or transmitted by telex.
Section 7.08. COSTS AND EXPENSES. The Originator will pay all
expenses, including fees and expenses of counsel, incident to the performance
of its obligations under this Agreement and the Originator agrees to pay all
reasonable out-of-pocket costs in connection with the enforcement of any
obligation of the Originator hereunder.
Section 7.09. REPRESENTATIONS. The respective agreements,
representations, warranties and other statements by the Originator and the
Depositor set forth in or made pursuant to this Agreement shall remain in full
force and effect and will survive the closing under Section 2.02 hereof.
Section 7.10. CONFIDENTIAL INFORMATION. The Depositor agrees
that it will neither use nor disclose to any person the names and addresses of
the Obligors, except in connection with the enforcement of the Depositor's
rights hereunder, under the Receivable, under any [Pooling and Servicing
Agreement] [Trust Agreement] or as required by law.
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<PAGE> 32
Section 7.11. HEADINGS AND CROSS-REFERENCES. The various
headings in this Agreement are included for convenience only and shall not
affect the meaning or interpretation of any provision of this Agreement.
References in this Agreement to section names or numbers are to such sections
of this Agreement.
Section 7.12. GOVERNING LAW. This Agreement and the
Assignment shall be governed by and construed in accordance with the internal
laws of the State of [New York].
Section 7.13. COUNTERPARTS. This Agreement may be executed in
two or more counterparts and by different parties on separate counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
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<PAGE> 33
IN WITNESS WHEREOF, the parties hereby have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date and year first above written.
[ORIGINATOR]
By
--------------------------------------
Name:
Title:
ACC CONSUMER FINANCE CORPORATION
By
--------------------------------------
Name:
Title:
30
<PAGE> 34
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Receivables
Acquisition Agreement dated as of _______, 199__, by and between the
undersigned and Advanta Auto Finance Corporation ("the Depositor") (the
"Receivables Acquisition Agreement"), the undersigned (the "Originator") does
hereby (A) pledge, transfer, assign and otherwise convey unto the Depositor,
without recourse (capitalized terms used herein and not otherwise defined shall
have the meaning assigned to them in the Receivables Acquisition Agreement),
(i) all right, title and interest of the undersigned in and to the Receivables
identified on the Schedule attached as Exhibit B to the Receivables Acquisition
Agreement and all moneys due thereon, on and after the Cutoff Date; (ii) the
interest of the Originator in the security interests in the Financed Vehicles
granted by the Obligors pursuant to the Receivables and the certificates of
title to such Financed Vehicles; (iii) the interest of the Originator in any
proceeds from claims on any physical damage, credit. life, risk default or
disability insurance policies covering the Financed Vehicles or Obligors; and
(iv) the proceeds of any and all of the foregoing and any recourse in equity or
by contract against the Originator and (B) grant to the Trustee a security
interest in the Reserve Fund (as defined in the [[Pooling and Servicing
Agreement] [Trust Agreement]) and the Residual Interest (as defined in the
[Pooling and Servicing Agreement] [Trust Agreement]). The Originator hereby
acknowledges that the Trustee is entitled to hold such Reserve Fund and
Residual Interest pending distributions as stated in Section _____ of the
[Pooling and Servicing Agreement] [Trust Agreement]. The foregoing assignment
does not constitute and is not intended to result in any assumption by the
Depositor of any obligation of the undersigned to the Obligors, insurers or any
other person in connection with the Receivables, Custodian Files (as defined in
the [Pooling and Servicing Agreement] [Trust Agreement]), Servicer Fees (as
defined in the [Pooling and Servicing Agreement] [Trust Agreement]), any
insurance policies or any agreement or instrument relating to any of them.
This Assignment is made pursuant to and upon the
representations, warranties and agreements on the part of the undersigned
contained in the Receivables Acquisition Agreement and is to be governed by the
Receivables Acquisition Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment
to be duly executed as of _________, 199__.
[ORIGINATOR]
By
--------------------------------------
<PAGE> 35
EXHIBIT B
SCHEDULE OF RECEIVABLES
- --------------------------------------------------------------------------------
A-1
<PAGE> 36
Name:
Title:
A-2
<PAGE> 1
Exhibit 99.1
[Exhibit 99.1 Form of Prospectus Supplement. This form of Prospectus Supplement
is for illustrative purposes only. A Prospectus Supplement in definitive form
reflecting the terms of each Series of Certificates will be filed with the
Commission under the Securities Act of 1933, as amended, pursuant to Rule 424(b)
promulgated thereunder.]
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED ____________)
ACC AUTOMOBILE RECEIVABLES TRUST ____-__
$_________ ____% Asset Backed Notes, Class A
$_________ ____% Asset Backed Certificates
ACC Automobile Receivables Trust ____-__, ACC Consumer Finance Corporation,
as Issuer as Seller and Servicer
The Asset Backed Notes (the "Notes") will be issued pursuant to an
Indenture dated as of __________, between ACC Auto Receivables Trust ____-__
(the "Issuer") and ______________________, ____________________ ("__________"),
as trustee (the "Indenture Trustee") and as collateral agent (the "Collateral
Agent"). The Notes will be issued in two classes, a senior class (the "Class A
Notes") and a subordinate class (the "Class B Notes" and together with the Class
A Notes, the "Notes"). The Class B Notes are not being offered hereby. The
Issuer will also issue $_________ Asset Backed Certificates (the "Certificates"
and together with the Notes, the "Securities").
The assets of the Issuer which will be pledged to the Collateral Agent
for the benefit of Noteholders will initially include a pool of non-prime retail
installment sales contracts (the "Receivables") secured by new and used
automobiles and light trucks, all monies paid or payable thereunder after the
Cutoff Date, security interests in the vehicles financed thereby, certain bank
accounts and the proceeds thereof, and the right to receive certain insurance
proceeds and certain other property. The Receivables were purchased by ACC
Consumer Finance Corporation ("ACC" or the "Servicer") from motor vehicle
dealers and may have been sold by ACC pursuant to warehouse financing
arrangements and repurchased. In connection with the issuance of the Securities
by the Issuer, the Issuer will purchase the Receivables from ACC. The aggregate
principal balance of the pool of Receivables to be transferred on the Closing
Date (the "Initial Receivables") is expected to be $____________.
Additional non-prime retail installment sale contracts are intended to
be purchased by the Issuer from ACC from time to time on or before _________,
from funds on deposit in a pre-funding account to be established with the
Indenture Trustee (the "Pre-Funding Account"). Approximately $___________ of
such additional contracts may be acquired by the Issuer.
Principal and interest will be distributed to the holders of the
Securities (the "Securityholders") on the 17th day of each month (or, if such
day is a Saturday, Sunday, legal holiday or other day on which commercial banks
or trust companies in the States of ____________, ______________ or
_____________ or any other location of any successor Servicer, successor
Indenture Trustee or successor Collateral Agent are authorized or obligated by
law, executive order or governmental decree to be closed, on the next succeeding
day (such day, a "Business Day")), beginning ____________. The "Final Scheduled
Distribution Date" is ____________.
Full and complete payment of the Scheduled Payments (as defined herein)
on the Class A Notes only on each Distribution Date is unconditionally and
irrevocably guaranteed pursuant to a financial guaranty insurance policy (the
"Policy") to be issued by
[________]
<PAGE> 2
Capitalized terms used herein are defined terms having specific
meanings. An "Index of Defined Terms" is set forth at page S-___ hereto, which
indicates the page on which such defined terms are defined.
THE RIGHTS OF THE HOLDERS OF THE CERTIFICATES WILL BE SUBORDINATED TO
THE RIGHTS OF THE HOLDERS OF THE NOTES, AS SET FORTH HEREIN UNDER "DESCRIPTION
OF THE TRANSFER AND SERVICING AGREEMENT -- DISTRIBUTIONS."
SEE "RISK FACTORS" AT PAGE S-__ HEREIN AND AT PAGE __ IN THE ACCOMPANYING
PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS IN THE NOTES OFFERED HEREBY.
THE NOTES REPRESENT OBLIGATIONS OF THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN THE SELLER, THE MASTER SERVICER OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THE SECURITIES NOR THE UNDERLYING RECEIVABLES ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
==================================================================================================================
PRICE TO PUBLIC(1) UNDERWRITING DISCOUNT(2) PROCEEDS TO THE TRUST(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Per Class A Note.................. ________% ____% ________%
- ------------------------------------------------------------------------------------------------------------------
Per Certificate...................
- ------------------------------------------------------------------------------------------------------------------
Total............................. $_________ $_______ $_________
==================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, at the applicable rate, from _________.
(2) ACC has agreed to indemnify the Underwriter against certain liabilities,
including liabilities under the Securities Act of 1933, as amended. See
"Underwriting".
The Notes are offered subject to receipt and acceptance by the Underwriter, to
prior sale and to the Underwriter's right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice.
It is expected that the Notes and the Certificates will be offered globally and
delivered in book-entry form on or about March 31, 1997 through the facilities
of The Depository Trust Company ("DTC"), CEDEL S.A. ("Cedel") and the Euroclear
System ("Euroclear") against payment in immediately available funds.
2
<PAGE> 3
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT AFFECT THE PRICE OF THE NOTES. SUCH TRANSACTIONS MAY INCLUDE
THE PURCHASE OF NOTES TO COVER SYNDICATE SHORT POSITIONS. FOR A DESCRIPTION OF
THESE TRANSACTIONS, SEE "UNDERWRITING."
---------------------------
The information in this Prospectus Supplement is qualified in its
entirety by the more detailed information appearing or incorporated by reference
in the accompanying Prospectus. Prior to making an investment decision with
respect to the Notes offered hereby, prospective investors should carefully
consider the information contained in this Prospectus Supplement and the
Prospectus.
There currently is no secondary market for the Notes. The Underwriter
intends to make a market in the Notes but has no obligation to do so. There is
no assurance that one will develop or, if one does develop, that it will
continue until the Notes are paid in full.
UNTIL 90 DAYS FROM THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
AVAILABLE INFORMATION
The Company has filed a Registration Statement under the
Securities Act of 1933, as amended (the "1933 Act"), with the Securities and
Exchange Commission (the "Commission") on behalf of the Trust with respect to
the Notes offered pursuant to the Prospectus dated ______________ and this
Prospectus Supplement. For further information, reference is made to the
Registration Statement and amendments thereof and to the exhibits thereto, which
are available for inspection without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
7 World Trade Center, 13th Floor, New York, New York 10048; and at The
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The Commission maintains a site on the World Wide Web containing
reports, proxy materials, information statements and other items. The address is
http://www.sec.gov. Copies of the Registration Statement and amendments thereof
and exhibits thereto may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
REPORTS TO THE SECURITYHOLDERS
So long as the Notes are in book-entry form, monthly and
annual reports concerning the Notes and the Trust will be sent by the Indenture
Trustee to Cede & Co., as the nominee of DTC and as registered holder of the
Notes pursuant to the Sale and Servicing Agreement. DTC will supply such reports
to Beneficial Owners in accordance with its procedures. See "Risk Factors,"
"Description of the Securities -- Book-Entry Registration" and " -- Reports to
Securityholders" in the Prospectus. To the extent required by the Securities
Exchange Act of 1934, as amended, the Trust will provide financial information
to the registered holder which has been examined and reported upon, with an
opinion expressed by an independent public accountant; to the extent not so
required, such financial information will be unaudited. The Seller has
determined that the financial statements of no entity other than the Insurer are
material to the offering made hereby. The Trust will be formed to own the
Receivables, and to issue the Securities. The Trust will have no assets or
obligations prior to issuance of the Securities and will engage in no activities
other than those described herein. Accordingly, no financial statements with
respect to the Trust are included in this Prospectus Supplement.
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<PAGE> 4
Until 90 days from the date of this Prospectus Supplement,
dealers effecting transactions in the Notes whether or not participating in this
distribution, may be required to deliver a prospectus and a prospectus
supplement. This is in addition to the obligation of dealers to deliver a
prospectus and a prospectus supplement when acting as underwriters and with
respect to their unsold allotments or subscriptions.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In addition to the documents described in the Prospectus under
"Incorporation of Certain Documents by Reference," the consolidated financial
statements of ____________ and Subsidiaries included in, or as exhibits to, the
Annual Report on Form 10-K for the year ended __________ which have been filed
with the Commission by ___________, are hereby incorporated by reference in the
Registration Statement (as defined in the Prospectus) of which this Prospectus
and Prospectus Supplement form a part.
The Seller on behalf of the Trust hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, as amended, each
filing of the Trust's annual report pursuant to section 13(a) or section 15(d)
of the Exchange Act and each filing of the financial statements of the Insurer
included in or as an exhibit to the annual report of _________ filed pursuant to
section 13(a) or section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the Notes offered hereby, and the offering of such Notes
at that time shall be deemed to be the initial bona fide offering thereof.
The Company will provide, without charge, to any person to whom this
Prospectus Supplement is delivered, upon oral or written request of such person,
a copy of any or all of the foregoing financial statements incorporated by
reference. Requests for such copies should be sent to ACC Consumer Finance
Corporation, attention: _______________. All financial statements of the Insurer
included in documents filed by __________ pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
subsequent to the date of this Prospectus Supplement and prior to the
termination of the offering of the Notes shall be deemed to be incorporated by
reference into this Prospectus Supplement and to be a part hereof from the
respective dates of filing of such documents.
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<PAGE> 5
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the Prospectus. Capitalized terms used are defined elsewhere in the Prospectus
Supplement or in the Prospectus. Reference is made to the Index of Defined Terms
herein and the Index of Terms in the Prospectus for the definitions of certain
capitalized terms.
ISSUER.............................. ACC Automobile Receivables Trust ____,
a Delaware business trust (the
"Issuer") wholly owned by ACC Funding
Corp. ("ACC Funding") (which will own
a ___% interest in the Issuer) and
ACC Receivables Corp. ("ACC
Receivables") (which will own a ___%
interest in the Issuer). Each of ACC
Receivables and ACC Funding is a
special purpose, bankruptcy-remote
subsidiary of ACC.
OWNER TRUSTEE....................... _______________________,
_______________ banking corporation,
not in its individual capacity but
solely as trustee under the Trust
Agreement, dated as of ________, with
ACC, ACC Funding and ACC Receivables
(the "Owner Trustee").
SELLER AND SERVICER ................ ACC Consumer Finance Corporation, a
Delaware corporation, ("ACC," and,
under the Sale, Servicing and
Collateral Management Agreement in
its capacity as Servicer, the
"Servicer" and in its capacity as
Seller, the "Seller"). The Servicer
will be obligated, pursuant to the
Sale, Servicing and Collateral
Management Agreement, subject to the
limitations set forth therein, to
service the Receivables and to
repurchase certain of the Receivables
if it breaches certain of its
servicing obligations under the Sale,
Servicing and Collateral Management
Agreement or certain other covenants
with respect to the Servicer, in each
case only in a manner that materially
and adversely affects such
Receivables, the interests of the
Issuer, the Noteholders or the
Insurer. See "The Seller and Servicer
in the Prospectus."
The Seller will be obligated,
pursuant to the Sale, Servicing and
Collateral Management Agreement,
dated as of __________, among the
Seller, the Issuer, the Servicer, the
Backup Servicer and the Trust
Collateral Agent (the "Sale,
Servicing and Collateral Management
Agreement"), subject to the
limitations set forth therein, to
purchase certain of the Receivables
under certain circumstances if any
representations and warranties made
therein by the Seller with respect to
the Receivables are incorrect in a
manner that materially and adversely
affects such Receivables, the
interests of the Issuer, the
Noteholders or the Insurer.
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<PAGE> 6
INITIAL CUTOFF DATE .............. The close of business on __________ or
with respect to each Initial
Receivable originated after such
date, the date of origination of such
Receivable.
CLOSING DATE ..................... _________.
INDENTURE TRUSTEE, BACKUP SERVICER
AND TRUST COLLATERAL AGENT........ ______________________,
____________________ (in its capacity
as Indenture Trustee under the
Indenture, the "Indenture Trustee",
in its capacity as Collateral Agent
under the Sale, Servicing and
Collateral Management Agreement, the
"Trust Collateral Agent", and in its
capacity as Backup Servicer under the
Servicing and Collateral Management
Agreement, the "Backup Servicer").
DESCRIPTION OF THE
NOTES ............................ The Notes will be issued pursuant to an
Indenture, dated as of _________,
between the Issuer, the Indenture
Trustee and the Trust Collateral
Agent (the "Indenture"). The Notes
will be issued in fully registered
form in minimum denominations of
$1,000 and integral multiples of
$1,000 in excess thereof.
The Notes will be issued in two
classes, a senior class (the "Class A
Notes") and a subordinate class (the
"Class B Notes").
The Original Principal Balance of each
class will be as follows:
Class A Notes: $_________
Class B Notes: $_________
The Class A Notes will be represented
by global securities registered in
the name of Cede & Co. ("Cede"), as
nominee of The Depository Trust
Company ("DTC"). Class A Noteholders
will not be entitled to receive
definitive securities representing
such holders' interest except in
certain circumstances described in
the Sale, Servicing and Collateral
Management Agreement. Transfers
within DTC will be in accordance with
the usual rules and operating
procedures of the relevant system.
The rights of the owners of the
beneficial interests in the Class A
Notes may only be exercised through
DTC and its participating
organizations, except as otherwise
specified herein. See "Description of
the Notes--Book-Entry Registration."
The Class B Notes are not being offered
hereby.
DESCRIPTION OF THE
INDENTURE ........................ The payment priorities set forth in the
Indenture require (i) except to the
extent of funds available in the
Class B Reserve Fund (as defined
below), that no payments of interest
will be
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<PAGE> 7
paid to the Class B Noteholders on
any Distribution Date unless the full
amount of interest and principal then
due to the Class A Noteholders has
been paid, as well as certain
reimbursements due to the Insurer,
and (ii) except to the extent of
funds available in the Class B
Reserve Fund (as defined below), that
no payments of principal will be paid
to the Class B Noteholders on any
Distribution Date unless the full
amount of interest and principal then
due to the Class A Noteholders, the
full amount of interest then due to
the Class B Noteholders, as well as
certain reimbursements due to the
Insurer, and funding of certain
reserve accounts established for the
benefit of the Insurer, have been
paid in full. Consequently, the Class
B Noteholders will receive no
distributions of principal from
sources other than the Class B
Reserve Fund until these provisions
have been satisfied (during which
period some of or all the
distributions of principal to which
the Class B Noteholders would
otherwise be entitled will be
deposited to such reserve accounts)
and may thereafter experience
temporary suspensions of payments of
principal.
CLASS A NOTE INTEREST
RATE................................. The Class A Notes will bear interest
at a rate of ____% per annum,
calculated on the basis of a
360-day year consisting of twelve
30-day months, using the applicable
Note Interest Rate (the "Class A
Note Interest Rate"), as set forth
on the cover page hereof.
DESCRIPTION OF THE
CERTIFICATES............................ [_____%] Auto Receivables Backed
Certificates (the "Certificates")
in the aggregate principal amount
of $____________ will be offered.
The Issuer will purchase the
remaining $__________ principal
amount of the Certificates. The
Certificates will be available for
purchase in denominations of
$100,000 and integral multiples of
$100,000 in excess thereof.
The Certificates will be issued in
fully registered, certificated form
("Definitive Certificates") to
Certificateholders or their
nominees.] The Certificates will be
issued pursuant to a Trust
Agreement to be dated as of
___________, 199_ (the "Trust
Agreement") between the Issuer and
the Owner Trustee, acting under not
in its individual capacity but
solely as trustee of the Trust.
Purchasers of Certificates and
their assignees must represent that
they are United States persons.
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<PAGE> 8
TRUST PROPERTY........................ The property of the Issuer (the "Trust
Estate") will include certain
non-prime retail installment sale
contracts (the "Initial Receivables")
secured by new or used automobiles,
light duty trucks, vans and mini-vans
(the "Initial Financed Vehicles"),
all monies paid or payable thereunder
after the Initial Cutoff Date,
security interests in the Initial
Financed Vehicles securing the
Initial Receivables, certain bank
accounts and the proceeds thereof,
any proceeds from claims on certain
insurance policies, certain rights
under the Sale, Servicing and
Collateral Management Agreement and
all proceeds of the foregoing.
On or before _________, the Issuer may
acquire from time to time (each such
date a "Subsequent Transfer Date")
from ACC, using the money on deposit
in a pre-funding account to be
established with the Indenture
Trustee (the "Pre-Funding Account"),
approximately $_________ (the
"Original Pre- Funded Amount") of
additional non-prime retail
installment sale contracts (the
"Subsequent Receivables" and together
with the Initial Receivables, the
"Receivables") secured by new or used
automobiles, light duty trucks, vans
and mini- vans (the "Subsequent
Financed Vehicles" and together with
the Initial Financed Vehicles, the
"Financed Vehicles"), together with
all monies paid or payable under such
Subsequent Receivables after the
related subsequent cutoff date (each
a "Subsequent Cutoff Date" and
together with the Initial Cutoff
Date, each a "Cutoff Date")
established pursuant to the related
subsequent transfer agreement (each a
"Subsequent Transfer Agreement") to
be entered into at the time of such
subsequent transfer of Receivables to
the Issuer among the Seller, the
Servicer, the Trust Collateral Agent
and the Indenture Trustee, security
interests in the Financed Vehicles
securing the Receivables and all
proceeds of the foregoing. ACC has
previously originated and identified
Receivables having an aggregate
principal balance of approximately
$_________ that it expects to
transfer to the Issuer on one or more
Subsequent Transfer Dates.
RECEIVABLES............................ The Receivables consist of non-prime
retail automobile installment sales
contracts which were sold and
purchased in the manner described
above and pursuant to ACC's finance
programs. ACC's finance programs
target automobile purchasers with
below average credit profiles who are
generally unable to obtain credit
from traditional lending sources. The
Receivables had, as of the Initial
Cutoff Date, a weighted average
annual percentage rate ("APR") of
approximately ____%, a weighted
average original term of ____ months
and a weighted average remaining term
of ____ months. The Receivables had
an Aggregate Principal Balance of
$_________ as of the Initial Cutoff
Date (the "Original Pool Balance").
See "The Trust Property."
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<PAGE> 9
Certain contracts included in the pool
as of the Initial Cutoff Date may
prepay in full, or may be determined
not to meet the eligibility
requirements for the final pool, and
may not be included in the final
pool. As a result of the foregoing,
the statistical distribution of
characteristics as of the Closing
Date for the final Receivables pool
may vary somewhat from the
statistical distribution of such
characteristics as of the Initial
Cutoff Date as presented in this
Private Placement Memorandum,
although such variance will not be
material.
The Seller has represented and
warranted that no Initial Receivable
is more than 30 days delinquent as of
the Initial Cutoff Date, and that no
more than 0.07% of the Initial
Receivables have been extended by the
Servicer. Approximately
$19,800,000.00 of the Subsequent
Receivables have already been
originated and identified for
transfer to the Issuer by the Seller.
See "The Trust Property."
Following the Closing Date and
subject to the prior written consent
of the Insurer and satisfaction of
certain conditions set forth in the
Sale, Servicing and Collateral
Management Agreement, the Issuer will
be obligated to purchase the
Subsequent Receivables from the
Seller as described below under
"Pre-Funding Account." The Seller
will make certain representations as
of the related Subsequent Cutoff Date
with respect to the Receivables,
including any Subsequent Receivables.
See "The Trust Property."
PRE-FUNDING ACCOUNT................ During the period from and including
the Closing Date until the earliest
of (i) the date on which the
Pre-Funded Amount (after giving
effect to any transfer of Subsequent
Receivables to the Issuer on such
date) is less than $100,000, (ii) the
date on which an Event of Default
occurs under the Indenture or which a
Servicer Termination Event occurs
under the Sale, Servicing and
Collateral Management Agreement or
(iii) the Distribution Date in
_________ (the "Funding Period"), the
Pre-Funding Account will be
maintained with the Indenture Trustee
and is designed solely to hold funds
to be applied by the Indenture
Trustee to pay the Seller the
purchase price for Subsequent
Receivables. Monies on deposit in the
Pre- Funding Account will not be
available to cover losses on or in
respect of the Receivables. On the
Closing Date, the Pre- Funding
Account will be funded with the
Original Pre-Funded Amount from the
sale proceeds of the Notes.
The Seller expects that the Pre-Funded
Amount will be reduced to less than
$100,000 by _________, although no
assurances can be given in this
regard. If any portion of the
Pre-Funded Amount remains at the end
of the Funding Period, such amount
will be distributed as a partial
prepayment to the
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Noteholders as described below
under "Mandatory Prepayment".
INTEREST RESERVE ACCOUNT.............. During the Funding Period, funds will
be held in an Interest Reserve
Account to cover any shortfalls due
to investment earnings on funds in
the Pre-Funding Account being less
than the interest due on the Notes.
See "Description of the Trust
Documents -- The Accounts."
DISTRIBUTION DATE..................... The 17th day of each month (or if such
17th day is not a Business Day, the
immediately following Business Day),
commencing _________.
TERMS OF THE NOTES
A. INTEREST.......................... Interest on the outstanding principal
amount of the Notes of each Class
will accrue at the applicable Note
Interest Rate from _________, in the
case of the first Distribution Date
or from the most recent Distribution
Date on which interest has been paid
to but excluding the following
Distribution Date. Interest on the
Notes for any Distribution Date due
but not paid on such Distribution
Date will be due on the next
Distribution Date together with
interest on such amount at the
applicable Note Interest Rate. The
amount of interest distributable on
the Notes on each Distribution Date
will equal 30 days' interest (or, in
the case of the first Distribution
Date, interest accrued from and
including the Closing Date to but
excluding such Distribution Date).
See "Description of the Notes -
Payments of Interest" herein.
Interest will be calculated on the
basis of a 360-day year consisting of
twelve 30-day months.
The "Note Principal Balance" of each
class of Notes will equal, initially,
the original principal amount of
Notes of such class issued by Issuer
on the Closing Date and thereafter
will equal the original Note
Principal Balance of such class
reduced by all principal distributed
to the Noteholders of the Notes of
such class.
B. PRINCIPAL......................... Class A Notes. Principal on the Class A
Notes will be payable on each
Distribution Date in an amount equal
to the Class A Noteholders' Principal
Distributable Amount (as defined
below). The Class A Noteholders'
Principal Distributable Amount for
any Distribution Date will equal the
Class A Noteholders' Percentage of an
amount equal to the sum of the
following amounts (such sum with
respect to any Distribution Date, the
("Principal Distributable Amount"))
with respect to the related Monthly
Period, computed in accordance with
the simple interest method with
respect to
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Simple Interest Receivables (as
defined herein) or in accordance with
the actuarial method with respect to
Rule of 78s Receivables (as defined
herein): (i) that portion of all
collections on Receivables (other
than Liquidated Receivables and
Purchased Receivables) allocable to
principal, including full and partial
principal prepayments, received
during such Monthly Period, (ii) the
principal balance of each Receivable
that became a Liquidated Receivable
during such Monthly Period (other
than Purchased Receivables), (iii)
the principal balance of each
Receivable that was repurchased by
the Servicer or the Seller as of the
last day of such Monthly Period, (iv)
the aggregate amount of any Cram Down
Loss (as defined below), and (v) any
unpaid portion of the amounts
included in clauses (i), (ii), (iii)
and (iv) above with respect to a
prior Distribution Date. The Class A
Noteholders' Principal Distributable
Amount will also include, at the
option of the Insurer, the Class A
Noteholders' Percentage of the
principal balance of each Receivable
that was required to be, but was not,
so repurchased. See "Description of
the Notes" and "Description of the
Trust Documents" herein.
Class B Notes. Principal on the Class B
Notes will be payable on each
Distribution Date in an amount equal
to the Class B Noteholders' Principal
Distributable Amount. The Class B
Noteholders' Principal Distributable
Amount will equal the Class B
Noteholders' Percentage of the
Principal Distributable Amount. The
Class B Noteholders' Percentage is
____% initially (until the Class A
Notes have been paid in full at which
time it will equal 100% or until the
Class B Notes have been paid in full
at which time it will equal 0%).
The outstanding principal amount of the
Notes, if any, will be payable on
_________ (the "Final Scheduled
Distribution Date").
"Cram Down Loss" means, with respect to
a Receivable, if a court of
appropriate jurisdiction in an
insolvency proceeding has issued an
order reducing the amount owed on a
Receivable or otherwise modifying or
restructuring the scheduled payments
to be made on a Receivable, an amount
equal to the excess of the principal
balance of such Receivable
immediately prior to such order over
the principal balance of such
Receivable as so reduced or the net
present value (using as the discount
rate the higher of the contract rate
or the rate of interest, if any,
specified by the court in such order)
of the scheduled payments as so
modified or restructured. A Cram Down
Loss will be deemed to have occurred
on the date of issuance of such
order.
"Liquidated Receivable" means, with
respect to any Monthly Period, a
Receivable as to which (i) 60 days
have elapsed
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since the Servicer repossessed the
Financed Vehicle, (ii) the Servicer
has determined in good faith that all
amounts it expects to recover have
been received, (iii) ninety percent
or more of a scheduled payment shall
have become 120 or more days
delinquent, or in the case of an
Obligor who is subject to bankruptcy
proceedings, 210 or more days
delinquent or (iv) the Financed
Vehicle has been sold and the
proceeds received. Any Receivable
that becomes a Purchased Receivable
on or before the related Business Day
immediately preceding the related
Determination Date shall not be a
Liquidated Receivable.
A "Monthly Period" with respect to a
Distribution Date will be the
calendar month preceding the month in
which such Distribution Date occurs.
C. PAYMENT PRIORITY.................. On each Distribution Date the Available
Funds (together with certain other
monies) will be applied in the
following order of priority:
first, to the Servicer, the Servicing
Fee then due;
second, to any Lockbox Bank or other
relevant local bank, the Indenture
Trustee, Custodian, Backup Servicer,
Trust Collateral Agent, and the Owner
Trustee (including the Indenture
Trustee if acting in any such
additional capacity), their fees then
due (in each case, to the extent such
fees have not been previously paid by
the Servicer);
third, to the Class A Noteholders,
the interest then due with respect to
each Class of Class A Notes;
fourth, to the Class A Noteholders,
the Class A Noteholders' Principal
Distributable Amount;
fifth, to the Insurer, the premium
owing to it in connection with the
Policy (the "Premium Amount") then
due it and any amounts owing under
the Insurance Agreement;
sixth, to the Class B Noteholders,
the interest then due with respect to
the Class B Notes;
seventh, to certain reserve accounts
maintained for the benefit of the
Insurer, until such reserve accounts
are fully funded at their required
level;
eighth, to the Class B Noteholders,
the Class B Noteholders' Principal
Distributable Amount;
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ninth, all remaining funds to the
Class B Noteholders to reduce the
principal balance of the Class B
Notes until the principal balance of
the Class B Notes is reduced to zero;
and
tenth, to the Issuer, any remainder.
D. MANDATORY PREPAYMENT............. The Notes of each Class will be prepaid
in part on the Distribution Date on
or immediately following the end of
the Funding Period in the event that
any portion of the Pre- Funded Amount
remains after giving effect to the
purchase of all Subsequent
Receivables during the Funding
Period. The aggregate principal
amount of each Class of Notes subject
to prepayment will be an amount equal
to such Class's pro rata share (based
on the respective current principal
amount of each Class of Notes) of the
Pre-Funded Amount at the end of the
Funding Period.
E. OPTIONAL REDEMPTION.............. The Notes will be redeemed in whole,
but not in part, on any Distribution
Date on which the Issuer or the
Servicer exercises its option to
purchase the Receivables (with the
consent of the Insurer, if a claim
has previously been made under the
Policy or, if such purchase would
result in a claim under the Policy or
if such purchase would result in any
amount owing to the Insurer remaining
unpaid), which, subject to certain
provisions in the Sale, Servicing and
Collateral Management Agreement, can
occur after the Pool Balance is equal
to or less than 10% of the Original
Pool Balance, at a redemption price
which is not less than the Note
Principal Balance plus accrued and
unpaid interest thereon. See
"Description of the Notes - Optional
Redemption" herein.
F. MANDATORY REDEMPTION............. The Notes may be accelerated and
subject to immediate payment at par
upon the occurrence of an Event of
Default under the Indenture. So long
as no Insurer Default shall have
occurred and be continuing, an Event
of Default under the Indenture will
occur only upon delivery by the
Insurer to the Issuer of notice of
the occurrence of certain events of
default under the Insurance and
Indemnity Agreement, dated as of May
1, 1997 (the "Insurance Agreement"),
among the Insurer, the Issuer, the
Seller, the Servicer, ACC Receivables
and ACC Funding. The Policy does not
guarantee payment of any amounts that
became due on an accelerated basis,
unless the Insurer elects, in its
sole discretion, to pay such amounts
in whole or in part. See "Description
of the Notes - Mandatory Redemption -
Events of Default;" herein.
TERMS OF THE CERTIFICATES:
A. PASS-THROUGH RATE.............. A rate equal to [__%]; provided,
however, that on and after the
_______________, 199__ Payment Date,
if the aggregate amount of Realized
Losses during the period from the
Cut-off
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<PAGE> 14
Date through the end of the fiscal
month ending in ________, 199___ is
an amount, expressed as a percentage,
that is (x) _____% or less (but
greater than _____% of the Pool
Balance as of the Cut-off Date, the
Pass-Through Rate (as determined in
the clause preceding this proviso)
for any Payment Date shall be
increased by _____% per annum or (y)
_____% or less of the Pool Balance as
of the Cut-off Date, the Pass-Through
Rate (as determined in the clause
preceding this proviso) for any
Payment Date shall be increased by
_____% per annum.
B. INTEREST........................ On each Payment Date, the Owner
Trustee shall distribute pro rata to
the holders of record of the
Certificates (the
"Certificateholders" and together
with the Noteholders, the
"Securityholders") as of the [last
day] of the immediately preceding
[calendar month] (the "Certificate
Record Date") interest at the
Pass-Through Rate on the Certificate
Balance as of the preceding Payment
Date (after giving effect to
distributions made on such date)
generally to the extent of funds
available therefor following payment
of the Servicing Fee and
distributions in respect of the
Notes. Interest for a Payment Date
will accrue from and including the
most recent Payment Date on which
interest has been paid (or, in the
case of the first Payment Date, from
the Closing Date) to but excluding
such current Payment Date and will be
calculated on the basis of a year of
360 days, in each case for the actual
number of days occurring in the
period for which such interest is
payable. In addition,
Certificateholders will receive on
each Payment Date, if on such Payment
Date the amount on deposit in the
Reserve Account, after giving effect
to all withdrawals and deposits
required to be made on such Payment
Date, exceeds the Specified Reserve
Account Balance, an amount equal to
such excess.
C. PRINCIPAL...................... Principal of the Certificates will be
payable on each Payment Date on and
after the latest of (i) the Payment
Date following the Payment Date on
which the [A-1 Notes] have been paid
in full, (ii) the _______________,
199___ Payment Date and (iii) the
Payment Date following the Payment
Date on which the lesser of the full
amount of the Maturity Draw or the
amount of the Maturity Draw, if any,
necessary to increase the amount on
deposit in the Reserve Account to the
Specified Reserve Account Balance is
deposited into the Reserve Account,
in an amount generally equal to the
Certificateholders' Principal
Distributable Amount for the
Collection Period preceding such
Payment Date, to the extent of funds
available therefor following payment
of the Servicing Fee and
distributions of interest and
principal in respect of the Notes and
interest in respect of the
Certificates. The Certificateholders'
Principal Distributable Amount
generally will be based on the
Certificateholders' Percentage of the
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<PAGE> 15
Principal Distribution Amount, which
for any Payment Date will be based
upon decreases in the Note Value of
the Receivables and/or collections on
and losses in respect of the
principal of the Receivables during
the related Collection Period. See
"Description of the Transfer and
Servicing Agreements--Distributions"
herein.
The outstanding amount, if any, of
the Certificates will be payable in
full on _______________, 199__.
D. OPTIONAL PURCHASE.............. If the Servicer exercises its option
to purchase the Receivables when the
aggregate principal amount of the
Receivables is less than _____% of
the Pool Balance as of the Cut-off
Date, the Certificateholders will
receive an amount in respect of the
Certificates equal to the Certificate
Balance together with accrued
interest at the Pass-Through Rate and
the Certificates will be retired. See
"Description of the
Certificates--Optional Purchase"
herein.
SECURITY INSURER...................... ________________________ (the
"Insurer") is a financial guaranty
insurance company incorporated under
the laws of the State of
______________. See "The Policy" and
"The Insurer."
THE POLICY............................ On the Closing Date, the Insurer will
issue the Policy to the Indenture
Trustee for the benefit of the
Securityholders pursuant to which the
Insurer will unconditionally and
irrevocably guarantee to the
Securityholders payment of the
Scheduled Payments for each
Distribution Date. See "The Policy".
REPURCHASE AND PURCHASE
OBLIGATIONS......................... The Seller (pursuant to the Sale,
Servicing and Collateral Management
Agreement) will be obligated to
repurchase a Receivable if such
Receivables or the interest of the
Class A Securityholders or the
Insurer are materially adversely
affected by a breach of any
representation or warranty made by
the Seller with respect to such
Receivable, if the breach has not
been cured by the last day of the
first full calendar month following
the discovery by or notice to the
Issuer of the breach.
The Servicer (pursuant to the Sale,
Servicing and Collateral Management
Agreement) will be obligated to
repurchase a Receivable if such
Receivable is materially adversely
affected by a breach of certain of
its servicing obligations under the
Sale, Servicing and Collateral
Management Agreement (including, but
not limited to, its obligation to
ensure that the perfected security
interest of Accent Financial
Services, OFLA or ACC in the
related Financed Vehicles is
maintained) or certain other
covenants with respect to the
Servicer, if the
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breach has not been cured by the
last day of the first full calendar
month following the discovery or
notice to the Servicer of the
breach.
SERVICER FEE.......................... Each month the Servicer will receive a
fee for servicing the Receivables
(the "Servicer Fee") equal to (a) the
product of one-twelfth of 3.00% (the
"Servicing Fee Rate") and the Pool
Balance outstanding at the beginning
of the calendar month immediately
preceding such Distribution Date (the
"Servicing Fee") plus (b) a
supplemental servicing fee (the
"Supplemental Servicing Fee") equal
to (i) any late fees, prepayment
fees, liquidation fees and other
administrative fees and expenses
collected during such month, plus
(ii) the net realized earnings on all
investments of funds deposited in the
Collection Account during such month.
See "Provisions of the Trust
Documents -- Servicing Compensation
and Indenture Trustees' Fees."
TAX STATUS............................ In the opinion of Dewey Ballantine,
special counsel to the Seller, for
federal income tax purposes, the
Issuer will not be treated as an
association (or publicly traded
partnership) taxable as a corporation
and the Class A Notes will be
characterized as debt. Each
Noteholder, by the acceptance of a
Note, will agree to treat the Notes
as debt. The Certificateholders will
agree to treat the trust as a
partnership in which they are
partners for purposes of federal and
state income tax, franchise tax and
any other income tax, with the assets
of the partnership being the assets
held by the Trust, the partners of
the partnership being the
Certificateholders and the Notes
being debt of the partnership.
Alternative characterizations of the
Trust and the Securities are
possible, as more fully described
herein. See "Certain Federal Income
Tax Consequences" herein.
ERISA CONSIDERATIONS.................. The acquisition of Notes or
Certificates by an employee benefit
plan subject to the Employee
Retirement Income Security Act of
1974, as amended ("ERISA") or the
provisions of Section 4975 of the
Code (the "Plan"), could result in a
prohibited transaction under "ERISA"
or Section 4975 of the Code, unless
such acquisition is subject to a
statutory or administrative
exemption, if, by virtue of such
acquisition, assets held by the
Issuer and pledged to the Indenture
Trustee were deemed to be assets of
the Plan. In addition, the Issuer or
other parties may be considered to be
a fiduciary with respect to any Plan.
Therefore, the acquisition and
transfer of the Notes or Certificates
are subject to certain restrictions.
See "ERISA Considerations."
The Class B Notes are not eligible
for purchase by a Benefit Plan.
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RATING................................ As a condition to the issuance of the
Securities, the Class A Notes will be
rated at least "____" and the
Certificates will be rated at least
"____" by Standard & Poor's Ratings
Services, a division of The
McGraw-Hill Companies, Inc. ("S&P")
and "Aaa" by Moody's Investors
Service, Inc. ("Moody's") on the
basis of the issuance of the Policy
by the Insurer. There is no assurance
that a rating will not be lowered or
withdrawn by a rating agency based on
a change in circumstances deemed by
such rating agency to adversely
affect the Securities. A rating is
not a recommendation to purchase,
hold or sell the Securities, in as
much as such rating does not comment
as to market price or suitability for
a particular investor. See "Risk
Factors - Ratings of the Securities."
RISK FACTORS.......................... For a discussion of certain factors
that should be considered by
prospective investors in the Notes
and Certificates, see "Risk Factors"
herein and in the Prospectus.
CERTAIN LEGAL MATTERS................. Certain legal matters relating to the
validity of the issuance of the
Securities will be passed upon for
the Issuer and the Underwriter by
Dewey Ballantine, New York, NY.
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<PAGE> 18
RISK FACTORS
RISK OF LOSSES ASSOCIATED WITH ACC'S UNDERWRITING PROCESS AND SUBJECTIVE CREDIT
STANDARDS
The underwriting standards applied by ACC may not be as stringent as
those of the finance companies of motor vehicle manufacturers or other financial
institutions since ACC purchases retail automobile installment contracts which
may not meet the credit standards of traditional primary lenders. The ACC
finance program focuses on the non-prime market including obligors with below
average credit profiles who may not be able to receive financing from more
traditional sources. The ACC finance program sets specific limits for the credit
amount extended. ACC's credit decisions are judgmental. See "The Seller and
Servicer -- Application Processing and Purchasing Criteria."
RISK OF LOSSES ASSOCIATED WITH LIMITED ASSETS
The Issuer will not have, nor is it permitted or expected to have, any
significant assets or sources of funds available for the payment of the
Securities other than the Receivables, the Pre-Funding Account, the Capitalized
Interest Account. Securityholders must rely for repayment upon payments on the
Receivables and, if and to the extent available, amounts on deposit in the
Pre-Funding Account, the Capitalized Interest Account, the Reserve Account and,
with respect to the Class A Notes only, payments of claims made under the
Policy. The Pre-Funded Amount on deposit in the Pre-Funding Account will be used
solely to purchase Subsequent Receivables and is not available to cover losses
on the Receivables. The Capitalized Interest Account is designed to cover
obligations of the Issuer relating to that portion of its assets not invested in
Receivables and is not designed to provide protection against losses on the
Receivables. Similarly, although the Policy will be available on each
Distribution Date to cover shortfalls in distributions of the Scheduled Payments
with respect to the Securities on such Distribution Date, if the Insurer
defaults in its obligations under the Policy, the Issuer will depend on current
distributions on the Receivables and, with respect to the Securities only,
amounts, if any, available therefor in certain collateral accounts maintained
for the benefit of the Insurer to make payments on the Securities. See "The
Insurer" and "The Policy" herein.
RISK OF LOSSES ASSOCIATED WITH GEOGRAPHIC CONCENTRATION OF RECEIVABLES
As of the Initial Cutoff Date (based on principal balance and mailing
address of the Obligors), Obligors with respect to approximately ____% and ____%
of the Receivables were located in ______________, _______ and ____________,
respectively and substantially all of the rest of the Receivables were located
in those states identified in the table on page __. See "The Trust Property".
Accordingly, adverse economic conditions or other factors particularly affecting
any of these states could adversely affect the delinquency or loan loss
experience of the Issuer with respect to the Receivables.
RISK OF PREPAYMENT FROM THE PRE-FUNDING ACCOUNT BASED UPON ACC'S ABILITY TO
ORIGINATE SUBSEQUENT RECEIVABLES
To the extent that the Pre-Funded Amount has not been fully applied to
the purchase of Subsequent Receivables by the Issuer by the end of the Funding
Period, the Securityholders will receive a prepayment of principal on the
Mandatory Redemption Date in an amount equal to their pro rata share (based on
the current principal balance of each Class and the Note Principal Balance) of
the Pre-Funded Amount (exclusive of investment earnings) remaining in the
Pre-Funding Account at the end of the Funding Period; provided that, if the
total amount of such Pre-Funded Amount at the end of the Pre-Funding Period is
$100,000 or less, such amount shall be applied exclusively to the Class of
Securities then entitled to receive distribution. Any reinvestment risk from the
prepayment of the
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<PAGE> 19
Securities from the Pre-Funded Amount at the end of the Funding Period will be
borne by the Securityholders. See "Maturity and Prepayment Considerations" and
"Yield Considerations" herein.
The conveyance of Subsequent Receivables to the Issuer during the
Funding Period is subject to the conditions described herein under "The Trust
Property -- Eligibility Criteria." The ability of the Issuer to invest in
Subsequent Receivables is dependent upon the ability of ACC to originate through
Dealers a sufficient amount of motor vehicle retail installment sales contracts
that meet such eligibility criteria. The ability of the Seller to originate
sufficient Subsequent Receivables may be affected by a variety of social and
economic factors. Economic factors include interest rates, unemployment levels,
the rate of inflation and consumer perception of economic conditions generally.
The Seller has no basis to predict whether or the extent to which economic or
social factors will affect the availability of Subsequent Receivables.
Approximately $_________ of the Subsequent Receivables have already been
originated and identified for transfer to the Issuer by the Seller. There can be
no assurance that the Insurer will consent to the transfer of Subsequent
Receivables during the Pre-Funding Period. See "The Trust Property" herein.
RISK OF LOWER YIELD ASSOCIATED WITH MATURITY AND PREPAYMENT CONSIDERATIONS
All of the Receivables are prepayable at any time. The rate of
prepayments on the Receivables may be influenced by a variety of economic,
social and other factors, including the fact that an Obligor generally may not
sell or transfer the related Financed Vehicle securing a Receivable without the
consent of ACC. (For this purpose the term "prepayments" includes prepayments in
full, certain partial prepayments related to refunds of extended service
contract costs and unearned insurance premiums, liquidations due to default,
Cram Down Losses, as well as receipts of proceeds from physical damage,
repossession loss, credit life and credit accident and health insurance policies
and certain other Receivables repurchased for administrative reasons.) The rate
of prepayment on the Receivables may also be influenced by the structure of the
loan, the nature of the Obligors and the Financed Vehicles and servicing
decisions as discussed above. In addition, under certain circumstances, the
Seller and the Servicer are obligated to purchase Receivables pursuant to the
Sale, Servicing Agreement and Collateral Management Agreement as a result of
breaches of certain covenants. The Servicer also has the right, subject to
certain conditions, to purchase the Receivables when the Pool Balance is 10% or
less of the Original Pool Balance. Any reinvestment risks resulting from a
faster or slower incidence of prepayment of Receivables will be borne entirely
by the Securityholders. See "Yield Considerations".
RISK OF LOSSES ASSOCIATED WITH NONPRIME LENDING
The Company's underwriting guidelines relate to a category of lending
commonly known as "nonprime", in which loans may be made to applicants who have
experienced certain adverse credit events but who meet certain other
creditworthiness tests. Such "nonprime" loans may experience higher rates of
delinquencies, repossessions and losses, especially under adverse economic
conditions, as compared with loans originated pursuant to a traditional lending
program. See "Risk Factors" -- in the Prospectus.
RISK OF LIMITED LIQUIDITY OR DELAYS IN PAYMENTS ASSOCIATED WITH BOOK-ENTRY
REGISTRATION
Issuance of the Securities in book-entry form may reduce the liquidity
of such Securities in the secondary trading market since investors may be
unwilling to purchase Securities for which they cannot obtain definitive
physical securities representing such Securityholders' interests, except in
certain circumstances described herein.
Securityholders may experience some delay in their receipt of
distributions of interest on and principal of the Securities since distributions
may be required to be forwarded by the Trustee to DTC, CEDEL or Euroclear and,
in such case, DTC, CEDEL or Euroclear, as the case may be, will be
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<PAGE> 20
required to credit such distributions to the accounts of its participating
organization which thereafter will be required to credit them to the accounts of
the Securityholders either directly or indirectly through indirect participants.
See "The Securities -- Book-Entry Registration." See "Risk Factors" in the
Prospectus.
RISK OF LIMITED LIQUIDITY OR LOWER MARKET PRICE ASSOCIATED WITH A REDUCTION OR
WITHDRAWAL OF RATINGS OF THE SECURITIES
As a condition to the issuance of the Securities, the Class A
Securities will be rated at least "___" and the Certificates will be rated at
least "___" by S&P and "Aaa" by Moody's on the basis of the issuance of the
Policy by the Insurer. There is no assurance that a rating will not be lowered
or withdrawn by a rating agency based on a change in circumstances deemed by
such rating agency to adversely affect the related Class of Securities. A rating
is not a recommendation to purchase, hold or sell the Securities, in as much as
such rating does not comment as to market price or suitability for a particular
investor. In the event that any rating initially assigned to the Securities were
subsequently lowered or withdrawn for any reason, including by reason of a
downgrading of the security insurer's claims-paying ability, no person or entity
will be obligated to provide any additional credit enhancement with respect to
the Securities. Any reduction or withdrawal of a rating will have an adverse
effect on the liquidity and market price of the Securities. See "Ratings of the
Securities."
RISK OF LIQUIDATION OF TRUST PROPERTY ASSOCIATED WITH EVENTS OF DEFAULT UNDER
THE INDENTURE
So long as no Insurer Default shall have occurred and be continuing,
neither the Indenture Trustee nor the Noteholders may declare an Event of
Default under the Indenture. So long as an Insurer Default shall not have
occurred and be continuing, an Event of Default will occur only upon delivery by
the Insurer to the Indenture Trustee of notice of the occurrence of certain
events of default under the Insurance Agreement. Upon the occurrence of an Event
of Default under the Indenture (so long as an Insurer Default shall not have
occurred and be continuing), the Insurer will have the right, but not the
obligation, to cause the liquidation, in whole or in part, of the Trust
Property, which will result in redemption, in whole or in part, of the
Securities. Following the occurrence of an Event of Default, the Indenture
Trustee will continue to submit claims under the Policy as necessary to enable
the Issuer to continue to make payments of the Scheduled Payments with respect
to the Class A Securities.
RISK OF REDEMPTION OF THE SECURITIES ASSOCIATED WITH INSOLVENCY OF ACC FUNDING
The Trust Agreement provides that, in the event that ACC Funding
becomes insolvent, or is terminated or dissolved (a "Dissolution Event") and the
Owner Trustee is unable to obtain an opinion of counsel satisfactory to the
Insurer to the effect that the Issuer will not thereafter be an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes, the Issuer will effect redemption of the Securities and the
Certificateholder will terminate the Issuer and cause the winding-up of the
affairs of the Issuer, unless within such 90 days the holders of a majority of
the Certificate Percentage Interest (as defined in the Trust Agreement) agree in
writing to continue the business of the Issuer and the Owner Trustee is able to
obtain the opinion of counsel described above.
RISK OF LOSSES ASSOCIATED WITH NON-PERFECTION OF SECURITY INTERESTS IN
CERTIFICATES OF TITLE FOR FINANCED VEHICLES AND WITH INSOLVENCY OF THE SELLER
In connection with the sale and assignment of the Receivables to the
Issuer, security interests in the Financed Vehicles which have been assigned by
the Seller to the Issuer will be assigned by the Issuer to the Indenture
Trustee. In most states, such an assignment is an effective conveyance of a
security interest without amendment of any security interest noted on a
vehicle's certificate of title, and the assignee succeeds thereby to the
assignor's rights as secured party. However, a security interest
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<PAGE> 21
in a motor vehicle registered in the states in which a majority of Financed
Vehicles purchased under ACC's finance programs are currently registered, may be
perfected only by causing such vehicle's certificate of title to be amended to
note the security interest of the secured party. Such notation of a secured
party's security interest is generally effected in such states by depositing
with the applicable state highway department, motor vehicle registrar or similar
state authority, the vehicle's certificate of title, an application containing
the name and address of the secured party, and the necessary registration fees.
Because of the administrative burden and expense that would be entailed
in doing so, the certificates of title for the Financed Vehicles will not
identify the Indenture Trustee or the Owner Trustee as the secured party, and
will not be deposited with the state highway department, motor vehicle registrar
or other state authorities in any state. In the absence of such action, the
Indenture Trustee and the Owner Trustee may not have a perfected security
interest in the Financed Vehicles and, in the event that another person obtains
a perfected security interest in a Financed Vehicle subsequent to the transfer
of the Receivables to the Issuer, such person might acquire rights in such
Financed Vehicle prior to the rights of the Issuer. The Seller will covenant in
the Sale, Servicing and Collateral Management Agreement to repurchase any
Receivable if, on the Closing Date a valid, subsisting and enforceable first
priority security interest has not been perfected (or is not in the process of
perfection) in favor of Accent Financial Services, OFLA or the Seller, which
will have been validly assigned to the Issuer and the Indenture Trustee, in the
related Financed Vehicle. The Seller, as Servicer, will covenant in the Sale,
Servicing and Collateral Management Agreement to repurchase any Receivable if,
after the Closing Date, a valid, subsisting and enforceable first priority
security interest in the name of Accent Financial Services, OFL-A or the Seller
is not maintained on behalf of the Indenture Trustee in the related Financed
Vehicle.
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to make it unlikely that the voluntary or involuntary
application for relief by the Seller under the United States Bankruptcy Code or
similar applicable state laws ("Insolvency Laws") will result in the
consolidation of the assets and liabilities of the Issuer with those of the
Seller. These steps include the creation of the Issuer as a separate,
limited-purpose entity pursuant to its trust certificate (the "Trust
Certificate"), the creation of separate limited purpose entities to hold the
ownership interest in the Issuer pursuant to the Articles of Incorporation of
each of ACC Receivables and ACC Funding which contain certain limitations
(including restrictions on the nature of the business of each of ACC Receivables
and ACC Funding) and a restriction on either's ability to commence a voluntary
case or proceeding under any Insolvency Law without the unanimous affirmative
vote of all of the members of its board of directors. The Certificates of
Incorporation of each of ACC Receivables and ACC Funding also include a
provision that requires each of ACC Receivables and ACC Funding to have at least
two directors who qualify under the Articles of Incorporation as "independent
directors."
The Seller has received the advice of counsel, concluding on the basis
of a reasoned analysis of analogous case law (although there is no precedent
based on directly similar facts) to the effect that, subject to certain facts,
assumptions and qualifications specified therein, a court would conclude that
the assets and liabilities of the Seller would not be consolidated with the
assets and liabilities of the Issuer, ACC Receivables or ACC Funding in the
event of the application of the federal bankruptcy laws to the Seller. If a
court concluded otherwise, or a filing were to be made under any Insolvency Law
by or against the Seller, or if an attempt were to be made to litigate any of
the foregoing issues, delays in the distributions on the Securities (and
possible reductions in the amount of such distributions) could occur. The Issuer
is not expected to have any significant assets or sources of funds. In a case
decided in 1993 by the United States Court of Appeals for the Tenth Circuit,
such Circuit Court found that accounts sold prior to a bankruptcy should be
treated as part of the bankruptcy estate of the seller of such accounts. If the
Seller were to become a debtor in a bankruptcy proceeding and a court applied
the reasoning of the Circuit Court reflected in the case described above to
chattel paper, delays in payments to Securityholders could occur or reductions
in the amounts of such payments could result.
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The Seller intends that any transfer of Receivables to the Issuer will
constitute a sale, rather than a pledge of the Receivables to secure
indebtedness of the Seller. However, if the Seller were to become a debtor under
any Insolvency Laws, a creditor or trustee in bankruptcy of the Seller, as
debtor-in-possession, might argue that such sale of Receivables by the Seller
was a pledge of Receivables rather than a sale, and if such position -- that the
transfer of Receivables was a pledge rather than a sale or otherwise should be
treated as part of the bankruptcy estate of the Seller -- were presented to or
accepted by a court, then delays in payments to Noteholders could occur or
reductions in the amounts of such payments could result. In addition, if the
transfer of any Receivable is recharacterized as a pledge, then a tax lien,
other governmental lien, or other lien created by operation of law on the
property of the Seller may have priority over the Issuer's interest in such
Receivable.
USE OF PROCEEDS
The net proceeds to be received by the Issuer from the sale of the
Securities will be used to pay the Seller, the purchase price for the
Receivables, to make the deposits of the Pre-Funded Amount into the Pre-Funding
Account and to make the initial deposit into the Capitalized Interest Account.
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THE ISSUER
GENERAL
The Issuer, ACC Automobile Receivables Trust ____, is a business trust
formed, prior to its purchase of the Receivables and the issuance of the Notes,
under the laws of the State of Delaware pursuant to the Trust Agreement for the
purpose of engaging in the transactions described in this Private Placement
Memorandum. After its formation, the Issuer will not engage in any activity
other than (i) acquiring, holding and managing the Receivables and the other
assets of the Issuer and proceeds therefrom, (ii) issuing the Notes, (iii)
making payments on the Notes and (iv) engaging in other activities that are
necessary, suitable or convenient to accomplish the foregoing or are incidental
thereto or connected therewith.
The Issuer's principal offices are in Wilmington, Delaware, in care of
Wilmington Trust Company as Owner Trustee, at the address listed below under "--
The Owner Trustee."
THE OWNER TRUSTEE
______________________ is the Owner Trustee under the Trust Agreement,
is a ____________ banking corporation and its principal offices are located at
________________________________. The Owner Trustee will perform limited
administrative functions under the Trust Agreement. The Owner Trustee's
liability in connection with the issuance and sale of the Notes is limited
solely to the express obligations of the Owner Trustee set forth in the Trust
Agreement and the Sale, Servicing and Collateral Management Agreement.
THE INDENTURE TRUSTEE
_________________________ is the Indenture Trustee under the Indenture.
________________________ is a national banking association, the principal
offices of which are located at the ___________________________.
THE TRUST PROPERTY
GENERAL
The Trust Property will include, among other things, the following: (a)
motor vehicle retail installment sale contracts secured by new and used
vehicles, light trucks and vans; (b) all monies paid or payable thereunder after
the Initial Cutoff Date or the Subsequent Cutoff Date, as the case may be; (c)
such amounts as from time to time may be held in the Lockbox Account, the
Collection Account, the Pre-Funding Account, the Capitalized Interest Account
and the Class B Reserve Fund; (d) an assignment of the interest of the Seller in
the security interests in the Financed Vehicles granted by the Obligors pursuant
to the Receivables and any accessions thereto; (e) an assignment of the rights
of the Seller against Dealers under agreements between the Seller and such
Dealers (the "Dealer Agreements"); (f) an assignment of the right to receive
proceeds from claims on certain physical damage, credit life and disability
insurance policies covering the Financed Vehicles or the Obligors; (g) an
assignment of the rights of the Seller under the Purchase Agreement and any
Subsequent Purchase Agreements (as defined herein); (h) the Receivables Files;
(i) certain other rights under the Trust Documents and (j) all proceeds of the
foregoing.
Most of the Initial Receivables were, and most of the Subsequent
Receivables were or will be, originated by Dealers in accordance with ACC's
requirements under agreements with Dealers for assignment to the Seller, have
been or will be so assigned, and evidence or will evidence the indirect
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financing made available to the Obligors by the Seller. The remaining
Receivables were originated directly by the Seller or by Accent Financial
Services, a wholly owned subsidiary of ACC. Dealer Agreements may provide for
repurchase or recourse against the Dealer in the event of a breach of a
representation or warranty by the Dealer under a Dealer Agreement.
The "Pool Balance" at any time represents the aggregate principal
balance of the Receivables at the end of the preceding Monthly Period (plus the
amount, if any, then on deposit in the Pre-Funding Account on such date), after
giving effect to all payments received from Obligors and any Purchase Amounts to
be remitted by the Seller, for such Monthly Period and all losses, including
Cram Down Losses, realized on Receivables liquidated during such Monthly Period.
In connection with its formation, the Issuer will issue one
transferrable and one non- transferrable Certificate (each a "Certificate") each
of which will represent a fractional undivided interest in the Trust Property
but subject to the lien of the Trust Collateral Agent in the Trust Property
created by the Indenture. The transferrable Certificate will initially be held
by ACC Receivables and may thereafter be pledged or otherwise transferred (under
certain conditions) and the non-transferrable Certificate will be held by ACC
Funding in each case pursuant to the Trust Agreement. Pursuant to the Indenture,
the Issuer will grant a security interest in the Trust Property (other than the
Certificate Distribution Account) in favor of the Trust Collateral Agent for the
benefit of the Indenture Trustee on behalf of the Noteholders and for the
benefit of the Insurer in support of the obligations owing to it under the
Insurance Agreement. Any proceeds of such security interest in the Trust
Property would be distributed according to the Indenture, as described below
under "Description of the Trust Documents -- Distributions." The Insurer would
be entitled to such distributions only after payment of amounts owing to holders
of the Class A Notes.
All of the Receivables not already owned by the Seller will be sold to
the Seller pursuant to a Purchase Agreement (the "Purchase Agreement" and, in
the case of Subsequent Receivables, a "Subsequent Purchase Agreement") and by
the Seller to the Issuer pursuant to the Sale, Servicing and Collateral
Management Agreement. One hundred percent (100%) of the Receivables (as a
percentage of the aggregate principal balance) comprising the property of the
Issuer consist of non-prime retail automobile installment sales contracts. The
Receivables originally were, or, with respect to the Subsequent Receivables,
were or will have been originated in the ordinary course of its business
pursuant to ACC's finance programs and underwriting standards. Approximately
$_________ by aggregate principal balance of non-prime retail automobile
installment sales contracts that will become Subsequent Receivables have already
been so originated by ACC.
ELIGIBILITY CRITERIA
The Receivables (including some Receivables that will become Subsequent
Receivables) were, or, with respect to the remaining Subsequent Receivables,
will have been, selected according to several criteria, including the following:
each Receivable (i) was originated in the United States, (ii) has a contractual
APR that equals or exceeds ___%, (iii) provides for level monthly payments which
provide interest at the APR and fully amortize the amount financed over an
original term no greater than 72 months, (iv) is not more than 30 days past due
as of the Initial Cutoff Date or Subsequent Cutoff Date, as the case may be, (v)
is attributable to the purchase of a new or used automobile, light duty truck,
van or mini-van and (vi) as of the Initial Cutoff Date or the Subsequent Cutoff
Date, as the case may be, has a remaining term of not more than 72 months. No
selection procedures adverse to the Noteholders or the Insurer were utilized in
selecting the Receivables to be conveyed to the Issuer.
The obligation of the Issuer to purchase Subsequent Receivables on a
Subsequent Transfer Date is subject to the condition that the Receivables owned
by the Issuer, including the Subsequent Receivables to be conveyed to the Issuer
on such Subsequent Transfer Date, meet the following criteria: (i) the Insurer
(so long as no Insurer Default shall have occurred and be continuing), in its
sole and absolute discretion shall have approved in writing the transfer of such
Subsequent Receivables to
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the Issuer; (ii) not more than ___% of the principal balances of the Receivables
owned by the Issuer relate to Financed Vehicles that are used automobiles, light
duty trucks, vans or mini-vans; (iii) the weighted average APR of the
Receivables owned by the Issuer is not less than ___%; (iv) the weighted average
remaining term to maturity of the Receivables on such Subsequent Cutoff Date is
not greater than 60 months; and (v) not more than ____% of the Receivables have
Obligors whose mailing addresses are in Florida, not more than ____% of the
Receivables have Obligors whose mailing address is in California, not more than
____% of the Receivables have obligors whose mailing address is in Texas, and
not more than ____% of the Receivables have Obligors whose mailing address is in
any one other state. As to clauses (ii), (iii) and (iv) in the immediately
preceding sentence, such criteria will be based on the characteristics of the
Initial Receivables on the Initial Cutoff Date and the Receivables, including
the Subsequent Receivables, on the related Subsequent Cutoff Date, and as to
clause (v) in the immediately preceding sentence, such criteria will be based on
the mailing addresses of the Obligors of the Initial Receivables on the Initial
Cutoff Date and the Subsequent Receivables on the related Subsequent Cutoff
Date.
Except for the criteria described in the preceding paragraphs, there
are no required characteristics for the Subsequent Receivables. Therefore,
following the transfer of Subsequent Receivables to the Issuer, the aggregate
characteristics of the entire pool of Receivables owned by the Issuer, including
the composition of the Receivables, the distribution by APR, the geographic
distribution and the distribution by remaining term to maturity described in the
following tables, may vary from those of the Initial Receivables.
COMPOSITION OF THE INITIAL RECEIVABLES
Total Pool of Initial Receivables
---------------------------------
Original Pool Balance
Number of Initial Receivables
Average Principal Balance(1)
Range of Principal Balances
Average Original Amount Financed(2)
Range of Original Amounts Financed
Weighted Average APR(3)
Range of APRs
Weighted Average Original Term(3)
Range of Original Terms
Weighted Average Remaining Term(3)
Range of Remaining Terms
Weighted Average Months of Seasoning(3)
Range of Months of Seasoning
- -------------------------
(1) Sum of Principal Balance divided by total number of loans.
(2) Sum of aggregate Amount Financed divided by total number of loans.
(3) Weighted by Principal Balance as of the Cutoff Date.
23
<PAGE> 26
DISTRIBUTION BY APR OF THE INITIAL RECEIVABLES
(as of the Cutoff Date)
<TABLE>
<CAPTION>
Percentage Number
Aggregate by of Percentage
Principal Principal Initial by
APR Range Balance Balance Receivables Number
--------- ------- ------- ----------- ------
<S> <C> <C> <C> <C>
Total:
- ---------------------------------------------
</TABLE>
(1) Due to rounding, may not add up to 100.00%.
<TABLE>
<CAPTION>
DISTRIBUTION BY INTEREST ACCRUAL METHOD
(as of the Cutoff Date)
Aggregate Percentage of Number of
Interest Principal Aggregate Initial Percentage
Accrual Method Balance Principal Balance Receivables by Number
-------------- ------- ----------------- ----------- ---------
<S> <C> <C> <C> <C>
Rule of 78s
Total:
- -------------------------
</TABLE>
(1) Due to rounding, may not add up to 100.00%.
24
<PAGE> 27
STATE DISTRIBUTION BY MAILING ADDRESS OF OBLIGOR
(as of the Cutoff Date)
<TABLE>
<CAPTION>
Percentage
Aggregate by Number Percentage
Principal Principal of by
Location Balance Balance Receivables Number
-------- ------- ------- ----------- ------
<S> <C> <C> <C> <C>
Alabama
Arizona
Arkansas
California
Colorado
Delaware
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Michigan
Mississippi
Missouri
Montana
Nebraska
Nevada
New Jersey
New Mexico
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Virginia
Washington
Washington DC
West Virginia
Total:
- ----------------------
</TABLE>
(1) Due to rounding, may not add up to 100.00%.
25
<PAGE> 28
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES
(as of the Cutoff Date)
<TABLE>
<CAPTION>
Percentage
Aggregate by Number Percentage
Remaining Term Principal Principal of by
Range Balance Balance Initial Receivables Number
<S> <C> <C> <C> <C>
21 to 23
24 to 29
30 to 35
36 to 41
42 to 47
48 to 53
54 to 59
60 to 65
66 to 71
72 to 72
Total:
</TABLE>
- -------------------------
(1) Due to rounding, may not add up to 100.00%.
As of the Initial Cutoff Date, approximately ____% of the total number
of the Initial Receivables owned by the Issuer, and approximately ____% by
principal balance of the Initial Receivables owned by the Issuer, relate to new
automobiles, light-duty trucks, vans and mini-vans. As of the Initial Cutoff
Date, approximately ____% of the total number of the Initial Receivables
included in the Trust Property, and approximately ____% by principal balance of
the Initial Receivables owned by the Issuer, relate to used automobiles and
light-duty trucks.
PAYMENTS ON THE RECEIVABLES
Each Receivable provides for the allocation of payments according to
(i) the simple interest method ("Simple Interest Receivables") or (ii) the "sum
of periodic balances" or "sum of monthly payments" method ("Actuarial
Receivables"). Except as otherwise described, the scheduled payment on each
Receivable is a fixed level monthly payment which will amortize the full amount
of the Receivable over its term assuming, in the case of each Simple Interest
Receivable, that the Obligor does not pay any installment after its due date.
Payments on Simple Interest Receivables will be applied first to
interest accrued through the date immediately preceding the date of payment and
then to unpaid principal. Accordingly, if an Obligor pays an installment before
its due date, the portion of the payment allocable to interest for the payment
period will be less than if the payment had been made on the due date, the
portion of the payment applied to reduce the principal balance will be
correspondingly greater, and the principal balance will be amortized more
rapidly than scheduled. Conversely, if an Obligor pays an installment after its
due date, the portion
26
<PAGE> 29
of the payment allocable to interest for the payment period will be greater than
if the payment had been made on the due date, the portion of the payment applied
to reduce the principal balance will be correspondingly less, and the principal
balance will be amortized more slowly than scheduled, in which case a larger
portion of the principal balance may be due on the final scheduled payment date.
An Actuarial Receivable provides for the payment by the Obligor of a
specified total amount of payments, payable in monthly installments on the
related due date, which total represents the principal amount financed and
finance charges in an amount calculated on the basis of a stated APR for the
term of such Receivable. The amount of each scheduled payment is calculated in
accordance with the Rule of 78s. Notwithstanding the foregoing, the rate at
which such amount of finance charges is earned and, correspondingly, the amount
of each scheduled payment allocated to reduction of the outstanding principal
balance of an Actuarial Receivable is calculated in accordance with the
actuarial method and all payments (other than partial prepayments) received by
the Servicer on or in respect of the Actuarial Receivables will be allocated
pursuant to the Sale, Servicing and Collateral Management Agreement on an
actuarial basis. Collections on an Actuarial Receivable made during a Collection
Period will be applied first, to the scheduled payment on such Actuarial
Receivable, and second, to any late fees accrued with respect to such Actuarial
Receivable. Any collections remaining shall be applied to reduce the principal
balance of the Actuarial Receivable.
REPURCHASE OBLIGATIONS
In connection with the sale of the Receivables, the security interests
in the Financed Vehicles securing the Receivables have been assigned by ACC to
the Issuer and by the Issuer to the Indenture Trustee. ACC, as Seller will be
obligated to repurchase any Receivable sold to the Issuer as to which a breach
has occurred as to the representation and warranty that a security interest in
the Financed Vehicle securing such Receivable has not been perfected (or was
not, at the time such representation and warranty was made, in the process of
perfection) in favor of Accent Financial Services, OFL-A or ACC, if such breach
will materially adversely affect such Receivable or the interests of the
Noteholders or the Insurer and, if such failure or breach is not cured by the
last day of the first full calendar month following the discovery by or notice
to the breaching party of the breach.
The Sale, Servicing and Collateral Management Agreement provides that
if the Seller breaches certain representations and warranties relating to the
Receivables and the Financed Vehicles in a manner that materially and adversely
affects any Receivable or the interests of the Noteholders or the Insurer or the
interests of the Issuer, the Seller shall, unless such breach shall have been
cured in all material respects, purchase such Receivable from the Issuer. The
Seller shall be obligated to repurchase such Receivable if its breach under the
Sale, Servicing and Collateral Management Agreement is not cured by the last day
of the first full calendar month following the discovery by or notice to the
Seller of the breach.
The Sale, Servicing and Collateral Management Agreement also provides
that if the Servicer breaches certain of its servicing obligations under the
Sale, Servicing and Collateral Management Agreement (including, but not limited
to its obligation to ensure that the perfected security interest of Accent
Financial Services, OFL-A or ACC in the related Financed Vehicles is maintained)
or certain other covenants with regard to the Servicer, in each case only in a
manner that materially and adversely affects the interests of any Receivable or
the interests of the Noteholders or the Insurer or the interests of the Issuer,
the Servicer shall, unless such breach shall have been cured in all material
respects, purchase such Receivable from the Issuer. The Servicer shall be
obligated to repurchase such Receivable if a Servicer breach under the Sale,
Servicing and Collateral Management Agreement is not cured by the last day of
the first full calendar month following the discovery by or notice to the
Servicer of the breach.
27
<PAGE> 30
MATURITY AND PREPAYMENT ASSUMPTIONS
All the Receivables are prepayable at any time, provided that an
Actuarial Receivable must be prepaid in full. If prepayments are received on the
Receivables, the actual weighted average life of the Receivables may be shorter
than the scheduled weighted average life (i.e., the weighted average life
assuming that payments will be made as scheduled and that no prepayments will be
made). (For this purpose, the term "prepayments" also includes liquidations due
to default, as well as receipt of proceeds from credit life, credit disability,
and casualty insurance policies.) Weighted average life means the average amount
of time during which each dollar of principal on a Receivable is outstanding.
The rate of prepayments on the Receivables may be influenced by a
variety of factors, including the fact that an Obligor may not transfer its
equity in a Financed Vehicle without the consent of ACC. Any reinvestment risks
resulting from a faster or slower incidence of prepayment of Receivables will be
borne by the Noteholders. See also "Further Provisions of the Principal
Transaction Documents -- Termination" regarding the Servicer's option to
purchase all of the Receivables as of the last day of any month in which the
Pool Balance at the close of business on the Record Date is less than 10% of the
original balance of the Notes. See also "Description of the Notes - Mandatory
Prepayment" regarding mandatory partial prepayment of the Notes in the event
that any portion of the Pre-Funded Amount remains after giving effect to the
purchase of all Subsequent Receivables during the Funding Period.
YIELD CONSIDERATIONS
Interest on the Receivables will be paid to the Noteholders on each
Distribution Date in an amount equal to one-twelfth of the applicable Note
Interest Rate applied to the principal balance of the related Class of Notes on
the last day of the preceding Collection Period. In the event of prepayments on
Receivables, Noteholders will nonetheless be entitled to receive interest for
the full month on the Notes. The Receivables have different APRs, as set forth
above. In all cases, however, the APR exceeds the sum of (i) the Servicing Fee
Rate and (ii) the applicable Note Interest Rate.
DELINQUENCY AND LOAN LOSS INFORMATION
Set forth below is certain information concerning ACC's delinquency and
loss experience with respect to its gross servicing portfolio of retail
installment sale contracts for new and used automobiles, light duty trucks, vans
and mini-vans acquired pursuant to its finance programs. Delinquency is
recognized on a contractual basis only. Installment payments must equal or
exceed 90% of the scheduled payment due for a contract to be considered current.
28
<PAGE> 31
ACC CONSUMER FINANCE CORPORATION
HISTORICAL DELINQUENCY
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended
3/31/97 12/31/96 9/30/96 6/30/96 3/31/96
Dollars Percent Dollars Percent Dollars Percent Dollars Percent Dollars Percent
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Amount Outstanding (1) $303,986 100% $251,751 100% $209,761 100% $172,562 100% 139,969 100%
Delinquencies (2)
31-60 Days 7,794 2.56% 7,870 3.13% 5,959 2.84% 4,609 2.67% 2,069 1.48%
61-90 Days 2,631 0.87% 2,341 0.93% 1,656 0.79% 1,255 0.73% 798 0.57%
Over 90 Days 766 0.25% 813 0.32% 451 0.22% 387 0.22% 193 0.14%
Subtotal: 11,191 3.68% 11,024 4.38% 8,066 3.85% $ 6,251 3.62% 3,060 2.19%
Skips 55 0.02% 394 0.16% 257 0.12% 60 0.03% 157 0.11%
Bankruptcies 1,372 0.45% 1,266 0.50% 832 0.40% 525 0.30% 610 0.43%
Repossessions on hand (3) 2,454 0.81% 2,216 0.88% 1,685 0.80% 1,369 0.99% 1,130 0.81%
-------- ----- ------- ----- ------- ----- ------- ----- -------- -----
Total Delinquencies and
Repossessions on hand $ 15,072 4.96% $14,900 5.92% $10,840 5.17% $ 8,205 4.75% $ 4,957 3.54%
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
12/31/95
Dollars Percent
<S> <C> <C>
Amount Outstanding (1) 117,539 100%
Delinquencies (2)
31-60 Days 3,064 2.61%
61-90 Days 1,014 0.86%
Over 90 Days 275 0.23%
Subtotal: 4,353 3.70%
Skips 180 0.15%
Bankruptcies 463 0.39%
Repossessions on hand (3) 861 0.73%
------ ------
Total Delinquencies and
Repossessions on hand $5,857 4.98%
</TABLE>
- -------------------------------
(1) Amount outstanding is the net remaining principal balance.
(2) The period of delinquency is based on the number of days payments are
contractually past due.
(3) Amounts shown represent the remaining balance of installment loans which
have been repossessed, but not yet liquidated.
29
<PAGE> 32
ACC CONSUMER FINANCE CORPORATION
HISTORICAL NET LOSS EXPERIENCE
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Quarter Quarter Quarter Quarter Quarter Quarter
Ended Ended Ended Ended Ended Ended
3/31/97 12/31/96 9/30/96 6/30/96 3/31/96 12/31/95
------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Principal amount outstanding (1) $303,986 $251,751 $209,761 $172,562 $139,969 $117,539
Average principal amount outstanding (2) $274,507 $232,617 $191,162 $156,266 $128,754 $108,784
Number of loans outstanding 27,880 23,145 19,410 16,034 13,049 10,935
Average number of loans outstanding (2) 25,236 21,278 17,722 14,542 11,992 10,083
Number of repossessions (3) 597 526 434 291 279 184
Principal amount of repossessions (3) (4) $ 6,703 $ 5,773 $ 4,729 $ 3,156 $ 2,984 $ 1,983
Number of repossessions as a percent of average
number of loans outstanding (5) 9.46% 9.89% 9.80% 8.00% 9.31% 7.30%
Principal amount of repossessions as a percent of
average principal amount outstanding (5) 9.77% 9.93% 9.90% 8.08% 9.27% 7.29%
Net losses excluding benefits of VSI Policy (6) . $ 4,109 $ 3,215 $ 2,442 $ 1,548 $ 1,636 $ 1,500
Net losses as a percent of average principal amount
outstanding (5) 5.99% 5.53% 5.11% 3.96% 5.08% 5.52%
Net losses including benefits of VSI Policy (6) . $ 3,543 $ 2,945 $ 2,227 $ 1,329 $ 1,417 $ 1,233
Net losses as a percent of average principal amount
outstanding (5)(6) 5.16% 5.06% 4.66% 3.40% 4.40% 4.53%
</TABLE>
- -------------------------
(1) Principal Amount Outstanding is the net remaining principal balance.
(2) For the three-month period ended December 31, 1996, average principle
outstanding as of the beginning and the end of each month during the
period. For prior periods, average of principle outstanding as of the
beginning and the end of the period presented.
(3) For the quarters ended after December 31, 1995, the numbers and amounts
of repossessions are net of reinstatements.
(4) Remaining principal balance at time of repossession.
(5) Annualized.
(6) Net Losses are net of recoveries and include remaining principal
balance at time of charge-off. In the case of repossession, net losses
include the remaining balance at the time of repossession less
liquidation proceeds (for disposed vehicles) or the NADA wholesale
value (for vehicles repossessed but not sold). Net losses do not
include repossessions that are less than 120 days delinquent and are
not charged off.
The data presented in the above tables are for illustrative purposes
only. There is no assurance that ACC's delinquency, credit loss and repossession
experience with respect to automobile, light duty truck, van and mini-van
installment sale contracts in the future, or the experience of the Issuer with
respect to the Receivables, will be similar to that set forth above. Losses and
delinquencies are affected by, among other things, general and regional economic
conditions and the supply of and demand for automobiles, light duty trucks, vans
and mini-vans.
INSURANCE
In addition to the physical damage insurance policies maintained by the
borrowers naming Accent Financial Services or OFL-A as the loss payee, ACC
maintains VSI Insurance on all automobile loans. This policy was put in place
effective January 1, 1995 and covers the entire portfolio. This protects ACC's
interest in the collateral against uninsured physical damage, filing errors and
omissions.
ACC maintains fidelity bond coverage insuring against losses through
wrongdoing of its officers, employees and agents.
30
<PAGE> 33
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a form
of which has been filed as an exhibit to the Registration Statement. The
following summary describes certain terms of the Notes and the Indenture. The
summary does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Notes and the Indenture.
The following summary supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the Notes of
any given series and the related Indenture set forth in the accompanying
Prospectus.
The Notes will be offered for purchase in denominations of $100,000 and
integral multiples of $1,000 in excess thereof, in book-entry form only. Persons
acquiring beneficial interests in the Notes will hold their interests through
DTC in the United States or Cedel or Euroclear in Europe. See "Description of
the Securities -- Book-Entry Registration" in the Prospectus and Annex I to the
Prospectus.
PAYMENTS OF INTEREST
Interest on the principal amount of the Notes will accrue at the
applicable Note Interest Rate and will be payable to the Noteholders monthly on
each Distribution Date, commencing _________. Interest will accrue from and
including the most recent Distribution Date on which interest has been paid (or,
in the case of the first Distribution Date, from and including the Closing Date)
to but excluding the following Distribution Date (each, an "Interest Period").
Interest on the Notes will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. Interest accrued as of any Distribution Date
but not paid on such Distribution Date will be due on the next Distribution
Date, together with, to the extent permitted by law, interest on such amount at
the applicable Note Interest Rate. Interest payments on the Notes will be made
from the Note Distribution Amount (as defined herein) after payment of accrued
and unpaid trustees' fees and other administrative fees of the Issuer and
payment of the Servicing Fee. See "Description of the Trust Documents --
Distributions" herein.
PAYMENTS OF PRINCIPAL
The "Principal Distributable Amount", with respect to any Distribution
Date, will be an amount equal to the sum of the following amounts with respect
to the related Monthly Period, computed in accordance with the simple interest
method in the case of a Simple Interest Receivable and the actuarial method in
the case of an Actuarial Method Receivable: (i) that portion of all collections
on Receivables (other than Liquidated Receivables and Purchased Receivables)
allocable to principal, including full and partial principal prepayments,
received during such Monthly Period (ii) the principal balance of each
Receivable that became a Liquidated Receivable during the related Monthly Period
(other than Purchased Receivables), (iii) the principal balance of each
Receivable that was repurchased by the Issuer, the Servicer or the Seller as of
the last day of such Monthly Period, (iv) the aggregate amount of any Cram Down
Loss during such Monthly Period, and (v) any unpaid portion of the amounts
included in clauses (i), (ii), (iii) and (iv) above with respect to a prior
Distribution Date. Principal payments on the Class A Notes will be made from the
Distribution Amount after payment of accrued and unpaid trustees' fees and other
administrative fees of the Issuer, payment of the Servicing Fee and after
distribution of the Class A Noteholders' Interest Distributable Amount. See
"Description of the Sale, Servicing and Collateral Management Agreement and the
Trust Documents -- Distributions" herein.
Principal payments will be made to the Class A Noteholders on each
Distribution Date in an amount equal to the Class A Noteholders' Principal
Distributable Amount for the calendar month (the "Monthly Period") preceding
such Distribution Date. The Class A Noteholders' Principal Distributable Amount
will equal the Class A Noteholders' Percentage of the Principal Distributable
Amount. The Class A Noteholders' Principal Distributable Amount will also
include, at the option of the Insurer, the Class A Noteholders' Percentage of
the principal balance of each Receivable that was required to be, but was not
repurchased by the Seller or the Issuer.
31
<PAGE> 34
The Class A Noteholders' Percentage will be 94% for each Distribution
Date other than a Distribution Date after which the Class A Notes have been paid
in full, or zero for any Distribution Date after the Distribution Date on which
the Class A Notes are paid in full.
Principal payments will be made to the Class B Noteholders on each
Distribution Date in an amount equal to the Class B Noteholders' Principal
Distributable Amount together with any other remaining Available Funds for the
Monthly Period preceding such Distribution Date. The Class B Noteholders'
Principal Distributable Amount will equal the Class B Noteholders' Percentage of
the Principal Distributable Amount.
Principal payments on the Class B Notes will be made from (i) the
Distribution Amount after payment of accrued and unpaid trustee's fees and other
administrative fees of the Issuer, payment of the Servicing Fee, distribution of
the Noteholders' Interest Distributable Amount, payment of the Class A
Noteholders' Principal Distributable Amount, payment and reimbursement to the
Insurer of certain amounts owing to it under the Insurance Agreement and the
funding of certain reserve funds established for the benefit of the Insurer and
(ii) amounts available to be withdrawn from the Class B Reserve Fund in excess
of the Floor Amount. See "Description of the Trust Documents -- Distributions"
herein.
The Class B Noteholders' Percentage will be ___% for each Distribution
Date other than a Distribution Date after which the Class A Notes have been paid
in full or 100% for any Distribution Date after the Class A Notes are paid in
full; provided, however, that the Class B Noteholders' Percentage will be zero
percent when the principal balance of the Class B Notes has been reduced to
zero.
In addition, the outstanding principal amount of the Notes of any
Class, to the extent not previously paid, will be payable on the respective
Final Scheduled Distribution Date for such Class. The actual date on which the
aggregate outstanding principal amount of any Class of Notes is paid may be
earlier than the Final Scheduled Distribution Date for such Class, depending on
a variety of factors.
MANDATORY REDEMPTION
Each Class of Notes will be redeemed in part on the Mandatory
Redemption Date in the event that any portion of the Pre-Funded Amount remains
on deposit in the Pre-Funding Account at the end of the Funding Period. The
aggregate principal amount of each Class of Notes to be redeemed will be an
amount equal to such Class's pro rata share (based on the respective current
principal amount of each Class of Notes) of the remaining Pre-Funded Amount on
such date (such Class's "Note Prepayment Amount"). Approximately $_________
already been originated and identified for transfer to the Issuer by the Seller.
OPTIONAL REDEMPTION
The Class A Notes and the Class B Notes, to the extent still
outstanding, may be redeemed in whole, but not in part, on any Distribution Date
on which the Servicer exercises its option to purchase the Receivables (with the
consent of the Insurer, if a claim has previously been made under the Policy or
if such purchase would result in a claim under the Policy or if such purchase
would result in any amount owing to the Insurer remaining unpaid). The Servicer
may purchase the Receivables when the Pool Balance has declined to 10% or less
of the Original Pool Balance. Such redemption will affect early retirement of
the Notes of such Classes. The redemption price will be equal to the unpaid
principal amount of the Notes of each such Class, plus accrued and unpaid
interest thereon (the "Redemption Price").
EVENTS OF DEFAULT
Unless an Insurer Default shall have occurred and be continuing,
"Events of Default" under the Indenture will consist of those events defined in
the Insurance Agreement as Insurance Agreement Indenture Cross-Defaults, and
will constitute an Event of Default under the Indenture only if the Insurer
shall have delivered to the Indenture Trustee, and not rescinded, a written
notice specifying that any such Insurance Agreement Indenture Cross-Defaults
constitutes an Event of Default under the Indenture. "Insurance Agreement
Indenture Cross-Defaults" consist of: (i) a demand for payment being made under
the Policy; (ii) certain events of bankruptcy, insolvency, receivership or
liquidation of the Issuer; (iii) the
32
<PAGE> 35
Issuer becoming taxable as an association (or publicly traded partnership)
taxable as a corporation for federal or state income tax purposes; (iv) on any
Distribution Date, the sum of the Available Funds with respect to such
Distribution Date plus the amount (if any) available from certain collateral
accounts maintained for the benefit of the Insurer being less than the sum of
the amounts described in clauses (a)-(e) under "Description of the Trust
Documents -- Distributions" herein; and (v) any failure to observe or perform in
any material respect any other covenants or agreements in the Indenture, or any
representation or warranty of the Issuer made in the Indenture or in any
certificate or other writing delivered pursuant thereto or in connection
therewith proving to have been incorrect in any material respect when made, and
such failure continuing or not being cured, or the circumstance or condition in
respect of which such misrepresentation or warranty was incorrect not having
been eliminated or otherwise cured, for 30 days after the giving of written
notice of such failure or incorrect representation or warranty to the Issuer and
the Indenture Trustee by the Insurer.
Upon the occurrence of an Event of Default, so long as an Insurer
Default shall not have occurred and be continuing, the Insurer will have the
right, but not the obligation, to cause the Trust Collateral Agent to liquidate
the Trust Property in whole or in part, on any date or dates following the
acceleration of the Class A Notes due to such Event of Default as the Insurer,
in its sole discretion, shall elect, and to deliver the proceeds of such
liquidation to the Indenture Trustee for distribution in accordance with the
terms of the Indenture. The Insurer may not, however, cause the Trust Collateral
Agent to liquidate the Trust Property in whole or in part if the proceeds of
such liquidation would not be sufficient to pay all outstanding principal of and
accrued interest on the Class A Notes, unless such Event of Default arose from a
claim being made on the Policy or from certain events of bankruptcy, insolvency,
receivership or liquidation of the Issuer. Following the occurrence of any Event
of Default, the Indenture Trustee and the Owner Trustee will continue to submit
claims as necessary under the Policy for any shortfalls in the Scheduled
Payments on the Class A Notes. Following any Event of Default under the
Indenture, the Insurer in its sole discretion may elect to pay all or any
portion of the outstanding amount of the Class A Notes, plus accrued interest
thereon. See "The Policy" herein.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement. A copy of the Trust Agreement will be filed with the Commission
following the issuance of the Securities. The following summary describes
certain terms of the Certificates and the Trust Agreement. The summary does not
purport to be complete and is qualified in its entirety by reference to the
provisions of the Certificates and the Trust Agreement.
Distributions of principal of, and interest on, the Certificates will
be made by the Owner Trustee in accordance with the procedures set forth in the
Trust Agreement directly to holders of Certificates in whose names the
Certificates were registered at the close of business on the Certificate Record
Date. Such distributions will be made by check mailed to the address of such
holder as it appears on the register maintained by the Owner Trustee or by wire
transfer. The final payment on any Certificate, however, will be made only upon
presentation and surrender of such Certificate at the office or agency specified
in the notice of final distribution to Certificateholders.
Certificates will be transferable and exchangeable at the offices of
the Owner Trustee or a certificate registrar named in a notice delivered to
holders of Certificates. No service charge will be imposed for any registration
of transfer or exchange, but the Owner Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
Purchasers (including nominees of beneficial owners) of Certificates
and their assignees must represent that the beneficial owners are individuals or
entities that are U.S. persons (generally, citizens or residents of the U.S. and
corporations or partnerships organized under U.S. law), and each must provide a
certification of non-foreign status under penalties of perjury.
33
<PAGE> 36
THE CERTIFICATES
Distributions of Interest Income. Certificateholders will be entitled
to distributions in an amount equal to the amount of interest that would accrue
on the Certificate Balance at the Pass-Through Rate. [The Pass-Through Rate for
any Payment Date means [___%] provided, however that on and after the
_______________, 199__ Payment Date, if the aggregate amount of Realized Losses
during the period from the Cut-off Date through the end of the fiscal month
ending in _______________, 199__ is ar amount that is (x) _____% or less (but
greater than _____%) of the Pool Balance as of the Cut-off Date the Pass-Through
Rate (as determined in the clause preceding this proviso) for any Payment Date
shall be increased by _____% per annum or (y) _____% or less of the Pool Balance
as of the Cut-off Date, the Pass-Through Rate (as determined in the clause
preceding this proviso) for any Payment Date shall be increased by _____% per
annum. [In addition, Certificateholders will receive on each Payment Date, if on
such Payment Date the amount on deposit in the Reserve Account, after giving
effect to all withdrawals for payments on the Notes and the Certificates and all
deposits required to be made on such Payment Date, exceeds the Specified Reserve
Account Balance, an amount equal to such excess. Interest will be calculated on
the basis on a year of 360 days, in each case for the actual number of days
occurring in the period for which interest is payable. Such amounts will be
distributable every [month] on each Payment Date commencing _______________,
199__. Interest for each Payment Date will accrue from and including "the
Closing Date or from the most recent Payment Date but excluding the current
Payment Date. Interest distributions due for any Payment Date but not
distributed on such Payment Date will be due on the next Payment Date increased
by an amount equal to interest on such amount at the Pass-Through Rate. Interest
distributions with respect to the Certificates will be funded from the portion
of the Total Distribution Amount and the funds in the Reserve Account remaining
after the distribution of the Servicing Fee and the Noteholders' Distributable
Amount. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account" herein.
Distributions of Principal Payments. Certificateholders will be
entitled to distributions on each Payment Date in an amount generally equal to
the Certificateholders' Percentage of (or, following the payment in full of the
Notes, all of) the Principal Distribution Amount. Distributions with respect to
principal payments will be funded from the portion of the Total Distribution
Amount remaining after the distribution of the Servicing Fee, the Noteholders'
Distributable Amount and the Certificateholders' Interest Distributable Amount,
and from funds, if any, in the Reserve Account remaining after the payment of
the Noteholders' Distributable Amount and the Certificateholders' Interest
Distributable Amount. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account" herein. Until the Payment
Date following the latest to occur of (i) the Payment Date after the Payment
Date on which the principal balance of the [A-1 Notes] is reduced to zero, (ii)
the _______________, 199__ Payment Date and (iii) the Payment Date after the
Payment Date on which the lesser of the full amount of the Maturity Draw or the
amount of the Maturity Draw, if any, necessary to increase the amount on deposit
in the Reserve Account to the Specified Reserve Account Balance is deposited
into the Reserve Account, the Certificateholders' Percentage will be zero.
Thereafter, the Certificateholders' Percentage will be _____%. However, if the
amount on deposit in the Reserve Account is less than the lower of _____% of the
initial Pool Balance and the sum of the aggregate outstanding principal amount
of the Notes and the Certificate Balance on any Payment Date, then, with respect
to each Payment Date thereafter, the Certificateholders will not receive any
distributions of principal until the Notes have been paid in full.
Optional Purchase. If the Servicer exercises its option to purchase the
Receivables when the aggregate principal amount of the Receivables is less than
_____% of the initial Pool Balance, the Certificateholders will receive an
amount in respect of the Certificates equal to the Certificate Balance together
with accrued interest at the Pass-Through Rate and the Certificates will be
retired.
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THE INSURER
The following information has been obtained from _________________ (the
"Insurer") and has not been verified by the Seller, the Servicer or ___________.
No representation or warranty is made by the Seller, the Servicer or _________
with respect thereto.
THE POLICY
Simultaneously with the issuance of the Securities, the Insurer will
deliver the Policy to the Trust Collateral Agent as agent for the Indenture
Trustee for the benefit of each Securityholder. Under the Policy, the Insurer
will unconditionally and irrevocably guarantee to the Trust Collateral Agent for
the benefit of each Securityholder the full and complete payment of (i)
Scheduled Payments (as defined below) on the Securities and (ii) the amount of
any Scheduled Payment which subsequently is avoided in whole or in part as a
preference payment under applicable law.
"Scheduled Payments" means payments which are scheduled to be made on
the Securities during the term of the Policy in accordance with the original
terms of the Securities when issued and without regard to any subsequent
amendment or modification of the Securities that has not been consented to by
the Insurer, which "Scheduled Payments" are (i) the Securityholder's Interest
Distributable Amount and (ii) the Securityholder's Principal Distributable
Amount with respect to a Distribution Date; Scheduled Payments do not include
payments which become due on an accelerated basis as a result of (a) a default
by the Issuer, (b) an election by the Issuer to pay principal on an accelerated
basis, (c) the occurrence of an Event of Default under the Indenture or (d) any
other cause, unless the Insurer elects, in its sole discretion, to pay in whole
or in part such principal due upon acceleration, together with any accrued
interest to the date of acceleration. In the event the Insurer does not so
elect, the Policy will continue to guarantee Scheduled Payments due on the
Securities in accordance with their original terms. Scheduled Payments shall not
include (x) any portion of a Securityholder's Interest Distributable Amount due
to Securityholder because the appropriate notice and certificate for payment in
proper form was not timely Received (as defined below) by the Insurer, (y) any
portion of a Securityholder's Interest Distributable Amount due to
Securityholder representing interest on any Securityholder's Interest Carryover
Shortfall, or (z) any Security Prepayment Amounts unless, in each case, the
Insurer elects, in its sole discretion, to pay such amount in whole or in part.
Scheduled Payments shall not include, nor shall coverage be provided under the
Policy in respect of, any taxes, withholding or other charge imposed by any
governmental authority due in connection with the payment of any Scheduled
Payment to a Securityholder.
Payment of claims on the Policy made in respect of Scheduled Payments
will be made by the Insurer following Receipt by the Insurer of the appropriate
notice for payment on the later to occur of (i) 12:00 noon, New York City time,
on the third Business Day (as defined below) following Receipt of such notice
for payment, and (ii) 12:00 noon, New York City time, on the date on which such
payment was due on the Securities.
If payment of any amount avoided as a preference under applicable
bankruptcy, insolvency, receivership or similar law is required to be made under
the Policy, the Insurer shall cause such payment to be made on the later of (a)
the date when due to be paid pursuant to the Order referred to below or (b) the
first to occur of (i) the fourth Business Day following Receipt by the Insurer
from the Trust Collateral Agent of (A) a certified copy of the order (the
"Order") of the court or other governmental body which exercised jurisdiction to
the effect that the Securityholder is required to return principal or interest
paid on the Securities during the term of the Policy because such payments were
avoidable as preference payments under applicable bankruptcy law, (B) a
certificate of the Securityholder that the Order has been entered and is not
subject to any stay and (C) an assignment duly executed and delivered by the
Securityholder, in such form as is reasonably required by the Insurer and
provided to the Securityholder by the Insurer, irrevocably assigning to the
Insurer all rights and claims of the Securityholder relating to or arising under
the Securities against the Issuer or otherwise with respect to such preference
payment, or (ii) the date of Receipt (as defined below) by the Insurer from the
Trust Collateral Agent of the items referred to in clauses (A), (B) and (C)
above if, at least four Business Days prior to such date of Receipt, the Insurer
shall have received written notice from the Trust Collateral Agent that such
items were to be delivered on such date and such date was specified in such
notice. Such payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order and not to the
Trust Collateral Agent or any Securityholder directly (unless a
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Securityholder has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which case
such payment shall be disbursed to the Trust Collateral Agent for distribution
to such Securityholder upon proof of such payment reasonably satisfactory to the
Insurer). In connection with the foregoing, the Insurer shall have the rights
provided in the Indenture.
The terms "Receipt" and "Received" with respect to the Policy shall
mean actual delivery to the Insurer and to its fiscal agent, if any, prior to
12:00 noon, New York City time, on a Business Day; delivery either on a day that
is not a Business Day or after 12:00 noon, New York City time, shall be deemed
to be Receipt on the next succeeding Business Day. If any notice or certificate
given under the Policy by the Trust Collateral Agent is not in proper form or is
not properly completed, executed or delivered, it shall be deemed not to have
been Received, and the Insurer or its fiscal agent shall promptly so advise the
Trust Collateral Agent, and the Trust Collateral Agent may submit an amended
notice.
Under the Policy, "Business Day" means any day other than (i) a
Saturday or Sunday or (ii) a day on which banking institutions in Wilmington,
Delaware, the City of New York or Minneapolis, Minnesota or any other location
of any successor Servicer, successor Owner Trustee or successor Trust Collateral
Agent are authorized or obligated by law, executive order or governmental decree
to be closed.
The Insurer's obligations under the Policy in respect of Scheduled
Payments shall be discharged to the extent funds are transferred to the Trust
Collateral Agent as provided in the related Policy whether or not such funds are
properly applied by the Trust Collateral Agent.
The Insurer shall be subrogated to the rights of each Securityholder to
receive payments of principal and interest to the extent of any payment by the
Insurer under the Policy.
Claims under the Policy constitute direct, unsecured and unsubordinated
obligations of the Insurer ranking not less than pari passu with other unsecured
and unsubordinated indebtedness of the Insurer for borrowed money. Claims
against the Insurer under the Policy and claims against the Insurer under each
other financial guaranty insurance policy issued thereby constitute pari passu
claims against the general assets of the Insurer. The terms of the Policy cannot
be modified or altered by any other agreement or instrument, or by the merger,
consolidation or dissolution of the Issuer. The Policy may not be canceled or
revoked prior to distribution in full of all Scheduled Payments with respect to
the Securities. The Policy is not covered by the property/casualty insurance
security fund specified in Article 76 of the New York Insurance Law. The Policy
is governed by the laws of the State of New York.
DESCRIPTION OF THE TRUST DOCUMENTS
The following summary describes certain terms of the Purchase Agreement
and any Subsequent Purchase Agreement (together, the "Purchase Agreements"), the
Sale and Servicing Agreement, any Subsequent Transfer Agreement, the Indenture
and the Trust Agreement (together, the "Trust Documents"). Forms of the Trust
Documents have been filed as exhibits to the Registration Statement. The summary
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, all the provisions of the Trust Documents. The following
summary supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Trust Documents set forth
in the Prospectus.
SALE AND ASSIGNMENT OF RECEIVABLES.
On or prior to the Closing Date, or, with respect to Subsequent
Receivables, the related Subsequent Transfer Date, the Seller will enter into a
Sale, Servicing and Collateral Management Agreement with the Issuer pursuant to
which the Seller will, on or prior to such Closing Date, or, with respect to
Subsequent Receivables, the related Subsequent Transfer Date, sell and assign to
the Issuer, without recourse, its entire interest in and to the related
Receivables, including its security interest in the Financed Vehicles securing
such Receivables and its rights to receive all payments on, or proceeds with
respect to, such Receivables to the extent paid or payable after the applicable
Cutoff Date. Pursuant to the Sale, Servicing and Collateral Management
Agreement, the Seller will agree that, upon the occurrence of a breach of a
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representation or warranty under the Trust Documents with respect to any of the
Receivables, the Issuer and certain other parties will be entitled to require
the Seller to repurchase such Receivables from the Issuer. Such rights of the
Issuer under the Sale, Servicing and Collateral Management Agreement will
constitute part of the property of the Issuer and may be enforced directly by
the Owner Trustee and the Insurer. In addition, the Issuer will pledge such
rights to the Indenture Trustee as collateral for the Securities, and such
rights may be enforced directly by the Indenture Trustee.
Each Receivable transferred by the Seller to the Issuer will be
identified in a schedule appearing as an exhibit to the Trust Documents (the
"Schedule of Receivables").
ACCOUNTS
Each Obligor will be instructed to make payments with respect to the
Receivables after the Cutoff Date directly to one or more post office boxes or
other mailing locations (each, a "Lockbox") maintained by the Lockbox Bank, and
a segregated account will be established and maintained with a bank or banks
acceptable to the Insurer, in the name of the Indenture Trustee for the benefit
of the Securityholders, into which all payments made from Obligors to a Lockbox
on or with respect to the Receivables must be deposited within one business day
of receipt (the "Lockbox Account"). The Issuer will also establish and maintain
with the Indenture Trustee one or more accounts (the "Collection Account"), in
the name of the Indenture Trustee on behalf of the Securityholders and the
Insurer, into which all amounts previously deposited in the Lockbox Account in
respect of the Receivables will be transferred within two business days of
deposit in the Lockbox Account. The Collection Account will be maintained with
the Indenture Trustee so long as the Indenture Trustee's deposits have a rating
acceptable to the Insurer and the Rating Agencies. If the deposits of the
Indenture Trustee or its corporate parent no longer have such acceptable rating,
the Servicer shall, with the Indenture Trustee's assistance as necessary, cause
such Accounts to be moved within 30 days to a bank whose deposits have such
rating.
The Trust Collateral Agent will also establish and maintain an account,
in its own name for the benefit of the Indenture Trustee, on behalf of the Class
A Noteholders and the Insurer in which amounts released from the Collection
Account for distribution to Class A Noteholders will be deposited and from which
all distributions to Class A Noteholders will be made (the "Class A Note
Distribution Account"). The Trust Collateral Agent will also establish and
maintain an account, in its own name for the benefit of the Indenture Trustee,
on behalf of the Class B Noteholders in which amounts released from the
Collection Account for distribution to Class B Noteholders will be deposited and
from which all distributions to Class B Noteholders will be made (the "Class B
Note Distribution Account"). The Trust Collateral Agent will also establish and
maintain an account, on behalf of the Certificateholders, in which amounts
released from the Collection Account for distribution to the Issuer will be
deposited and from which all distributions to Certificateholders will be made
(the "Certificate Distribution Account").
On the Closing Date, a cash amount funded from the proceeds of the sale
of the Notes equal to approximately $_________ (the "Initial Pre-Funded Amount")
will be deposited in an account (the "Pre-Funding Account") which will be
established with the Trust Collateral Agent and used solely to pay the Seller
the Purchase Price for Subsequent Receivables. The "Funding Period" is the
period from the Closing Date until the earliest of(i) the date on which the
amount on deposit in the Pre-Funding Account is less than $100,000, (ii) the
date on which an Event of Default under the Indenture or a Servicer Termination
Event occurs under the Sale, Servicing and Collateral Management Agreement, or
(iii) the Distribution Date in _________. The Initial Pre-Funded Amount, as
reduced from time to time during the Funding Period by the amount thereof used
to purchase Subsequent Receivables in accordance with the Sale, Servicing and
Collateral Management Agreement, is referred to herein as the "Pre-Funded
Amount." Monies on deposit in the Pre-Funding Account will not be available to
cover losses on or in respect of the Receivables.
The Seller expects that the Pre-Funded Amount will be reduced to less
than $100,000 on or before the end of the Funding Period, although no assurance
can be given in this regard. Approximately $_________ of the Subsequent
Receivables have already been originated and identified for transfer to the
Issuer by the Seller. There can be no assurance that the Insurer will consent to
the transfer of Subsequent Receivables during the Pre-Funding Period. Any
Pre-Funded Amount remaining at the end of the Funding Period will be payable to
the Noteholders as described herein. The "Mandatory Redemption Date" is the
earlier of (i) the Distribution Date in _________ or (ii) if the last day of the
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Funding Period occurs on or prior to the Determination Date (as defined herein)
occurring in _________, the Distribution Date relating to such Determination
Date.
On the Closing Date, a cash amount shall be deposited in an account
(the "Capitalized Interest Account") which will be established with the Trust
Collateral Agent. The amount, if any deposited in the Capitalized Interest
Account will be applied on the Distribution Dates occurring in _________ to fund
an amount (the "Monthly Capitalized Interest Amount") equal to the amount of
interest accrued for each such Distribution Date at the weighted average
Interest Rates on the portion of the Notes having a principal balance in excess
of the principal balances of the Receivables (which portion will equal the
Pre-Funded Amount). Any amounts remaining in the Capitalized Interest Account on
the Mandatory Redemption Date and not used for such purposes are required to be
paid directly to the Issuer on such date. See "Description of the Trust
Documents -- Accounts."
All such Accounts shall be Eligible Deposit Accounts (as defined in the
Indenture) acceptable to the Insurer (so long as no Insurer Default has occurred
and is continuing).
SERVICING COMPENSATION AND INDENTURE TRUSTEES' FEES
Each month the Servicer will receive a fee for servicing the
Receivables (the "Servicer Fee") equal to (a) the product of one-twelfth of
3.00% (the "Servicing Fee Rate") and the Pool Balance outstanding at the
beginning of the calendar month immediately preceding such Distribution Date
(the "Servicing Fee") plus (b) a supplemental servicing fee (the "Supplemental
Servicing Fee") equal to (i) any late fees, prepayment fees, liquidation fees
and other administrative fees and expenses collected during such month, plus
(ii) the net realized earnings on all investments of funds deposited in the
Collection Account during such month. So long as ACC is the Servicer, a portion
of the Servicing Fee will be payable to the Backup Servicer for agreeing to
stand by as successor Servicer and for performing certain other functions.
Payments by or on behalf of Obligors will be allocated to scheduled payments,
late fees and other charges and principal and interest in accordance with the
Servicer's normal practices and procedures.
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of automotive receivables as an agent for
their beneficial owner, including collecting and posting all payments,
responding to inquiries of Obligors on the Receivables, investigating
delinquencies, reporting tax information to Obligors, paying costs related to
disposition of defaulted accounts, and policing the collateral. The Servicing
Fee also will compensate the Servicer for administering the Receivables,
including accounting for collections and furnishing monthly and annual
statements to the Issuer and the Insurer with respect to distributions and
generating federal income tax information. The Servicing Fee also will reimburse
the Servicer for certain taxes, accounting fees, outside auditor fees, data
processing costs and other costs incurred in connection with administering the
Receivables and for payment of the fees of the Backup Servicer.
On each Distribution Date, the Indenture Trustee is entitled to
receive a fee for its services as Indenture Trustee and Trust Collateral Agent
during the prior Monthly Period in an amount agreed upon by the Indenture
Trustee and the Servicer. On each Distribution Date, the Owner Trustee is
entitled to receive a fee for its services as Owner Trustee during the prior
Monthly Period in an amount agreed upon by the Owner Trustee and the Servicer.
CERTAIN ALLOCATIONS
On each Determination Date, the Servicer will be required to deliver
the Servicer's Certificate to the Indenture Trustee, the Owner Trustee and the
Insurer specifying, among other things, the amount of aggregate collections on
the Receivables and the aggregate Purchase Amount of Receivables to be purchased
by the Seller, the Servicer, all with respect to the preceding Monthly Period.
On each Determination Date the Indenture Trustee will (based solely on
the information contained in the Servicer's Certificate delivered on the related
Determination Date) deliver to the Trust Collateral Agent, the Insurer and the
Servicer a Deficiency Notice specifying the Deficiency Claim Amount, if any, for
such Distribution Date. Such Deficiency Notice will direct the Trust Collateral
Agent to remit such Deficiency Claim Amount from amounts on deposit in certain
collateral accounts maintained for the benefit of the Insurer for deposit in the
Collection Account.
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DISTRIBUTIONS
On each Distribution Date, the Servicer is required to instruct the
Indenture Trustee to make the following distributions in the following order of
priority:
1. From the Distribution Amount, to the Servicer, the Servicing
Fee for the related Monthly Period, any Supplemental Servicing
Fees for such month and certain other amounts relating to
mistaken deposits, postings or checks returned for
insufficient funds to the extent the Servicer has not
reimbursed itself in respect of such amount or to the extent
not retained by the Servicer.
2. From the remaining Distribution Amount, to any Lockbox Bank or
other relevant local bank, the Indenture Trustee, Custodian,
Backup Servicer, Trust Collateral Agent and the Owner Trustee
(including the Indenture Trustee if acting in any such
additional capacity), any accrued and unpaid trustees' fees
and any accrued and unpaid fees (in each case, to the extent
such fees have not been previously paid by the Servicer).
3. From the remaining Distribution Amount plus the related
portion of any Policy Claim Amount, if any, to the Class A
Note Distribution Account, the Class A Noteholders' Interest
Distributable Amount.
4. From the remaining Distribution Amount plus the related
portion of any Policy Claim Amount, if any, to the Class A
Note Distribution Account, the Class A Noteholders' Principal
Distributable Amount, to be distributed as described under
"Description of the Notes -- Payments of Principal."
5. From the remaining Distribution Amount, to the Insurer, the
Premium Amount then due it and any amounts owing under the
Insurance Agreement.
6. From the Available Funds plus amounts available to be
withdrawn from the Class B Reserve Fund, to the Class B Note
Distribution Account, the Class B Noteholders' Interest
Distributable Amount.
7. From Available Funds to the Trust Collateral Agent for deposit
in accordance with the terms of the Spread Account Agreement
to fund certain reserve accounts maintained for the benefit of
the Insurer, until such reserve accounts are funded at their
required level.
8. From Available Funds, plus amounts available to be withdrawn
from the Class B Reserve Fund in excess of the Floor Amount,
to the Class B Note Distribution Account, the Class B
Noteholders' Principal Distributable Amount.
9. From Available Funds, together with any amounts released from
the Class B Reserve Fund or the Spread Account, all remaining
funds to the Class B Noteholders to reduce the principal
balance of the Class B Notes until the principal balance of
the Class B Notes is reduced to zero.
10. From Available Funds, to the Certificate Distribution Account,
or as otherwise specified in the Trust Documents, any
remaining funds.
11. From the Certificate Distribution Account to the
Certificateholders.
In the event that the Servicer's Certificate indicates that the
Distribution Amount will be insufficient on any Distribution Date to cover the
distributions required pursuant to clauses (a) through (e) above on such
Distribution Date, the Indenture Trustee shall furnish to the Insurer no later
than 12:00 noon New York City time on the related Draw Date a completed notice
of claim in the amount of the Policy Claim Amount. Amounts paid by the Insurer
pursuant to any such notice of claim shall be deposited by the Insurer into the
Class A Note Distribution Account for payment to Class A Noteholders on the
related Distribution Date.
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STATEMENTS TO SECURITYHOLDERS
On or prior to each Distribution Date, the Indenture Trustee will be
required to forward a statement to the Securityholders on such Distribution
Date. Such statements will be based on the information in the related Servicer's
Certificate setting forth certain information required under the Trust
Documents.
Each amount set forth pursuant to subclauses (i) through (vi) with
respect to Securities will be expressed as a dollar amount per $1,000 of the
initial principal amount of the Notes, as applicable.
Unless and until Definitive Notes or Definitive Notes are issued, such
reports will be sent on behalf of the Trust to Cede & Co., as registered holder
of the Notes and the nominee of DTC.
Within the required period of time after the end of each calendar year,
the Indenture Trustee will furnish to each person who at any time during such
calendar year was a Noteholder or Certificateholder, a statement as to the
aggregate amounts of interest and principal paid to such Noteholder or
Certificateholder, information regarding the amount of servicing compensation
received by the Servicer and such other information as ACC deems necessary to
enable such Noteholder or Certificateholder to prepare its tax returns.
SPREAD ACCOUNT
On the Closing Date, the Spread Account will be established with
___________________, as Trust Collateral Agent for the benefit of the Indenture
Trustee on behalf of the Securityholders, and the Insurer pursuant to a certain
Spread Account Agreement Supplement dated as of the Closing Date (the "Spread
Account Agreement"). The Spread Account will not be subject to the lien created
by the Indenture. On each Distribution Date, the Trust Collateral Agent will be
required to deposit additional amounts into the Spread Account from payments on
the Receivables as described under "Description of the Notes -Distributions"
above. Amounts, if any, on deposit in the Spread Account will be available to
the extent provided in the Spread Account Agreement to fund any Deficiency Claim
Amount otherwise required to be made on a Distribution Date. The aggregate
amount required to be on deposit at any time in the Spread Account (the
"Specified Spread Account Requirement") will be determined in accordance with
the Insurance Agreement and the Spread Account Agreement. The Specified Spread
Account Requirement may increase or decrease over time as a result of floors,
caps and triggers set forth in the Insurance Agreement or the Spread Account
Agreement, even if no withdrawals are made from the Spread Account. Amounts on
deposit in the Spread Account on any Distribution Date (after giving effect to
all distributions made on such Distribution Date) in excess of the Specified
Spread Account Requirement for such Distribution Date will be distributed as
additional payments in reduction of the principal balance of the Class B Notes
and after such principal balance has been reduced to zero will be released to
the Issuer. Amounts on deposit or to be deposited in the Spread Account may be
distributed to persons other than the Insurer or the Noteholders without the
consent of the Noteholders.
Amounts held from time to time in the Spread Account will continue to
be held for the benefit of holders of the Class A Notes and the Insurer. Funds
in the Spread Account will be invested in Eligible Investments.
In addition, the Issuer, the Insurer and the Trust Collateral Agent may
amend the Spread Account Agreement (and any provisions in the Insurance
Agreement relating to the Spread Account) in any respect (including, without
limitation, reducing or eliminating the Specified Spread Account Requirement
and/or reducing or eliminating the funding requirements of the Spread Account or
permitting such funds to be used for the benefit of persons other than
Noteholders) without the consent of, or notice to, the Indenture Trustee, the
Owner Trustee or the Noteholders. The Trust Collateral Agent shall not withhold
or delay its consent with respect to any amendment that does not adversely
affect the Trust Collateral Agent in its individual capacity. Notwithstanding
any reduction in or elimination of the funding requirements of the Spread
Account or the depletion thereof, the Insurer will be obligated on each
Distribution Date to fund for the benefit of the Class A Noteholders the full
amount of each Scheduled Payment otherwise required to be made on such
Distribution Date in accordance with the terms of the Policy. If the Insurer
breaches its obligations, any losses on the Receivables will be borne by such
Class A Noteholders.
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The amount required to be on deposit in the Spread Account may increase
or decrease without Noteholder consent and there can be no assurance that the
amounts on deposit in the Spread Account will reach the Specified Spread Account
Requirement since the existence of the Spread Account and any other term or
provision in the Spread Account Agreement regarding the Spread Account may be
amended by the Insurer without Noteholder consent. Consequently, the Class A
Noteholders should not rely on amounts on deposit in or to be deposited to the
Spread Account in evaluating the likelihood of receiving repayment of the Notes.
Since amounts will be deposited to the Spread Account from Available Funds prior
and releases of amounts from the Spread Account will be distributed as principal
in addition to distributions of Class B Noteholders' Principal Distributable
Amount, modifications of the Specified Spread Account Requirement may cause
unexpected interruption or acceleration of payments of principal on the Class B
Notes.
SERVICER TERMINATION EVENT
"Servicer Termination Event" under the Sale, Servicing and Collateral
Management Agreement will consist of the occurrence and continuance of any of
the following: (i) any failure by the Servicer to deliver to the Trust
Collateral Agent for distribution to the Noteholders any required payment, which
failure continues unremedied for two Business Days (one Business Day with
respect to payment of Purchase Amounts) after written notice is received by the
Servicer from the Indenture Trustee or (unless a Insurer Default shall be
continuing) the Insurer or after discovery of such failure by a responsible
officer of the Servicer, or any failure to deliver the Servicer's Certificate
(as defined in the Sale, Servicing and Collateral Management Agreement) by the
fifth Business Day prior to the Distribution Date, and which shall comply with
the requirements therefor; (ii) any failure by the Servicer duly to observe or
perform in any material respect certain of its covenants and agreements under
the Sale, Servicing and Collateral Management Agreement; (iii) failure to
satisfy certain other material covenants and agreements set forth in the Sale,
Servicing and Collateral Management Agreement which failure continues unremedied
for 30 days after the giving of written notice of such failure (1) to the
Servicer by the Insurer, the Trust Collateral Agent or the Issuer, or (2) if a
Insurer Default has occurred and is continuing, to the Servicer by any holder of
a Note or a Certificate; (iv) certain events of insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings with respect
to the Servicer or the Issuer and certain actions by the Servicer, or, so long
as ACC is Servicer, of its affiliates, indicating its insolvency, reorganization
pursuant to bankruptcy proceedings, or inability to pay its obligations; (v) the
material breach of certain of the Servicer's representations or warranties and
the Servicer's failure to cure within 30 days after notice thereof; (vi) so long
as a Insurer Default shall not have occurred and be continuing, the Insurer
shall not have delivered an extension notice; (vii) so long as a Insurer Default
shall not have occurred and be continuing, an Insurance Agreement Event of
Default or an event of default under any other Insurance and Indemnity Agreement
relating to any series of securities shall have occurred; or (viii) a claim is
made under the Policy.
"Insurer Default" shall mean the occurrence and continuance of any of
the following events:
(a) the Insurer shall have failed to make a payment required
under the Policy in accordance with its terms;
(b) the Insurer shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United
States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (ii) made a general assignment for the benefit of its
creditors, or (iii) had an order for relief entered against it under
the United States Bankruptcy Code or any other similar federal or state
law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department
of Insurance or other competent regulatory authority shall have entered
a final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent or receiver for the Insurer or for all or any
material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Insurer
(or the taking of possession of all or any material portion of the
property of the Insurer).
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RIGHTS UPON SERVICER TERMINATION EVENT
As long as a Servicer Termination Event under the Sale, Servicing and
Collateral Management Agreement remains unremedied, (x) provided no Insurer
Default shall have occurred and be continuing, the Insurer in its sole and
absolute discretion or (y) if a Insurer Default shall have occurred and be
continuing, then the Trust Collateral Agent or a Security Majority, may
terminate all the rights and obligations of the Servicer under such Agreement,
whereupon (i) if ACC is terminated under the Agreement, the Backup Servicer, or
such other successor servicer as shall have been appointed by the Insurer (so
long as no Insurer Default shall have occurred and be continuing) will succeed
to all the responsibilities, duties, and liabilities of the Servicer under such
Agreement or (ii) if a Servicer other than ACC is terminated under the
Agreement, a successor servicer will be appointed by the Insurer (or, if a
Insurer Default shall have occurred and be continuing, by the Trust Collateral
Agent). Any such successor Servicer will succeed to all the responsibilities,
duties, and liabilities of the Servicer under the Sale, Servicing and Collateral
Management Agreement and will be entitled to similar compensation arrangements.
There is no assurance that the succession of a successor servicer will not
result in a material disruption in the performance of the duties of the
servicer.
WAIVER OF PAST DEFAULTS
The Insurer may, on behalf of the Issuer and all holders of the Notes,
waive any default by the Servicer in the performance of its obligations under
the Sale, Servicing and Collateral Management Agreement and its consequences. No
such waiver will impair the Noteholders' rights with respect to subsequent
defaults.
AMENDMENT
The Sale, Servicing and Collateral Management Agreement may be amended
by the Seller, the Servicer and the Owner Trustee with the consent of the
Indenture Trustee, (which consent may not be unreasonably withheld) and with the
prior written consent of the Insurer (so long as no Insurer Default has occurred
and is continuing), but without the consent of the Noteholders, to cure any
ambiguity, or to correct or supplement any provision therein which may be
inconsistent with any other provision therein; provided that such action shall
not adversely affect in any material respect the interests of any Noteholder;
provided, further, that if an Insurer Default has occurred and is continuing,
such action shall not materially adversely affect the interests of the Insurer.
The Seller, the Servicer and the Owner Trustee may also amend the Sale,
Servicing and Collateral Management Agreement with the prior written consent of
the Insurer, the consent of the Indenture Trustee, the consent of Noteholders
holding a majority of the principal amount of the Notes outstanding to add,
change or eliminate any other provisions with respect to matters or questions
arising under such Agreement or affecting the rights of the Noteholders;
provided that such action will not (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Receivables or distributions that are required to be made for the benefit of the
Noteholders or (ii) reduce the aforesaid percentage of the Noteholders required
to consent to any such amendment, without, in either case, the consent of the
holders of all Notes outstanding; provided, further, that if an Insurer Default
has occurred and is continuing, such action shall not materially adversely
affect the interest of the Insurer. The Seller and Servicer must deliver to the
Owner Trustee, the Indenture Trustee and the Insurer upon the execution and
delivery of the Sale, Servicing and Collateral Management Agreement and any
amendment thereto an opinion of counsel, satisfactory to the Indenture Trustee
and Insurer, that all financing statements and continuation statements have been
filed that are necessary to fully protect and preserve the Indenture Trustee's
interest in the Receivables.
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including Insolvency Laws, may interfere
with or affect the ability of a lender to realize upon collateral or enforce a
deficiency judgment. For example, in a Chapter 13 proceeding under the federal
bankruptcy law, a court may prevent a lender from repossessing a motor vehicle,
and, as part of the rehabilitation plan, reduce the amount of the secured
indebtedness to the market value of the motor vehicle at the time of bankruptcy
(as determined by the court), leaving the party providing financing as a general
unsecured creditor for the remainder of the indebtedness. A bankruptcy court may
also reduce the monthly payments due under a contract or change the rate of
interest and time of repayment of the indebtedness.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following general discussion, when read in conjunction
with the discussion of "Federal Income Tax Consequences" in the Prospectus,
describes certain federal income tax consequences to the original purchasers of
the Notes and the Certificates of the purchase, ownership and disposition of the
Securities. It does not purport to discuss all federal income tax consequences
that may be applicable to investment in the Securities or to particular
categories of investors, some of which may be subject to special rules.
The discussion that follows, and the opinions set forth below
of Dewey Ballantine, special tax counsel to the Issuer ("Tax Counsel"), are
based on the provisions of the Internal Revenue Code of 1986, as amended (the
"Code") and Treasury regulations promulgated thereunder as in effect on the date
hereof and on existing judicial and administrative interpretations thereof.
These authorities are subject to change and to differing interpretations, which
could apply retroactively. The opinions of Tax Counsel are not binding on the
courts or the Internal Revenue Service (the "IRS"). Potential investors should
consult their own tax advisors in determining the federal, state, local, foreign
and any other tax consequences to them of the purchase, ownership and
disposition of the Securities.
TAX CLASSIFICATION OF THE TRUST
Tax Counsel will advise the Trust that, based upon the terms of the
Trust Agreement and related documents and transactions as described in the
Prospectus and herein (and assuming ongoing compliance with such agreement and
documents), the Trust will not be classified as an association (or as a publicly
traded partnership) taxable as a corporation for federal income tax purposes.
This advice is based upon conclusions by Tax Counsel that (1) the Trust will not
have certain characteristics necessary for a business trust to be classified as
an association taxable as a corporation, and (2) the nature of the income of the
Trust will exempt it from the rule that certain publicly traded partnerships are
taxable as corporations.
[Prospective investors should be aware, however, that the proper
characterization of the arrangement involving the Trust, the Certificates, the
Notes, the Seller and the Servicer is not entirely clear because there is no
authority on transactions closely comparable to that contemplated herein.] If,
contrary to the opinion of Tax Counsel, the IRS successfully argued that the
Trust should be classified (and thus taxable) as a corporation, the Trust,
including the income from the Receivables (reduced by deductions, including
interest expense on the Notes if the Notes were treated as debt of the Trust and
not otherwise recharacterized), would be subject to federal income tax at
corporate rates. Such a tax could substantially reduce the amounts available to
make payments on the Notes and distributions on the Certificates (and holders of
Certificates could be liable for any such tax that is unpaid by the Trust).
TAX CONSIDERATION FOR NOTES
CHARACTERIZATION OF THE NOTES AS INDEBTEDNESS. In the opinion
of Tax Counsel, although no transaction closely comparable to that contemplated
herein has been the subject of any Treasury regulation, revenue ruling or
judicial decision, based on the application of existing law to the facts as set
forth in the applicable agreements, the proper treatment of the Notes is as
indebtedness for federal income tax purposes.
Except as described below, interest paid or accrued on a Note
will be treated as ordinary income to the Noteholders and principal payments on
a Note will be treated as a return of capital to the extent of the Noteholder's
basis in the Note allocable thereto. An accrual method taxpayer will be required
to include in income interest on the Notes when earned, even if not paid, unless
it is determined to be uncollectible. It is not anticipated that the Notes will
be issued with original issue discount. See "Federal Income Tax Consequences --
Treatment of the Notes as Indebtedness -- Interest Income on the Notes" in the
Prospectus.
ALTERNATIVE CHARACTERIZATIONS OF THE NOTES. Although it is the
opinion of Tax Counsel that the Notes are properly characterized as indebtedness
for federal income tax purposes, no assurance can be given that such
characterization of the Notes will prevail. If the Notes were treated as an
ownership interest in the Receivables, all income on such Receivables would be
income to the holders of the Notes, and related fees and expenses would
generally be
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deductible (subject to certain limitations on the deductibility of miscellaneous
itemized deductions by individuals) and certain market discount and premium
provisions of the Code might apply to a purchase of the Notes.
If, alternatively, the Notes were treated as an equity
interest in the Trust, the Trust would be treated as a partnership for federal
income tax purposes. As a partnership, the Trust will not be subject to federal
income tax unless treated as a publicly traded partnership taxable as a
corporation. Any such corporate income tax could materially reduce cash
available to make payments on the Notes. Tax Counsel is of the opinion that,
although no transaction closely comparable to that contemplated herein has been
the subject of any Treasury regulation, revenue ruling or judicial decision and,
therefore, is subject to interpretation, the Trust, if treated as a partnership,
will not be treated as a publicly traded partnership taxable as a corporation.
This opinion is based on Tax Counsel's conclusion that the nature of the income
of the Trust exempts it from the rules that certain publicly traded partnerships
are taxable as corporations.
TAX CONSIDERATIONS FOR CERTIFICATEHOLDERS
Partnership Treatment of the Trust. ACC and the Servicer will express
their intent in the Trust Agreement and related documents and will agree, and
the other Certificateholders will agree by their purchase of Certificates, to
treat the Trust as a partnership for purposes of federal and state income tax,
franchise tax and any other taxes measured in whole or in part by income, with
the assets of the partnership being the assets held by the Trust, the partners
of the partnership being the Certificateholders, and the Notes representing
indebtedness of the partnership. The Certificateholders will further agree in
such documents to take no action inconsistent with the treatment of Certificates
for such purposes as partnership interests in the Trust.
[In view of the lack of cases or rulings on similar transactions, a
variety of alternative characterizations are possible in addition to the
position to be taken by Certificateholders that the Certificates represent
equity interests in a partnership with the Sponsor.] For example, because the
Certificates have certain features characteristic of debt, the Certificates
might be considered for tax purposes as debt of the Sponsor or of the Trust. It
is also possible that the Trust might be treated for tax purposes as holding
debt of the Sponsor rather than the Receivables. Any such characterization
should not result in materially adverse tax consequences to Certificateholders
as compared to the consequences from treatment of the Certificates as equity in
a partnership, as described below, although there could be some timing
differences for income inclusion by Certificateholders. Accordingly, the
following discussion assumes that the Certificates represent equity interests in
a partnership that owns the Receivables for federal income tax purposes.
Partnership Taxation. As a partnership, the Trust will not be subject
to federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's distributive share of income, gains,
losses, deductions and credits of the Trust and to report such items on his
personal income tax return for the taxable year with or within which ends the
Trust's taxable year. (As explained below, the Trust's taxable year ends
_________________.) The income of the Trust will consist primarily of interest
and finance charges earned on the Receivables (including appropriate adjustments
for market discount, original issue discount, and premium) and any income or
gain upon collection or disposition of Receivables. The expenses of the Trust
will consist primarily of interest accruing on the Notes, servicing and other
fees, and losses or deductions upon collection or disposition of Receivables.
The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership agreement
(here, the Trust Agreement and related documents). The Trust Agreement will
provide, in general, that the Certificateholders will be allocated taxable
income of the Trust for each fiscal month equal to the sum of (i) the
Certificateholders' [Monthly] Interest Distributable Amount for the Payment Date
following such fiscal month; (ii) an amount equivalent to interest that accrues
on amounts previously due on Certificates but not yet distributed; and (iii)
subject to the discussion below on discount and premium, any Trust income
attributable to discount (of less any offset attributable to allowable premium)
on the Receivables that corresponds to any difference of the principal amount of
the Certificates and their initial issue price. All remaining taxable income of
the Trust will be allocated to the Sponsor. [Based upon the economic arrangement
of the parties this approach for allocating Trust income should be permissible,
but because of the absence of authority directly on point, no assurance can be
given that the IRS would not require a greater amount of income to be allocated
to Certificateholders.] Moreover, even under the foregoing method of allocation,
holders of Certificates may be allocated income equal to the entire Pass-Through
Rate plus the other Items described above even
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though the Trust might not have sufficient cash to make current cash
distributions of such amount. Thus, cash basis holders will in effect be
required to report income from the Certificates on the accrual basis and
Certificateholders may become liable for taxes on Trust income even if such
holders have not received cash from the Trust to pay such taxes. In addition,
under such allocation a Certificateholders' taxable income could exceed the
amount of net income allocated to him because of limitations on deductions for
expenses or losses of the Trust allocated to such holder. Alternatively, it is
possible that the IRS would treat Certificateholders as receiving guaranteed
payments from the Trust, in which case the payments on Certificates would be
treated as ordinary income but not as interest income. In addition, because tax
allocations and tax reporting will be done on a uniform basis for all
Certificateholders but Certificateholders may be purchasing Certificates at
different times and at different prices, Certificateholders may be required to
report on their tax returns taxable income that is greater or less than the
amount reported to them by the Trust. Under the Trust Agreement, the Sponsor is
authorized to adjust the allocations described above if necessary to reflect the
economic income, gain or loss to the Certificateholders (including the Sponsor)
or as otherwise required by the Code.
All of the taxable income allocated for taxable years of the Trust
beginning on or before December 31, 1994 to a Certificateholder that is a
pension, profit sharing or employee benefit plan or other tax exempt entity
(including an individual retirement account) will constitute "unrelated business
taxable income" generally taxable to such a holder under the Code. For Trust
taxable years beginning after December 31, 1994, a portion of the taxable income
allocated to such a Certificateholder will be treated as income from "debt
financed property", which generally will be taxable as unrelated business
taxable income.
An individual taxpayer's share of expenses of the Trust (including fees
for the Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or in
part because of the two percent limitation on miscellaneous itemized deductions
and might result in such holder being taxed on an amount of income that exceeds
the amount of cash actually distributed to such holder over the life of the
Trust.
The Trust intends to make all tax calculations relating to Trust income
and allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the Trust
might be required to incur additional expense but it is not expected that there
will be any significant adverse tax effect on Certificateholders.
Discount and Premium. As a result of their interest rate and payment
features, it is likely that state interest on some of the Receivables would be
treated as original issue discount under the [Proposed OID Regulations] that is
includible in income by holders as such discount accrues. Since the Trust will
elect the accrual method of tax accounting, it is not expected that such
treatment would, as a general rule, have any materially adverse tax effect on
holders of Certificates. Certificateholders should be aware, however, that
interest accruing on some Receivables for a payment period could exceed payments
due thereunder for such period, in which case the likelihood might increase that
holders of Certificates would recognize Trust income prior to the receipt of
cash from the Trust that is attributable to such income.
The cost of acquisition by the Trust for the Receivables (exclusive of
amounts paid for accrued interest thereon) may be greater or less than the
remaining principal balance of the Receivables at the time of acquisition. If
so, the Receivables will have been acquired at a premium or discount, as the
case may be, exclusive of Receivables treated as contributed by the Sponsor as a
partner to the Trust (as indicated above, the Trust will make this calculation
of discount or premium on an aggregate basis, but might be required to recompute
it on a Receivable by Receivable basis.)
If the Trust acquires the Receivables at a premium or at a market
discount, the Trust will elect to include such discount in income as it accrues
over the life of the Receivables or (to the extent allowable) may offset such
premium against interest income or original issue discount on the Receivables.
If the aggregate initial principal amount of Certificates differs from their
aggregate issue price, market discount income or allowable premium deductions
attributable to such difference will be allocated to Certificateholders. Because
some Receivables have indefinite maturities, the method and timing for including
market discount or offsetting premium against income thereon is not clear under
present law and the offset for premium might be deferred until maturity; one
reasonable approach, however, would be on the basis of principal payments when
made.
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Constructive Termination. Under Section 708 of the Code, the Trust will
be deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a termination occurs, there will be a closing of the
partnership's taxable year for all partners and the Trust will be considered to
distribute its assets to the partners, who would then be treated as
recontributing those assets to the Trust, as a new partnership. The Trust will
not comply with certain technical requirements that might apply when such a
constructive termination occurs. As a result, the Trust may be subject to
certain tax penalties and may incur additional expenses if it is required to
comply with those requirements. (Furthermore, the Trust might not be able to
comply due to lack of data.) Moreover, if the tax year of the Trust is not a
calendar year the closing of a tax year of the Trust may cause a
Certificateholder reporting on a calendar year to report more than 12 months'
taxable income of the Trust.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
A Certificateholder's tax basis in a Certificate generally will equal his cost
increased by his share of Trust income (includible in his income) and decreased
by any distributions received with respect to such Certificate. In addition,
both tax basis in a Certificate and the amount realized on a sale of such
Certificate would include the holder's share of the outstanding balance of the
Notes and other liabilities of the Trust. A holder acquiring Certificates at
different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a pro rata portion of such aggregate tax basis to the
Certificates sold (rather than maintaining a separate tax basis in each
Certificate for purposes of computing gain or loss on a sale of that
Certificate).
Any gain on the sale of a Certificate attributable to the holder's
share of unrecognized accrued market discount, if any, on the Receivables would
generally be treated as ordinary income to the holder and might give rise to
special tax reporting requirements. The Trust does not expect to have any other
assets that would give rise to such special reporting requirements. Thus, to
avoid those special reporting requirements, the Trust will elect to include
market discount in income as it accrues if the Receivables are acquired at a
market discount.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess generally will give rise to
a capital loss upon the retirement of the Certificates.
Allocations Between Transferors and Transferees. In general, the
Trust's taxable income and losses will be determined each fiscal month and the
tax items for a particular fiscal month will be apportioned among the
Certificateholders in proportion to the principal amount of Certificates owned
by them as of the close of the last day of the corresponding calendar month,
which is the Certificate Record Date for the next Payment Date. As a result of
this monthly allocation, a holder purchasing Certificates may be allocated tax
items (which will affect its tax liability and tax basis) attributable to
periods before the actual transfer.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificateholders. The Sponsor is
authorized to revise the Trust's method of allocation between transferors and
transferees to conform to a method permitted by future regulations.
No Section 754 Election. In the event that a Certificateholder sells
its Certificates at a gain (loss), the purchasing Certificateholder will have a
higher (lower) basis in the Certificates than that of the selling
Certificateholder. The tax basis of the Trust's assets will not be adjusted to
reflect that higher (or lower) basis unless the Trust were to file an election
under Section 754 of the Code. In order to avoid the administrative complexities
that would be involved in keeping accurate accounting records, as well as
potentially onerous information reporting requirements, the Trust will not make
such election. As a result, Certificateholders might be allocated a greater or
lesser amount of Trust income than would be appropriate based on their own
purchase price for Certificates.
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Administrative Matters. The Owner Trustee is required to keep or cause
to be kept complete and accurate books of the Trust. Code Section 706 requires
that a partnership adopt the taxable year of its majority interest partners, or,
if none, its principal partners, and the Sponsor has a taxable year that ends
___________________. Accordingly, such books will be maintained for financial
reporting and tax purposes on an accrual basis and the fiscal and taxable year
of the Trust will be the 12-month period ending _____________ (or, in the case
of _______________, 199__, the period from the Closing Date to _______________,
199__). The Owner Trustee will file a partnership information return (IRS Form
1065) with the IRS for each taxable year of the Trust and will report to holders
and the IRS each Certificateholder s allocable share of items of Trust income
and expense on Schedule K-1. The Trust will provide the Schedule K-1 information
to nominees that fail to provide the Trust with the information statement
described below and such nominees will be required to forward such information
to the beneficial owners of the Certificates. Generally, holders must file tax
returns that are consistent with the information return filed by the Trust or be
subject to penalties unless the holder notifies the IRS of all such
inconsistencies.
Under Code Section 6031, any person that holds Certificates as a
nominee at any time during the Trust taxable year is required to furnish the
Trust with a statement containing certain information on the nominee, the
beneficial owners and the Certificates so held. The information referred to
below or any taxable year must be furnished to the Trust on or before the last
day of the first month following the close of the Trust's taxable year, i.e.,
_________________. Such information includes (i) the name, address and taxpayer
identification number of the nominee and (ii) as to each beneficial owner (x)
the name, address and taxpayer identification number of such person, (y) whether
such person is a United States person, a tax-exempt entity or a foreign
government, an international organization, or any wholly-owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, acquired or transferred on behalf of such person
throughout the year. In addition, brokers and financial institutions that hold
Certificates through a nominee are required to furnish directly to the Trust
Information as to themselves and their ownership of Certificates. A clearing
agency registered under Section 17A of the Exchange Act that holds an interest
in a partnership as a nominee is not required to furnish any such information
statement to the Trust. Nominees, brokers and financial institutions that fail
to provide the Trust with the information described above may be subject to
penalties.
The Sponsor, as the tax matters partner, will be responsible for
representing the Certificateholders in any dispute with the IRS. The Code
provides for administrative examination of a partnership as if the partnership
were a separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years since the later of the
filing or the last date for filing of the partnership information return. Any
adverse determination following an audit of the return of the Trust by the
appropriate taxing authorities could result in an adjustment of the returns of
the Certificateholders, and, under certain circumstances, a Certificateholder
may be precluded from separately litigating a proposed adjustment to the items
of the Trust. An adjustment could also result in an audit of a
Certificateholder's returns and adjustments of items not related to the income
and losses of the Trust.
Foreign Persons. Ownership of Certificates by nonresident aliens and
foreign corporations and other foreign persons raises tax issues unique to such
persons, may have substantially adverse tax consequences to them, and will
subject the Trust to U.S. tax withholding and reporting requirements. For this
reason, purchasers (including nominees of beneficial owners) of Certificates and
their assignees must represent that the beneficial owners of Certificates are
individuals or entities that are U.S. persons (generally, citizens or residents
of the U.S. and corporations or partnerships organized under U.S. law), and each
purchaser must provide a certification of non-foreign status signed under
penalties of perjury.
Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup" withholding tax
of 31% (proposed to be increased to 36%) if, in general, the Certificateholder
fails to comply with certain identification procedures, unless the holder is an
exempt recipient under applicable provisions of the Code.
[Proposed Tax Legislation. Legislation pending before Congress would
apply special rules to "large partnerships", generally defined as partnerships
with at least 250 partners during a taxable year (counting towards such total
each owner during the year of a partnership interest that is transferred during
the year). Under the legislation, certain computations are made at the
partnership level rather than the partner level. In particular, taxable income
is calculated at the partnership
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level, and is calculated generally in the same manner as for an individual,
except that 70% of miscellaneous itemized deductions (such as expenses for the
production of nonbusiness income) are disallowed. As a result, all partners
(including corporations) might have a portion of their share of partnership
deductions (other than interest expense) disallowed. Moreover, large
partnerships would become subject to new audit procedures; among other things,
an adjustment to taxable income of the partnership for a prior year would flow
through to current partners in the year the audit was settled, and the
partnership itself (rather than the partners) would be subject to any applicable
interest or penalties. As proposed, these rules would apply to partnership
taxable years ending on or after December 31, 1993.
The proposed tax legislation dealing with large partnerships discussed
above was not adopted in the Revenue Reconciliation Act of 1993, which was
enacted into law in August 1993. No prediction can be made whether that proposal
or similar legislation might be enacted in the future, or the ultimate effective
date of such legislation or whether the number of Certificateholders would cause
the Trust to be considered a "large partnership".]
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE MAY NOT BE APPLICABLE
TO ANY INDIVIDUAL INVESTOR, DEPENDING UPON A NOTEHOLDER'S OR A
CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES AND THE CERTIFICATES, INCLUDING
THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
STATE AND LOCAL TAX CONSIDERATIONS
Potential Securityholders should consider the state and local income
tax consequences of the purchase, ownership and disposition of the Securities.
State and local income tax laws may differ substantially from the corresponding
federal law, and this discussion does not purport to describe any aspect of the
income tax laws of any state or locality. Therefore, potential Securityholders
should consult their own tax advisors with respect to the various state and
local tax consequences of an investment in the Securities.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit sharing, or other employee benefit plan from engaging in certain
transactions involving "plan assets" with persons that are "parties in interest"
under ERISA or "disqualified persons" under the Code with respect to the plan.
ERISA also imposes certain duties on persons who are fiduciaries of plans
subject to ERISA and prohibits certain transactions between a plan and parties
in interest with respect to such plans. Under ERISA, any person who exercises
any authority or control respecting the management or disposition of the assets
of a plan is considered to be a fiduciary of such plan (subject to certain
exceptions not here relevant). A violation of these "prohibited transaction"
rules may generate excise tax and other liabilities under ERISA and the Code for
such persons.
THE NOTES
In addition to the matters described below, purchasers of Class A Notes
that are insurance companies should consult with their counsel with respect to
the United States Supreme Court case interpreting the fiduciary responsibility
rules of ERISA, John Hancock Mutual Life Insurance Co. v. Harris Trust and
Savings Bank, 114 S.Ct. 517 (1993). In John Hancock, the Supreme Court ruled
that assets held in an insurance company's general account may be deemed to be
"plan assets" for ERISA purposes under certain circumstances. Prospective
purchasers should determine whether the decision affects their ability to make
purchases of the Class A Notes.
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Certain transactions involving the Issuer might be deemed to constitute
prohibited transactions under ERISA and the Code if assets of the Issuer were
deemed to be "plan assets" of an employee benefit plan subject to ERISA or the
Code, or an individual retirement account (an "IRA"), or any entity whose
underlying assets are deemed to be assets of an employee benefit plan or an IRA
by reason of such employee benefit plan's or such IRA's investment in such
entity (each a "Benefit Plan"). Under a regulation issued by the United States
Department of Labor (the "Plan Assets Regulation"), the assets of the Issuer
would be treated as plan assets of a Benefit Plan for the purposes of ERISA and
the Code only if the Benefit Plan acquires an "equity interest" in the Issuer
and none of the exceptions contained in the Plan Assets Regulation is
applicable. An equity interest is defined under the Plan Assets Regulation as an
interest other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features. The Seller
believes that the Class A Notes should be treated as indebtedness without
substantial equity features for purposes of the Plan Assets Regulation. This
determination is based in part upon the traditional debt features of the Notes,
including the reasonable expectation of purchasers of Notes that the Notes will
be repaid when due, as well as the absence of conversion rights, warrants and
other typical equity features. The debt treatment of the Notes for ERISA
purposes could change if the Issuer incurred losses. However, without regard to
whether the Class A Notes are treated as an equity interest for such purposes,
the acquisition or holding of Class A Notes by or on behalf of a Benefit Plan
could be considered to give rise to a prohibited transaction if certain parties
to the transaction are or become, or any of their respective affiliates is or
becomes, a party in interest or a disqualified person with respect to such
Benefit Plan. In such case, certain exemptions from the prohibited transaction
rules could be applicable depending on the type and circumstances of the plan
fiduciary making the decision to acquire a Class A Note. Included among these
exemptions are: Prohibited Transaction Class Exemption ("PTCE") 90-1, regarding
investments by insurance company pooled separate accounts; PTCE 95-60, regarding
investments by insurance company general accounts; PTCE 91-38, regarding
investments by bank collective investment funds; PTCE 96-23, regarding
transactions by in-house asset managers; and PTCE 84-14, regarding transactions
by "qualified professional asset managers." Each investor using the assets of a
Benefit Plan which acquires the Class A Notes, or to whom the Class A Notes are
transferred, will be required to represent that the acquisition and continued
holding of the Class A Notes will be covered by a Department of Labor class
exemption.
Employee plans that are government plans (as defined in Section 3(32)
of ERISA) and certain church plans (as defined in Section 3(53) of ERISA are not
subject to ERISA; however, such plans may be subject to comparable state law
restrictions.
Any Benefit Plan fiduciary considering the purchase of a Class A Note
should consult with its counsel with respect to the potential applicability of
ERISA and the Code to such investment. Moreover, each Benefit Plan fiduciary
should determine whether, under the general fiduciary standards of investment
prudence and diversification, an investment in the Class A Notes is appropriate
for the Benefit Plan, taking into account the overall investment policy of the
Benefit Plan and the composition of the Benefit Plan's investment portfolio.
THE CERTIFICATES
The Certificates may not be acquired by (a) an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By its acceptance of a
Certificate, each Certificateholder will be deemed to have represented and
warranted that it is not a Benefit Plan.
RATINGS
As a condition to the issuance of the Securities, the [A-1 Notes] must
be rated at least "__" by the Rating Agency, the [A-2 Notes] must be rated at
least "____" by the Rating Agency and the Certificates must be rated at least
"____" by the Rating Agency. A security rating is not a recommendation to buy,
sell or hold securities and may be subject to revision or withdrawal at any
time. The rating of ________________________ assigned to the Notes and
Certificates addresses the likelihood of the receipt by [A-1] Noteholders, [A-2]
Noteholders and Certificateholders of all distributions to which such [A-1]
Noteholders, [A-2] Noteholders and Certificateholders are entitled. The ratings
assigned to the [A-1 Notes], [A-2 Notes] and Certificates do not represent any
assessment of the likelihood that principal prepayments might differ from
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those originally anticipated or address the possibility that [A-1] Noteholders,
[A-2] Noteholders or Certificateholders might suffer a lower than anticipated
yield. The ratings of the Securities are also based on the rating of the
security insurer. Upon a security insurer default, the rating on the Securities
may be lowered or withdrawn entirely. In the event that any rating initially
assigned to the Securities were subsequently lowered or withdrawn for any
reason, including by reason of a downgrading of the security insurer's
claims-paying ability, no person or entity will be obligated to provide any
additional credit enhancement with respect to the Securities. Any reduction or
withdrawal of a rating will have an adverse effect on the liquidity and market
price of the Securities.
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UNDERWRITING
Subject to the terms and conditions contained in the Underwriting
Agreement, the Seller has agreed to cause the Trust to sell the Notes to
_________ (the "Underwriter"), and the Underwriter has agreed to purchase the
Notes.
The Underwriting Agreement provides that the obligations of the
Underwriter is subject to certain conditions precedent and that the Underwriter
will be obligated to purchase all the Notes, if any are purchased.
Distribution of the Notes may be made by the Underwriter from time to
time in one or more negotiated transactions, or otherwise, at varying prices to
be determined at the time of sale. The Underwriter may effect such transactions
by selling the Notes to or through dealers, and such dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Underwriter. In connection with the sale of the Notes, the Underwriter
may be deemed to have received compensation from the Seller in the form of
underwriting compensation. The Underwriter and any dealers that participate with
the Underwriter in the distribution of the Notes may be deemed to be
underwriters and any commissions received by them and any profit on the resale
of the Notes positioned by them may be deemed to be underwriting discounts and
commissions under the Securities Act of 1933, as amended (the "Securities Act").
If the Underwriter creates a short position in the Notes in connection
with the offering, i.e., if the Underwriter sells more Notes than are set forth
on the cover page of this Prospectus Supplement, the Underwriter may reduce that
short position by purchasing Notes in the open market.
In general, purchases of a security to reduce a short position could
cause the price of the security to be higher than it might be in the absence of
such purchases.
Neither the Seller nor the Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above, if engaged in, may have on the prices of the Notes. In
addition, neither the Seller not the Underwriter makes any representation that
the Underwriter will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The Notes are a new issue of securities with no established trading
market. The Underwriter has advised the Seller that it intends to act as market
makers for the Notes. However, the Underwriter is not obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of any trading market for the Notes.
The closing of the sale of the Notes is conditioned on the closing of
the sale of the Certificates.
Subject to the terms and conditions set forth in a certificate
underwriting agreement the "Certificate Underwriting Agreement"), ACC has agreed
to cause the Trust to sell to ___________________________ (the "Certificate
Underwriter(s)"; and, together with the Note Underwriter(s), the
"Underwriter(s)"), and the Certificate Underwriter(s) [has][have] agreed to
purchase, Certificates in an aggregate principal amount of
$____________________. The Sponsor will purchase Certificates in an aggregate
principal amount of $____________________ from the Certificate Underwriters and
will purchase Certificates in an aggregate principal amount of $_______________
from the Trust.
ACC has been advised by the Certificate Underwriter(s) that they
propose initially to offer the Certificates to the public at the prices set
forth on the cover hereof, and to certain dealers at such price less the initial
concession not in excess of ____% per Certificate. The Certificate
Underwriter(s) may allow and such dealers may reallow a concession not in excess
of ____% per Certificate to certain other dealers. After the initial public
offering of the Certificates, the public offering price and such concessions may
be changed.
The Certificate Underwriting Agreement provides that the Sponsor and
the Originator will indemnify the Certificate Underwriters against certain civil
liabilities, including liabilities under the Securities Act, or contribute to
payments the Certificate Underwriter(s) may be required to make in respect
thereof. The Commission is of the opinion that
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indemnification for securities law violations is contrary to the public policy
expressed in the federal securities laws, and, consequently, that such
indemnification provisions are unenforceable.
The Indenture Trustee (on behalf of the Trust) may, from time to time,
invest the funds in the Trust Accounts in Eligible Investments acquired from the
Certificate Underwriter(s).
The closing of the sale of the Certificates is conditioned on the
closing of the sale of the Notes.
The Seller has agreed to indemnify the Underwriter against certain
liabilities, including civil liabilities under the Securities Act, or contribute
to payments which the Underwriter may be required to make in respect thereof.
The Commission is of the opinion that indemnification for any securities law
violation is contrary to the public policy expressed in the federal securities
laws, and consequently, that such indemnification provisions are unenforceable.
The Underwriter has represented and agreed that (i) it has not offered
or sold and, prior to the expiration of the period of six months from the
Closing Date, will not offer or sell any Notes to persons in the United Kingdom,
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulation 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Notes in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the Issue of the Notes to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995, or is a person to whom such document may otherwise
lawfully be issued or passed on.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Seller prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of the Notes are effected. Accordingly, any resale of the Notes in Canada
must be made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales to be made
in accordance with available statutory exemptions or pursuant to a discretionary
exemption granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of the Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of a Note in Canada who receives a purchase confirmation
will be deemed to represent to the Seller and the dealer from whom such purchase
confirmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Note without the benefit of a
prospectus qualified under such securities laws, (ii) where required by law,
that such purchaser is purchasing as principal and not as agent and (iii) such
purchaser has reviewed the text above under "Resale Restrictions".
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of a Note to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any Notes
acquired by such purchaser pursuant to this offering. Such report must be in the
form attached to British Columbia Securities Commission Blanket Order BOR #
88/5, a copy of which may be obtained from the Seller. Only one such report must
be filed in respect of the Notes acquired on the same date and under the same
prospectus exemption.
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LEGAL OPINIONS
Certain legal matters relating to the Notes will be passed upon for
ACC, the Servicer and _________ by Dewey Ballantine, New York, New York. Certain
bankruptcy, federal income tax and other matters will be passed upon for ACC and
the Servicer by Dewey Ballantine. Certain legal matters under Minnesota law
relating to the Notes will be passed upon for the Issuer by Faegre & Benson.
Certain legal matters under Texas law relating to the Notes will be passed upon
for ACC and the Servicer by Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. Certain
legal matters under Florida law relating to the Notes will be passed upon for
ACC and the Servicer by Foley & Lardner. Certain legal matters under California
law relating to the Notes will be passed upon for ACC and the Servicer by Dewey
Ballantine.
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GLOSSARY
For the purposes hereof, the following terms shall have the following
meanings:
"Aggregate Principal Balance" means, with respect to any
Determination Date, the sum of the Principal Balances for all Receivables (other
than (i) any Receivable that became a Liquidated Receivable prior to the end of
the related Monthly Period and (ii) any Receivable that became a Purchased
Receivable prior to the end of the related Monthly Period) as of the
Determination Date.
"Amount Financed" means, with respect to a Receivable, the
aggregate amount advanced under such Receivable toward the purchase price of the
Financed Vehicle and related costs, including amounts advanced in respect of
accessories, insurance premiums, service, car club and warranty contracts, other
items customarily financed as part of retail automobile installment sale
contracts or promissory notes, and related costs.
"Available Funds" means, with respect to any Determination
Date, the sum of (i) the Collected Funds for such Determination Date, plus (ii)
all Purchase Amounts deposited in the Collection Account during the related
Monthly Period, plus income on investments held in the Collection Account, plus
(iii) the Monthly Capitalized Interest Amount with respect to the related
Distribution Date.
"Class A Noteholders' Distributable Amount" means, with
respect to any Distribution Date, the sum of the Class A Noteholders' Principal
Distributable Amount and the Class A Noteholders' Interest Distributable Amount.
"Class A Noteholders' Interest Carryover Shortfall" means,
with respect to any Distribution Date and the Class A Notes, the excess of the
Class A Noteholders' Interest Distributable Amount for the preceding
Distribution Date, over the amount in respect of interest that was actually
deposited in the Class A Note Distribution Account on such preceding
Distribution Date, plus interest on the amount of interest due but not paid to
Class A Noteholders on the preceding Distribution Date, to the extent permitted
by law, at the Interest Rate borne by the Class A Notes from such preceding
Distribution Date to but excluding the current Distribution Date.
"Class A Noteholders' Interest Distributable Amount" means,
with respect to any Distribution Date, the sum of the Class A Noteholders'
Monthly Interest Distributable Amount for the Class A Notes for such
Distribution Date and the Class A Noteholders' Interest Carryover Shortfall for
Class A Notes for such Distribution Date.
"Class A Noteholders' Monthly Interest Distributable Amount"
means, with respect to any Distribution Date and Class A Notes, interest accrued
during the applicable Interest Period at the Interest Rate borne by such Class
of Class A Notes on the outstanding principal amount of such Class immediately
prior to such Distribution Date, calculated on the basis of a 360-day year and
twelve 30-day months.
"Class A Noteholders' Monthly Principal Distributable Amount"
means, with respect to any Distribution Date, the Class A Noteholders'
Percentage of the Principal Distributable Amount.
"Class A Noteholders' Percentage" means (i) for each
Distribution Date other than a Distribution Date on which the Class A Notes are
paid in full, 94%, or (ii) for any Distribution Date after the Distribution Date
on which the Class A Notes are paid in full, zero.
"Class A Noteholders' Principal Carryover Shortfall" means, as
of the close of any Distribution Date, the excess of the Class A Noteholders'
Principal Distributable Amount for the preceding Distribution Date over the
amount in respect of principal that was actually deposited in the Class A Note
Distribution Account on such Distribution Date.
"Class A Noteholders' Principal Distributable Amount" means,
with respect to any Distribution Date (other than the Final Scheduled
Distribution Date), the sum of the Class A Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and the Class A Noteholders'
Principal Carryover Shortfall as of the close of the preceding
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Distribution Date. The Class A Noteholders' Principal Distributable Amount on
the Final Scheduled Distribution Date for the Class A Notes will equal the
outstanding principal amount, if any, of such Class A Notes.
"Insurer Optional Deposit" means, with respect to any
Distribution Date, an amount delivered by the Insurer, at its sole option, other
than pursuant to the Policy for deposit into the Collection Account for any of
the following purposes: (i) to provide funds in respect of the payment of fees
or expenses of any provider of services to the Trust with respect to such
Distribution Date; or (ii) to include such amount as part of the Distribution
Amount for such Distribution Date to the extent that without such amount a draw
would be required to be made on the Policy.
"Class B Noteholders' Distributable Amount" means, with
respect to any Distribution Date, the sum of the Noteholders' Principal
Distributable Amount and the Class B Noteholders' Interest Distributable Amount.
"Class B Noteholders' Interest Carryover Shortfall" means,
with respect to any Distribution Date and the Class B Notes, the excess of the
Class B Noteholders' Interest Distributable Amount for the preceding
Distribution Date, over the amount in respect of interest that was actually
deposited in the Class B Note Distribution Account on such preceding
Distribution Date, plus interest on the amount of interest due but not paid to
Class B Noteholders on the preceding Distribution Date, to the extent permitted
by law, at the Interest Rate borne by the Class B Notes from such preceding
Distribution Date to but excluding the current Distribution Date.
"Class B Noteholders' Interest Distributable Amount" means,
with respect to any Distribution Date, the sum of the Class B Noteholders'
Monthly Interest Distributable Amount for the Class B Notes for such
Distribution Date and the Class B Noteholders' Interest Carryover Shortfall for
Class B Notes for such Distribution Date.
"Class B Noteholders' Monthly Interest Distributable Amount"
means, with respect to any Distribution Date and Class B Notes, interest accrued
during the applicable Interest Period at the Interest Rate borne by such Class
of Class B Notes on the outstanding principal amount of such Class immediately
prior to such Distribution Date, calculated on the basis of a 360-day year and
twelve 30-day months.
"Class B Noteholders' Monthly Principal Distributable Amount"
means, with respect to any Distribution Date, the Class B Noteholders'
Percentage of the Principal Distributable Amount.
"Class B Noteholders' Percentage" means (i) for each
Distribution Date other than a Distribution Date on which the Class A Notes have
been paid in full, 6% or (ii) for any Distribution Date after the Class A Notes
are paid in full, 100 %; provided, however, that the Class B Noteholders'
Percentage will be zero percent when the principal balance of the Class B Notes
has been reduced to zero.
"Class B Noteholders' Principal Carryover Shortfall" means, as
of the close of any Distribution Date, the excess of the Class B Noteholders'
Principal Distributable Amount for the preceding Distribution Date over the
amount in respect of principal that was actually deposited in the Class B Note
Distribution Account on such Distribution Date.
"Class B Noteholders' Principal Distributable Amount" means,
with respect to any Distribution Date (other than the Final Scheduled
Distribution Date for any Class B Notes), the sum of the Class B Noteholders'
Monthly Principal Distributable Amount for such Distribution Date and the Class
B Noteholders' Principal Carryover Shortfall as of the close of the preceding
Distribution Date. The Class B Noteholders' Principal Distributable Amount on
the Final Scheduled Distribution Date for the Class B Notes will equal the
outstanding principal amount, if any, of such Class B Notes.
"Collected Funds" means, with respect to any Determination
Date, the amount of funds in the Collection Account representing collections on
the Receivables during the related Monthly Period, including all Net Liquidation
Proceeds collected during the related Monthly Period (but excluding any Purchase
Amounts).
"Cram Down Loss" means, with respect to a Receivable if a
court of appropriate jurisdiction in an insolvency proceeding shall have issued
an order reducing the amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments to be made on such Receivable, an amount
equal to (i) the excess of the principal
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balance of such Receivable immediately prior to such order over the principal
balance of such Receivable as so reduced and/or (ii) if such court shall have
issued an order reducing the effective rate of interest on such Receivable, the
net present value (using as the discount rate the higher of the APR on such
Receivable or the rate of interest, if any, specified by the court in such
order) of the scheduled payments as so modified or restructured. A "Cram Down
Loss" shall be deemed to have occurred on the date of issuance of such order.
"Deficiency Claim Amount" means, with respect to any
Determination Date, the excess, if any, of the sum of the amounts payable on the
related Distribution Date pursuant to clauses (a) through (e) under "Description
of Notes - Distributions" over the amount of Available Funds.
"Deficiency Notice" means a written notice delivered by the
Indenture Trustee to the Insurer, the fiscal agent, if necessary, and the
Servicer and any other person required under the Insurance Agreement, specifying
the Deficiency Claim Amount for such Distribution Date.
"Determination Date" means, with respect to any Collection
Period, the 5th Business Day prior to the related Distribution Date.
"Distribution Amount" means, with respect to any Distribution
Date the sum of (i) the Available Funds for the immediately preceding
Determination Date plus (ii) the Deficiency Claim Amount, if any, received by
the Indenture Trustee with respect to such Distribution Date.
"Floor Amount" means with respect to the Class B Reserve Fund
and any Distribution Date, an amount equal to the product of the Interest Rate
for the Class B Notes and the principal balance of the Class B Notes as of such
Distribution Date.
"Liquidated Receivable" means, with respect to any Monthly
Period, a Receivable as to which (i) 60 days have elapsed since the Servicer
repossessed the Financed Vehicle, (ii) the Servicer has determined in good faith
that all amounts it expects to recover have been received, (iii) ninety percent
or more of a scheduled payment shall have become 120 or more days delinquent, or
in the case of an Obligor who is subject to bankruptcy proceedings, 210 or more
days delinquent or (iv) the Financed Vehicle has been sold and the proceeds
received. Any Receivable that becomes a Purchased Receivable on or before the
related Business Day immediately preceding the related Determination Date shall
not be a Liquidated Receivable.
"Net Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable (other than
amounts withdrawn from certain collateral accounts and drawings under the
Policy) net of the Servicer's reasonable out-of-pocket costs, including
repossession and resale expenses not already deducted from such proceeds, and
any amounts that are required to be refunded to the Obligor on such Receivable;
provided, however, that Net Liquidation Proceeds with respect to any Receivables
shall in no event be less than zero.
"Policy Claim Amount" means, with respect to any Determination
Date on which the Indenture Trustee has delivered a Deficiency Notice, the
shortfall of (y) the Distribution Amount with respect to the related
Distribution Date (after giving effect to the amounts payable on such
Distribution Date pursuant to clauses (a) and (b) under "Distributions") over
(2) the amount necessary to pay the Scheduled Payments on the Class A Notes with
respect to such Distribution Date.
"Principal Balance" means, with respect to any Receivable, as
of any date, the Amount Financed minus (i) that portion of all amounts received
on or prior to such date and allocable to principal in accordance with the terms
of the Receivable, and (ii) any Cram Down Loss in respect of such Receivable.
"Principal Distributable Amount" means, with respect to any
Distribution Date, an amount equal to the sum of the following amounts with
respect to the related Monthly Period, computed in accordance with the simple
interest method in the case of a Simple Interest Receivable and the actuarial
method in the case of an Actuarial Method Receivable: (i) that portion of all
collections on Receivables (other than Liquidated Receivables and Purchased
Receivables) allocable to principal, including full and partial principal
prepayments, received during such Monthly Period
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(ii) the principal balance of each Receivable that became a Liquidated
Receivable during the related Monthly Period (other than Purchased Receivables),
(iii) the principal balance of each Receivable that was repurchased by the
Issuer, the Servicer or the Seller as of the last day of such Monthly Period,
(iv) the aggregate amount of any Cram Down Loss during such Monthly Period, and
(v) any unpaid portion of the amounts included in clauses (i), (ii), (iii) and
(iv) above with respect to a prior Distribution Date. Principal payments on the
Class A Notes will be made from the Distribution Amount after payment of accrued
and unpaid trustees' fees and other administrative fees of the Issuer, payment
of the Servicing Fee and after distribution of the Class A Noteholders' Interest
Distributable Amount. See "Description of the Sale, Servicing and Collateral
Management Agreement and the Trust Documents -- Distributions" herein.
"Purchase Amount" means, with respect to a Receivable, the
principal balance and all accrued and unpaid interest on the Receivable as of
the date of purchase.
"Purchased Receivable" means, a Receivable purchased as of the
close of business on the last day of the related Monthly Period by the Servicer
or by the Seller pursuant to the repurchase obligations of the Sale, Servicing
and Collateral Management Agreement.
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EXHIBIT 99.2
[Exhibit 99.2 Form of Prospectus Supplement. This form of Prospectus Supplement
is for illustrative purposes only. A Prospectus Supplement in definitive form
reflecting the terms of each Series of Certificates will be filed with the
Commission under the Securities Act of 1933, as amended, pursuant to Rule
424(b) promulgated thereunder.]
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED ____________)
ACC AUTOMOBILE RECEIVABLES TRUST ____-__
$_________ ____% Asset Backed Notes, Class A
ACC Automobile Receivables Trust ____-__, ACC Consumer Finance Corporation,
as Issuer as Seller and Servicer
The Asset Backed Notes (the "Notes") will be issued pursuant to an
Indenture dated as of __________, between ACC Auto Receivables Trust ____-__
(the "Issuer") ________________________________________________ ("_______
_____"), as trustee (the "Indenture Trustee") and as collateral agent (the
"Collateral Agent"). The Notes will be issued in two classes, a senior class
(the "Class A Notes") and a subordinate class (the "Class B Notes" and together
with the Class A Notes, the "Notes"). The Class B Notes are not being offered
hereby.
The assets of the Issuer which will be pledged to the Collateral Agent
for the benefit of Noteholders will initially include a pool of non-prime retail
installment sales contracts (the "Receivables") secured by new and used
automobiles and light trucks, all monies paid or payable thereunder after the
Cutoff Date, security interests in the vehicles financed thereby, certain bank
accounts and the proceeds thereof, and the right to receive certain insurance
proceeds and certain other property. The Receivables were purchased by ACC
Consumer Finance Corporation ("ACC" or the "Servicer") from motor vehicle
dealers and may have been sold by ACC pursuant to warehouse financing
arrangements and repurchased. In connection with the issuance of the Notes by
the Issuer, the Issuer will purchase the Receivables from ACC. The aggregate
principal balance of the pool of Receivables to be transferred on the Closing
Date (the "Initial Receivables") is expected to be $____________.
Additional non-prime retail installment sale contracts are intended to
be purchased by the Issuer from ACC from time to time on or before _________,
from funds on deposit in a pre-funding account to be established with the
Indenture Trustee (the "Pre-Funding Account"). Approximately $___________ of
such additional contracts may be acquired by the Issuer.
Principal and interest will be distributed to the holders of the Notes
(the "Noteholders") on the 17th day of each month (or, if such day is a
Saturday, Sunday, legal holiday or other day on which commercial banks or trust
companies in the States of _________________________________ or any other
location of any successor Servicer, successor Indenture Trustee or successor
Collateral Agent are authorized or obligated by law, executive order or
governmental decree to be closed, on the next succeeding day (such day, a
"Business Day")), beginning ____________. The "Final Scheduled Distribution
Date" is ____________.
Full and complete payment of the Scheduled Payments (as defined herein)
on the Class A Notes only on each Distribution Date is unconditionally and
irrevocably guaranteed pursuant to a financial guaranty insurance policy (the
"Policy") to be issued by
[--------]
SEE "RISK FACTORS" AT PAGE S-__ HEREIN AND AT PAGE __ IN THE ACCOMPANYING
PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS IN THE NOTES OFFERED HEREBY.
THE NOTES REPRESENT OBLIGATIONS OF, THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN THE SELLER, THE MASTER SERVICER OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THE SECURITIES NOR THE UNDERLYING RECEIVABLES ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
<PAGE> 2
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PRICE TO PUBLIC(1) UNDERWRITING DISCOUNT PROCEEDS TO THE TRUST(1)
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Per Class A Note.................. ________% ____% ________%
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Total............................. $_________ $_______ $_________
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(1) Plus accrued interest, if any, at the applicable rate, from _________.
(2) ACC has agreed to indemnify the Underwriter against certain liabilities,
including liabilities under the Securities Act of 1933, as amended. See
"Underwriting".
The Notes are offered subject to receipt and acceptance by the Underwriter, to
prior sale and to the Underwriter's right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice.
It is expected that the Notes will be offered globally and delivered in
book-entry form on or about March 31, 1997 through the facilities of The
Depository Trust Company ("DTC"), CEDEL S.A. ("Cedel") and the Euroclear System
("Euroclear") against payment in immediately available funds.
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TABLE OF CONTENTS
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AVAILABLE INFORMATION............................................................. 1
REPORTS TO THE NOTEHOLDERS........................................................ 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................................... 2
SUMMARY ......................................................................... 3
RISK FACTORS...................................................................... 13
YIELD CONSIDERATIONS.............................................................. 24
DELINQUENCY AND LOAN LOSS INFORMATION............................................. 24
THE CLASS A NOTE INSURER.......................................................... 30
THE POLICY........................................................................ 31
DESCRIPTION OF THE TRUST DOCUMENTS................................................ 33
CERTAIN FEDERAL INCOME TAX CONSEQUENCES........................................... 40
STATE AND LOCAL TAX CONSIDERATIONS................................................ 41
ERISA CONSIDERATIONS.............................................................. 41
UNDERWRITING...................................................................... 43
LEGAL OPINIONS.................................................................... 44
GLOSSARY ......................................................................... 45
Appendix A........................................................................ 1
</TABLE>
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT AFFECT THE PRICE OF THE NOTES. SUCH TRANSACTIONS MAY INCLUDE
THE PURCHASE OF NOTES TO COVER SYNDICATE SHORT POSITIONS. FOR A DESCRIPTION OF
THESE TRANSACTIONS, SEE "UNDERWRITING."
---------------------------
The information in this Prospectus Supplement is qualified in its
entirety by the more detailed information appearing or incorporated by reference
in the accompanying Prospectus. Prior to making an investment decision with
respect to the Notes offered hereby, prospective investors should carefully
consider the information contained in this Prospectus Supplement and the
Prospectus.
There currently is no secondary market for the Notes. The Underwriter
intends to make a market in the Notes but has no obligation to do so. There is
no assurance that one will develop or, if one does develop, that it will
continue until the Notes are paid in full.
UNTIL 90 DAYS FROM THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
AVAILABLE INFORMATION
The Company has filed a Registration Statement under the
Securities Act of 1933, as amended (the "1933 Act"), with the Securities and
Exchange Commission (the "Commission") on behalf of the Trust with respect to
the Notes offered pursuant to the Prospectus dated -------------- and this
Prospectus Supplement. For further information, reference is made to the
Registration Statement and amendments thereof and to the exhibits thereto, which
are available for inspection without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
7 World Trade Center, 13th Floor, New York, New York 10048; and at The
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The Commission maintains a site on the World Wide Web containing
reports, proxy materials, information statements and other items. The address is
http://www.sec.gov. Copies of the Registration Statement and amendments thereof
and exhibits thereto may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
REPORTS TO THE NOTEHOLDERS
So long as the Notes are in book-entry form, monthly and
annual reports concerning the Notes and the Trust will be sent by the Indenture
Trustee to Cede & Co., as the nominee of DTC and as registered holder of the
Notes pursuant to the Sale and Servicing Agreement. DTC will supply such reports
to Beneficial Owners in accordance with its procedures. See "Risk Factors,"
"Description of the Securities -- Book-Entry Registration" and " -- Reports to
Securityholders" in the Prospectus. To the extent required by the Securities
Exchange Act of 1934, as amended, the Trust will provide financial information
to the registered holder which has been examined and reported upon, with an
opinion expressed by an independent public accountant; to the extent not so
required, such financial information will be unaudited. The Seller has
determined that the financial statements of no entity other than the Insurer are
material to the offering made hereby. The Trust will be formed to own the
Receivables, and to issue the Securities. The Trust will have no assets or
obligations prior to issuance of the Securities and will engage in no activities
other than those described herein. Accordingly, no financial statements with
respect to the Trust are included in this Prospectus Supplement.
Until 90 days from the date of this Prospectus Supplement,
dealers effecting transactions in the Notes whether or not participating in this
distribution, may be required to deliver a prospectus and a prospectus
supplement. This is in addition to the obligation of dealers to deliver a
prospectus and a
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prospectus supplement when acting as underwriters and with respect to their
unsold allotments or subscriptions.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In addition to the documents described in the Prospectus under
"Incorporation of Certain Documents by Reference," the consolidated financial
statements of ____________ and Subsidiaries included in, or as exhibits to, the
Annual Report on Form 10-K for the year ended __________ which have been filed
with the Commission by ___________, are hereby incorporated by reference in the
Registration Statement (as defined in the Prospectus) of which this Prospectus
and Prospectus Supplement form a part.
The Seller on behalf of the Trust hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, as amended, each
filing of the Trust's annual report pursuant to section 13(a) or section 15(d)
of the Exchange Act and each filing of the financial statements of the Insurer
included in or as an exhibit to the annual report of _________ filed pursuant to
section 13(a) or section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the Notes offered hereby, and the offering of such Notes
at that time shall be deemed to be the initial bona fide offering thereof.
The Company will provide, without charge, to any person to whom this
Prospectus Supplement is delivered, upon oral or written request of such person,
a copy of any or all of the foregoing financial statements incorporated by
reference. Requests for such copies should be sent to ACC Consumer Finance
Corporation, attention: _______________. All financial statements of the Insurer
included in documents filed by __________ pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
subsequent to the date of this Prospectus Supplement and prior to the
termination of the offering of the Notes shall be deemed to be incorporated by
reference into this Prospectus Supplement and to be a part hereof from the
respective dates of filing of such documents.
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<PAGE> 6
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the Prospectus. Capitalized terms used are defined elsewhere in the Prospectus
Supplement or in the Prospectus. Reference is made to the Index of Defined Terms
herein and the Index of Terms in the Prospectus for the definitions of certain
capitalized terms.
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ISSUER.....................................ACC Automobile Receivables Trust ____, a Delaware business
trust (the "Issuer") wholly owned by ACC Funding Corp.
("ACC Funding") (which will own a ___% interest in the
Issuer) and ACC Receivables Corp. ("ACC Receivables")
(which will own a ___% interest in the Issuer). Each of ACC
Receivables and ACC Funding is a special purpose,
bankruptcy-remote subsidiary of ACC.
OWNER TRUSTEE.............................._____________________________________________________,
not in its individual capacity but solely as trustee under
the Trust Agreement, dated as of ________, with ACC, ACC Funding
and ACC Receivables (the "Owner Trustee").
SELLER AND SERVICER .......................ACC Consumer Finance Corporation, a Delaware corporation,
("ACC," and, under the Sale, Servicing and Collateral
Management Agreement in its capacity as Servicer, the
"Servicer" and in its capacity as Seller, the "Seller"). The
Servicer will be obligated, pursuant to the Sale, Servicing and
Collateral Management Agreement, subject to the limitations
set forth therein, to service the Receivables and to
repurchase certain of the Receivables if it breaches certain of
its servicing obligations under the Sale, Servicing and
Collateral Management Agreement or certain other covenants
with respect to the Servicer, in each case only in a manner
that materially and adversely affects such Receivables, the
interests of the Issuer, the Noteholders or the Class A Note
Insurer. See "The Seller and Servicer in the Prospectus."
The Seller will be obligated, pursuant to the Sale, Servicing
and Collateral Management Agreement, dated as of
__________, among the Seller, the Issuer, the Servicer, the
Backup Servicer and the Trust Collateral Agent (the "Sale,
Servicing and Collateral Management Agreement"), subject to
the limitations set forth therein, to purchase certain of the
Receivables under certain circumstances if any
representations and warranties made therein by the Seller
with respect to the Receivables are incorrect in a manner that
materially and adversely affects such Receivables, the
interests of the Issuer, the Noteholders or the Class A Note
Insurer.
INITIAL CUTOFF DATE .......................The close of business on __________ or with respect to each
Initial Receivable originated after such date, the date of
origination of such Receivable.
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CLOSING DATE .............................._________.
INDENTURE TRUSTEE, BACKUP SERVICER
AND TRUST COLLATERAL AGENT ................___________________________________________ (in its
capacity as Indenture Trustee under the Indenture, the
"Indenture Trustee", in its capacity as Collateral Agent
under the Sale, Servicing and Collateral Management Agreement,
the "Trust Collateral Agent", and in its capacity as Backup
Servicer under the Servicing and Collateral Management
Agreement, the "Backup Servicer").
DESCRIPTION OF THE
NOTES .....................................The Notes will be issued pursuant to an Indenture, dated as of
_________, between the Issuer, the Indenture Trustee and
the Trust Collateral Agent (the "Indenture"). The Notes will
be issued in fully registered form in minimum denominations
of $1,000 and integral multiples of $1,000 in excess thereof.
The Notes will be issued in two classes, a senior class (the
"Class A Notes") and a subordinate class (the "Class B
Notes").
The Original Principal Balance of each class will be as
follows:
Class A Notes: $_________
Class B Notes: $_________
The Class A Notes will be represented by global securities
registered in the name of Cede & Co. ("Cede"), as nominee
of The Depository Trust Company ("DTC"). Class A
Noteholders will not be entitled to receive definitive securities
representing such holders' interest except in certain
circumstances described in the Sale, Servicing and Collateral
Management Agreement. Transfers within DTC will be in
accordance with the usual rules and operating procedures of
the relevant system. The rights of the owners of the
beneficial interests in the Class A Notes may only be
exercised through DTC and its participating organizations,
except as otherwise specified herein. See "Description of the
Notes--Book-Entry Registration."
The Class B Notes are not being offered hereby.
DESCRIPTION OF THE
INDENTURE ................................. The payment priorities set forth in the Indenture require (i)
except to the extent of funds available in the Class B Reserve
Fund (as defined below), that no payments of interest will be
paid to the Class B Noteholders on any Distribution Date
unless the full amount of interest and principal then due to the
Class A Noteholders has been paid, as well as certain
reimbursements due to the Insurer, and (ii) except to the extent
of funds available in the Class B Reserve Fund (as defined below),
that no payments of principal will be
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paid to the Class B Noteholders on any Distribution Date unless
the full amount of interest and principal then due to the Class A
Noteholders, the full amount of interest then due to the Class B
Noteholders, as well as certain reimbursements due to the Insurer,
and funding of certain reserve accounts established for the benefit
of the Insurer, have been paid in full. Consequently, the Class B
Noteholders will receive no distributions of principal from sources
other than the Class B Reserve Fund until these provisions have been
satisfied (during which period some of or all the distributions of
principal to which the Class B Noteholders would otherwise be entitled
will be deposited to such reserve accounts) and may thereafter
experience temporary suspensions of payments of principal.
CLASS A NOTE INTEREST
RATE....................................The Class A Notes will bear interest at a rate of ____% per
annum, calculated on the basis of a 360-day year consisting of
twelve 30-day months, using the applicable Note Interest Rate
(the "Class A Note Interest Rate"), as set forth on the cover
page hereof.
TRUST PROPERTY.............................The property of the Issuer initially pledged to secure payment of
the Notes (such property, the "Trust Estate") will include
certain non-prime retail installment sale contracts (the "Initial
Receivables") secured by new or used automobiles, light duty
trucks, vans and mini-vans (the "Initial Financed Vehicles"), all
monies paid or payable thereunder after the Initial Cutoff Date,
security interests in the Initial Financed Vehicles securing the
Initial Receivables, certain bank accounts and the proceeds
thereof, any proceeds from claims on certain insurance policies,
certain rights under the Sale, Servicing and Collateral
Management Agreement and all proceeds of the foregoing.
On or before _________, the Issuer may acquire from time to
time (each such date a "Subsequent Transfer Date") from
ACC, using the money on deposit in a pre-funding account to
be established with the Indenture Trustee (the "Pre-Funding
Account"), approximately $_________ (the "Original Pre-
Funded Amount") of additional non-prime retail installment
sale contracts (the "Subsequent Receivables" and together
with the Initial Receivables, the "Receivables") secured by
new or used automobiles, light duty trucks, vans and mini-
vans (the "Subsequent Financed Vehicles" and together with
the Initial Financed Vehicles, the "Financed Vehicles"),
together with all monies paid or payable under such
Subsequent Receivables after the related subsequent cutoff
date (each a "Subsequent Cutoff Date" and together with the
Initial Cutoff Date, each a "Cutoff Date") established pursuant
to the related subsequent transfer agreement (each a
"Subsequent Transfer Agreement") to be entered into at the
time of such subsequent transfer of Receivables to the Issuer
among the Seller, the Servicer, the Trust Collateral Agent and
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the Indenture Trustee, security interests in the Financed
Vehicles securing the Receivables and all proceeds of the
foregoing. ACC has previously originated and identified
Receivables having an aggregate principal balance of
approximately $_________ that it expects to transfer to the
Issuer on one or more Subsequent Transfer Dates.
RECEIVABLES................................The Receivables consist of non-prime retail automobile install-
ment sales contracts which were sold and purchased in the
manner described above and pursuant to ACC's finance
programs. ACC's finance programs target automobile
purchasers with below average credit profiles who are
generally unable to obtain credit from traditional lending
sources. The Receivables had, as of the Initial Cutoff Date,
a weighted average annual percentage rate ("APR") of
approximately ____%, a weighted average original term of
____ months and a weighted average remaining term of ____
months. The Receivables had an Aggregate Principal
Balance of $_________ as of the Initial Cutoff Date (the
"Original Pool Balance"). See "The Trust Property."
Certain contracts included in the pool as of the Initial Cutoff
Date may prepay in full, or may be determined not to meet
the eligibility requirements for the final pool, and may not be
included in the final pool. As a result of the foregoing, the
statistical distribution of characteristics as of the Closing Date
for the final Receivables pool may vary somewhat from the
statistical distribution of such characteristics as of the Initial
Cutoff Date as presented in this Private Placement
Memorandum, although such variance will not be material.
The Seller has represented and warranted that no Initial
Receivable is more than 30 days delinquent as of the Initial
Cutoff Date, and that no more than 0.07% of the Initial
Receivables have been extended by the Servicer.
Approximately $19,800,000.00 of the Subsequent Receivables
have already been originated and identified for transfer to the
Issuer by the Seller. See "The Trust Property."
Following the Closing Date and subject to the prior written consent
of the Insurer and satisfaction of certain conditions set forth in
the Sale, Servicing and Collateral Management Agreement, the Issuer
will be obligated to purchase the Subsequent Receivables from the
Seller as described below under "Pre-Funding Account." The Seller
will make certain representations as of the related Subsequent
Cutoff Date with respect to the Receivables, including any
Subsequent Receivables. See "The Trust Property."
PRE-FUNDING ACCOUNT........................During the period from and including the Closing Date until the
earliest of (i) the date on which the Pre-Funded Amount (after
giving effect to any transfer of Subsequent Receivables to the
Issuer on such date) is less than $100,000, (ii) the date on
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which an Event of Default occurs under the Indenture or which a
Servicer Termination Event occurs under the Sale, Servicing and
Collateral Management Agreement or (iii) the Distribution Date in
_________ (the "Funding Period"), the Pre-Funding Account will be
maintained with the Indenture Trustee and is designed solely to
hold funds to be applied by the Indenture Trustee to pay the
Seller the purchase price for Subsequent Receivables. Monies on
deposit in the Pre-Funding Account will not be available to cover
losses on or in respect of the Receivables. On the Closing Date,
the Pre-Funding Account will be funded with the Original
Pre-Funded Amount from the sale proceeds of the Notes.
The Seller expects that the Pre-Funded Amount will be
reduced to less than $100,000 by _________, although no
assurances can be given in this regard. If any portion of the
Pre-Funded Amount remains at the end of the Funding
Period, such amount will be distributed as a partial
prepayment to the Noteholders as described below under
"Mandatory Prepayment".
INTEREST RESERVE ACCOUNT...................During the Funding Period, funds will be held in an Interest
Reserve Account to cover any shortfalls due to investment
earnings on funds in the Pre-Funding Account being less than
the interest due on the Notes. See "Description of the Trust
Documents -- The Accounts."
DISTRIBUTION DATE..........................The 17th day of each month (or if such 17th day is not a
Business Day, the immediately following Business Day),
commencing _________.
INTEREST...................................Interest on the outstanding principal amount of the Notes of each
Class will accrue at the applicable Note Interest Rate from
_________, in the case of the first Distribution Date or from the
most recent Distribution Date on which interest has been paid to
but excluding the following Distribution Date. Interest on the
Notes for any Distribution Date due but not paid on such
Distribution Date will be due on the next Distribution Date
together with interest on such amount at the applicable Note
Interest Rate. The amount of interest distributable on the Notes
on each Distribution Date will equal 30 days' interest (or, in
the case of the first Distribution Date, interest accrued from
and including the Closing Date to but excluding such Distribution
Date). See "Description of the Notes - Payments of Interest"
herein. Interest will be calculated on the basis of a 360-day
year consisting of twelve 30-day months.
The "Note Principal Balance" of each class of Notes will
equal, initially, the original principal amount of Notes of such
class issued by Issuer on the Closing Date and thereafter will
equal the original Note Principal Balance of such class
reduced by all principal distributed to the Noteholders of the
Notes of such class.
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PRINCIPAL..................................Class A Notes. Principal on the Class A Notes will be payable on
each Distribution Date in an amount equal to the Class A
Noteholders' Principal Distributable Amount (as defined below).
The Class A Noteholders' Principal Distributable Amount for any
Distribution Date will equal the Class A Noteholders' Percentage of
an amount equal to the sum of the following amounts (such sum with
respect to any Distribution Date, the ("Principal Distributable
Amount")) with respect to the related Monthly Period, computed in
accordance with the simple interest method with respect to Simple
Interest Receivables (as defined herein) or in accordance with the
actuarial method with respect to Rule of 78s Receivables (as
defined herein): (i) that portion of all collections on
Receivables (other than Liquidated Receivables and Purchased
Receivables) allocable to principal, including full and partial
principal prepayments, received during such Monthly Period, (ii)
the principal balance of each Receivable that became a Liquidated
Receivable during such Monthly Period (other than Purchased
Receivables), (iii) the principal balance of each Receivable that
was repurchased by the Servicer or the Seller as of the last day of
such Monthly Period, (iv) the aggregate amount of any Cram Down
Loss (as defined below), and (v) any unpaid portion of the amounts
included in clauses (i), (ii), (iii) and (iv) above with respect to
a prior Distribution Date. The Class A Noteholders' Principal
Distributable Amount will also include, at the option of the
Insurer, the Class A Noteholders' Percentage of the principal
balance of each Receivable that was required to be, but was not, so
repurchased. See "Description of the Notes" and "Description of
the Trust Documents" herein.
Class B Notes. Principal on the Class B Notes will be payable
on each Distribution Date in an amount equal to the Class B
Noteholders' Principal Distributable Amount. The Class B
Noteholders' Principal Distributable Amount will equal the
Class B Noteholders' Percentage of the Principal Distributable
Amount. The Class B Noteholders' Percentage is ____%
initially (until the Class A Notes have been paid in full at
which time it will equal 100% or until the Class B Notes have
been paid in full at which time it will equal 0%).
The outstanding principal amount of the Notes, if any, will be
payable on _________ (the "Final Scheduled Distribution Date").
"Cram Down Loss" means, with respect to a Receivable, if a court
of appropriate jurisdiction in an insolvency proceeding has
issued an order reducing the amount owed on a Receivable or
otherwise modifying or restructuring the scheduled payments to be
made on a Receivable, an amount equal to the excess of the
principal balance of such Receivable immediately prior to such
order over the principal balance of such Receivable as so reduced
or the net present value (using as the discount rate the higher
of the contract
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rate or the rate of interest, if any, specified by the court in
such order) of the scheduled payments as so modified or
restructured. A Cram Down Loss will be deemed to have occurred on
the date of issuance of such order.
"Liquidated Receivable" means, with respect to any Monthly
Period, a Receivable as to which (i) 60 days have elapsed since
the Servicer repossessed the Financed Vehicle, (ii) the Servicer
has determined in good faith that all amounts it expects to
recover have been received, (iii) ninety percent or more of a
scheduled payment shall have become 120 or more days delinquent,
or in the case of an Obligor who is subject to bankruptcy
proceedings, 210 or more days delinquent or (iv) the Financed
Vehicle has been sold and the proceeds received. Any Receivable
that becomes a Purchased Receivable on or before the related
Business Day immediately preceding the related Determination Date
shall not be a Liquidated Receivable.
A "Monthly Period" with respect to a Distribution Date will be
the calendar month preceding the month in which such Distribution
Date occurs.
PAYMENT PRIORITY...........................On each Distribution Date the Available Funds (together with
certain other monies) will be applied in the following order of
priority:
first, to the Servicer, the Servicing Fee then due;
second, to any Lockbox Bank or other relevant local bank, the
Indenture Trustee, Custodian, Backup Servicer, Trust
Collateral Agent, and the Owner Trustee (including the
Indenture Trustee if acting in any such additional capacity),
their fees then due (in each case, to the extent such fees
have not been previously paid by the Servicer);
third, to the Class A Noteholders, the interest then due with
respect to each Class of Class A Notes;
fourth, to the Class A Noteholders, the Class A Noteholders'
Principal Distributable Amount;
fifth, to the Class A Note Insurer, the premium owing to it in
connection with the Policy (the "Premium Amount") then due
it and any amounts owing under the Insurance Agreement;
sixth, to the Class B Noteholders, the interest then due with
respect to the Class B Notes;
seventh, to certain reserve accounts maintained for the
benefit of the Class A Note Insurer, until such reserve
accounts are fully funded at their required level;
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eighth, to the Class B Noteholders, the Class B Noteholders'
Principal Distributable Amount;
ninth, all remaining funds to the Class B Noteholders to
reduce the principal balance of the Class B Notes until the
principal balance of the Class B Notes is reduced to zero; and
tenth, to the Issuer, any remainder.
MANDATORY PREPAYMENT.......................The Notes of each Class will be prepaid in part on the
Distribution Date on or immediately following the end of the
Funding Period in the event that any portion of the Pre-Funded
Amount remains after giving effect to the purchase of all
Subsequent Receivables during the Funding Period. The aggregate
principal amount of each Class of Notes subject to prepayment
will be an amount equal to such Class's pro rata share (based on
the respective current principal amount of each Class of Notes)
of the Pre-Funded Amount at the end of the Funding Period.
NOTE INSURER...............................The Insurer is a financial guaranty insurance company incorporated
under the laws of the State of . See "The Policy" and
"The Insurer."
THE POLICY.................................On the Closing Date, the Insurer will issue the Policy to the
Indenture Trustee for the benefit of the Class A Noteholders
pursuant to which the Class A Note Insurer will unconditionally and
irrevocably guarantee to the Class A Noteholders payment of the
Scheduled Payments for each Distribution Date. See "The Policy".
REPURCHASE AND PURCHASE
OBLIGATIONS..............................The Seller (pursuant to the Sale, Servicing and Collateral
Management Agreement) will be obligated to repurchase a
Receivable if such Receivables or the interest of the Class A
Noteholders or the Insurer are materially adversely
affected by a breach of any representation or warranty made by
the Seller with respect to such Receivable, if the breach has not
been cured by the last day of the first full calendar month
following the discovery by or notice to the Issuer of the breach.
The Servicer (pursuant to the Sale, Servicing and Collateral
Management Agreement) will be obligated to repurchase a
Receivable if such Receivable is materially adversely affected
by a breach of certain of its servicing obligations under the
Sale, Servicing and Collateral Management Agreement
(including, but not limited to, its obligation to ensure that the
perfected security interest of Accent Financial Services, OFL-
A or ACC in the related Financed Vehicles is maintained) or
certain other covenants with respect to the Servicer, if the
breach has not been cured by the last day of the first full
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calendar month following the discovery or notice to the Servicer
of the breach.
SERVICER FEE...............................Each month the Servicer will receive a fee for servicing the
Receivables (the "Servicer Fee") equal to (a) the product of
one-twelfth of 3.00% (the "Servicing Fee Rate") and the Pool
Balance outstanding at the beginning of the calendar month
immediately preceding such Distribution Date (the "Servicing
Fee") plus (b) a supplemental servicing fee (the
"Supplemental Servicing Fee") equal to (i) any late fees,
prepayment fees, liquidation fees and other administrative
fees and expenses collected during such month, plus (ii) the
net realized earnings on all investments of funds deposited in
the Collection Account during such month. See "Provisions
of the Trust Documents -- Servicing Compensation and
Indenture Trustees' Fees."
OPTIONAL REDEMPTION........................The Notes will be redeemed in whole, but not in part, on any
Distribution Date on which the Issuer or the Servicer
exercises its option to purchase the Receivables (with the
consent of the Insurer, if a claim has previously been made
under the Policy or, if such purchase would result in a claim
under the Policy or if such purchase would result in any amount
owing to the Insurer remaining unpaid), which, subject to
certain provisions in the Sale, Servicing and Collateral
Management Agreement, can occur after the Pool Balance is equal
to or less than 10% of the Original Pool Balance, at a
redemption price which is not less than the Note Principal
Balance plus accrued and unpaid interest thereon. See
"Description of the Notes - Optional Redemption" herein.
MANDATORY
REDEMPTION.................................The Notes may be accelerated and subject to immediate
payment at par upon the occurrence of an Event of Default
under the Indenture. So long as no Insurer Default shall
have occurred and be continuing, an Event of Default under
the Indenture will occur only upon delivery by the Insurer
to the Issuer of notice of the occurrence of certain events
of default under the Insurance and Indemnity Agreement, dated
as of May 1, 1997 (the "Insurance Agreement"), among the
Insurer, the Issuer, the Seller, the Servicer, ACC Receivables
and ACC Funding. The Policy does not guarantee payment of any
amounts that became due on an accelerated basis, unless the
Insurer elects, in its sole discretion, to pay such amounts in
whole or in part. See "Description of the Notes - Mandatory
Redemption - Events of Default;" herein.
TAX STATUS.................................In the opinion of Dewey Ballantine, special counsel to the
Seller, for federal income tax purposes, the Issuer will not be
treated as an association (or publicly traded partnership)
taxable as a corporation and the Class A Notes will be
characterized as debt. Each Noteholder, by the acceptance
</TABLE>
11
<PAGE> 15
<TABLE>
<CAPTION>
<S> <C>
of a Note, will agree to treat the Notes as debt. See "Certain Federal Income Tax
Consequences" herein.
ERISA CONSIDERATIONS.......................As described herein, the Class A Notes may be purchased by Benefit Plans (as hereinafter
defined) that are subject to the Employee Retirement Income Security Act of 1974
("ERISA") or entities using assets of such Benefit Plans. Any Benefit Plan should
consult its tax and/or legal advisors in determining whether all required conditions
have been satisfied.
The Class B Notes are not eligible for purchase by a Benefit Plan.
RATING.....................................As a condition to the issuance of the Notes, the Class A Notes will be rated at least
"AAA" by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc. ("S&P") and "Aaa" by Moody's Investors Service, Inc. ("Moody's") on the basis of
the issuance of the Policy by the Insurer. There is no assurance that a rating will
not be lowered or withdrawn by a rating agency based on a change in circumstances
deemed by such rating agency to adversely affect the Class A Notes. A rating is not a
recommendation to purchase, hold or sell the Class A Notes, in as much as such rating
does not comment as to market price or suitability for a particular investor. See
"Risk Factors - Ratings of the Notes."
CERTAIN LEGAL MATTERS......................Certain legal matters relating to the validity of the issuance of the Offered Notes
will be passed upon for the Issuer and the Underwriter by Dewey Ballantine, New York,
N.Y.
</TABLE>
12
<PAGE> 16
RISK FACTORS
RISK OF LOSSES ASSOCIATED WITH ACC'S UNDERWRITING PROCESS AND SUBJECTIVE CREDIT
STANDARDS
The underwriting standards applied by ACC may not be as stringent as
those of the finance companies of motor vehicle manufacturers or other financial
institutions since ACC purchases retail automobile installment contracts which
may not meet the credit standards of traditional primary lenders. The ACC
finance program focuses on the non-prime market including obligors with below
average credit profiles who may not be able to receive financing from more
traditional sources. The ACC finance program sets specific limits for the credit
amount extended. ACC's credit decisions are judgmental. See "The Seller and
Servicer -- Application Processing and Purchasing Criteria."
RISK OF LOSSES ASSOCIATED WITH LIMITED ASSETS
The Issuer will not have, nor is it permitted or expected to have, any
significant assets or sources of funds available for the payment of the Class A
Notes other than the Receivables, the Pre-Funding Account, the Capitalized
Interest Account. Noteholders must rely for repayment upon payments on the
Receivables and, if and to the extent available, amounts on deposit in the
Pre-Funding Account, the Capitalized Interest Account The Reserve and, with
respect to the Class A Notes only, payments of claims made under the Policy. The
Pre-Funded Amount on deposit in the Pre-Funding Account will be used solely to
purchase Subsequent Receivables and is not available to cover losses on the
Receivables. The Capitalized Interest Account is designed to cover obligations
of the Issuer relating to that portion of its assets not invested in Receivables
and is not designed to provide protection against losses on the Receivables.
Similarly, although the Policy will be available on each Distribution Date to
cover shortfalls in distributions of the Scheduled Payments with respect to the
Class A Notes on such Distribution Date, if the Insurer defaults in its
obligations under the Policy, the Issuer will depend on current distributions on
the Receivables and, with respect to the only, amounts, if any, available
therefor in certain collateral accounts maintained for the benefit of the
Insurer to make payments on the Notes. See "The Class A Note Insurer" and "The
Policy" herein.
RISK OF LOSSES ASSOCIATED WITH GEOGRAPHIC CONCENTRATION OF RECEIVABLES
As of the Initial Cutoff Date (based on principal balance and mailing
address of the Obligors), Obligors with respect to approximately ____% and ____%
of the Receivables were located in ____________________________, respectively
and substantially all of the rest of the Receivables were located in those
states identified in the table on page __. See "The Trust Property".
Accordingly, adverse economic conditions or other factors particularly affecting
any of these states could adversely affect the delinquency or loan loss
experience of the Issuer with respect to the Receivables.
RISK OF PREPAYMENT FROM THE PRE-FUNDING ACCOUNT; BASED UPON ACC'S ABILITY TO
ORIGINATE SUBSEQUENT RECEIVABLES
To the extent that the Pre-Funded Amount has not been fully applied to
the purchase of Subsequent Receivables by the Issuer by the end of the Funding
Period, the Noteholders will receive a prepayment of principal on the Mandatory
Redemption Date in an amount equal to their pro rata share (based on the current
principal balance of each Class and the Note Principal Balance) of the
Pre-Funded Amount (exclusive of investment earnings) remaining in the
Pre-Funding Account at the end of the Funding Period; provided that, if the
total amount of such Pre-Funded Amount at the end of the Pre-Funding Period is
$100,000 or less, such amount shall be applied exclusively to the Class of Class
A Notes then entitled to receive distribution. Any reinvestment risk from the
prepayment of the Notes from the Pre-Funded Amount at the end of the Funding
Period will be borne by the Noteholders. See "Maturity and Prepayment
Considerations" and "Yield Considerations" herein.
The conveyance of Subsequent Receivables to the Issuer during the
Funding Period is subject to the conditions described herein under "The Trust
Property -- Eligibility Criteria." The ability of the
13
<PAGE> 17
Issuer to invest in Subsequent Receivables is dependent upon the ability of ACC
to originate through Dealers a sufficient amount of motor vehicle retail
installment sales contracts that meet such eligibility criteria. The ability of
the Seller to originate sufficient Subsequent Receivables may be affected by a
variety of social and economic factors. Economic factors include interest rates,
unemployment levels, the rate of inflation and consumer perception of economic
conditions generally. The Seller has no basis to predict whether or the extent
to which economic or social factors will affect the availability of Subsequent
Receivables. Approximately $_________ of the Subsequent Receivables have already
been originated and identified for transfer to the Issuer by the Seller. There
can be no assurance that the Class A Note Insurer will consent to the transfer
of Subsequent Receivables during the Pre-Funding Period. See "The Trust
Property" herein.
RISKS OF LOWER YIELD ASSOCIATED WITH MATURITY AND PREPAYMENT CONSIDERATIONS
All of the Receivables are prepayable at any time. The rate of
prepayments on the Receivables may be influenced by a variety of economic,
social and other factors, including the fact that an Obligor generally may not
sell or transfer the related Financed Vehicle securing a Receivable without the
consent of ACC. (For this purpose the term "prepayments" includes prepayments in
full, certain partial prepayments related to refunds of extended service
contract costs and unearned insurance premiums, liquidations due to default,
Cram Down Losses, as well as receipts of proceeds from physical damage,
repossession loss, credit life and credit accident and health insurance policies
and certain other Receivables repurchased for administrative reasons.) The rate
of prepayment on the Receivables may also be influenced by the structure of the
loan, the nature of the Obligors and the Financed Vehicles and servicing
decisions as discussed above. In addition, under certain circumstances, the
Seller and the Servicer are obligated to purchase Receivables pursuant to the
Sale, Servicing Agreement and Collateral Management Agreement as a result of
breaches of certain covenants. The Servicer also has the right, subject to
certain conditions, to purchase the Receivables when the Pool Balance is 10% or
less of the Original Pool Balance. Any reinvestment risks resulting from a
faster or slower incidence of prepayment of Receivables will be borne entirely
by the Noteholders. See "Yield Considerations".
RISK OF LOSSES ASSOCIATED WITH NONPRIME LENDING
The Company's underwriting guidelines relate to a category of lending
commonly known as "nonprime", in which loans may be made to applicants who have
experienced certain adverse credit events but who meet certain other
creditworthiness tests. Such "nonprime" loans may experience higher rates of
delinquencies, repossessions and losses, especially under adverse economic
conditions, as compared with loans originated pursuant to a traditional lending
program. See "Risk Factors" -- in the Prospectus.
RISKS OF LIMITED LIQUIDITY OR DELAYS IN PAYMENTS ASSOCIATED WITH BOOK-ENTRY
REGISTRATION
Issuance of the Notes in book-entry form may reduce the liquidity of
such Securities in the secondary trading market since investors may be unwilling
to purchase Notes for which they cannot obtain definitive physical securities
representing such Noteholders' interests, except in certain circumstances
described herein.
Noteholders may experience some delay in their receipt of distributions
of interest on and principal of the Notes since distributions may be required to
be forwarded by the Trustee to DTC, CEDEL or Euroclear and, in such case, DTC,
CEDEL or Euroclear, as the case may be, will be required to credit such
distributions to the accounts of its participating organization which thereafter
will be required to credit them to the accounts of the Noteholders either
directly or indirectly through indirect participants. See "The Certificates --
Book-Entry Registration." See "Risk Factors" in the Prospectus.
RISKS OF LIMITED LIQUIDITY OR LOWER MARKET PRICE ASSOCIATED WITH A REDUCTION OR
WITHDRAWAL OF RATINGS OF THE NOTES
As a condition to the issuance of the Notes, the Class A Notes will be
rated at least "AAA" by S&P and "Aaa" by Moody's on the basis of the issuance of
the Policy by the Insurer.
14
<PAGE> 18
There is no assurance that a rating will not be lowered or withdrawn by a rating
agency based on a change in circumstances deemed by such rating agency to
adversely affect the related Class of Class A Notes. A rating is not a
recommendation to purchase, hold or sell the Notes, in as much as such rating
does not comment as to market price or suitability for a particular investor.
In the event that any rating initially assigned to the Notes were subsequently
lowered or withdrawn for any reason, including by reason of a downgrading of
the security insurer's claims-paying ability, no person or entity will be
obligated to provide any additional credit enhancement with respect to the
Notes. Any reduction or withdrawal of a rating will have an adverse effect on
the liquidity and market price of the Notes. See "Ratings of the Notes."
RISK OF LIQUIDATION OF TRUST PROPERTY ASSOCIATED WITH
EVENTS OF DEFAULT UNDER THE INDENTURE
So long as no Insurer Default shall have occurred and be continuing,
neither the Indenture Trustee nor the Noteholders may declare an Event of
Default under the Indenture. So long as an Insurer Default shall not have
occurred and be continuing, an Event of Default will occur only upon delivery by
the Insurer to the Indenture Trustee of notice of the occurrence of certain
events of default under the Insurance Agreement. Upon the occurrence of an Event
of Default under the Indenture (so long as an Insurer Default shall not have
occurred and be continuing), the Insurer will have the right, but not the
obligation, to cause the liquidation, in whole or in part, of the Trust
Property, which will result in redemption, in whole or in part, of the Notes.
Following the occurrence of an Event of Default, the Indenture Trustee will
continue to submit claims under the Policy as necessary to enable the Issuer to
continue to make payments of the Scheduled Payments with respect to the Class A
Notes.
RISK OF REDEMPTION OF THE NOTES ASSOCIATED WITH INSOLVENCY OF ACC FUNDING
The Trust Agreement provides that, in the event that ACC Funding
becomes insolvent, or is terminated or dissolved (a "Dissolution Event") and the
Owner Trustee is unable to obtain an opinion of counsel satisfactory to the
Class A Note Insurer to the effect that the Issuer will not thereafter be an
association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes, the Issuer will effect redemption of the Notes and
the Certificateholder will terminate the Issuer and cause the winding-up of the
affairs of the Issuer, unless within such 90 days the holders of a majority of
the Certificate Percentage Interest (as defined in the Trust Agreement) agree in
writing to continue the business of the Issuer and the Owner Trustee is able to
obtain the opinion of counsel described above.
RISK OF LOSSES ASSOCIATED WITH NON-PERFECTION OF SECURITY INTERESTS IN
CERTIFICATES OF TITLE FOR FINANCED VEHICLES AND WITH INSOLVENCY OF THE SELLER
In connection with the sale and assignment of the Receivables to the
Issuer, security interests in the Financed Vehicles which have been assigned by
the Seller to the Issuer will be assigned by the Issuer to the Indenture
Trustee. In most states, such an assignment is an effective conveyance of a
security interest without amendment of any security interest noted on a
vehicle's certificate of title, and the assignee succeeds thereby to the
assignor's rights as secured party. However, a security interest in a motor
vehicle registered in the states in which a majority of Financed Vehicles
purchased under ACC's finance programs are currently registered, may be
perfected only by causing such vehicle's certificate of title to be amended to
note the security interest of the secured party. Such notation of a secured
party's security interest is generally effected in such states by depositing
with the applicable state highway department, motor vehicle registrar or similar
state authority, the vehicle's certificate of title, an application containing
the name and address of the secured party, and the necessary registration fees.
Because of the administrative burden and expense that would be entailed
in doing so, the certificates of title for the Financed Vehicles will not
identify the Indenture Trustee or the Owner Trustee as the secured party, and
will not be deposited with the state highway department, motor vehicle registrar
or other state authorities in any state. In the absence of such action, the
Indenture Trustee and the Owner Trustee may not have a perfected security
interest in the Financed Vehicles and, in the event that another person obtains
a perfected security interest in a Financed Vehicle subsequent to the transfer
of the Receivables to the Issuer, such person might acquire rights in such
Financed Vehicle prior to the rights of the Issuer. The Seller will covenant in
the Sale, Servicing and Collateral Management Agreement to repurchase any
Receivable if, on the Closing Date a valid, subsisting and
15
<PAGE> 19
enforceable first priority security interest has not been perfected (or is not
in the process of perfection) in favor of Accent Financial Services, OFL-A or
the Seller, which will have been validly assigned to the Issuer and the
Indenture Trustee, in the related Financed Vehicle. The Seller, as Servicer,
will covenant in the Sale, Servicing and Collateral Management Agreement to
repurchase any Receivable if, after the Closing Date, a valid, subsisting and
enforceable first priority security interest in the name of Accent Financial
Services, OFL-A or the Seller is not maintained on behalf of the Indenture
Trustee in the related Financed Vehicle.
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to make it unlikely that the voluntary or involuntary
application for relief by the Seller under the United States Bankruptcy Code or
similar applicable state laws ("Insolvency Laws") will result in the
consolidation of the assets and liabilities of the Issuer with those of the
Seller. These steps include the creation of the Issuer as a separate,
limited-purpose entity pursuant to its trust certificate (the "Trust
Certificate"), the creation of separate limited purpose entities to hold the
ownership interest in the Issuer pursuant to the Articles of Incorporation of
each of ACC Receivables and ACC Funding which contain certain limitations
(including restrictions on the nature of the business of each of ACC Receivables
and ACC Funding) and a restriction on either's ability to commence a voluntary
case or proceeding under any Insolvency Law without the unanimous affirmative
vote of all of the members of its board of directors. The Certificates of
Incorporation of each of ACC Receivables and ACC Funding also include a
provision that requires each of ACC Receivables and ACC Funding to have at least
two directors who qualify under the Articles of Incorporation as "independent
directors."
The Seller has received the advice of counsel, concluding on the basis
of a reasoned analysis of analogous case law (although there is no precedent
based on directly similar facts) to the effect that, subject to certain facts,
assumptions and qualifications specified therein, a court would conclude that
the assets and liabilities of the Seller would not be consolidated with the
assets and liabilities of the Issuer, ACC Receivables or ACC Funding in the
event of the application of the federal bankruptcy laws to the Seller. If a
court concluded otherwise, or a filing were to be made under any Insolvency Law
by or against the Seller, or if an attempt were to be made to litigate any of
the foregoing issues, delays in the distributions on the Notes (and possible
reductions in the amount of such distributions) could occur. The Issuer is not
expected to have any significant assets or sources of funds. In a case decided
in 1993 by the United States Court of Appeals for the Tenth Circuit, such
Circuit Court found that accounts sold prior to a bankruptcy should be treated
as part of the bankruptcy estate of the seller of such accounts. If the Seller
were to become a debtor in a bankruptcy proceeding and a court applied the
reasoning of the Circuit Court reflected in the case described above to chattel
paper, delays in payments to Noteholders could occur or reductions in the
amounts of such payments could result.
The Seller intends that any transfer of Receivables to the Issuer will
constitute a sale, rather than a pledge of the Receivables to secure
indebtedness of the Seller. However, if the Seller were to become a debtor under
any Insolvency Laws, a creditor or trustee in bankruptcy of the Seller, as
debtor-in-possession, might argue that such sale of Receivables by the Seller
was a pledge of Receivables rather than a sale, and if such position -- that the
transfer of Receivables was a pledge rather than a sale or otherwise should be
treated as part of the bankruptcy estate of the Seller -- were presented to or
accepted by a court, then delays in payments to Noteholders could occur or
reductions in the amounts of such payments could result. In addition, if the
transfer of any Receivable is recharacterized as a pledge, then a tax lien,
other governmental lien, or other lien created by operation of law on the
property of the Seller may have priority over the Issuer's interest in such
Receivable.
USE OF PROCEEDS
The net proceeds to be received by the Issuer from the sale of the
Notes will be used to pay the Seller, the purchase price for the Receivables, to
make the deposits of the Pre-Funded Amount into the Pre-Funding Account and to
make the initial deposit into the Capitalized Interest Account.
16
<PAGE> 20
THE ISSUER
GENERAL
The Issuer, ACC Automobile Receivables Trust ____, is a business trust
formed, prior to its purchase of the Receivables and the issuance of the Notes,
under the laws of the State of Delaware pursuant to the Trust Agreement for the
purpose of engaging in the transactions described in this Private Placement
Memorandum. After its formation, the Issuer will not engage in any activity
other than (i) acquiring, holding and managing the Receivables and the other
assets of the Issuer and proceeds therefrom, (ii) issuing the Notes, (iii)
making payments on the Notes and (iv) engaging in other activities that are
necessary, suitable or convenient to accomplish the foregoing or are incidental
thereto or connected therewith.
The Issuer's principal offices are in ____________________, in care of
________________________ as Owner Trustee, at the address listed below under
"--The Owner Trustee."
THE OWNER TRUSTEE
_________________________ is the Owner Trustee under the Trust
Agreement, is a ________ banking corporation and its principal offices are
located at _______________________________________________________________
_______________________________________. The Owner Trustee will perform limited
administrative functions under the Trust Agreement. The Owner Trustee's
liability in connection with the issuance and sale of the Notes is limited
solely to the express obligations of the Owner Trustee set forth in the Trust
Agreement and the Sale, Servicing and Collateral Management Agreement.
THE INDENTURE TRUSTEE
____________________________________________ is the Indenture Trustee
under the Indenture. ___________________________________________ is a national
banking association, the principal offices of which are located at the ________
___________________________________________________________________________.
THE TRUST PROPERTY
GENERAL
The Trust Property will include, among other things, the following: (a)
motor vehicle retail installment sale contracts secured by new and used
vehicles, light trucks and vans; (b) all monies paid or payable thereunder after
the Initial Cutoff Date or the Subsequent Cutoff Date, as the case may be; (c)
such amounts as from time to time may be held in the Lockbox Account, the
Collection Account, the Pre-Funding Account, the Capitalized Interest Account
and the Class B Reserve Fund; (d) an assignment of the interest of the Seller in
the security interests in the Financed Vehicles granted by the Obligors pursuant
to the Receivables and any accessions thereto; (e) an assignment of the rights
of the Seller against Dealers under agreements between the Seller and such
Dealers (the "Dealer Agreements"); (f) an assignment of the right to receive
proceeds from claims on certain physical damage, credit life and disability
insurance policies covering the Financed Vehicles or the Obligors; (g) an
assignment of the rights of the Seller under the Purchase Agreement and any
Subsequent Purchase Agreements (as defined herein); (h) the Receivables Files;
(i) certain other rights under the Trust Documents and (j) all proceeds of the
foregoing.
Most of the Initial Receivables were, and most of the Subsequent
Receivables were or will be, originated by Dealers in accordance with ACC's
requirements under agreements with Dealers for assignment to the Seller, have
been or will be so assigned, and evidence or will evidence the indirect
financing made available to the Obligors by the Seller. The remaining
Receivables were originated directly by the Seller or by Accent Financial
Services, a wholly owned subsidiary of ACC. Dealer
17
<PAGE> 21
Agreements may provide for repurchase or recourse against the Dealer in the
event of a breach of a representation or warranty by the Dealer under a Dealer
Agreement.
The "Pool Balance" at any time represents the aggregate principal
balance of the Receivables at the end of the preceding Monthly Period (plus the
amount, if any, then on deposit in the Pre-Funding Account on such date), after
giving effect to all payments received from Obligors and any Purchase Amounts to
be remitted by the Seller, for such Monthly Period and all losses, including
Cram Down Losses, realized on Receivables liquidated during such Monthly Period.
In connection with its formation, the Issuer will issue one
transferrable and one non-transferrable Certificate (each a "Certificate") each
of which will represent a fractional undivided interest in the Trust Property
but subject to the lien of the Trust Collateral Agent in the Trust Property
created by the Indenture. The transferrable Certificate will initially be held
by ACC Receivables and may thereafter be pledged or otherwise transferred (under
certain conditions) and the non-transferrable Certificate will be held by ACC
Funding in each case pursuant to the Trust Agreement. Pursuant to the Indenture,
the Issuer will grant a security interest in the Trust Property (other than the
Certificate Distribution Account) in favor of the Trust Collateral Agent for the
benefit of the Indenture Trustee on behalf of the Noteholders and for the
benefit of the Insurer in support of the obligations owing to it under the
Insurance Agreement. Any proceeds of such security interest in the Trust
Property would be distributed according to the Indenture, as described below
under "Description of the Trust Documents -- Distributions." The Insurer would
be entitled to such distributions only after payment of amounts owing to holders
of the Class A Notes.
All of the Receivables not already owned by the Seller will be sold to
the Seller pursuant to a Purchase Agreement (the "Purchase Agreement" and, in
the case of Subsequent Receivables, a "Subsequent Purchase Agreement") and by
the Seller to the Issuer pursuant to the Sale, Servicing and Collateral
Management Agreement. One hundred percent (100%) of the Receivables (as a
percentage of the aggregate principal balance) comprising the property of the
Issuer consist of non-prime retail automobile installment sales contracts. The
Receivables originally were, or, with respect to the Subsequent Receivables,
were or will have been originated in the ordinary course of its business
pursuant to ACC's finance programs and underwriting standards. Approximately
$_________ by aggregate principal balance of non-prime retail automobile
installment sales contracts that will become Subsequent Receivables have already
been so originated by ACC.
ELIGIBILITY CRITERIA
The Receivables (including some Receivables that will become Subsequent
Receivables) were, or, with respect to the remaining Subsequent Receivables,
will have been, selected according to several criteria, including the following:
each Receivable (i) was originated in the United States, (ii) has a contractual
APR that equals or exceeds ___%, (iii) provides for level monthly payments which
provide interest at the APR and fully amortize the amount financed over an
original term no greater than 72 months, (iv) is not more than 30 days past due
as of the Initial Cutoff Date or Subsequent Cutoff Date, as the case may be, (v)
is attributable to the purchase of a new or used automobile, light duty truck,
van or mini-van and (vi) as of the Initial Cutoff Date or the Subsequent Cutoff
Date, as the case may be, has a remaining term of not more than 72 months. No
selection procedures adverse to the Noteholders or the Insurer were utilized in
selecting the Receivables to be conveyed to the Issuer.
The obligation of the Issuer to purchase Subsequent Receivables on a
Subsequent Transfer Date is subject to the condition that the Receivables owned
by the Issuer, including the Subsequent Receivables to be conveyed to the Issuer
on such Subsequent Transfer Date, meet the following criteria: (i) the Insurer
(so long as no Insurer Default shall have occurred and be continuing), in its
sole and absolute discretion shall have approved in writing the transfer of such
Subsequent Receivables to the Issuer; (ii) not more than ___% of the principal
balances of the Receivables owned by the Issuer relate to Financed Vehicles that
are used automobiles, light duty trucks, vans or mini-vans; (iii) the weighted
average APR of the Receivables owned by the Issuer is not less than ___%; (iv)
the weighted average remaining term to maturity of the Receivables on such
18
<PAGE> 22
Subsequent Cutoff Date is not greater than 60 months; and (v) not more than
____% of the Receivables have Obligors whose mailing addresses are in Florida,
not more than ____% of the Receivables have Obligors whose mailing address is in
California, not more than ____% of the Receivables have obligors whose mailing
address is in Texas, and not more than ____% of the Receivables have Obligors
whose mailing address is in any one other state. As to clauses (ii), (iii) and
(iv) in the immediately preceding sentence, such criteria will be based on the
characteristics of the Initial Receivables on the Initial Cutoff Date and the
Receivables, including the Subsequent Receivables, on the related Subsequent
Cutoff Date, and as to clause (v) in the immediately preceding sentence, such
criteria will be based on the mailing addresses of the Obligors of the Initial
Receivables on the Initial Cutoff Date and the Subsequent Receivables on the
related Subsequent Cutoff Date.
Except for the criteria described in the preceding paragraphs, there
are no required characteristics for the Subsequent Receivables. Therefore,
following the transfer of Subsequent Receivables to the Issuer, the aggregate
characteristics of the entire pool of Receivables owned by the Issuer, including
the composition of the Receivables, the distribution by APR, the geographic
distribution and the distribution by remaining term to maturity described in the
following tables, may vary from those of the Initial Receivables.
COMPOSITION OF THE INITIAL RECEIVABLES
<TABLE>
<CAPTION>
Total Pool of Initial Receivables
---------------------------------
<S> <C>
Original Pool Balance
Number of Initial Receivables
Average Principal Balance(1)
Range of Principal Balances
Average Original Amount Financed(2)
Range of Original Amounts Financed
Weighted Average APR(3)
Range of APRs
Weighted Average Original Term(3)
Range of Original Terms
Weighted Average Remaining Term(3)
Range of Remaining Terms
Weighted Average Months of Seasoning(3)
Range of Months of Seasoning
</TABLE>
- -------------------------
(1) Sum of Principal Balance divided by total number of loans.
(2) Sum of aggregate Amount Financed divided by total number of loans.
(3) Weighted by Principal Balance as of the Cutoff Date.
19
<PAGE> 23
DISTRIBUTION BY APR OF THE INITIAL RECEIVABLES
(as of the Cutoff Date)
<TABLE>
<CAPTION>
Percentage Number
Aggregate by of Percentage
Principal Principal Initial by
APR Range Balance Balance Receivables Number
--------- ------- ------- ----------- ------
<S> <C> <C> <C> <C> <C>
Total:
</TABLE>
- -------------------------
(1) Due to rounding, may not add up to 100.00%.
DISTRIBUTION BY INTEREST ACCRUAL METHOD
(as of the Cutoff Date)
<TABLE>
<CAPTION>
Aggregate Percentage of Number of
Interest Principal Aggregate Initial Percentage
Accrual Method Balance Principal Balance Receivables by Number
-------------- ------- ----------------- ----------- ---------
<S> <C> <C> <C> <C>
Rule of 78s
Total:
</TABLE>
- -------------------------
(1) Due to rounding, may not add up to 100.00%.
20
<PAGE> 24
STATE DISTRIBUTION BY MAILING ADDRESS OF OBLIGOR
(as of the Cutoff Date)
<TABLE>
<CAPTION>
Percentage
Aggregate by Number Percentage
Principal Principal of by
Location Balance Balance Receivables Number
-------- ------- ------- ----------- ------
<S> <C> <C> <C> <C>
Alabama
Arizona
Arkansas
California
Colorado
Delaware
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Michigan
Mississippi
Missouri
Montana
Nebraska
Nevada
New Jersey
New Mexico
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Virginia
Washington
Washington DC
West Virginia
Total:
</TABLE>
- -------------------------
(1) Due to rounding, may not add up to 100.00%.
21
<PAGE> 25
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES
(as of the Cutoff Date)
<TABLE>
<CAPTION>
Percentage
Aggregate by Number Percentage
Remaining Term Principal Principal of by
Range Balance Balance Initial Receivables Number
----- ------- ------- ------------------- ------
<S> <C> <C> <C> <C>
21 to 23
24 to 29
30 to 35
36 to 41
42 to 47
48 to 53
54 to 59
60 to 65
66 to 71
72 to 72
Total:
</TABLE>
- -------------------------
(1) Due to rounding, may not add up to 100.00%.
As of the Initial Cutoff Date, approximately ____% of the total number
of the Initial Receivables owned by the Issuer, and approximately ____% by
principal balance of the Initial Receivables owned by the Issuer, relate to new
automobiles, light-duty trucks, vans and mini-vans. As of the Initial Cutoff
Date, approximately ____% of the total number of the Initial Receivables
included in the Trust Property, and approximately ____% by principal balance of
the Initial Receivables owned by the Issuer, relate to used automobiles and
light-duty trucks.
PAYMENTS ON THE RECEIVABLES
Each Receivable provides for the allocation of payments according to
(i) the simple interest method ("Simple Interest Receivables") or (ii) the "sum
of periodic balances" or "sum of monthly payments" method ("Actuarial
Receivables"). Except as otherwise described, the scheduled payment on each
Receivable is a fixed level monthly payment which will amortize the full amount
of the Receivable over its term assuming, in the case of each Simple Interest
Receivable, that the Obligor does not pay any installment after its due date.
Payments on Simple Interest Receivables will be applied first to
interest accrued through the date immediately preceding the date of payment and
then to unpaid principal. Accordingly, if an Obligor pays an installment before
its due date, the portion of the payment allocable to interest for the payment
period will be less than if the payment had been made on the due date, the
portion of the payment applied to reduce the principal balance will be
correspondingly greater, and the principal balance will be amortized more
rapidly than scheduled. Conversely, if an Obligor pays an installment after its
due date, the portion
22
<PAGE> 26
of the payment allocable to interest for the payment period will be greater than
if the payment had been made on the due date, the portion of the payment applied
to reduce the principal balance will be correspondingly less, and the principal
balance will be amortized more slowly than scheduled, in which case a larger
portion of the principal balance may be due on the final scheduled payment date.
An Actuarial Receivable provides for the payment by the Obligor of a
specified total amount of payments, payable in monthly installments on the
related due date, which total represents the principal amount financed and
finance charges in an amount calculated on the basis of a stated APR for the
term of such Receivable. The amount of each scheduled payment is calculated in
accordance with the Rule of 78s. Notwithstanding the foregoing, the rate at
which such amount of finance charges is earned and, correspondingly, the amount
of each scheduled payment allocated to reduction of the outstanding principal
balance of an Actuarial Receivable is calculated in accordance with the
actuarial method and all payments (other than partial prepayments) received by
the Servicer on or in respect of the Actuarial Receivables will be allocated
pursuant to the Sale, Servicing and Collateral Management Agreement on an
actuarial basis. Collections on an Actuarial Receivable made during a Collection
Period will be applied first, to the scheduled payment on such Actuarial
Receivable, and second, to any late fees accrued with respect to such Actuarial
Receivable. Any collections remaining shall be applied to reduce the principal
balance of the Actuarial Receivable.
REPURCHASE OBLIGATIONS
In connection with the sale of the Receivables, the security interests
in the Financed Vehicles securing the Receivables have been assigned by ACC to
the Issuer and by the Issuer to the Indenture Trustee. ACC, as Seller will be
obligated to repurchase any Receivable sold to the Issuer as to which a breach
has occurred as to the representation and warranty that a security interest in
the Financed Vehicle securing such Receivable has not been perfected (or was
not, at the time such representation and warranty was made, in the process of
perfection) in favor of Accent Financial Services, OFL-A or ACC, if such breach
will materially adversely affect such Receivable or the interests of the
Noteholders or the Insurer and, if such failure or breach is not cured by the
last day of the first full calendar month following the discovery by or notice
to the breaching party of the breach.
The Sale, Servicing and Collateral Management Agreement provides that
if the Seller breaches certain representations and warranties relating to the
Receivables and the Financed Vehicles in a manner that materially and adversely
affects any Receivable or the interests of the Noteholders or the Insurer or the
interests of the Issuer, the Seller shall, unless such breach shall have been
cured in all material respects, purchase such Receivable from the Issuer. The
Seller shall be obligated to repurchase such Receivable if its breach under the
Sale, Servicing and Collateral Management Agreement is not cured by the last day
of the first full calendar month following the discovery by or notice to the
Seller of the breach.
The Sale, Servicing and Collateral Management Agreement also provides
that if the Servicer breaches certain of its servicing obligations under the
Sale, Servicing and Collateral Management Agreement (including, but not limited
to its obligation to ensure that the perfected security interest of Accent
Financial Services, OFL-A or ACC in the related Financed Vehicles is maintained)
or certain other covenants with regard to the Servicer, in each case only in a
manner that materially and adversely affects the interests of any Receivable or
the interests of the Noteholders or the Insurer or the interests of the Issuer,
the Servicer shall, unless such breach shall have been cured in all material
respects, purchase such Receivable from the Issuer. The Servicer shall be
obligated to repurchase such Receivable if a Servicer breach under the Sale,
Servicing and Collateral Management Agreement is not cured by the last day of
the first full calendar month following the discovery by or notice to the
Servicer of the breach.
23
<PAGE> 27
MATURITY AND PREPAYMENT ASSUMPTIONS
All the Receivables are prepayable at any time, provided that an
Actuarial Receivable must be prepaid in full. If prepayments are received on the
Receivables, the actual weighted average life of the Receivables may be shorter
than the scheduled weighted average life (i.e., the weighted average life
assuming that payments will be made as scheduled and that no prepayments will be
made). (For this purpose, the term "prepayments" also includes liquidations due
to default, as well as receipt of proceeds from credit life, credit disability,
and casualty insurance policies.) Weighted average life means the average amount
of time during which each dollar of principal on a Receivable is outstanding.
The rate of prepayments on the Receivables may be influenced by a
variety of factors, including the fact that an Obligor may not transfer its
equity in a Financed Vehicle without the consent of ACC. Any reinvestment risks
resulting from a faster or slower incidence of prepayment of Receivables will be
borne by the Noteholders. See also "Further Provisions of the Principal
Transaction Documents -- Termination" regarding the Servicer's option to
purchase all of the Receivables as of the last day of any month in which the
Pool Balance at the close of business on the Record Date is less than 10% of the
original balance of the Notes. See also "Description of the Notes - Mandatory
Prepayment" regarding mandatory partial prepayment of the Notes in the event
that any portion of the Pre-Funded Amount remains after giving effect to the
purchase of all Subsequent Receivables during the Funding Period.
YIELD CONSIDERATIONS
Interest on the Receivables will be paid to the Noteholders on each
Distribution Date in an amount equal to one-twelfth of the applicable Note
Interest Rate applied to the principal balance of the related Class of Notes on
the last day of the preceding Collection Period. In the event of prepayments on
Receivables, Noteholders will nonetheless be entitled to receive interest for
the full month on the Notes. The Receivables have different APRs, as set forth
above. In all cases, however, the APR exceeds the sum of (i) the Servicing Fee
Rate and (ii) the applicable Note Interest Rate.
DELINQUENCY AND LOAN LOSS INFORMATION
Set forth below is certain information concerning ACC's delinquency and
loss experience with respect to its gross servicing portfolio of retail
installment sale contracts for new and used automobiles, light duty trucks, vans
and mini-vans acquired pursuant to its finance programs. Delinquency is
recognized on a contractual basis only. Installment payments must equal or
exceed 90% of the scheduled payment due for a contract to be considered current.
24
<PAGE> 28
ACC CONSUMER FINANCE CORPORATION
HISTORICAL DELINQUENCY
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Quarter Ended Quarter Ended
3/31/97 12/31/96 9/30/96 6/30/96
Dollars Percent Dollars Percent Dollars Percent Dollars Percent
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Amount Outstanding (1) $303,986 100% $251,751 100% $209,761 100% $172,562 100%
Delinquencies (2)
31-60 Days 7,794 2.56% 7,870 3.13% 5,959 2.84% 4,609 2.67%
61-90 Days 2,631 0.87% 2,341 0.93% 1,656 0.79% 1,255 0.73%
Over 90 Days 766 0.25% 813 0.32% 451 0.22% 387 0.22%
Subtotal: 11,191 3.68% 11,024 4.38% 8,066 3.85% $ 6,251 3.62%
Skips 55 0.02% 394 0.16% 257 0.12% 60 0.03%
Bankruptcies 1,372 0.45% 1,266 0.50% 832 0.40% 525 0.30%
Repossessions on hand (3) 2,454 0.81% 2,216 0.88% 1,685 0.80% 1,369 0.99%
----- ----- ----- ----- ----- ----- ----- -----
Total Delinquencies and
Repossessions on hand $ 15,072 4.96% $14,900 5.92% $10,840 5.17% $8,205 4.75%
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
3/31/96 12/31/95
Dollars Percent Dollars Percent
<S> <C> <C> <C> <C>
Amount Outstanding (1) 139,969 100% 117,539 100%
Delinquencies (2)
31-60 Days 2,069 1.48% 3,064 2.61%
61-90 Days 798 0.57% 1,014 0.86%
Over 90 Days 193 0.14% 275 0.23%
Subtotal: 3,060 2.19% 4,353 3.70%
Skips 157 0.11% 180 0.15%
Bankruptcies 610 0.43% 463 0.39%
Repossessions on hand (3) 1,130 0.81% 861 0.73%
----- ----- --- -----
Total Delinquencies and
Repossessions on hand $4,957 3.54% $5,857 4.98%
</TABLE>
- -------------------------------
(1) Amount outstanding is the net remaining principal balance.
(2) The period of delinquency is based on the number of days payments are
contractually past due.
(3) Amounts shown represent the remaining balance of installment loans which
have been repossessed, but not yet liquidated.
25
<PAGE> 29
ACC CONSUMER FINANCE CORPORATION
HISTORICAL NET LOSS EXPERIENCE
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Quarter Quarter Quarter Quarter Quarter Quarter
Ended Ended Ended Ended Ended Ended
3/31/97 12/31/96 9/30/96 6/30/96 3/31/96 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Principal amount outstanding (1) ........................ $303,986 $251,751 $209,761 $172,562 $139,969 $117,539
Average principal amount outstanding (2) ................ $274,507 $232,617 $191,162 $156,266 $128,754 $108,784
Number of loans outstanding ............................. 27,880 23,145 19,410 16,034 13,049 10,935
Average number of loans outstanding (2) ................. 25,236 21,278 17,722 14,542 11,992 10,083
Number of repossessions (3) ............................. 597 526 434 291 279 184
Principal amount of repossessions (3) (4) ............... $ 6,703 $ 5,773 $ 4,729 $ 3,156 $ 2,984 $ 1,983
Number of repossessions as a percent of average number
of loans outstanding (5) ............................ 9.46% 9.89% 9.80% 8.00% 9.31% 7.30%
Principal amount of repossessions as a percent of average
principal amount outstanding (5) .................... 9.77% 9.93% 9.90% 8.08% 9.27% 7.29%
Net losses excluding benefits of VSI Policy (6) ......... $ 4,109 $ 3,215 $ 2,442 $ 1,548 $ 1,636 $ 1,500
Net losses as a percent of average principal amount
outstanding (5) ..................................... 5.99% 5.53% 5.11% 3.96% 5.08% 5.52%
Net losses including benefits of VSI Policy (6) ......... $ 3,543 $ 2,945 $ 2,227 $ 1,329 $ 1,417 $ 1,233
Net losses as a percent of average principal amount
outstanding (5)(6) .................................. 5.16% 5.06% 4.66% 3.40% 4.40% 4.53%
</TABLE>
- -------------------------
(1) Principal Amount Outstanding is the net remaining principal balance.
(2) For the three-month period ended December 31, 1996, average principle
outstanding as of the beginning and the end of each month during the
period. For prior periods, average of principle outstanding as of the
beginning and the end of the period presented.
(3) For the quarters ended after December 31, 1995, the numbers and amounts of
repossessions are net of reinstatements.
(4) Remaining principal balance at time of repossession.
(5) Annualized.
(6) Net Losses are net of recoveries and include remaining principal balance
at time of charge-off. In the case of repossession, net losses include the
remaining balance at the time of repossession less liquidation proceeds
(for disposed vehicles) or the NADA wholesale value (for vehicles
repossessed but not sold). Net losses do not include repossessions that
are less than 120 days delinquent and are not charged off.
The data presented in the above tables are for illustrative purposes
only. There is no assurance that ACC's delinquency, credit loss and repossession
experience with respect to automobile, light duty truck, van and mini-van
installment sale contracts in the future, or the experience of the Issuer with
respect to the Receivables, will be similar to that set forth above. Losses and
delinquencies are affected by, among other things, general and regional economic
conditions and the supply of and demand for automobiles, light duty trucks, vans
and mini-vans.
INSURANCE
In addition to the physical damage insurance policies maintained by the
borrowers naming Accent Financial Services or OFL-A as the loss payee, ACC
maintains VSI Insurance on all automobile loans. This policy was put in place
effective January 1, 1995 and covers the entire portfolio. This protects ACC's
interest in the collateral against uninsured physical damage, filing errors and
omissions.
ACC maintains fidelity bond coverage insuring against losses through
wrongdoing of its officers, employees and agents.
26
<PAGE> 30
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a form
of which has been filed as an exhibit to the Registration Statement. The
following summary describes certain terms of the Notes and the Indenture. The
summary does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Notes and the Indenture.
The following summary supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the Notes of
any given series and the related Indenture set forth in the accompanying
Prospectus.
The Notes will be offered for purchase in denominations of $100,000 and
integral multiples of $1,000 in excess thereof, in book-entry form only. Persons
acquiring beneficial interests in the Notes will hold their interests through
DTC in the United States or Cedel or Euroclear in Europe. See "Description of
the Securities -- Book-Entry Registration" in the Prospectus and Annex I to the
Prospectus.
PAYMENTS OF INTEREST
Interest on the principal amount of the Notes will accrue at the
applicable Note Interest Rate and will be payable to the Noteholders monthly on
each Distribution Date, commencing _________. Interest will accrue from and
including the most recent Distribution Date on which interest has been paid (or,
in the case of the first Distribution Date, from and including the Closing Date)
to but excluding the following Distribution Date (each, an "Interest Period").
Interest on the Notes will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. Interest accrued as of any Distribution Date
but not paid on such Distribution Date will be due on the next Distribution
Date, together with, to the extent permitted by law, interest on such amount at
the applicable Note Interest Rate. Interest payments on the Notes will be made
from the Note Distribution Amount (as defined herein) after payment of accrued
and unpaid trustees' fees and other administrative fees of the Issuer and
payment of the Servicing Fee. See "Description of the Trust Documents --
Distributions" herein.
PAYMENTS OF PRINCIPAL
The "Principal Distributable Amount", with respect to any Distribution
Date, will be an amount equal to the sum of the following amounts with respect
to the related Monthly Period, computed in accordance with the simple interest
method in the case of a Simple Interest Receivable and the actuarial method in
the case of an Actuarial Method Receivable: (i) that portion of all collections
on Receivables (other than Liquidated Receivables and Purchased Receivables)
allocable to principal, including full and partial principal prepayments,
received during such Monthly Period (ii) the principal balance of each
Receivable that became a Liquidated Receivable during the related Monthly Period
(other than Purchased Receivables), (iii) the principal balance of each
Receivable that was repurchased by the Issuer, the Servicer or the Seller as of
the last day of such Monthly Period, (iv) the aggregate amount of any Cram Down
Loss during such Monthly Period, and (v) any unpaid portion of the amounts
included in clauses (i), (ii), (iii) and (iv) above with respect to a prior
Distribution Date. Principal payments on the Class A Notes will be made from the
Distribution Amount after payment of accrued and unpaid trustees' fees and other
administrative fees of the Issuer, payment of the Servicing Fee and after
distribution of the Class A Noteholders' Interest Distributable Amount. See
"Description of the Sale, Servicing and Collateral Management Agreement and the
Trust Documents -- Distributions" herein.
Principal payments will be made to the Class A Noteholders on each
Distribution Date in an amount equal to the Class A Noteholders' Principal
Distributable Amount for the calendar month (the "Monthly Period") preceding
such Distribution Date. The Class A Noteholders' Principal Distributable Amount
will equal the Class A Noteholders' Percentage of the Principal Distributable
Amount. The Class A Noteholders' Principal Distributable Amount will also
include, at the option of the Insurer, the Class A Noteholders' Percentage of
the principal balance of each Receivable that was required to be, but was not
repurchased by the Seller or the Issuer.
The Class A Noteholders' Percentage will be 94% for each Distribution
Date other than a Distribution Date after which the Class A Notes have been paid
in full, or zero for any Distribution Date after the Distribution Date on which
the Class A Notes are paid in full.
Principal payments will be made to the Class B Noteholders on each
Distribution Date in an amount equal to the Class B Noteholders' Principal
Distributable Amount together with any other remaining Available Funds for the
Monthly
27
<PAGE> 31
Period preceding such Distribution Date. The Class B Noteholders' Principal
Distributable Amount will equal the Class B Noteholders' Percentage of the
Principal Distributable Amount.
Principal payments on the Class B Notes will be made from (i) the
Distribution Amount after payment of accrued and unpaid trustee's fees and other
administrative fees of the Issuer, payment of the Servicing Fee, distribution of
the Noteholders' Interest Distributable Amount, payment of the Class A
Noteholders' Principal Distributable Amount, payment and reimbursement to the
Insurer of certain amounts owing to it under the Insurance Agreement and the
funding of certain reserve funds established for the benefit of the Insurer and
(ii) amounts available to be withdrawn from the Class B Reserve Fund in excess
of the Floor Amount. See "Description of the Trust Documents -- Distributions"
herein.
The Class B Noteholders' Percentage will be ___% for each Distribution
Date other than a Distribution Date after which the Class A Notes have been paid
in full or 100% for any Distribution Date after the Class A Notes are paid in
full; provided, however, that the Class B Noteholders' Percentage will be zero
percent when the principal balance of the Class B Notes has been reduced to
zero.
In addition, the outstanding principal amount of the Notes of any
Class, to the extent not previously paid, will be payable on the respective
Final Scheduled Distribution Date for such Class. The actual date on which the
aggregate outstanding principal amount of any Class of Notes is paid may be
earlier than the Final Scheduled Distribution Date for such Class, depending on
a variety of factors.
MANDATORY REDEMPTION
Each Class of Notes will be redeemed in part on the Mandatory
Redemption Date in the event that any portion of the Pre-Funded Amount remains
on deposit in the Pre-Funding Account at the end of the Funding Period. The
aggregate principal amount of each Class of Notes to be redeemed will be an
amount equal to such Class's pro rata share (based on the respective current
principal amount of each Class of Notes) of the remaining Pre-Funded Amount on
such date (such Class's "Note Prepayment Amount"). Approximately $_________
already been originated and identified for transfer to the Issuer by the Seller.
OPTIONAL REDEMPTION
The Class A Notes and the Class B Notes, to the extent still
outstanding, may be redeemed in whole, but not in part, on any Distribution Date
on which the Servicer exercises its option to purchase the Receivables (with the
consent of the Insurer, if a claim has previously been made under the Policy or
if such purchase would result in a claim under the Policy or if such purchase
would result in any amount owing to the Insurer remaining unpaid). The Servicer
may purchase the Receivables when the Pool Balance has declined to 10% or less
of the Original Pool Balance. Such redemption will affect early retirement of
the Notes of such Classes. The redemption price will be equal to the unpaid
principal amount of the Notes of each such Class, plus accrued and unpaid
interest thereon (the "Redemption Price").
EVENTS OF DEFAULT
Unless an Insurer Default shall have occurred and be continuing,
"Events of Default" under the Indenture will consist of those events defined in
the Insurance Agreement as Insurance Agreement Indenture Cross- Defaults, and
will constitute an Event of Default under the Indenture only if the Insurer
shall have delivered to the Indenture Trustee, and not rescinded, a written
notice specifying that any such Insurance Agreement Indenture Cross-Defaults
constitutes an Event of Default under the Indenture. "Insurance Agreement
Indenture Cross-Defaults" consist of: (i) a demand for payment being made under
the Policy; (ii) certain events of bankruptcy, insolvency, receivership or
liquidation of the Issuer; (iii) the Issuer becoming taxable as an association
(or publicly traded partnership) taxable as a corporation for federal or state
income tax purposes; (iv) on any Distribution Date, the sum of the Available
Funds with respect to such Distribution Date plus the amount (if any) available
from certain collateral accounts maintained for the benefit of the Insurer being
less than the sum of the amounts described in clauses (a)-(e) under "Description
of the Trust Documents -- Distributions" herein; and (v) any failure to observe
or perform in any material respect any other covenants or agreements in the
Indenture, or any representation or warranty of the Issuer made in the Indenture
or in any certificate or other writing delivered pursuant thereto or in
connection therewith proving to have been incorrect in any material respect when
made, and such failure continuing or not being cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was incorrect
not having been eliminated or otherwise cured, for 30 days after
28
<PAGE> 32
the giving of written notice of such failure or incorrect representation or
warranty to the Issuer and the Indenture Trustee by the Insurer.
Upon the occurrence of an Event of Default, so long as an Insurer
Default shall not have occurred and be continuing, the Insurer will have the
right, but not the obligation, to cause the Trust Collateral Agent to liquidate
the Trust Property in whole or in part, on any date or dates following the
acceleration of the Class A Notes due to such Event of Default as the Insurer,
in its sole discretion, shall elect, and to deliver the proceeds of such
liquidation to the Indenture Trustee for distribution in accordance with the
terms of the Indenture. The Insurer may not, however, cause the Trust Collateral
Agent to liquidate the Trust Property in whole or in part if the proceeds of
such liquidation would not be sufficient to pay all outstanding principal of and
accrued interest on the Class A Notes, unless such Event of Default arose from a
claim being made on the Policy or from certain events of bankruptcy, insolvency,
receivership or liquidation of the Issuer. Following the occurrence of any Event
of Default, the Indenture Trustee and the Owner Trustee will continue to submit
claims as necessary under the Policy for any shortfalls in the Scheduled
Payments on the Class A Notes. Following any Event of Default under the
Indenture, the Insurer in its sole discretion may elect to pay all or any
portion of the outstanding amount of the Class A Notes, plus accrued interest
thereon. See "The Policy" herein.
29
<PAGE> 33
THE CLASS A NOTE INSURER
The following information has been obtained from (the "Insurer") and
has not been verified by the Seller, the Servicer or ___________. No
representation or warranty is made by the Seller, the Servicer or _________ with
respect thereto.
30
<PAGE> 34
THE POLICY
Simultaneously with the issuance of the Notes, the Insurer will deliver
the Policy to the Trust Collateral Agent as agent for the Indenture Trustee for
the benefit of each Class A Noteholder. Under the Policy, the Insurer will
unconditionally and irrevocably guarantee to the Trust Collateral Agent for the
benefit of each Class A Noteholder the full and complete payment of (i)
Scheduled Payments (as defined below) on the Class A Notes and (ii) the amount
of any Scheduled Payment which subsequently is avoided in whole or in part as a
preference payment under applicable law.
"Scheduled Payments" means payments which are scheduled to be made on
the Class A Notes during the term of the Policy in accordance with the original
terms of the Class A Notes when issued and without regard to any subsequent
amendment or modification of the Class A Notes that has not been consented to by
the Insurer, which "Scheduled Payments" are (i) the Class A Noteholders'
31
<PAGE> 35
Interest Distributable Amount and (ii) the Class A Noteholders' Principal
Distributable Amount with respect to a Distribution Date; Scheduled Payments do
not include payments which become due on an accelerated basis as a result of (a)
a default by the Issuer, (b) an election by the Issuer to pay principal on an
accelerated basis, (c) the occurrence of an Event of Default under the Indenture
or (d) any other cause, unless the Insurer elects, in its sole discretion, to
pay in whole or in part such principal due upon acceleration, together with any
accrued interest to the date of acceleration. In the event the Insurer does not
so elect, the Policy will continue to guarantee Scheduled Payments due on the
Class A Notes in accordance with their original terms. Scheduled Payments shall
not include (x) any portion of a Class A Noteholders' Interest Distributable
Amount due to Class A Noteholders because the appropriate notice and certificate
for payment in proper form was not timely Received (as defined below) by the
Insurer, (y) any portion of a Class A Noteholders' Interest Distributable Amount
due to Class A Noteholders representing interest on any Class A Noteholders'
Interest Carryover Shortfall, or (z) any Class A Note Prepayment Amounts unless,
in each case, the Insurer elects, in its sole discretion, to pay such amount in
whole or in part. Scheduled Payments shall not include, nor shall coverage be
provided under the Policy in respect of, any taxes, withholding or other charge
imposed by any governmental authority due in connection with the payment of any
Scheduled Payment to a Class A Noteholder.
Payment of claims on the Policy made in respect of Scheduled Payments
will be made by the Class A Note Insurer following Receipt by the Class A Note
Insurer of the appropriate notice for payment on the later to occur of (i) 12:00
noon, New York City time, on the third Business Day (as defined below) following
Receipt of such notice for payment, and (ii) 12:00 noon, New York City time, on
the date on which such payment was due on the Class A Notes.
If payment of any amount avoided as a preference under applicable
bankruptcy, insolvency, receivership or similar law is required to be made under
the Policy, the Insurer shall cause such payment to be made on the later of (a)
the date when due to be paid pursuant to the Order referred to below or (b) the
first to occur of (i) the fourth Business Day following Receipt by the Insurer
from the Trust Collateral Agent of (A) a certified copy of the order (the
"Order") of the court or other governmental body which exercised jurisdiction to
the effect that the Class A Noteholder is required to return principal or
interest paid on the Class A Notes during the term of the Policy because such
payments were avoidable as preference payments under applicable bankruptcy law,
(B) a certificate of the Class A Noteholder that the Order has been entered and
is not subject to any stay and (C) an assignment duly executed and delivered by
the Class A Noteholder, in such form as is reasonably required by the Insurer
and provided to the Class A Noteholder by the Insurer, irrevocably assigning to
the Insurer all rights and claims of the Class A Noteholder relating to or
arising under the Class A Notes against the Issuer or otherwise with respect to
such preference payment, or (ii) the date of Receipt (as defined below) by the
Insurer from the Trust Collateral Agent of the items referred to in clauses (A),
(B) and (C) above if, at least four Business Days prior to such date of Receipt,
the Insurer shall have received written notice from the Trust Collateral Agent
that such items were to be delivered on such date and such date was specified in
such notice. Such payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order and not to the
Trust Collateral Agent or any Class A Noteholder directly (unless a Class A
Noteholder has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which case
such payment shall be disbursed to the Trust Collateral Agent for distribution
to such Class A Noteholder upon proof of such payment reasonably satisfactory to
the Insurer). In connection with the foregoing, the Insurer shall have the
rights provided in the Indenture.
The terms "Receipt" and "Received" with respect to the Policy shall
mean actual delivery to the Class A Note Insurer and to its fiscal agent, if
any, prior to 12:00 noon, New York City time, on a Business Day; delivery either
on a day that is not a Business Day or after 12:00 noon, New York City time,
shall be deemed to be Receipt on the next succeeding Business Day. If any notice
or certificate given under the Policy by the Trust Collateral Agent is not in
proper form or is not properly completed, executed or delivered, it shall be
deemed not to have been Received, and the Class A Note Insurer or its fiscal
agent shall promptly so advise the Trust Collateral Agent, and the Trust
Collateral Agent may submit an amended notice.
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Under the Policy, "Business Day" means any day other than (i) a
Saturday or Sunday or (ii) a day on which banking institutions in ________,
________________________________________________________ or any other location
of any successor Servicer, successor Owner Trustee or successor Trust Collateral
Agent are authorized or obligated by law, executive order or governmental decree
to be closed.
The Insurer's obligations under the Policy in respect of Scheduled
Payments shall be discharged to the extent funds are transferred to the Trust
Collateral Agent as provided in the related Policy whether or not such funds are
properly applied by the Trust Collateral Agent.
The Insurer shall be subrogated to the rights of each Class A
Noteholder to receive payments of principal and interest to the extent of any
payment by the Class A Note Insurer under the Policy.
Claims under the Policy constitute direct, unsecured and unsubordinated
obligations of the Insurer ranking not less than pari passu with other unsecured
and unsubordinated indebtedness of the Class A Note Insurer for borrowed money.
Claims against the Insurer under the Policy and claims against the Insurer under
each other financial guaranty insurance policy issued thereby constitute pari
passu claims against the general assets of the Insurer. The terms of the Policy
cannot be modified or altered by any other agreement or instrument, or by the
merger, consolidation or dissolution of the Issuer. The Policy may not be
canceled or revoked prior to distribution in full of all Scheduled Payments with
respect to the Class A Notes. The Policy is not covered by the property/casualty
insurance security fund specified in Article 76 of the New York Insurance Law.
The Policy is governed by the laws of the State of New York.
DESCRIPTION OF THE TRUST DOCUMENTS
The following summary describes certain terms of the Purchase Agreement
and any Subsequent Purchase Agreement (together, the "Purchase Agreements"), the
Sale and Servicing Agreement, any Subsequent Transfer Agreement, the Indenture
and the Trust Agreement (together, the "Trust Documents"). Forms of the Trust
Documents have been filed as exhibits to the Registration Statement. The summary
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, all the provisions of the Trust Documents. The following
summary supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Trust Documents set forth
in the Prospectus.
SALE AND ASSIGNMENT OF RECEIVABLES.
On or prior to the Closing Date, or, with respect to Subsequent
Receivables, the related Subsequent Transfer Date, the Seller will enter into a
Sale, Servicing and Collateral Management Agreement with the Issuer pursuant to
which the Seller will, on or prior to such Closing Date, or, with respect to
Subsequent Receivables, the related Subsequent Transfer Date, sell and assign to
the Issuer, without recourse, its entire interest in and to the related
Receivables, including its security interest in the Financed Vehicles securing
such Receivables and its rights to receive all payments on, or proceeds with
respect to, such Receivables to the extent paid or payable after the applicable
Cutoff Date. Pursuant to the Sale, Servicing and Collateral Management
Agreement, the Seller will agree that, upon the occurrence of a breach of a
representation or warranty under the Trust Documents with respect to any of the
Receivables, the Issuer and certain other parties will be entitled to require
the Seller to repurchase such Receivables from the Issuer. Such rights of the
Issuer under the Sale, Servicing and Collateral Management Agreement will
constitute part of the property of the Issuer and may be enforced directly by
the Owner Trustee and the Insurer. In addition, the Issuer will pledge such
rights to the Indenture Trustee as collateral for the Notes, and such rights may
be enforced directly by the Indenture Trustee.
Each Receivable transferred by the Seller to the Issuer will be
identified in a schedule appearing as an exhibit to the Trust Documents (the
"Schedule of Receivables").
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ACCOUNTS
Each Obligor will be instructed to make payments with respect to the
Receivables after the Cutoff Date directly to one or more post office boxes or
other mailing locations (each, a "Lockbox") maintained by the Lockbox Bank, and
a segregated account will be established and maintained with a bank or banks
acceptable to the Insurer, in the name of the Indenture Trustee for the benefit
of the Noteholders, into which all payments made from Obligors to a Lockbox on
or with respect to the Receivables must be deposited within one business day of
receipt (the "Lockbox Account"). The Issuer will also establish and maintain
with the Indenture Trustee one or more accounts (the "Collection Account"), in
the name of the Indenture Trustee on behalf of the Noteholders and the Insurer,
into which all amounts previously deposited in the Lockbox Account in respect of
the Receivables will be transferred within two business days of deposit in the
Lockbox Account. The Collection Account will be maintained with the Indenture
Trustee so long as the Indenture Trustee's deposits have a rating acceptable to
the Insurer and the Rating Agencies. If the deposits of the Indenture Trustee or
its corporate parent no longer have such acceptable rating, the Servicer shall,
with the Indenture Trustee's assistance as necessary, cause such Accounts to be
moved within 30 days to a bank whose deposits have such rating.
The Trust Collateral Agent will also establish and maintain an account,
in its own name for the benefit of the Indenture Trustee, on behalf of the Class
A Noteholders and the Insurer in which amounts released from the Collection
Account for distribution to Class A Noteholders will be deposited and from which
all distributions to Class A Noteholders will be made (the "Class A Note
Distribution Account"). The Trust Collateral Agent will also establish and
maintain an account, in its own name for the benefit of the Indenture Trustee,
on behalf of the Class B Noteholders in which amounts released from the
Collection Account for distribution to Class B Noteholders will be deposited and
from which all distributions to Class B Noteholders will be made (the "Class B
Note Distribution Account"). The Trust Collateral Agent will also establish and
maintain an account, on behalf of the Certificateholders, in which amounts
released from the Collection Account for distribution to the Issuer will be
deposited and from which all distributions to Certificateholders will be made
(the "Certificate Distribution Account").
On the Closing Date, a cash amount funded from the proceeds of the sale
of the Notes equal to approximately $_________ (the "Initial Pre-Funded Amount")
will be deposited in an account (the "Pre-Funding Account") which will be
established with the Trust Collateral Agent and used solely to pay the Seller
the Purchase Price for Subsequent Receivables. The "Funding Period" is the
period from the Closing Date until the earliest of(i) the date on which the
amount on deposit in the Pre-Funding Account is less than $100,000, (ii) the
date on which an Event of Default under the Indenture or a Servicer Termination
Event occurs under the Sale, Servicing and Collateral Management Agreement, or
(iii) the Distribution Date in _________. The Initial Pre-Funded Amount, as
reduced from time to time during the Funding Period by the amount thereof used
to purchase Subsequent Receivables in accordance with the Sale, Servicing and
Collateral Management Agreement, is referred to herein as the "Pre-Funded
Amount." Monies on deposit in the Pre-Funding Account will not be available to
cover losses on or in respect of the Receivables.
The Seller expects that the Pre-Funded Amount will be reduced to less
than $100,000 on or before the end of the Funding Period, although no assurance
can be given in this regard. Approximately $_________ of the Subsequent
Receivables have already been originated and identified for transfer to the
Issuer by the Seller. There can be no assurance that the Insurer will consent to
the transfer of Subsequent Receivables during the Pre-Funding Period. Any
Pre-Funded Amount remaining at the end of the Funding Period will be payable to
the Noteholders as described herein. The "Mandatory Redemption Date" is the
earlier of (i) the Distribution Date in _________ or (ii) if the last day of the
Funding Period occurs on or prior to the Determination Date (as defined herein)
occurring in _________, the Distribution Date relating to such Determination
Date.
On the Closing Date, a cash amount shall be deposited in an account
(the "Capitalized Interest Account") which will be established with the Trust
Collateral Agent. The amount, if any deposited in the Capitalized Interest
Account will be applied on the Distribution Dates occurring in _________ to fund
an amount (the "Monthly Capitalized Interest Amount") equal to the amount of
interest accrued for each such Distribution Date at the weighted average
Interest Rates on the portion of the Notes having a principal balance in excess
of the principal balances of the Receivables (which portion will equal the
Pre-Funded
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Amount). Any amounts remaining in the Capitalized Interest Account on the
Mandatory Redemption Date and not used for such purposes are required to be paid
directly to the Issuer on such date. See "Description of the Trust Documents --
Accounts."
All such Accounts shall be Eligible Deposit Accounts (as defined in the
Indenture) acceptable to the Insurer (so long as no Insurer Default has occurred
and is continuing).
SERVICING COMPENSATION AND INDENTURE TRUSTEES' FEES
Each month the Servicer will receive a fee for servicing the
Receivables (the "Servicer Fee") equal to (a) the product of one-twelfth of
3.00% (the "Servicing Fee Rate") and the Pool Balance outstanding at the
beginning of the calendar month immediately preceding such Distribution Date
(the "Servicing Fee") plus (b) a supplemental servicing fee (the "Supplemental
Servicing Fee") equal to (i) any late fees, prepayment fees, liquidation fees
and other administrative fees and expenses collected during such month, plus
(ii) the net realized earnings on all investments of funds deposited in the
Collection Account during such month. So long as ACC is the Servicer, a portion
of the Servicing Fee will be payable to the Backup Servicer for agreeing to
stand by as successor Servicer and for performing certain other functions.
Payments by or on behalf of Obligors will be allocated to scheduled payments,
late fees and other charges and principal and interest in accordance with the
Servicer's normal practices and procedures.
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of automotive receivables as an agent for
their beneficial owner, including collecting and posting all payments,
responding to inquiries of Obligors on the Receivables, investigating
delinquencies, reporting tax information to Obligors, paying costs related to
disposition of defaulted accounts, and policing the collateral. The Servicing
Fee also will compensate the Servicer for administering the Receivables,
including accounting for collections and furnishing monthly and annual
statements to the Issuer and the Insurer with respect to distributions and
generating federal income tax information. The Servicing Fee also will reimburse
the Servicer for certain taxes, accounting fees, outside auditor fees, data
processing costs and other costs incurred in connection with administering the
Receivables and for payment of the fees of the Backup Servicer.
On each Distribution Date, the Indenture Trustee is entitled to receive
a fee for its services as Indenture Trustee and Trust Collateral Agent during
the prior Monthly Period in an amount agreed upon by the Indenture Trustee and
the Servicer. On each Distribution Date, the Owner Trustee is entitled to
receive a fee for its services as Owner Trustee during the prior Monthly Period
in an amount agreed upon by the Owner Trustee and the Servicer.
CERTAIN ALLOCATIONS
On each Determination Date, the Servicer will be required to deliver
the Servicer's Certificate to the Indenture Trustee, the Owner Trustee and the
Insurer specifying, among other things, the amount of aggregate collections on
the Receivables and the aggregate Purchase Amount of Receivables to be purchased
by the Seller, the Servicer, all with respect to the preceding Monthly Period.
On each Determination Date the Indenture Trustee will (based solely on
the information contained in the Servicer's Certificate delivered on the related
Determination Date) deliver to the Trust Collateral Agent, the Insurer and the
Servicer a Deficiency Notice specifying the Deficiency Claim Amount, if any, for
such Distribution Date. Such Deficiency Notice will direct the Trust Collateral
Agent to remit such Deficiency Claim Amount from amounts on deposit in certain
collateral accounts maintained for the benefit of the Insurer for deposit in the
Collection Account.
DISTRIBUTIONS
On each Distribution Date, the Servicer is required to instruct the
Indenture Trustee to make the following distributions in the following order of
priority:
1. From the Distribution Amount, to the Servicer, the Servicing
Fee for the related Monthly Period, any Supplemental Servicing
Fees for such month and certain other amounts relating to
mistaken deposits, postings or checks returned for
insufficient funds to the
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extent the Servicer has not reimbursed itself in respect of
such amount or to the extent not retained by the Servicer.
2. From the remaining Distribution Amount, to any Lockbox Bank or
other relevant local bank, the Indenture Trustee, Custodian,
Backup Servicer, Trust Collateral Agent and the Owner Trustee
(including the Indenture Trustee if acting in any such
additional capacity), any accrued and unpaid trustees' fees
and any accrued and unpaid fees (in each case, to the extent
such fees have not been previously paid by the Servicer).
3. From the remaining Distribution Amount plus the related
portion of any Policy Claim Amount, if any, to the Class A
Note Distribution Account, the Class A Noteholders' Interest
Distributable Amount.
4. From the remaining Distribution Amount plus the related
portion of any Policy Claim Amount, if any, to the Class A
Note Distribution Account, the Class A Noteholders' Principal
Distributable Amount, to be distributed as described under
"Description of the Notes -- Payments of Principal."
5. From the remaining Distribution Amount, to the Insurer, the
Premium Amount then due it and any amounts owing under the
Insurance Agreement.
6. From the Available Funds plus amounts available to be
withdrawn from the Class B Reserve Fund, to the Class B Note
Distribution Account, the Class B Noteholders' Interest
Distributable Amount.
7. From Available Funds to the Trust Collateral Agent for deposit
in accordance with the terms of the Spread Account Agreement
to fund certain reserve accounts maintained for the benefit of
the Insurer, until such reserve accounts are funded at their
required level.
8. From Available Funds, plus amounts available to be withdrawn
from the Class B Reserve Fund in excess of the Floor Amount,
to the Class B Note Distribution Account, the Class B
Noteholders' Principal Distributable Amount.
9. From Available Funds, together with any amounts released from
the Class B Reserve Fund or the Spread Account, all remaining
funds to the Class B Noteholders to reduce the principal
balance of the Class B Notes until the principal balance of
the Class B Notes is reduced to zero.
10. From Available Funds, to the Certificate Distribution Account,
or as otherwise specified in the Trust Documents, any
remaining funds.
11. From the Certificate Distribution Account to the
Certificateholders.
In the event that the Servicer's Certificate indicates that the
Distribution Amount will be insufficient on any Distribution Date to cover the
distributions required pursuant to clauses (a) through (e) above on such
Distribution Date, the Indenture Trustee shall furnish to the Insurer no later
than 12:00 noon New York City time on the related Draw Date a completed notice
of claim in the amount of the Policy Claim Amount. Amounts paid by the Insurer
pursuant to any such notice of claim shall be deposited by the Insurer into the
Class A Note Distribution Account for payment to Class A Noteholders on the
related Distribution Date.
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STATEMENTS TO NOTEHOLDERS
On or prior to each Distribution Date, the Indenture Trustee will be
required to forward a statement to the Noteholders on such Distribution Date.
Such statements will be based on the information in the related Servicer's
Certificate setting forth certain information required under the Trust
Documents. Each such statement to be delivered to Noteholders will include the
following information as to the Notes with respect to such Distribution Date or
the period since the previous Distribution Date, as applicable:
(i) the amount of the distribution allocable to interest on or
with respect to each Class of the Notes:
(ii) the amount of the distribution allocable to principal
with respect to each Class of the Notes;
(iii) the amount of the distribution on the Class A Notes
payable pursuant to a claim on the Policy;
(iv) the aggregate outstanding principal amount for each Class
of Notes, in each case, after giving effect to all payments reported
under (ii) above on such date;
(v) the Class A Noteholders' Interest Carryover Shortfall, the
Class B Noteholders' Interest Carryover Shortfall, the Class A
Noteholders' Principal Carryover Shortfall, the Class B Noteholders'
Principal Carryover Shortfall, if any, and the change in such amounts
from the preceding statement;
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Monthly Period;
(vii) for each such date during the Funding Period, the
remaining Pre-Funded Amount, the amount in the Pre-Funding Account and
the amount remaining in the Capitalized Interest Account; and
(viii) for the final Subsequent Transfer Date, the amount of
any remaining Pre-Funded Amount that has not been used to fund the
purchase of Subsequent Receivables and is being passed through as
payments of principal of the Notes.
Each amount set forth pursuant to subclauses (i) through (vi) with
respect to Notes will be expressed as a dollar amount per $1,000 of the initial
principal amount of the Notes, as applicable.
Unless and until Definitive Notes or Definitive Notes are issued, such
reports will be sent on behalf of the Trust to Cede & Co., as registered holder
of the Notes and the nominee of DTC.
Within the required period of time after the end of each calendar year,
the Indenture Trustee will furnish to each person who at any time during such
calendar year was a Noteholder or Certificateholder, a statement as to the
aggregate amounts of interest and principal paid to such Noteholder or
Certificateholder, information regarding the amount of servicing compensation
received by the Servicer and such other information as ACC deems necessary to
enable such Noteholder or Certificateholder to prepare its tax returns.
SPREAD ACCOUNT
On the Closing Date, the Spread Account will be established with
Norwest Bank Minnesota, National Association, as Trust Collateral Agent for the
benefit of the Indenture Trustee on behalf of the Class A Noteholders, and the
Class A Note Insurer pursuant to a certain Spread Account Agreement Supplement
dated as of the Closing Date (the "Spread Account Agreement"). The Spread
Account will not be subject to the lien created by the Indenture. On each
Distribution Date, the Trust Collateral Agent will be required to deposit
additional amounts into the Spread Account from payments on the Receivables as
described under "Description of the Notes -Distributions" above. Amounts, if
any, on deposit in the Spread Account will be available to the extent provided
in the Spread Account Agreement to fund any
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Deficiency Claim Amount otherwise required to be made on a Distribution Date.
The aggregate amount required to be on deposit at any time in the Spread Account
(the "Specified Spread Account Requirement") will be determined in accordance
with the Insurance Agreement and the Spread Account Agreement. The Specified
Spread Account Requirement may increase or decrease over time as a result of
floors, caps and triggers set forth in the Insurance Agreement or the Spread
Account Agreement, even if no withdrawals are made from the Spread Account.
Amounts on deposit in the Spread Account on any Distribution Date (after giving
effect to all distributions made on such Distribution Date) in excess of the
Specified Spread Account Requirement for such Distribution Date will be
distributed as additional payments in reduction of the principal balance of the
Class B Notes and after such principal balance has been reduced to zero will be
released to the Issuer. Amounts on deposit or to be deposited in the Spread
Account may be distributed to persons other than the Class A Note Insurer or the
Noteholders without the consent of the Noteholders.
Amounts held from time to time in the Spread Account will continue to
be held for the benefit of holders of the Class A Notes and the Insurer. Funds
in the Spread Account will be invested in Eligible Investments.
In addition, the Issuer, the Insurer and the Trust Collateral Agent may
amend the Spread Account Agreement (and any provisions in the Insurance
Agreement relating to the Spread Account) in any respect (including, without
limitation, reducing or eliminating the Specified Spread Account Requirement
and/or reducing or eliminating the funding requirements of the Spread Account or
permitting such funds to be used for the benefit of persons other than
Noteholders) without the consent of, or notice to, the Indenture Trustee, the
Owner Trustee or the Noteholders. The Trust Collateral Agent shall not withhold
or delay its consent with respect to any amendment that does not adversely
affect the Trust Collateral Agent in its individual capacity. Notwithstanding
any reduction in or elimination of the funding requirements of the Spread
Account or the depletion thereof, the Insurer will be obligated on each
Distribution Date to fund for the benefit of the Class A Noteholders the full
amount of each Scheduled Payment otherwise required to be made on such
Distribution Date in accordance with the terms of the Policy. If the Insurer
breaches its obligations, any losses on the Receivables will be borne by such
Class A Noteholders.
The amount required to be on deposit in the Spread Account may increase
or decrease without Noteholder consent and there can be no assurance that the
amounts on deposit in the Spread Account will reach the Specified Spread Account
Requirement since the existence of the Spread Account and any other term or
provision in the Spread Account Agreement regarding the Spread Account may be
amended by the Insurer without Noteholder consent. Consequently, the Class A
Noteholders should not rely on amounts on deposit in or to be deposited to the
Spread Account in evaluating the likelihood of receiving repayment of the Notes.
Since amounts will be deposited to the Spread Account from Available Funds prior
and releases of amounts from the Spread Account will be distributed as principal
in addition to distributions of Class B Noteholders' Principal Distributable
Amount, modifications of the Specified Spread Account Requirement may cause
unexpected interruption or acceleration of payments of principal on the Class B
Notes.
SERVICER TERMINATION EVENT
"Servicer Termination Event" under the Sale, Servicing and Collateral
Management Agreement will consist of the occurrence and continuance of any of
the following: (i) any failure by the Servicer to deliver to the Trust
Collateral Agent for distribution to the Noteholders any required payment, which
failure continues unremedied for two Business Days (one Business Day with
respect to payment of Purchase Amounts) after written notice is received by the
Servicer from the Indenture Trustee or (unless a Class A Note Insurer Default
shall be continuing) the Insurer or after discovery of such failure by a
responsible officer of the Servicer, or any failure to deliver the Servicer's
Certificate (as defined in the Sale, Servicing and Collateral Management
Agreement) by the fifth Business Day prior to the Distribution Date, and which
shall comply with the requirements therefor; (ii) any failure by the Servicer
duly to observe or perform in any material respect certain of its covenants and
agreements under the Sale, Servicing and Collateral Management Agreement; (iii)
failure to satisfy certain other material covenants and agreements set forth in
the Sale, Servicing and Collateral Management Agreement which failure continues
unremedied for 30 days after the giving of written notice of such failure (1) to
the Servicer by the Insurer, the Trust Collateral Agent or the Issuer, or (2) if
a Insurer Default has occurred and is
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continuing, to the Servicer by any holder of a Note or a Certificate; (iv)
certain events of insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings with respect to the Servicer or the Issuer
and certain actions by the Servicer, or, so long as ACC is Servicer, of its
affiliates, indicating its insolvency, reorganization pursuant to bankruptcy
proceedings, or inability to pay its obligations; (v) the material breach of
certain of the Servicer's representations or warranties and the Servicer's
failure to cure within 30 days after notice thereof; (vi) so long as a Insurer
Default shall not have occurred and be continuing, the Insurer shall not have
delivered an extension notice; (vii) so long as a Insurer Default shall not have
occurred and be continuing, an Insurance Agreement Event of Default or an event
of default under any other Insurance and Indemnity Agreement relating to any
series of securities shall have occurred; or (viii) a claim is made under the
Policy.
"Insurer Default" shall mean the occurrence and continuance of any of
the following events:
(a) the Insurer shall have failed to make a payment required
under the Policy in accordance with its terms;
(b) the Insurer shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United
States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (ii) made a general assignment for the benefit of its
creditors, or (iii) had an order for relief entered against it under
the United States Bankruptcy Code or any other similar federal or state
law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department
of Insurance or other competent regulatory authority shall have entered
a final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent or receiver for the Insurer or for all or any
material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Insurer
(or the taking of possession of all or any material portion of the
property of the Class A Note Insurer).
RIGHTS UPON SERVICER TERMINATION EVENT
As long as a Servicer Termination Event under the Sale, Servicing and
Collateral Management Agreement remains unremedied, (x) provided no Insurer
Default shall have occurred and be continuing, the Class A Note Insurer in its
sole and absolute discretion or (y) if a Insurer Default shall have occurred and
be continuing, then the Trust Collateral Agent or a Security Majority, may
terminate all the rights and obligations of the Servicer under such Agreement,
whereupon (i) if ACC is terminated under the Agreement, the Backup Servicer, or
such other successor servicer as shall have been appointed by the Insurer (so
long as no Insurer Default shall have occurred and be continuing) will succeed
to all the responsibilities, duties, and liabilities of the Servicer under such
Agreement or (ii) if a Servicer other than ACC is terminated under the
Agreement, a successor servicer will be appointed by the Insurer (or, if a
Insurer Default shall have occurred and be continuing, by the Trust Collateral
Agent). Any such successor Servicer will succeed to all the responsibilities,
duties, and liabilities of the Servicer under the Sale, Servicing and Collateral
Management Agreement and will be entitled to similar compensation arrangements.
There is no assurance that the succession of a successor servicer will not
result in a material disruption in the performance of the duties of the
servicer.
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WAIVER OF PAST DEFAULTS
The Insurer may, on behalf of the Issuer and all holders of the Notes,
waive any default by the Servicer in the performance of its obligations under
the Sale, Servicing and Collateral Management Agreement and its consequences. No
such waiver will impair the Noteholders' rights with respect to subsequent
defaults.
AMENDMENT
The Sale, Servicing and Collateral Management Agreement may be amended
by the Seller, the Servicer and the Owner Trustee with the consent of the
Indenture Trustee, (which consent may not be unreasonably withheld) and with the
prior written consent of the Insurer (so long as no Insurer Default has occurred
and is continuing), but without the consent of the Noteholders, to cure any
ambiguity, or to correct or supplement any provision therein which may be
inconsistent with any other provision therein; provided that such action shall
not adversely affect in any material respect the interests of any Noteholder;
provided, further, that if an Insurer Default has occurred and is continuing,
such action shall not materially adversely affect the interests of the Class A
Note Insurer. The Seller, the Servicer and the Owner Trustee may also amend the
Sale, Servicing and Collateral Management Agreement with the prior written
consent of the Insurer, the consent of the Indenture Trustee, the consent of
Noteholders holding a majority of the principal amount of the Notes outstanding
to add, change or eliminate any other provisions with respect to matters or
questions arising under such Agreement or affecting the rights of the
Noteholders; provided that such action will not (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that are required to be made for the
benefit of the Noteholders or (ii) reduce the aforesaid percentage of the
Noteholders required to consent to any such amendment, without, in either case,
the consent of the holders of all Notes outstanding; provided, further, that if
an Insurer Default has occurred and is continuing, such action shall not
materially adversely affect the interest of the Insurer. The Seller and Servicer
must deliver to the Owner Trustee, the Indenture Trustee and the Insurer upon
the execution and delivery of the Sale, Servicing and Collateral Management
Agreement and any amendment thereto an opinion of counsel, satisfactory to the
Indenture Trustee and Insurer, that all financing statements and continuation
statements have been filed that are necessary to fully protect and preserve the
Indenture Trustee's interest in the Receivables.
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including Insolvency Laws, may interfere
with or affect the ability of a lender to realize upon collateral or enforce a
deficiency judgment. For example, in a Chapter 13 proceeding under the federal
bankruptcy law, a court may prevent a lender from repossessing a motor vehicle,
and, as part of the rehabilitation plan, reduce the amount of the secured
indebtedness to the market value of the motor vehicle at the time of bankruptcy
(as determined by the court), leaving the party providing financing as a general
unsecured creditor for the remainder of the indebtedness. A bankruptcy court may
also reduce the monthly payments due under a contract or change the rate of
interest and time of repayment of the indebtedness.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following general discussion, when read in conjunction
with the discussion of "Federal Income Tax Consequences" in the Prospectus,
describes certain federal income tax consequences to the original purchasers of
the Notes of the purchase, ownership and disposition of the Notes. It does not
purport to discuss all federal income tax consequences that may be applicable to
investment in the Notes or to particular categories of investors, some of which
may be subject to special rules.
The discussion that follows, and the opinions set forth below
of Dewey Ballantine, special tax counsel to the Issuer ("Tax Counsel"), are
based on the provisions of the Internal Revenue Code of 1986, as amended (the
"Code") and Treasury regulations promulgated thereunder as in effect on the date
hereof and on existing judicial and administrative interpretations thereof.
These authorities are subject to change and to differing interpretations, which
could apply retroactively. The opinions of Tax Counsel are
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not binding on the courts or the Internal Revenue Service (the "IRS"). Potential
investors should consult their own tax advisors in determining the federal,
state, local, foreign and any other tax consequences to them of the purchase,
ownership and disposition of the Notes.
CHARACTERIZATION OF THE NOTES AS INDEBTEDNESS. In the opinion
of Tax Counsel, although no transaction closely comparable to that contemplated
herein has been the subject of any Treasury regulation, revenue ruling or
judicial decision, based on the application of existing law to the facts as set
forth in the applicable agreements, the proper treatment of the Notes is as
indebtedness for federal income tax purposes.
Except as described below, interest paid or accrued on a Note
will be treated as ordinary income to the Noteholders and principal payments on
a Note will be treated as a return of capital to the extent of the Noteholder's
basis in the Note allocable thereto. An accrual method taxpayer will be required
to include in income interest on the Notes when earned, even if not paid, unless
it is determined to be uncollectible. It is not anticipated that the Notes will
be issued with original issue discount. See "Federal Income Tax Consequences --
Treatment of the Notes as Indebtedness -- Interest Income on the Notes" in the
Prospectus.
ALTERNATIVE CHARACTERIZATIONS OF THE NOTES. Although it is the
opinion of Tax Counsel that the Notes are properly characterized as indebtedness
for federal income tax purposes, no assurance can be given that such
characterization of the Notes will prevail. If the Notes were treated as an
ownership interest in the Receivables, all income on such Receivables would be
income to the holders of the Notes, and related fees and expenses would
generally be deductible (subject to certain limitations on the deductibility of
miscellaneous itemized deductions by individuals) and certain market discount
and premium provisions of the Code might apply to a purchase of the Notes.
If, alternatively, the Notes were treated as an equity
interest in the Trust, the Trust would be treated as a partnership for federal
income tax purposes. As a partnership, the Trust will not be subject to federal
income tax unless treated as a publicly traded partnership taxable as a
corporation. Any such corporate income tax could materially reduce cash
available to make payments on the Notes. Tax Counsel is of the opinion that,
although no transaction closely comparable to that contemplated herein has been
the subject of any Treasury regulation, revenue ruling or judicial decision and,
therefore, is subject to interpretation, the Trust, if treated as a partnership,
will not be treated as a publicly traded partnership taxable as a corporation.
This opinion is based on Tax Counsel's conclusion that the nature of the income
of the Trust exempts it from the rules that certain publicly traded partnerships
are taxable as corporations.
STATE AND LOCAL TAX CONSIDERATIONS
Potential Noteholders should consider the state and local income tax
consequences of the purchase, ownership and disposition of the Notes. State and
local income tax laws may differ substantially from the corresponding federal
law, and this discussion does not purport to describe any aspect of the income
tax laws of any state or locality. Therefore, potential Noteholders should
consult their own tax advisors with respect to the various state and local tax
consequences of an investment in the Notes.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit sharing, or other employee benefit plan from engaging in certain
transactions involving "plan assets" with persons that are "parties in interest"
under ERISA or "disqualified persons" under the Code with respect to the plan.
ERISA also imposes certain duties on persons who are fiduciaries of plans
subject to ERISA and prohibits certain transactions between a plan and parties
in interest with respect to such plans. Under ERISA, any person who exercises
any authority or control respecting the management or disposition of the assets
of a plan is considered to be a fiduciary of such plan (subject to certain
exceptions not here relevant). A violation of these "prohibited transaction"
rules may generate excise tax and other liabilities under ERISA and the Code for
such persons.
In addition to the matters described below, purchasers of Class A Notes
that are insurance companies should consult with their counsel with respect to
the United States Supreme Court case interpreting the fiduciary responsibility
rules of ERISA, John Hancock Mutual Life Insurance Co. v. Harris
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<PAGE> 45
Trust and Savings Bank, 114 S.Ct. 517 (1993). In John Hancock, the Supreme Court
ruled that assets held in an insurance company's general account may be deemed
to be "plan assets" for ERISA purposes under certain circumstances. Prospective
purchasers should determine whether the decision affects their ability to make
purchases of the Class A Notes.
Certain transactions involving the Issuer might be deemed to constitute
prohibited transactions under ERISA and the Code if assets of the Issuer were
deemed to be "plan assets" of an employee benefit plan subject to ERISA or the
Code, or an individual retirement account (an "IRA"), or any entity whose
underlying assets are deemed to be assets of an employee benefit plan or an IRA
by reason of such employee benefit plan's or such IRA's investment in such
entity (each a "Benefit Plan"). Under a regulation issued by the United States
Department of Labor (the "Plan Assets Regulation"), the assets of the Issuer
would be treated as plan assets of a Benefit Plan for the purposes of ERISA and
the Code only if the Benefit Plan acquires an "equity interest" in the Issuer
and none of the exceptions contained in the Plan Assets Regulation is
applicable. An equity interest is defined under the Plan Assets Regulation as an
interest other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features. The Seller
believes that the Class A Notes should be treated as indebtedness without
substantial equity features for purposes of the Plan Assets Regulation. This
determination is based in part upon the traditional debt features of the Notes,
including the reasonable expectation of purchasers of Notes that the Notes will
be repaid when due, as well as the absence of conversion rights, warrants and
other typical equity features. The debt treatment of the Notes for ERISA
purposes could change if the Issuer incurred losses. However, without regard to
whether the Class A Notes are treated as an equity interest for such purposes,
the acquisition or holding of Class A Notes by or on behalf of a Benefit Plan
could be considered to give rise to a prohibited transaction if certain parties
to the transaction are or become, or any of their respective affiliates is or
becomes, a party in interest or a disqualified person with respect to such
Benefit Plan. In such case, certain exemptions from the prohibited transaction
rules could be applicable depending on the type and circumstances of the plan
fiduciary making the decision to acquire a Class A Note. Included among these
exemptions are: Prohibited Transaction Class Exemption ("PTCE") 90-1, regarding
investments by insurance company pooled separate accounts; PTCE 95-60, regarding
investments by insurance company general accounts; PTCE 91-38, regarding
investments by bank collective investment funds; PTCE 96-23, regarding
transactions by in-house asset managers; and PTCE 84-14, regarding transactions
by "qualified professional asset managers." Each investor using the assets of a
Benefit Plan which acquires the Class A Notes, or to whom the Class A Notes are
transferred, will be required to represent that the acquisition and continued
holding of the Class A Notes will be covered by a Department of Labor class
exemption.
Employee plans that are government plans (as defined in Section 3(32)
of ERISA) and certain church plans (as defined in Section 3(53) of ERISA are not
subject to ERISA; however, such plans may be subject to comparable state law
restrictions.
Any Benefit Plan fiduciary considering the purchase of a Class A Note
should consult with its counsel with respect to the potential applicability of
ERISA and the Code to such investment. Moreover, each Benefit Plan fiduciary
should determine whether, under the general fiduciary standards of investment
prudence and diversification, an investment in the Class A Notes is appropriate
for the Benefit Plan, taking into account the overall investment policy of the
Benefit Plan and the composition of the Benefit Plan's investment portfolio.
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UNDERWRITING
Subject to the terms and conditions contained in the Underwriting
Agreement, the Seller has agreed to cause the Trust to sell the Notes to
_________ (the "Underwriter"), and the Underwriter has agreed to purchase the
Notes.
The Underwriting Agreement provides that the obligations of the
Underwriter is subject to certain conditions precedent and that the Underwriter
will be obligated to purchase all the Notes, if any are purchased.
Distribution of the Notes may be made by the Underwriter from time to
time in one or more negotiated transactions, or otherwise, at varying prices to
be determined at the time of sale. The Underwriter may effect such transactions
by selling the Notes to or through dealers, and such dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Underwriter. In connection with the sale of the Notes, the Underwriter
may be deemed to have received compensation from the Seller in the form of
underwriting compensation. The Underwriter and any dealers that participate with
the Underwriter in the distribution of the Notes may be deemed to be
underwriters and any commissions received by them and any profit on the resale
of the Notes positioned by them may be deemed to be underwriting discounts and
commissions under the Securities Act of 1933, as amended (the "Securities Act").
If the Underwriter creates a short position in the Notes in connection
with the offering, i.e., if the Underwriter sells more Notes than are set forth
on the cover page of this Prospectus Supplement, the Underwriter may reduce that
short position by purchasing Notes in the open market.
In general, purchases of a security to reduce a short position could
cause the price of the security to be higher than it might be in the absence of
such purchases.
Neither the Seller nor the Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above, if engaged in, may have on the prices of the Notes. In
addition, neither the Seller not the Underwriter makes any representation that
the Underwriter will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The Notes are a new issue of securities with no established trading
market. The Underwriter has advised the Seller that it intends to act as market
makers for the Notes. However, the Underwriter is not obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of any trading market for the Notes.
The Seller has agreed to indemnify the Underwriter against certain
liabilities, including civil liabilities under the Securities Act, or contribute
to payments which the Underwriter may be required to make in respect thereof.
The Commission is of the opinion that indemnification for any securities law
violation is contrary to the public policy expressed in the federal securities
laws, and consequently, that such indemnification provisions are unenforceable.
The Underwriter has represented and agreed that (i) it has not offered
or sold and, prior to the expiration of the period of six months from the
Closing Date, will not offer or sell any Notes to persons in the United Kingdom,
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulation 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Notes in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the Issue of the Notes to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995, or is a person to whom such document may otherwise
lawfully be issued or passed on.
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NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Seller prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of the Notes are effected. Accordingly, any resale of the Notes in Canada
must be made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales to be made
in accordance with available statutory exemptions or pursuant to a discretionary
exemption granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of the Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of a Note in Canada who receives a purchase confirmation
will be deemed to represent to the Seller and the dealer from whom such purchase
confirmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Note without the benefit of a
prospectus qualified under such securities laws, (ii) where required by law,
that such purchaser is purchasing as principal and not as agent and (iii) such
purchaser has reviewed the text above under "Resale Restrictions".
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of a Note to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any Notes
acquired by such purchaser pursuant to this offering. Such report must be in the
form attached to British Columbia Securities Commission Blanket Order BOR #
88/5, a copy of which may be obtained from the Seller. Only one such report must
be filed in respect of the Notes acquired on the same date and under the same
prospectus exemption.
LEGAL OPINIONS
Certain legal matters relating to the Notes will be passed upon for
ACC, the Servicer and _________ by Dewey Ballantine, New York, New York. Certain
bankruptcy, federal income tax and other matters will be passed upon for ACC and
the Servicer by Dewey Ballantine. Certain legal matters under California
law relating to the Notes will be passed upon for ACC and the Servicer by Dewey
Ballantine.
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GLOSSARY
For the purposes hereof, the following terms shall have the following
meanings:
"Aggregate Principal Balance" means, with respect to any
Determination Date, the sum of the Principal Balances for all Receivables (other
than (i) any Receivable that became a Liquidated Receivable prior to the end of
the related Monthly Period and (ii) any Receivable that became a Purchased
Receivable prior to the end of the related Monthly Period) as of the
Determination Date.
"Amount Financed" means, with respect to a Receivable, the
aggregate amount advanced under such Receivable toward the purchase price of the
Financed Vehicle and related costs, including amounts advanced in respect of
accessories, insurance premiums, service, car club and warranty contracts, other
items customarily financed as part of retail automobile installment sale
contracts or promissory notes, and related costs.
"Available Funds" means, with respect to any Determination
Date, the sum of (i) the Collected Funds for such Determination Date, plus (ii)
all Purchase Amounts deposited in the Collection Account during the related
Monthly Period, plus income on investments held in the Collection Account, plus
(iii) the Monthly Capitalized Interest Amount with respect to the related
Distribution Date.
"Class A Noteholders' Distributable Amount" means, with
respect to any Distribution Date, the sum of the Class A Noteholders' Principal
Distributable Amount and the Class A Noteholders' Interest Distributable Amount.
"Class A Noteholders' Interest Carryover Shortfall" means,
with respect to any Distribution Date and the Class A Notes, the excess of the
Class A Noteholders' Interest Distributable Amount for the preceding
Distribution Date, over the amount in respect of interest that was actually
deposited in the Class A Note Distribution Account on such preceding
Distribution Date, plus interest on the amount of interest due but not paid to
Class A Noteholders on the preceding Distribution Date, to the extent permitted
by law, at the Interest Rate borne by the Class A Notes from such preceding
Distribution Date to but excluding the current Distribution Date.
"Class A Noteholders' Interest Distributable Amount" means,
with respect to any Distribution Date, the sum of the Class A Noteholders'
Monthly Interest Distributable Amount for the Class A Notes for such
Distribution Date and the Class A Noteholders' Interest Carryover Shortfall for
Class A Notes for such Distribution Date.
"Class A Noteholders' Monthly Interest Distributable Amount"
means, with respect to any Distribution Date and Class A Notes, interest accrued
during the applicable Interest Period at the Interest Rate borne by such Class
of Class A Notes on the outstanding principal amount of such Class immediately
prior to such Distribution Date, calculated on the basis of a 360-day year and
twelve 30-day months.
"Class A Noteholders' Monthly Principal Distributable Amount"
means, with respect to any Distribution Date, the Class A Noteholders'
Percentage of the Principal Distributable Amount.
"Class A Noteholders' Percentage" means (i) for each
Distribution Date other than a Distribution Date on which the Class A Notes are
paid in full, 94%, or (ii) for any Distribution Date after the Distribution Date
on which the Class A Notes are paid in full, zero.
"Class A Noteholders' Principal Carryover Shortfall" means, as
of the close of any Distribution Date, the excess of the Class A Noteholders'
Principal Distributable Amount for the preceding Distribution Date over the
amount in respect of principal that was actually deposited in the Class A Note
Distribution Account on such Distribution Date.
"Class A Noteholders' Principal Distributable Amount" means,
with respect to any Distribution Date (other than the Final Scheduled
Distribution Date), the sum of the Class A Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and the Class A Noteholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date. The Class A Noteholders' Principal
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Distributable Amount on the Final Scheduled Distribution Date for the Class A
Notes will equal the outstanding principal amount, if any, of such Class A
Notes.
"Class A Note Insurer Optional Deposit" means, with respect to
any Distribution Date, an amount delivered by the Class A Note Insurer, at its
sole option, other than pursuant to the Policy for deposit into the Collection
Account for any of the following purposes: (i) to provide funds in respect of
the payment of fees or expenses of any provider of services to the Trust with
respect to such Distribution Date; or (ii) to include such amount as part of the
Distribution Amount for such Distribution Date to the extent that without such
amount a draw would be required to be made on the Policy.
"Class B Noteholders' Distributable Amount" means, with
respect to any Distribution Date, the sum of the Noteholders' Principal
Distributable Amount and the Class B Noteholders' Interest Distributable Amount.
"Class B Noteholders' Interest Carryover Shortfall" means,
with respect to any Distribution Date and the Class B Notes, the excess of the
Class B Noteholders' Interest Distributable Amount for the preceding
Distribution Date, over the amount in respect of interest that was actually
deposited in the Class B Note Distribution Account on such preceding
Distribution Date, plus interest on the amount of interest due but not paid to
Class B Noteholders on the preceding Distribution Date, to the extent permitted
by law, at the Interest Rate borne by the Class B Notes from such preceding
Distribution Date to but excluding the current Distribution Date.
"Class B Noteholders' Interest Distributable Amount" means,
with respect to any Distribution Date, the sum of the Class B Noteholders'
Monthly Interest Distributable Amount for the Class B Notes for such
Distribution Date and the Class B Noteholders' Interest Carryover Shortfall for
Class B Notes for such Distribution Date.
"Class B Noteholders' Monthly Interest Distributable Amount"
means, with respect to any Distribution Date and Class B Notes, interest accrued
during the applicable Interest Period at the Interest Rate borne by such Class
of Class B Notes on the outstanding principal amount of such Class immediately
prior to such Distribution Date, calculated on the basis of a 360-day year and
twelve 30-day months.
"Class B Noteholders' Monthly Principal Distributable Amount"
means, with respect to any Distribution Date, the Class B Noteholders'
Percentage of the Principal Distributable Amount.
"Class B Noteholders' Percentage" means (i) for each
Distribution Date other than a Distribution Date on which the Class A Notes have
been paid in full, 6% or (ii) for any Distribution Date after the Class A Notes
are paid in full, 100 %; provided, however, that the Class B Noteholders'
Percentage will be zero percent when the principal balance of the Class B Notes
has been reduced to zero.
"Class B Noteholders' Principal Carryover Shortfall" means, as
of the close of any Distribution Date, the excess of the Class B Noteholders'
Principal Distributable Amount for the preceding Distribution Date over the
amount in respect of principal that was actually deposited in the Class B Note
Distribution Account on such Distribution Date.
"Class B Noteholders' Principal Distributable Amount" means,
with respect to any Distribution Date (other than the Final Scheduled
Distribution Date for any Class B Notes), the sum of the Class B Noteholders'
Monthly Principal Distributable Amount for such Distribution Date and the Class
B Noteholders' Principal Carryover Shortfall as of the close of the preceding
Distribution Date. The Class B Noteholders' Principal Distributable Amount on
the Final Scheduled Distribution Date for the Class B Notes will equal the
outstanding principal amount, if any, of such Class B Notes.
"Collected Funds" means, with respect to any Determination
Date, the amount of funds in the Collection Account representing collections on
the Receivables during the related Monthly Period, including all Net Liquidation
Proceeds collected during the related Monthly Period (but excluding any Purchase
Amounts).
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"Cram Down Loss" means, with respect to a Receivable if a
court of appropriate jurisdiction in an insolvency proceeding shall have issued
an order reducing the amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments to be made on such Receivable, an amount
equal to (i) the excess of the principal balance of such Receivable immediately
prior to such order over the principal balance of such Receivable as so reduced
and/or (ii) if such court shall have issued an order reducing the effective rate
of interest on such Receivable, the net present value (using as the discount
rate the higher of the APR on such Receivable or the rate of interest, if any,
specified by the court in such order) of the scheduled payments as so modified
or restructured. A "Cram Down Loss" shall be deemed to have occurred on the date
of issuance of such order.
"Deficiency Claim Amount" means, with respect to any
Determination Date, the excess, if any, of the sum of the amounts payable on the
related Distribution Date pursuant to clauses (a) through (e) under "Description
of Notes - Distributions" over the amount of Available Funds.
"Deficiency Notice" means a written notice delivered by the
Indenture Trustee to the Class A Note Insurer, the fiscal agent, if necessary,
and the Servicer and any other person required under the Insurance Agreement,
specifying the Deficiency Claim Amount for such Distribution Date.
"Determination Date" means, with respect to any Collection
Period, the 5th Business Day prior to the related Distribution Date.
"Distribution Amount" means, with respect to any Distribution
Date the sum of (i) the Available Funds for the immediately preceding
Determination Date plus (ii) the Deficiency Claim Amount, if any, received by
the Indenture Trustee with respect to such Distribution Date.
"Floor Amount" means with respect to the Class B Reserve Fund
and any Distribution Date, an amount equal to the product of the Interest Rate
for the Class B Notes and the principal balance of the Class B Notes as of such
Distribution Date.
"Liquidated Receivable" means, with respect to any Monthly
Period, a Receivable as to which (i) 60 days have elapsed since the Servicer
repossessed the Financed Vehicle, (ii) the Servicer has determined in good faith
that all amounts it expects to recover have been received, (iii) ninety percent
or more of a scheduled payment shall have become 120 or more days delinquent, or
in the case of an Obligor who is subject to bankruptcy proceedings, 210 or more
days delinquent or (iv) the Financed Vehicle has been sold and the proceeds
received. Any Receivable that becomes a Purchased Receivable on or before the
related Business Day immediately preceding the related Determination Date shall
not be a Liquidated Receivable.
"Net Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable (other than
amounts withdrawn from certain collateral accounts and drawings under the
Policy) net of the Servicer's reasonable out-of-pocket costs, including
repossession and resale expenses not already deducted from such proceeds, and
any amounts that are required to be refunded to the Obligor on such Receivable;
provided, however, that Net Liquidation Proceeds with respect to any Receivables
shall in no event be less than zero.
"Policy Claim Amount" means, with respect to any Determination
Date on which the Indenture Trustee has delivered a Deficiency Notice, the
shortfall of (y) the Distribution Amount with respect to the related
Distribution Date (after giving effect to the amounts payable on such
Distribution Date pursuant to clauses (a) and (b) under "Distributions") over
(2) the amount necessary to pay the Scheduled Payments on the Class A Notes with
respect to such Distribution Date.
"Principal Balance" means, with respect to any Receivable, as
of any date, the Amount Financed minus (i) that portion of all amounts received
on or prior to such date and allocable to principal in accordance with the terms
of the Receivable, and (ii) any Cram Down Loss in respect of such Receivable.
"Principal Distributable Amount" means, with respect to any
Distribution Date, an amount equal to the sum of the following amounts with
respect to the related Monthly Period, computed in accordance with the simple
interest method in the case of a Simple Interest Receivable and the actuarial
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method in the case of an Actuarial Method Receivable: (i) that portion of all
collections on Receivables (other than Liquidated Receivables and Purchased
Receivables) allocable to principal, including full and partial principal
prepayments, received during such Monthly Period (ii) the principal balance of
each Receivable that became a Liquidated Receivable during the related Monthly
Period (other than Purchased Receivables), (iii) the principal balance of each
Receivable that was repurchased by the Issuer, the Servicer or the Seller as of
the last day of such Monthly Period, (iv) the aggregate amount of any Cram Down
Loss during such Monthly Period, and (v) any unpaid portion of the amounts
included in clauses (i), (ii), (iii) and (iv) above with respect to a prior
Distribution Date. Principal payments on the Class A Notes will be made from the
Distribution Amount after payment of accrued and unpaid trustees' fees and other
administrative fees of the Issuer, payment of the Servicing Fee and after
distribution of the Class A Noteholders' Interest Distributable Amount. See
"Description of the Sale, Servicing and Collateral Management Agreement and the
Trust Documents -- Distributions" herein.
"Purchase Amount" means, with respect to a Receivable, the
principal balance and all accrued and unpaid interest on the Receivable as of
the date of purchase.
"Purchased Receivable" means, a Receivable purchased as of the
close of business on the last day of the related Monthly Period by the Servicer
or by the Seller pursuant to the repurchase obligations of the Sale, Servicing
and Collateral Management Agreement.
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Exhibit 99.3
[Exhibit 99.3 Form of Prospectus Supplement. This form of Prospectus Supplement
is for illustrative purposes only. A Prospectus Supplement in definitive form
reflecting the terms of each Series of Certificates will be filed with the
Commission under the Securities Act of 1933, as amended, pursuant to Rule 424(b)
promulgated thereunder.]
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED ____________)
ACC AUTOMOBILE RECEIVABLES TRUST ____-__
$_________ ____% Asset Backed Certificates, Class A
ACC Automobile Receivables Trust ____-__, ACC Consumer Finance Corporation,
as Issuer as Seller and Servicer
The Asset Backed Certificates (the "Certificates") will be issued
pursuant to Pooling & Servicing Agreement dated as of __________ (the "Pooling
and Servicing Agreement"), between ACC Consumer Finance (the "Servicer" and the
"Seller") and ____________________________________", as trustee (the "Trustee").
The Certificates will be issued in two classes, a senior class (the "Class A
Certificates") and a subordinate class (the "Class B Certificates" and together
with the Class A Certificates, the "Certificates"). The Class B Certificates are
not being offered hereby.
The Certificates represent the right to receive principal and interest
payments pursuant to the terms of the Pooling and Servicing Agreement. Such
rights are based solely upon the interests represented by the Certificates in
the ACC Automobile Receivables Trust ______ (the "Trust" or the "Issuer") formed
pursuant to the Pooling and Servicing Agreement.
The assets of the Trust will initially include a pool of non-prime
retail installment sales contracts (the "Receivables") secured by new and used
automobiles and light trucks, all monies paid or payable thereunder after the
Cutoff Date, security interests in the vehicles financed thereby, certain bank
accounts and the proceeds thereof, and the right to receive certain insurance
proceeds and certain other property. The Receivables were purchased by ACC
Consumer Finance Corporation ("ACC" or the "Servicer") from motor vehicle
dealers and may have been sold by ACC pursuant to warehouse financing
arrangements and repurchased. In connection with the issuance of the
Certificates by the Issuer, the Issuer will purchase the Receivables from ACC.
The aggregate principal balance of the pool of Receivables to be transferred on
the Closing Date (the "Initial Receivables") is expected to be $____________.
Additional non-prime retail installment sale contracts are intended to
be purchased by the Issuer from ACC from time to time on or before _________,
from funds on deposit in a pre-funding account to be established with the
Indenture Trustee (the "Pre-Funding Account"). Approximately $___________ of
such additional contracts may be acquired by the Issuer.
Principal and interest will be distributed to the holders of the
Certificates (the "Certificateholder") on the 17th day of each month (or, if
such day is a Saturday, Sunday, legal holiday or other day on which commercial
banks or trust companies in the States of New York, California or Minnesota or
any other location of any successor Servicer, successor Indenture Trustee or
successor Collateral Agent are authorized or obligated by law, executive order
or governmental decree to be closed, on the next succeeding day (such day, a
"Business Day")), beginning ____________. The "Final Scheduled Distribution
Date" is ____________.
Full and complete payment of the Scheduled Payments (as defined herein)
on the Class A Certificates only on each Distribution Date is unconditionally
and irrevocably guaranteed pursuant to a financial guaranty insurance policy
(the "Policy") to be issued by
[________]
<PAGE> 2
SEE "RISK FACTORS" AT PAGE S-__ HEREIN AND AT PAGE __ IN THE ACCOMPANYING
PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS IN THE CERTIFICATES OFFERED HEREBY.
THE CERTIFICATES REPRESENT OBLIGATIONS OF THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN THE SELLER, THE MASTER SERVICER OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THE SECURITIES NOR THE UNDERLYING RECEIVABLES ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
==================================================================================================================
PRICE TO PUBLIC(1) UNDERWRITING DISCOUNT(2) PROCEEDS TO THE TRUST(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Class A Note.................. ________% ____% ________%
- ------------------------------------------------------------------------------------------------------------------
Total............................. $_________ $_______ $_________
==================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, at the applicable rate, from _________.
(2) The Sponsor has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
See "Underwriting".
The Certificates are offered subject to receipt and acceptance by the
Underwriter, to prior sale and to the Underwriter's right to reject any order in
whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that the Certificates will be offered globally and delivered in
book-entry form on or about March 31, 1997 through the facilities of The
Depository Trust Company ("DTC"), CEDEL S.A. ("Cedel") and the Euroclear System
("Euroclear") against payment in immediately available funds.
2
<PAGE> 3
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT AFFECT THE PRICE OF THE CERTIFICATES. SUCH TRANSACTIONS MAY
INCLUDE THE PURCHASE OF CERTIFICATES TO COVER SYNDICATE SHORT POSITIONS. FOR A
DESCRIPTION OF THESE TRANSACTIONS, SEE "UNDERWRITING."
---------------------------
The information in this Prospectus Supplement is qualified in its
entirety by the more detailed information appearing or incorporated by reference
in the accompanying Prospectus. Prior to making an investment decision with
respect to the Certificates offered hereby, prospective investors should
carefully consider the information contained in this Prospectus Supplement and
the Prospectus.
There currently is no secondary market for the Certificates. The
Underwriter intends to make a market in the Certificates but has no obligation
to do so. There is no assurance that one will develop or, if one does develop,
that it will continue until the Certificates are paid in full.
UNTIL 90 DAYS FROM THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
AVAILABLE INFORMATION
The Company has filed a Registration Statement under the
Securities Act of 1933, as amended (the "1933 Act"), with the Securities and
Exchange Commission (the "Commission") on behalf of the Trust with respect to
the Certificates offered pursuant to the Prospectus dated ______________ and
this Prospectus Supplement. For further information, reference is made to the
Registration Statement and amendments thereof and to the exhibits thereto, which
are available for inspection without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
7 World Trade Center, 13th Floor, New York, New York 10048; and at The
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The Commission maintains a site on the World Wide Web containing
reports, proxy materials, information statements and other items. The address is
http://www.sec.gov. Copies of the Registration Statement and amendments thereof
and exhibits thereto may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
REPORTS TO THE CERTIFICATEHOLDER
So long as the Certificates are in book-entry form, monthly
and annual reports concerning the Certificates and the Trust will be sent by the
Indenture Trustee to Cede & Co., as the nominee of DTC and as registered holder
of the Certificates pursuant to the Sale and Servicing Agreement. DTC will
supply such reports to Beneficial Owners in accordance with its procedures. See
"Risk Factors," "Description of the Securities -- Book-Entry Registration" and "
- -- Reports to Securityholders" in the Prospectus. To the extent required by the
Securities Exchange Act of 1934, as amended, the Trust will provide financial
information to the registered holder which has been examined and reported upon,
with an opinion expressed by an independent public accountant; to the extent not
so required, such financial information will be unaudited. The Seller has
determined that the financial statements of no entity other than the Insurer are
material to the offering made hereby. The Trust will be formed to own the
Receivables, and to issue the Securities. The Trust will have no assets or
obligations prior to issuance of the Securities and will engage in no activities
other than those described herein. Accordingly, no financial statements with
respect to the Trust are included in this Prospectus Supplement.
1
<PAGE> 4
Until 90 days from the date of this Prospectus Supplement,
dealers effecting transactions in the Certificates whether or not participating
in this distribution, may be required to deliver a prospectus and a prospectus
supplement. This is in addition to the obligation of dealers to deliver a
prospectus and a prospectus supplement when acting as underwriters and with
respect to their unsold allotments or subscriptions.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In addition to the documents described in the Prospectus under
"Incorporation of Certain Documents by Reference," the consolidated financial
statements of ____________ and Subsidiaries included in, or as exhibits to, the
Annual Report on Form 10-K for the year ended __________ which have been filed
with the Commission by ___________, are hereby incorporated by reference in the
Registration Statement (as defined in the Prospectus) of which this Prospectus
and Prospectus Supplement form a part.
The Seller on behalf of the Trust hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, as amended, each
filing of the Trust's annual report pursuant to section 13(a) or section 15(d)
of the Exchange Act and each filing of the financial statements of the Insurer
included in or as an exhibit to the annual report of _________ filed pursuant to
section 13(a) or section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the Certificates offered hereby, and the offering of such
Certificates at that time shall be deemed to be the initial bona fide offering
thereof.
The Company will provide, without charge, to any person to whom this
Prospectus Supplement is delivered, upon oral or written request of such person,
a copy of any or all of the foregoing financial statements incorporated by
reference. Requests for such copies should be sent to ACC Consumer Finance
Corporation, attention: _______________. All financial statements of the Insurer
included in documents filed by __________ pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
subsequent to the date of this Prospectus Supplement and prior to the
termination of the offering of the Certificates shall be deemed to be
incorporated by reference into this Prospectus Supplement and to be a part
hereof from the respective dates of filing of such documents.
2
<PAGE> 5
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the Prospectus. Capitalized terms used are defined elsewhere in the Prospectus
Supplement or in the Prospectus. Reference is made to the Index of Defined Terms
herein and the Index of Terms in the Prospectus for the definitions of certain
capitalized terms.
ISSUER......................... ACC Automobile Receivables Trust ____, a
Delaware business trust (the "Issuer" or the
"Trust") wholly owned by ACC Funding Corp.
("ACC Funding") (which will own a ___%
interest in the Issuer) and ACC Receivables
Corp. ("ACC Receivables") (which will own a
___% interest in the Issuer). Each of ACC
Receivables and ACC Funding is a special
purpose, bankruptcy-remote subsidiary of ACC.
SELLER AND SERVICER ........... ACC Consumer Finance Corporation, a Delaware
corporation, ("ACC," and, under the Pooling
and Servicing Agreement in its capacity as
Servicer, the "Servicer" and in its capacity
as Seller, the "Seller"). The Servicer will be
obligated, pursuant to the Pooling and
Servicing Agreement, subject to the
limitations set forth therein, to service the
Receivables and to repurchase certain of the
Receivables if it breaches certain of its
servicing obligations under the Pooling and
Servicing Agreement or certain other covenants
with respect to the Servicer, in each case
only in a manner that materially and adversely
affects such Receivables, the interests of the
Issuer, the Certificateholder or the Insurer.
See "The Seller and Servicer in the
Prospectus."
The Seller will be obligated, pursuant to the
Pooling and Servicing Agreement, dated as of
__________, among the Seller, the Issuer, the
Servicer, the Backup Servicer and the Trust
Collateral Agent (the "Pooling and Servicing
Agreement"), subject to the limitations set
forth therein, to purchase certain of the
Receivables under certain circumstances if any
representations and warranties made therein by
the Seller with respect to the Receivables are
incorrect in a manner that materially and
adversely affects such Receivables, the
interests of the Issuer, the Certificateholder
or the Insurer.
INITIAL CUTOFF DATE............ The close of business on __________ or with
respect to each Initial Receivable originated
after such date, the date of origination of
such Receivable.
CLOSING DATE .................. _________.
3
<PAGE> 6
TRUSTEE AND BACKUP SERVICER.... __________________________________ (in its
capacity as Indenture Trustee under the
Pooling and Servicing Agreement, the
"Indenture Trustee" and in its capacity as
Backup Servicer under the Pooling and
Servicing Agreement, the "Backup Servicer").
DESCRIPTION OF THE
CERTIFICATES .................. The Certificates will be issued pursuant to a
Pooling and Servicing Agreement, dated as of
_________, between the Trustee and the Seller
and Servicer (the "Pooling and Servicing
Agreement"). The Certificates will be issued
in fully registered form in minimum
denominations of $1,000 and integral multiples
of $1,000 in excess thereof.
The Certificates will be issued in two classes,
a senior class (the "Class A Certificates") and
a subordinate class (the "Class B
Certificates").
The Original Principal Balance of each class
will be as follows:
Class A Certificates: $_________
Class B Certificates: $_________
The Certificates represent the right to receive
principal and interest payments pursuant to the
terms of the Pooling and Servicing Agreement.
Such rights are based solely upon the interests
represented by the Certificates in the ACC
Automobile Receivables Trust _____ (the "Trust"
or the "Issuer") formed pursuant to the Pooling
and Servicing Agreement.
The Class A Certificates will be represented by
global securities registered in the name of
Cede & Co. ("Cede"), as nominee of The
Depository Trust Company ("DTC"). Class A
Certificateholder will not be entitled to
receive definitive securities representing such
holders' interest except in certain
circumstances described in the Pooling and
Servicing Agreement. Transfers within DTC will
be in accordance with the usual rules and
operating procedures of the relevant system.
The rights of the owners of the beneficial
interests in the Class A Certificates may only
be exercised through DTC and its participating
organizations, except as otherwise specified
herein. See "Description of the
Certificates--Book- Entry Registration."
The Class B Certificates are not being offered
hereby.
DESCRIPTION OF THE
POOLING AND SERVICING AGREEMENT The payment priorities set forth in the Pooling
and Servicing Agreement require (i) except to
the extent of funds available
4
<PAGE> 7
in the Class B Reserve Fund (as defined below),
that no payments of interest will be paid to
the Class B Certificateholders on any
Distribution Date unless the full amount of
interest and principal then due to the Class A
Certificateholders has been paid, as well as
certain reimbursements due to the Insurer, and
(ii) except to the extent of funds available in
the Class B Reserve Fund (as defined below),
that no payments of principal will be paid to
the Class B Certificateholders on any
Distribution Date unless the full amount of
interest and principal then due to the Class A
Certificateholders, the full amount of interest
then due to the Class B Certificateholders, as
well as certain reimbursements due to the
Insurer, and funding of certain reserve
accounts established for the benefit of the
Insurer, have been paid in full. Consequently,
the Class B Certificateholders will receive no
distributions of principal from sources other
than the Class B Reserve Fund until these
provisions have been satisfied (during which
period some of or all the distributions of
principal to which the Class B
Certificateholders would otherwise be entitled
will be deposited to such reserve accounts) and
may thereafter experience temporary suspensions
of payments of principal.
CLASS A NOTE INTEREST
RATE........................ The Class A Certificates will bear interest
at a rate of ____% per annum, calculated on
the basis of a 360-day year consisting of
twelve 30-day months, using the applicable
Note Interest Rate (the "Class A Note Interest
Rate"), as set forth on the cover page hereof.
TRUST PROPERTY................. The property of the Issuer (the "Trust
Estate") will include certain non-prime retail
installment sale contracts (the "Initial
Receivables") secured by new or used
automobiles, light duty trucks, vans and
mini-vans (the "Initial Financed Vehicles"),
all monies paid or payable thereunder after
the Initial Cutoff Date, security interests in
the Initial Financed Vehicles securing the
Initial Receivables, certain bank accounts and
the proceeds thereof, any proceeds from claims
on certain insurance policies, certain rights
under the Pooling and Servicing Agreement and
the Receivables Purchase Agreement and all
proceeds of the foregoing.
On or before _________, the Issuer may acquire
from time to time (each such date a
"Subsequent Transfer Date") from ACC, using
the money on deposit in a pre-funding account
to be established with the Indenture Trustee
(the "Pre-Funding Account"), approximately
$_________ (the "Original Pre- Funded Amount")
of additional non-prime retail installment
sale contracts (the "Subsequent Receivables"
and together with the Initial Receivables, the
"Receivables") secured by new or used
automobiles, light duty trucks, vans and mini-
5
<PAGE> 8
vans (the "Subsequent Financed Vehicles" and
together with the Initial Financed Vehicles,
the "Financed Vehicles"), together with all
monies paid or payable under such Subsequent
Receivables after the related subsequent
cutoff date (each a "Subsequent Cutoff Date"
and together with the Initial Cutoff Date,
each a "Cutoff Date") established pursuant to
the related subsequent transfer agreement
(each a "Subsequent Transfer Agreement") to be
entered into at the time of such subsequent
transfer of Receivables to the Issuer among
the Seller, the Servicer, the Trust Collateral
Agent and the Indenture Trustee, security
interests in the Financed Vehicles securing
the Receivables and all proceeds of the
foregoing. ACC has previously originated and
identified Receivables having an aggregate
principal balance of approximately $_________
that it expects to transfer to the Issuer on
one or more Subsequent Transfer Dates.
RECEIVABLES.................... The Receivables consist of non-prime retail
automobile installment sales contracts which
were sold and purchased in the manner
described above and pursuant to ACC's finance
programs. ACC's finance programs target
automobile purchasers with below average
credit profiles who are generally unable to
obtain credit from traditional lending
sources. The Receivables had, as of the
Initial Cutoff Date, a weighted average annual
percentage rate ("APR") of approximately
____%, a weighted average original term of
____ months and a weighted average remaining
term of ____ months. The Receivables had an
Aggregate Principal Balance of $_________ as
of the Initial Cutoff Date (the "Original Pool
Balance"). See "The Trust Property."
Certain contracts included in the pool as of
the Initial Cutoff Date may prepay in full, or
may be determined not to meet the eligibility
requirements for the final pool, and may not
be included in the final pool. As a result of
the foregoing, the statistical distribution of
characteristics as of the Closing Date for the
final Receivables pool may vary somewhat from
the statistical distribution of such
characteristics as of the Initial Cutoff Date
as presented in this Private Placement
Memorandum, although such variance will not be
material.
The Seller has represented and warranted that
no Initial Receivable is more than 30 days
delinquent as of the Initial Cutoff Date, and
that no more than 0.07% of the Initial
Receivables have been extended by the
Servicer. Approximately $19,800,000.00 of the
Subsequent Receivables have already been
originated and identified for transfer to the
Issuer by the Seller. See "The Trust
Property."
Following the Closing Date and subject to the
prior written consent of the Insurer and
satisfaction of certain conditions
6
<PAGE> 9
set forth in the Pooling and Servicing
Agreement, the Issuer will be obligated to
purchase the Subsequent Receivables from the
Seller as described below under "Pre-Funding
Account." The Seller will make certain
representations as of the related Subsequent
Cutoff Date with respect to the Receivables,
including any Subsequent Receivables. See "The
Trust Property."
PRE-FUNDING ACCOUNT............ During the period from and including the
Closing Date until the earliest of (i) the
date on which the Pre-Funded Amount (after
giving effect to any transfer of Subsequent
Receivables to the Issuer on such date) is
less than $100,000, (ii) the date on which an
Event of Default or a Servicer Termination
Event occurs under the Pooling & Servicing
Agreement or (iii) the Distribution Date in
_________ (the "Funding Period"), the
Pre-Funding Account will be maintained with
the Indenture Trustee and is designed solely
to hold funds to be applied by the Indenture
Trustee to pay the Seller the purchase price
for Subsequent Receivables. Monies on deposit
in the Pre- Funding Account will not be
available to cover losses on or in respect of
the Receivables. On the Closing Date, the Pre-
Funding Account will be funded with the
Original Pre-Funded Amount from the sale
proceeds of the Certificates.
The Seller expects that the Pre-Funded Amount
will be reduced to less than $100,000 by
_________, although no assurances can be given
in this regard. If any portion of the
Pre-Funded Amount remains at the end of the
Funding Period, such amount will be
distributed as a partial prepayment to the
Certificateholders as described below under
"Mandatory Prepayment".
INTEREST RESERVE ACCOUNT....... During the Funding Period, funds will be held
in an Interest Reserve Account to cover any
shortfalls due to investment earnings on funds
in the Pre-Funding Account being less than the
interest due on the Certificates. See
"Description of the Trust Documents -- The
Accounts."
DISTRIBUTION DATE.............. The 17th day of each month (or if such 17th day
is not a Business Day, the immediately
following Business Day), commencing _________.
INTEREST....................... Interest on the outstanding principal amount of
the Certificates of each Class will accrue at
the applicable Note Interest Rate from
_________, in the case of the first
Distribution Date or from the most recent
Distribution Date on which interest has been
paid to but excluding the following
Distribution Date. Interest on the
Certificates for any Distribution Date due but
not paid on such Distribution Date will be due
on the next Distribution Date together with
interest on such amount at the applicable Note
Interest Rate. The amount of interest
7
<PAGE> 10
distributable on the Certificates on each
Distribution Date will equal 30 days' interest
(or, in the case of the first Distribution
Date, interest accrued from and including the
Closing Date to but excluding such
Distribution Date). See "Description of the
Certificates - Payments of Interest" herein.
Interest will be calculated on the basis of a
360-day year consisting of twelve 30-day
months.
The "Note Principal Balance" of each class of
Certificates will equal, initially, the
original principal amount of Certificates of
such class issued by Issuer on the Closing
Date and thereafter will equal the original
Note Principal Balance of such class reduced
by all principal distributed to the
Certificateholders of the Certificates of such
class.
PRINCIPAL...................... Class A Certificates. Principal on the Class A
Certificates will be payable on each
Distribution Date in an amount equal to the
Class A Certificateholders' Principal
Distributable Amount (as defined below). The
Class A Certificateholders' Principal
Distributable Amount for any Distribution Date
will equal the Class A Certificateholders'
Percentage of an amount equal to the sum of
the following amounts (such sum with respect
to any Distribution Date, the ("Principal
Distributable Amount")) with respect to the
related Monthly Period, computed in accordance
with the simple interest method with respect
to Simple Interest Receivables (as defined
herein) or in accordance with the actuarial
method with respect to Rule of 78s Receivables
(as defined herein): (i) that portion of all
collections on Receivables (other than
Liquidated Receivables and Purchased
Receivables) allocable to principal, including
full and partial principal prepayments,
received during such Monthly Period, (ii) the
principal balance of each Receivable that
became a Liquidated Receivable during such
Monthly Period (other than Purchased
Receivables), (iii) the principal balance of
each Receivable that was repurchased by the
Servicer or the Seller as of the last day of
such Monthly Period, (iv) the aggregate amount
of any Cram Down Loss (as defined below), and
(v) any unpaid portion of the amounts included
in clauses (i), (ii), (iii) and (iv) above
with respect to a prior Distribution Date. The
Class A Certificateholders' Principal
Distributable Amount will also include, at the
option of the Insurer, the Class A
Certificateholders' Percentage of the
principal balance of each Receivable that was
required to be, but was not, so repurchased.
See "Description of the Certificates" and
"Description of the Trust Documents" herein.
Class B Certificates. Principal on the Class B
Certificates will be payable on each
Distribution Date in an amount equal to the
Class B Certificateholders' Principal
Distributable Amount. The Class B
Certificateholders' Principal Distributable
Amount will equal the Class B
Certificateholders' Percentage of the
8
<PAGE> 11
Principal Distributable Amount. The Class B
Certificateholders' Percentage is ____%
initially (until the Class A Certificates have
been paid in full at which time it will equal
100% or until the Class B Certificates have
been paid in full at which time it will equal
0%).
The outstanding principal amount of the
Certificates, if any, will be payable on
_________ (the "Final Scheduled Distribution
Date").
"Cram Down Loss" means, with respect to a
Receivable, if a court of appropriate
jurisdiction in an insolvency proceeding has
issued an order reducing the amount owed on a
Receivable or otherwise modifying or
restructuring the scheduled payments to be
made on a Receivable, an amount equal to the
excess of the principal balance of such
Receivable immediately prior to such order
over the principal balance of such Receivable
as so reduced or the net present value (using
as the discount rate the higher of the
contract rate or the rate of interest, if any,
specified by the court in such order) of the
scheduled payments as so modified or
restructured. A Cram Down Loss will be deemed
to have occurred on the date of issuance of
such order.
"Liquidated Receivable" means, with respect to
any Monthly Period, a Receivable as to which
(i) 60 days have elapsed since the Servicer
repossessed the Financed Vehicle, (ii) the
Servicer has determined in good faith that all
amounts it expects to recover have been
received, (iii) ninety percent or more of a
scheduled payment shall have become 120 or
more days delinquent, or in the case of an
Obligor who is subject to bankruptcy
proceedings, 210 or more days delinquent or
(iv) the Financed Vehicle has been sold and
the proceeds received. Any Receivable that
becomes a Purchased Receivable on or before
the related Business Day immediately preceding
the related Determination Date shall not be a
Liquidated Receivable.
A "Monthly Period" with respect to a
Distribution Date will be the calendar month
preceding the month in which such Distribution
Date occurs.
PAYMENT PRIORITY............... On each Distribution Date the Available Funds
(together with certain other monies) will be
applied in the following order of priority:
first, to the Servicer, the Servicing Fee then
due;
second, to any Lockbox Bank or other relevant
local bank, the Indenture Trustee, Custodian
and Backup Servicer (including the Indenture
Trustee if acting in any such additional
9
<PAGE> 12
capacity), their fees then due (in each case,
to the extent such fees have not been
previously paid by the Servicer);
third, to the Class A Certificateholders, the
interest then due with respect to each Class
of Class A Certificates;
fourth, to the Class A Certificateholders, the
Class A Certificateholders' Principal
Distributable Amount;
fifth, to the Insurer, the premium owing to it
in connection with the Policy (the "Premium
Amount") then due it and any amounts owing
under the Insurance Agreement;
sixth, to the Class B Certificateholders, the
interest then due with respect to the Class B
Certificates;
seventh, to certain reserve accounts
maintained for the benefit of the Insurer,
until such reserve accounts are fully funded
at their required level;
eighth, to the Class B Certificateholders, the
Class B Certificateholders' Principal
Distributable Amount;
ninth, all remaining funds to the Class B
Certificateholders to reduce the principal
balance of the Class B Certificates until the
principal balance of the Class B Certificates
is reduced to zero; and
tenth, to the Issuer, any remainder.
MANDATORY PREPAYMENT........... The Certificates of each Class will be
prepaid in part on the Distribution Date on or
immediately following the end of the Funding
Period in the event that any portion of the
Pre- Funded Amount remains after giving effect
to the purchase of all Subsequent Receivables
during the Funding Period. The aggregate
principal amount of each Class of Certificates
subject to prepayment will be an amount equal
to such Class's pro rata share (based on the
respective current principal amount of each
Class of Certificates) of the Pre- Funded
Amount at the end of the Funding Period.
NOTE INSURER................... ________________________ (the "Insurer") is a
financial guaranty insurance company
incorporated under the laws of the State of
______________. See "The Policy" and "The
Insurer."
THE POLICY..................... On the Closing Date, the Insurer will issue the
Policy to the Indenture Trustee for the
benefit of the Certificateholders pursuant to
which the Insurer will unconditionally and
irrevocably guarantee to the
Certificateholders payment of the
10
<PAGE> 13
Scheduled Payments for each Distribution Date.
See "The Policy".
REPURCHASE AND PURCHASE
OBLIGATIONS.................. The Seller (pursuant to the Pooling and
Servicing Agreement) will be obligated to
repurchase a Receivable if such Receivables or
the interest of the Class A Certificateholders
or the Insurer are materially adversely
affected by a breach of any representation or
warranty made by the Seller with respect to
such Receivable, if the breach has not been
cured by the last day of the first full
calendar month following the discovery by or
notice to the Issuer of the breach.
The Servicer (pursuant to the Pooling and
Servicing Agreement) will be obligated to
repurchase a Receivable if such Receivable is
materially adversely affected by a breach of
certain of its servicing obligations under the
Pooling and Servicing Agreement (including,
but not limited to, its obligation to ensure
that the perfected security interest of Accent
Financial Services, OFL-A or ACC in the
related Financed Vehicles is maintained) or
certain other covenants with respect to the
Servicer, if the breach has not been cured by
the last day of the first full calendar month
following the discovery or notice to the
Servicer of the breach.
SERVICER FEE................... Each month the Servicer will receive a fee for
servicing the Receivables (the "Servicer Fee")
equal to (a) the product of one-twelfth of
3.00% (the "Servicing Fee Rate") and the Pool
Balance outstanding at the beginning of the
calendar month immediately preceding such
Distribution Date (the "Servicing Fee") plus
(b) a supplemental servicing fee (the
"Supplemental Servicing Fee") equal to (i) any
late fees, prepayment fees, liquidation fees
and other administrative fees and expenses
collected during such month, plus (ii) the net
realized earnings on all investments of funds
deposited in the Collection Account during
such month. See "Provisions of the Trust
Documents -- Servicing Compensation and
Indenture Trustees' Fees."
OPTIONAL REDEMPTION..............The Certificates will be redeemed in
whole, but not in part, on any Distribution
Date on which the Issuer or the Servicer
exercises its option to purchase the
Receivables (with the consent of the Insurer,
if a claim has previously been made under the
Policy or, if such purchase would result in a
claim under the Policy or if such purchase
would result in any amount owing to the
Insurer remaining unpaid), which, subject to
certain provisions in the Pooling and
Servicing Agreement, can occur after the Pool
Balance is equal to or less than 10% of the
Original Pool Balance, at a redemption price
which is not less than the Note Principal
Balance plus
11
<PAGE> 14
accrued and unpaid interest thereon. See
"Description of the Certificates - Optional
Redemption" herein.
MANDATORY
REDEMPTION..................... The Certificates may be accelerated and subject
to immediate payment at par upon the
occurrence of an Event of Default under the
Indenture. So long as no Insurer Default shall
have occurred and be continuing, an Event of
Default under the Indenture will occur only
upon delivery by the Insurer to the Issuer of
notice of the occurrence of certain events of
default under the Insurance and Indemnity
Agreement, dated as of May 1, 1997 (the
"Insurance Agreement"), among the Insurer, the
Issuer, the Seller, the Servicer, ACC
Receivables and ACC Funding. The Policy does
not guarantee payment of any amounts that
became due on an accelerated basis, unless the
Insurer elects, in its sole discretion, to pay
such amounts in whole or in part. See
"Description of the Certificates - Mandatory
Redemption - Events of Default;" herein.
TAX STATUS..................... In the opinion of Dewey Ballantine, special
counsel to the Seller, for federal income tax
purposes, the Issuer will not be treated as an
association (or publicly traded partnership)
taxable as a corporation and the Class A
Certificates will be characterized as debt.
Each Certificateholder, by the acceptance of a
Note, will agree to treat the Certificates as
debt. See "Certain Federal Income Tax
Consequences" herein.
ERISA CONSIDERATIONS........... As described herein, the Class A Certificates
may be purchased by Benefit Plans (as
hereinafter defined) that are subject to the
Employee Retirement Income Security Act of
1974 ("ERISA") or entities using assets of
such Benefit Plans. Any Benefit Plan should
consult its tax and/or legal advisors in
determining whether all required conditions
have been satisfied.
The Class B Certificates are not eligible for
purchase by a Benefit Plan.
RATING......................... As a condition to the issuance of the
Certificates, the Class A Certificates will be
rated at least "AAA" by Standard & Poor's
Ratings Services, a division of The
McGraw-Hill Companies, Inc. ("S&P") and "Aaa"
by Moody's Investors Service, Inc. ("Moody's")
on the basis of the issuance of the Policy by
the Insurer. There is no assurance that a
rating will not be lowered or withdrawn by a
rating agency based on a change in
circumstances deemed by such rating agency to
adversely affect the Class A Certificates. A
rating is not a recommendation to purchase,
hold or sell the Class A Certificates, in as
much as such rating does not comment as
12
<PAGE> 15
to market price or suitability for a
particular investor. See "Risk Factors -
Ratings of the Certificates."
CERTAIN LEGAL MATTERS.......... Certain legal matters relating to the
validity of the issuance of the Offered
Certificates will be passed upon for the
Issuer and the Underwriter by Dewey
Ballantine, New York, NY.
13
<PAGE> 16
RISK FACTORS
RISK OF LOSSES ASSOCIATED WITH ACC'S UNDERWRITING PROCESS AND SUBJECTIVE CREDIT
STANDARDS
The underwriting standards applied by ACC may not be as stringent as
those of the finance companies of motor vehicle manufacturers or other financial
institutions since ACC purchases retail automobile installment contracts which
may not meet the credit standards of traditional primary lenders. The ACC
finance program focuses on the non-prime market including obligors with below
average credit profiles who may not be able to receive financing from more
traditional sources. The ACC finance program sets specific limits for the credit
amount extended. ACC's credit decisions are judgmental. See "The Seller and
Servicer -- Application Processing and Purchasing Criteria."
RISK OF LOSSES ASSOCIATED WITH LIMITED ASSETS
The Issuer will not have, nor is it permitted or expected to have, any
significant assets or sources of funds available for the payment of the Class A
Certificates other than the Receivables, the Pre-Funding Account, the
Capitalized Interest Account. Certificateholders must rely for repayment upon
payments on the Receivables and, if and to the extent available, amounts on
deposit in the Pre-Funding Account, the Capitalized Interest Account, the
Reserve Account and, with respect to the Class A Certificates only, payments of
claims made under the Policy. The Pre-Funded Amount on deposit in the
Pre-Funding Account will be used solely to purchase Subsequent Receivables and
is not available to cover losses on the Receivables. The Capitalized Interest
Account is designed to cover obligations of the Issuer relating to that portion
of its assets not invested in Receivables and is not designed to provide
protection against losses on the Receivables. Similarly, although the Policy
will be available on each Distribution Date to cover shortfalls in distributions
of the Scheduled Payments with respect to the Class A Certificates on such
Distribution Date, if the Insurer defaults in its obligations under the Policy,
the Issuer will depend on current distributions on the Receivables and, with
respect to the Class A Certificates only, amounts, if any, available therefor in
certain collateral accounts maintained for the benefit of the Insurer to make
payments on the Certificates. See "The Insurer" and "The Policy" herein.
RISK OF LOSSES ASSOCIATED WITH GEOGRAPHIC CONCENTRATION OF RECEIVABLES
As of the Initial Cutoff Date (based on principal balance and mailing
address of the Obligors), Obligors with respect to approximately ____% and ____%
of the Receivables were located in California, Texas and Florida, respectively
and substantially all of the rest of the Receivables were located in those
states identified in the table on page __. See "The Trust Property".
Accordingly, adverse economic conditions or other factors particularly affecting
any of these states could adversely affect the delinquency or loan loss
experience of the Issuer with respect to the Receivables.
RISK OF PREPAYMENT FROM THE PRE-FUNDING ACCOUNT BASED UPON ACC'S ABILITY TO
ORIGINATE SUBSEQUENT RECEIVABLES
To the extent that the Pre-Funded Amount has not been fully applied to
the purchase of Subsequent Receivables by the Issuer by the end of the Funding
Period, the Certificateholders will receive a prepayment of principal on the
Mandatory Redemption Date in an amount equal to their pro rata share (based on
the current principal balance of each Class and the Note Principal Balance) of
the Pre-Funded Amount (exclusive of investment earnings) remaining in the
Pre-Funding Account at the end of the Funding Period; provided that, if the
total amount of such Pre-Funded Amount at the end of the Pre-Funding Period is
$100,000 or less, such amount shall be applied exclusively to the Class of Class
A Certificates then entitled to receive distribution. Any reinvestment risk from
the prepayment
14
<PAGE> 17
of the Certificates from the Pre-Funded Amount at the end of the Funding Period
will be borne by the Certificateholders. See "Maturity and Prepayment
Considerations" and "Yield Considerations" herein.
The conveyance of Subsequent Receivables to the Issuer during the
Funding Period is subject to the conditions described herein under "The Trust
Property -- Eligibility Criteria." The ability of the Issuer to invest in
Subsequent Receivables is dependent upon the ability of ACC to originate through
Dealers a sufficient amount of motor vehicle retail installment sales contracts
that meet such eligibility criteria. The ability of the Seller to originate
sufficient Subsequent Receivables may be affected by a variety of social and
economic factors. Economic factors include interest rates, unemployment levels,
the rate of inflation and consumer perception of economic conditions generally.
The Seller has no basis to predict whether or the extent to which economic or
social factors will affect the availability of Subsequent Receivables.
Approximately $_________ of the Subsequent Receivables have already been
originated and identified for transfer to the Issuer by the Seller. There can be
no assurance that the Insurer will consent to the transfer of Subsequent
Receivables during the Pre-Funding Period. See "The Trust Property" herein.
RISK OF LOWER YIELD ASSOCIATED WITH MATURITY AND PREPAYMENT CONSIDERATIONS
All of the Receivables are prepayable at any time. The rate of
prepayments on the Receivables may be influenced by a variety of economic,
social and other factors, including the fact that an Obligor generally may not
sell or transfer the related Financed Vehicle securing a Receivable without the
consent of ACC. (For this purpose the term "prepayments" includes prepayments in
full, certain partial prepayments related to refunds of extended service
contract costs and unearned insurance premiums, liquidations due to default,
Cram Down Losses, as well as receipts of proceeds from physical damage,
repossession loss, credit life and credit accident and health insurance policies
and certain other Receivables repurchased for administrative reasons.) The rate
of prepayment on the Receivables may also be influenced by the structure of the
loan, the nature of the Obligors and the Financed Vehicles and servicing
decisions as discussed above. In addition, under certain circumstances, the
Seller and the Servicer are obligated to purchase Receivables pursuant to the
Sale, Servicing Agreement and Collateral Management Agreement as a result of
breaches of certain covenants. The Servicer also has the right, subject to
certain conditions, to purchase the Receivables when the Pool Balance is 10% or
less of the Original Pool Balance. Any reinvestment risks resulting from a
faster or slower incidence of prepayment of Receivables will be borne entirely
by the Certificateholders. See "Yield Considerations".
RISK OF LOSSES ASSOCIATED WITH NONPRIME LENDING
The Company's underwriting guidelines relate to a category of lending
commonly known as "nonprime", in which loans may be made to applicants who have
experienced certain adverse credit events but who meet certain other
creditworthiness tests. Such "nonprime" loans may experience higher rates of
delinquencies, repossessions and losses, especially under adverse economic
conditions, as compared with loans originated pursuant to a traditional lending
program. See "Risk Factors" -- in the Prospectus.
RISK OF LIMITED LIQUIDITY OR DELAYS IN PAYMENTS ASSOCIATED WITH BOOK-ENTRY
REGISTRATION
Issuance of the Certificates in book-entry form may reduce the
liquidity of such Securities in the secondary trading market since investors may
be unwilling to purchase Certificates for which they cannot obtain definitive
physical securities representing such Certificateholders' interests, except in
certain circumstances described herein.
Certificateholders may experience some delay in their receipt of
distributions of interest on and principal of the Certificates since
distributions may be required to be forwarded by the Trustee to DTC,
15
<PAGE> 18
CEDEL or Euroclear and, in such case, DTC, CEDEL or Euroclear, as the case may
be, will be required to credit such distributions to the accounts of its
participating organization which thereafter will be required to credit them to
the accounts of the Certificateholders either directly or indirectly through
indirect participants. See "The Certificates -- Book-Entry Registration." See
"Risk Factors" in the Prospectus.
16
<PAGE> 19
RISK OF LIMITED LIQUIDITY OR LOWER MARKET PRICE ASSOCIATED WITH A REDUCTION OR
WITHDRAWAL OF RATINGS OF THE CERTIFICATES
As a condition to the issuance of the Certificates, the Class A
Certificates will be rated at least "AAA" by S&P and "Aaa" by Moody's on the
basis of the issuance of the Policy by the Insurer. There is no assurance that a
rating will not be lowered or withdrawn by a rating agency based on a change in
circumstances deemed by such rating agency to adversely affect the related Class
of Class A Certificates. A rating is not a recommendation to purchase, hold or
sell the Certificates, in as much as such rating does not comment as to market
price or suitability for a particular investor. In the event that any rating
initially assigned to the Certificates were subsequently lowered or withdrawn
for any reason, including by reason of a downgrading of the security insurer's
claims-paying ability, no person or entity will be obligated to provide any
additional credit enhancement with respect to the Certificates. Any reduction or
withdrawal of a rating will have an adverse effect on the liquidity and market
price of the Certificates. See "Ratings of the Certificates."
RISK OF LIQUIDATION OF TRUST PROPERTY ASSOCIATED WITH EVENTS OF DEFAULT UNDER
THE INDENTURE
So long as no Insurer Default shall have occurred and be continuing,
neither the Indenture Trustee nor the Certificateholders may declare an Event of
Default under the Indenture. So long as an Insurer Default shall not have
occurred and be continuing, an Event of Default will occur only upon delivery by
the Insurer to the Indenture Trustee of notice of the occurrence of certain
events of default under the Insurance Agreement. Upon the occurrence of an Event
of Default under the Indenture (so long as an Insurer Default shall not have
occurred and be continuing), the Insurer will have the right, but not the
obligation, to cause the liquidation, in whole or in part, of the Trust
Property, which will result in redemption, in whole or in part, of the
Certificates. Following the occurrence of an Event of Default, the Indenture
Trustee will continue to submit claims under the Policy as necessary to enable
the Issuer to continue to make payments of the Scheduled Payments with respect
to the Class A Certificates.
RISK OF REDEMPTION OF THE CERTIFICATES ASSOCIATED WITH INSOLVENCY OF ACC FUNDING
The Trust Agreement provides that, in the event that ACC Funding
becomes insolvent, or is terminated or dissolved (a "Dissolution Event") and the
Owner Trustee is unable to obtain an opinion of counsel satisfactory to the
Insurer to the effect that the Issuer will not thereafter be an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes, the Issuer will effect redemption of the Certificates and the
Certificateholder will terminate the Issuer and cause the winding-up of the
affairs of the Issuer, unless within such 90 days the holders of a majority of
the Certificate Percentage Interest (as defined in the Trust Agreement) agree in
writing to continue the business of the Issuer and the Owner Trustee is able to
obtain the opinion of counsel described above.
RISK OF LOSSES ASSOCIATED WITH NON-PERFECTION OF SECURITY INTERESTS IN
CERTIFICATES OF TITLE FOR FINANCED VEHICLES AND WITH INSOLVENCY OF THE SELLER
In connection with the sale and assignment of the Receivables to the
Issuer, security interests in the Financed Vehicles which have been assigned by
the Seller to the Issuer will be assigned by the Issuer to the Indenture
Trustee. In most states, such an assignment is an effective conveyance of a
security interest without amendment of any security interest noted on a
vehicle's certificate of title, and the assignee succeeds thereby to the
assignor's rights as secured party. However, a security interest in a motor
vehicle registered in the states in which a majority of Financed Vehicles
purchased under ACC's finance programs are currently registered, may be
perfected only by causing such vehicle's certificate of title to be amended to
note the security interest of the secured party. Such notation of a secured
party's security interest is generally effected in such states by depositing
with the applicable state highway department, motor vehicle registrar or similar
state authority, the vehicle's certificate of
17
<PAGE> 20
title, an application containing the name and address of the secured party, and
the necessary registration fees.
Because of the administrative burden and expense that would be entailed
in doing so, the certificates of title for the Financed Vehicles will not
identify the Indenture Trustee or the Owner Trustee as the secured party, and
will not be deposited with the state highway department, motor vehicle registrar
or other state authorities in any state. In the absence of such action, the
Indenture Trustee and the Owner Trustee may not have a perfected security
interest in the Financed Vehicles and, in the event that another person obtains
a perfected security interest in a Financed Vehicle subsequent to the transfer
of the Receivables to the Issuer, such person might acquire rights in such
Financed Vehicle prior to the rights of the Issuer. The Seller will covenant in
the Pooling and Servicing Agreement to repurchase any Receivable if, on the
Closing Date a valid, subsisting and enforceable first priority security
interest has not been perfected (or is not in the process of perfection) in
favor of Accent Financial Services, OFL-A or the Seller, which will have been
validly assigned to the Issuer and the Indenture Trustee, in the related
Financed Vehicle. The Seller, as Servicer, will covenant in the Pooling and
Servicing Agreement to repurchase any Receivable if, after the Closing Date, a
valid, subsisting and enforceable first priority security interest in the name
of Accent Financial Services, OFL-A or the Seller is not maintained on behalf of
the Indenture Trustee in the related Financed Vehicle.
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to make it unlikely that the voluntary or involuntary
application for relief by the Seller under the United States Bankruptcy Code or
similar applicable state laws ("Insolvency Laws") will result in the
consolidation of the assets and liabilities of the Issuer with those of the
Seller. These steps include the creation of the Issuer as a separate,
limited-purpose entity pursuant to its trust certificate (the "Trust
Certificate"), the creation of separate limited purpose entities to hold the
ownership interest in the Issuer pursuant to the Articles of Incorporation of
each of ACC Receivables and ACC Funding which contain certain limitations
(including restrictions on the nature of the business of each of ACC Receivables
and ACC Funding) and a restriction on either's ability to commence a voluntary
case or proceeding under any Insolvency Law without the unanimous affirmative
vote of all of the members of its board of directors. The Certificates of
Incorporation of each of ACC Receivables and ACC Funding also include a
provision that requires each of ACC Receivables and ACC Funding to have at least
two directors who qualify under the Articles of Incorporation as "independent
directors."
The Seller has received the advice of counsel, concluding on the basis
of a reasoned analysis of analogous case law (although there is no precedent
based on directly similar facts) to the effect that, subject to certain facts,
assumptions and qualifications specified therein, a court would conclude that
the assets and liabilities of the Seller would not be consolidated with the
assets and liabilities of the Issuer, ACC Receivables or ACC Funding in the
event of the application of the federal bankruptcy laws to the Seller. If a
court concluded otherwise, or a filing were to be made under any Insolvency Law
by or against the Seller, or if an attempt were to be made to litigate any of
the foregoing issues, delays in the distributions on the Certificates (and
possible reductions in the amount of such distributions) could occur. The Issuer
is not expected to have any significant assets or sources of funds. In a case
decided in 1993 by the United States Court of Appeals for the Tenth Circuit,
such Circuit Court found that accounts sold prior to a bankruptcy should be
treated as part of the bankruptcy estate of the seller of such accounts. If the
Seller were to become a debtor in a bankruptcy proceeding and a court applied
the reasoning of the Circuit Court reflected in the case described above to
chattel paper, delays in payments to Certificateholders could occur or
reductions in the amounts of such payments could result.
The Seller intends that any transfer of Receivables to the Issuer will
constitute a sale, rather than a pledge of the Receivables to secure
indebtedness of the Seller. However, if the Seller were to become a debtor under
any Insolvency Laws, a creditor or trustee in bankruptcy of the Seller, as
debtor-in-possession, might argue that such sale of Receivables by the Seller
was a pledge of
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<PAGE> 21
Receivables rather than a sale, and if such position -- that the transfer of
Receivables was a pledge rather than a sale or otherwise should be treated as
part of the bankruptcy estate of the Seller -- were presented to or accepted by
a court, then delays in payments to Certificateholders could occur or reductions
in the amounts of such payments could result. In addition, if the transfer of
any Receivable is recharacterized as a pledge, then a tax lien, other
governmental lien, or other lien created by operation of law on the property of
the Seller may have priority over the Issuer's interest in such Receivable.
USE OF PROCEEDS
The net proceeds to be received by the Issuer from the sale of the
Certificates will be used to pay the Seller, the purchase price for the
Receivables, to make the deposits of the Pre-Funded Amount into the Pre-Funding
Account and to make the initial deposit into the Capitalized Interest Account.
19
<PAGE> 22
THE TRUST PROPERTY
GENERAL
The Trust Property will include, among other things, the following: (a)
motor vehicle retail installment sale contracts secured by new and used
vehicles, light trucks and vans; (b) all monies paid or payable thereunder after
the Initial Cutoff Date or the Subsequent Cutoff Date, as the case may be; (c)
such amounts as from time to time may be held in the Lockbox Account, the
Collection Account, the Pre-Funding Account, the Capitalized Interest Account
and the Class B Reserve Fund; (d) an assignment of the interest of the Seller in
the security interests in the Financed Vehicles granted by the Obligors pursuant
to the Receivables and any accessions thereto; (e) an assignment of the rights
of the Seller against Dealers under agreements between the Seller and such
Dealers (the "Dealer Agreements"); (f) an assignment of the right to receive
proceeds from claims on certain physical damage, credit life and disability
insurance policies covering the Financed Vehicles or the Obligors; (g) an
assignment of the rights of the Seller under the Receivables Purchase Agreement
and any Subsequent Receivables Purchase Agreements (as defined herein); (h) the
Receivables Files; and (i) all proceeds of the foregoing.
Most of the Initial Receivables were, and most of the Subsequent
Receivables were or will be, originated by Dealers in accordance with ACC's
requirements under agreements with Dealers for assignment to the Seller, have
been or will be so assigned, and evidence or will evidence the indirect
financing made available to the Obligors by the Seller. The remaining
Receivables were originated directly by the Seller or by Accent Financial
Services, a wholly owned subsidiary of ACC. Dealer Agreements may provide for
repurchase or recourse against the Dealer in the event of a breach of a
representation or warranty by the Dealer under a Dealer Agreement.
The "Pool Balance" at any time represents the aggregate principal
balance of the Receivables at the end of the preceding Monthly Period (plus the
amount, if any, then on deposit in the Pre-Funding Account on such date), after
giving effect to all payments received from Obligors and any Purchase Amounts to
be remitted by the Seller, for such Monthly Period and all losses, including
Cram Down Losses, realized on Receivables liquidated during such Monthly Period.
All of the Receivables not already owned by the Seller will be sold to
the Seller pursuant to a Receivables Purchase Agreement (the "Receivables
Purchase Agreement" and, in the case of Subsequent Receivables, a "Subsequent
Receivables Purchase Agreement") and by the Seller to the Issuer pursuant to the
Pooling and Servicing Agreement. One hundred percent (100%) of the Receivables
(as a percentage of the aggregate principal balance) comprising the property of
the Issuer consist of non-prime retail automobile installment sales contracts.
The Receivables originally were, or, with respect to the Subsequent Receivables,
were or will have been originated in the ordinary course of its business
pursuant to ACC's finance programs and underwriting standards. Approximately
$_________ by aggregate principal balance of non-prime retail automobile
installment sales contracts that will become Subsequent Receivables have already
been so originated by ACC.
ELIGIBILITY CRITERIA
The Receivables (including some Receivables that will become Subsequent
Receivables) were, or, with respect to the remaining Subsequent Receivables,
will have been, selected according to several criteria, including the following:
each Receivable (i) was originated in the United States, (ii) has a contractual
APR that equals or exceeds ___%, (iii) provides for level monthly payments which
provide interest at the APR and fully amortize the amount financed over an
original term no greater than 72 months, (iv) is not more than 30 days past due
as of the Initial Cutoff Date or Subsequent Cutoff Date, as the case may be, (v)
is attributable to the purchase of a new or used automobile, light duty truck,
20
<PAGE> 23
van or mini-van and (vi) as of the Initial Cutoff Date or the Subsequent Cutoff
Date, as the case may be, has a remaining term of not more than 72 months. No
selection procedures adverse to the Certificateholders or the Insurer were
utilized in selecting the Receivables to be conveyed to the Issuer.
The obligation of the Issuer to purchase Subsequent Receivables on a
Subsequent Transfer Date is subject to the condition that the Receivables owned
by the Issuer, including the Subsequent Receivables to be conveyed to the Issuer
on such Subsequent Transfer Date, meet the following criteria: (i) the Insurer
(so long as no Insurer Default shall have occurred and be continuing), in its
sole and absolute discretion shall have approved in writing the transfer of such
Subsequent Receivables to the Issuer; (ii) not more than ___% of the principal
balances of the Receivables owned by the Issuer relate to Financed Vehicles that
are used automobiles, light duty trucks, vans or mini-vans; (iii) the weighted
average APR of the Receivables owned by the Issuer is not less than ___%; (iv)
the weighted average remaining term to maturity of the Receivables on such
Subsequent Cutoff Date is not greater than 60 months; and (v) not more than
____% of the Receivables have Obligors whose mailing addresses are in Florida,
not more than ____% of the Receivables have Obligors whose mailing address is in
California, not more than ____% of the Receivables have obligors whose mailing
address is in Texas, and not more than ____% of the Receivables have Obligors
whose mailing address is in any one other state. As to clauses (ii), (iii) and
(iv) in the immediately preceding sentence, such criteria will be based on the
characteristics of the Initial Receivables on the Initial Cutoff Date and the
Receivables, including the Subsequent Receivables, on the related Subsequent
Cutoff Date, and as to clause (v) in the immediately preceding sentence, such
criteria will be based on the mailing addresses of the Obligors of the Initial
Receivables on the Initial Cutoff Date and the Subsequent Receivables on the
related Subsequent Cutoff Date.
Except for the criteria described in the preceding paragraphs, there
are no required characteristics for the Subsequent Receivables. Therefore,
following the transfer of Subsequent Receivables to the Issuer, the aggregate
characteristics of the entire pool of Receivables owned by the Issuer, including
the composition of the Receivables, the distribution by APR, the geographic
distribution and the distribution by remaining term to maturity described in the
following tables, may vary from those of the Initial Receivables.
21
<PAGE> 24
COMPOSITION OF THE INITIAL RECEIVABLES
Total Pool of Initial Receivables
Original Pool Balance
Number of Initial Receivables
Average Principal Balance(1)
Range of Principal Balances
Average Original Amount Financed(2)
Range of Original Amounts Financed
Weighted Average APR(3)
Range of APRs
Weighted Average Original Term(3)
Range of Original Terms
Weighted Average Remaining Term(3)
Range of Remaining Terms
Weighted Average Months of Seasoning(3)
Range of Months of Seasoning
- ----------
(1) Sum of Principal Balance divided by total number of loans.
(2) Sum of aggregate Amount Financed divided by total number of loans.
(3) Weighted by Principal Balance as of the Cutoff Date.
22
<PAGE> 25
DISTRIBUTION BY APR OF THE INITIAL RECEIVABLES
(as of the Cutoff Date)
<TABLE>
<CAPTION>
Percentage Number
Aggregate by of Percentage
Principal Principal Initial by
APR Range Balance Balance Receivables Number
--------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Total:
</TABLE>
- ----------
(1) Due to rounding, may not add up to 100.00%.
DISTRIBUTION BY INTEREST ACCRUAL METHOD
(as of the Cutoff Date)
<TABLE>
<CAPTION>
Aggregate Percentage of Number of
Interest Principal Aggregate Initial Percentage
Accrual Method Balance Principal Balance Receivables by Number
-------------- --------- ----------------- ----------- ----------
<S> <C> <C> <C> <C>
Rule of 78s
Total:
</TABLE>
- ----------
(1) Due to rounding, may not add up to 100.00%.
23
<PAGE> 26
STATE DISTRIBUTION BY MAILING ADDRESS OF OBLIGOR
(as of the Cutoff Date)
<TABLE>
<CAPTION>
Percentage
Aggregate by Number Percentage
Principal Principal of by
Location Balance Balance Receivables Number
-------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Alabama
Arizona
Arkansas
California
Colorado
Delaware
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Michigan
Mississippi
Missouri
Montana
Nebraska
Nevada
New Jersey
New Mexico
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Virginia
Washington
Washington DC
West Virginia
Total:
</TABLE>
- ----------
(1) Due to rounding, may not add up to 100.00%.
24
<PAGE> 27
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES
(as of the Cutoff Date)
<TABLE>
<CAPTION>
Percentage
Aggregate by Number Percentage
Remaining Term Principal Principal of by
Range Balance Balance Initial Receivables Number
-------------- --------- ---------- ------------------- ----------
<S> <C> <C> <C> <C>
21 to 23
24 to 29
30 to 35
36 to 41
42 to 47
48 to 53
54 to 59
60 to 65
66 to 71
72 to 72
Total:
</TABLE>
- ----------
(1) Due to rounding, may not add up to 100.00%.
As of the Initial Cutoff Date, approximately ____% of the total number
of the Initial Receivables owned by the Issuer, and approximately ____% by
principal balance of the Initial Receivables owned by the Issuer, relate to new
automobiles, light-duty trucks, vans and mini-vans. As of the Initial Cutoff
Date, approximately ____% of the total number of the Initial Receivables
included in the Trust Property, and approximately ____% by principal balance of
the Initial Receivables owned by the Issuer, relate to used automobiles and
light-duty trucks.
PAYMENTS ON THE RECEIVABLES
Each Receivable provides for the allocation of payments according to
(i) the simple interest method ("Simple Interest Receivables") or (ii) the "sum
of periodic balances" or "sum of monthly payments" method ("Actuarial
Receivables"). Except as otherwise described, the scheduled payment on each
Receivable is a fixed level monthly payment which will amortize the full amount
of the Receivable over its term assuming, in the case of each Simple Interest
Receivable, that the Obligor does not pay any installment after its due date.
Payments on Simple Interest Receivables will be applied first to
interest accrued through the date immediately preceding the date of payment and
then to unpaid principal. Accordingly, if an Obligor pays an installment before
its due date, the portion of the payment allocable to interest for the payment
period will be less than if the payment had been made on the due date, the
portion of the payment applied to reduce the principal balance will be
correspondingly greater, and the principal balance will be amortized more
rapidly than scheduled. Conversely, if an Obligor pays an installment after its
due date, the portion
25
<PAGE> 28
of the payment allocable to interest for the payment period will be greater than
if the payment had been made on the due date, the portion of the payment applied
to reduce the principal balance will be correspondingly less, and the principal
balance will be amortized more slowly than scheduled, in which case a larger
portion of the principal balance may be due on the final scheduled payment date.
An Actuarial Receivable provides for the payment by the Obligor of a
specified total amount of payments, payable in monthly installments on the
related due date, which total represents the principal amount financed and
finance charges in an amount calculated on the basis of a stated APR for the
term of such Receivable. The amount of each scheduled payment is calculated in
accordance with the Rule of 78s. Notwithstanding the foregoing, the rate at
which such amount of finance charges is earned and, correspondingly, the amount
of each scheduled payment allocated to reduction of the outstanding principal
balance of an Actuarial Receivable is calculated in accordance with the
actuarial method and all payments (other than partial prepayments) received by
the Servicer on or in respect of the Actuarial Receivables will be allocated
pursuant to the Pooling and Servicing Agreement on an actuarial basis.
Collections on an Actuarial Receivable made during a Collection Period will be
applied first, to the scheduled payment on such Actuarial Receivable, and
second, to any late fees accrued with respect to such Actuarial Receivable. Any
collections remaining shall be applied to reduce the principal balance of the
Actuarial Receivable.
REPURCHASE OBLIGATIONS
In connection with the sale of the Receivables, the security interests
in the Financed Vehicles securing the Receivables have been assigned by ACC to
the Issuer and by the Issuer to the Indenture Trustee. ACC, as Seller will be
obligated to repurchase any Receivable sold to the Issuer as to which a breach
has occurred as to the representation and warranty that a security interest in
the Financed Vehicle securing such Receivable has not been perfected (or was
not, at the time such representation and warranty was made, in the process of
perfection) in favor of Accent Financial Services, OFL-A or ACC, if such breach
will materially adversely affect such Receivable or the interests of the
Certificateholders or the Insurer and, if such failure or breach is not cured by
the last day of the first full calendar month following the discovery by or
notice to the breaching party of the breach.
The Pooling and Servicing Agreement provides that if the Seller
breaches certain representations and warranties relating to the Receivables and
the Financed Vehicles in a manner that materially and adversely affects any
Receivable or the interests of the Certificateholders or the Insurer or the
interests of the Issuer, the Seller shall, unless such breach shall have been
cured in all material respects, purchase such Receivable from the Issuer. The
Seller shall be obligated to repurchase such Receivable if its breach under the
Pooling and Servicing Agreement is not cured by the last day of the first full
calendar month following the discovery by or notice to the Seller of the breach.
The Pooling and Servicing Agreement also provides that if the Servicer
breaches certain of its servicing obligations under the Pooling and Servicing
Agreement (including, but not limited to its obligation to ensure that the
perfected security interest of Accent Financial Services, OFL-A or ACC in the
related Financed Vehicles is maintained) or certain other covenants with regard
to the Servicer, in each case only in a manner that materially and adversely
affects the interests of any Receivable or the interests of the
Certificateholders or the Insurer or the interests of the Issuer, the Servicer
shall, unless such breach shall have been cured in all material respects,
purchase such Receivable from the Issuer. The Servicer shall be obligated to
repurchase such Receivable if a Servicer breach under the Pooling and Servicing
Agreement is not cured by the last day of the first full calendar month
following the discovery by or notice to the Servicer of the breach.
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<PAGE> 29
MATURITY AND PREPAYMENT ASSUMPTIONS
All the Receivables are prepayable at any time, provided that an
Actuarial Receivable must be prepaid in full. If prepayments are received on the
Receivables, the actual weighted average life of the Receivables may be shorter
than the scheduled weighted average life (i.e., the weighted average life
assuming that payments will be made as scheduled and that no prepayments will be
made). (For this purpose, the term "prepayments" also includes liquidations due
to default, as well as receipt of proceeds from credit life, credit disability,
and casualty insurance policies.) Weighted average life means the average amount
of time during which each dollar of principal on a Receivable is outstanding.
The rate of prepayments on the Receivables may be influenced by a
variety of factors, including the fact that an Obligor may not transfer its
equity in a Financed Vehicle without the consent of ACC. Any reinvestment risks
resulting from a faster or slower incidence of prepayment of Receivables will be
borne by the Certificateholders. See also "Further Provisions of the Principal
Transaction Documents -- Termination" regarding the Servicer's option to
purchase all of the Receivables as of the last day of any month in which the
Pool Balance at the close of business on the Record Date is less than 10% of the
original balance of the Certificates. See also "Description of the Certificates
- - Mandatory Prepayment" regarding mandatory partial prepayment of the
Certificates in the event that any portion of the Pre-Funded Amount remains
after giving effect to the purchase of all Subsequent Receivables during the
Funding Period.
YIELD CONSIDERATIONS
Interest on the Receivables will be paid to the Certificateholders on
each Distribution Date in an amount equal to one-twelfth of the applicable Note
Interest Rate applied to the principal balance of the related Class of
Certificates on the last day of the preceding Collection Period. In the event of
prepayments on Receivables, Certificateholders will nonetheless be entitled to
receive interest for the full month on the Certificates. The Receivables have
different APRs, as set forth above. In all cases, however, the APR exceeds the
sum of (i) the Servicing Fee Rate and (ii) the applicable Note Interest Rate.
DELINQUENCY AND LOAN LOSS INFORMATION
Set forth below is certain information concerning ACC's delinquency and
loss experience with respect to its gross servicing portfolio of retail
installment sale contracts for new and used automobiles, light duty trucks, vans
and mini-vans acquired pursuant to its finance programs. Delinquency is
recognized on a contractual basis only. Installment payments must equal or
exceed 90% of the scheduled payment due for a contract to be considered current.
27
<PAGE> 30
ACC CONSUMER FINANCE CORPORATION
HISTORICAL DELINQUENCY
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended
3/31/97 12/31/96 9/30/96 6/30/96 3/31/96
Dollars Percent Dollars Percent Dollars Percent Dollars Percent Dollars Percent
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Amount Outstanding (1) $303,986 100% $251,751 100% $209,761 100% $172,562 100% 139,969 100%
Delinquencies (2)
31-60 Days 7,794 2.56% 7,870 3.13% 5,959 2.84% 4,609 2.67% 2,069 1.48%
61-90 Days 2,631 0.87% 2,341 0.93% 1,656 0.79% 1,255 0.73% 798 0.57%
Over 90 Days 766 0.25% 813 0.32% 451 0.22% 387 0.22% 193 0.14%
Subtotal: 11,191 3.68% 11,024 4.38% 8,066 3.85% $ 6,251 3.62% 3,060 2.19%
Skips 55 0.02% 394 0.16% 257 0.12% 60 0.03% 157 0.11%
Bankruptcies 1,372 0.45% 1,266 0.50% 832 0.40% 525 0.30% 610 0.43%
Repossessions on hand (3) 2,454 0.81% 2,216 0.88% 1,685 0.80% 1,369 0.99% 1,130 0.81%
-------- ---- ------- ---- ------- ---- ------ ---- ------ ----
Total Delinquencies and
Repossessions on hand $ 15,072 4.96% $14,900 5.92% $10,840 5.17% $8,205 4.75% $4,957 3.54%
<CAPTION>
Quarter Ended
12/31/95
Dollars Percent
<S> <C> <C>
Amount Outstanding (1) 117,539 100%
Delinquencies (2)
31-60 Days 3,064 2.61%
61-90 Days 1,014 0.86%
Over 90 Days 275 0.23%
Subtotal: 4,353 3.70%
Skips 180 0.15%
Bankruptcies 463 0.39%
Repossessions on hand (3) 861 0.73%
------ ----
Total Delinquencies and
Repossessions on hand $5,857 4.98%
</TABLE>
- ----------
(1) Amount outstanding is the net remaining principal balance.
(2) The period of delinquency is based on the number of days payments are
contractually past due.
(3) Amounts shown represent the remaining balance of installment loans which
have been repossessed, but not yet liquidated.
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<PAGE> 31
ACC CONSUMER FINANCE CORPORATION
HISTORICAL NET LOSS EXPERIENCE
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Quarter Quarter Quarter Quarter Quarter Quarter
Ended Ended Ended Ended Ended Ended
3/31/97 12/31/96 9/30/96 6/30/96 3/31/96 12/31/95
------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Principal amount outstanding (1)................. $303,986 $251,751 $209,761 $172,562 $139,969 $117,539
Average principal amount outstanding (2)......... $274,507 $232,617 $191,162 $156,266 $128,754 $108,784
Number of loans outstanding...................... 27,880 23,145 19,410 16,034 13,049 10,935
Average number of loans outstanding (2).......... 25,236 21,278 17,722 14,542 11,992 10,083
Number of repossessions (3)...................... 597 526 434 291 279 184
Principal amount of repossessions (3) (4)........ $6,703 $5,773 $4,729 $3,156 $2,984 $1,983
Number of repossessions as a percent of average
number of loans outstanding (5).............. 9.46% 9.89% 9.80% 8.00% 9.31% 7.30%
Principal amount of repossessions as a percent of
average principal amount outstanding (5)..... 9.77% 9.93% 9.90% 8.08% 9.27% 7.29%
Net losses excluding benefits of VSI Policy (6).. $4,109 $3,215 $2,442 $1,548 $1,636 $1,500
Net losses as a percent of average principal
amount outstanding (5)....................... 5.99% 5.53% 5.11% 3.96% 5.08% 5.52%
Net losses including benefits of VSI Policy (6).. $3,543 $2,945 $2,227 $1,329 $1,417 $1,233
Net losses as a percent of average principal amount
outstanding (5)(6)........................... 5.16% 5.06% 4.66% 3.40% 4.40% 4.53%
</TABLE>
- ----------
(1) Principal Amount Outstanding is the net remaining principal balance.
(2) For the three-month period ended December 31, 1996, average principle
outstanding as of the beginning and the end of each month during the
period. For prior periods, average of principle outstanding as of the
beginning and the end of the period presented.
(3) For the quarters ended after December 31, 1995, the numbers and amounts of
repossessions are net of reinstatements.
(4) Remaining principal balance at time of repossession.
(5) Annualized.
(6) Net Losses are net of recoveries and include remaining principal balance
at time of charge-off. In the case of repossession, net losses include the
remaining balance at the time of repossession less liquidation proceeds
(for disposed vehicles) or the NADA wholesale value (for vehicles
repossessed but not sold). Net losses do not include repossessions that
are less than 120 days delinquent and are not charged off.
The data presented in the above tables are for illustrative purposes
only. There is no assurance that ACC's delinquency, credit loss and repossession
experience with respect to automobile, light duty truck, van and mini-van
installment sale contracts in the future, or the experience of the Issuer with
respect to the Receivables, will be similar to that set forth above. Losses and
delinquencies are affected by, among other things, general and regional economic
conditions and the supply of and demand for automobiles, light duty trucks, vans
and mini-vans.
INSURANCE
In addition to the physical damage insurance policies maintained by the
borrowers naming Accent Financial Services or OFL-A as the loss payee, ACC
maintains VSI Insurance on all automobile loans. This policy was put in place
effective January 1, 1995 and covers the entire portfolio. This protects ACC's
interest in the collateral against uninsured physical damage, filing errors and
omissions.
ACC maintains fidelity bond coverage insuring against losses through
wrongdoing of its officers, employees and agents.
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<PAGE> 32
THE TRUST
GENERAL
The Trust will be formed in accordance with the laws of the State of
Delaware, pursuant to the Pooling and Servicing Agreement, solely for the
purpose of effectuating the transactions described herein. Prior to formation,
the Trust will have had no assets or obligations and no operating history. Upon
formation, the Trust will not engage in any business activity other than
acquiring and holding the Receivables and, during the Funding Period, the
Pre-Funded Amount, issuing the Certificates and distributing payments thereon.
As described under "Description of the Trust Documents - Servicing Compensation
and Trustee's Fees, a portion of the monthly collections with respect to the
Receivables will be paid to the Servicer as servicing compensation. All other
expenses of the Trust will be paid as provided in the Pooling Agreement.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement to be entered into by the Servicer, the Seller, and the Trustee. The
Trustee will provide a copy of the Pooling and Servicing Agreement to subsequent
Certificateholders without charge on written request addressed to its Corporate
Trust Department at________________________.
The following summary describes certain terms of the Pooling and
Servicing Agreement, does not purport to be complete and is subject to and
qualified in its entirety by reference to the Pooling and Servicing Agreement.
Wherever provisions of the Pooling and Servicing Agreement are referred to, such
provisions are hereby incorporated herein by reference.
GENERAL
The obligations evidenced by the Certificates are recourse to the
assets of the Trust only and are not recourse to the Seller, the Servicer, the
Trustee, or any other Person. The Trustee will agree in the Pooling and
Servicing Agreement and in the Certificates to pay to the Certificatholders (i)
an amount of principal equal to the Initial Principal Balance and (ii) interest
due on the Certificates, in each case at the times, from the sources and on the
terms and conditions set forth in the Pooling and Servicing Agreement and in the
Certificates.
The Certificates will be issued in fully registered form only, as
authenticated by the Trustee. Each Certificate will evidence [$1,000,000] or
more of the Initial Principal Balance.
The "Percentage Interest" owned by a Certificateholder will be
expressed, for voting and certain other purposes under the Pooling Agreement, as
the percentage obtained by dividing the denomination representing the Percentage
Interest of the related Certificate by the Initial Certificate Principal Amount.
The Certificates are transferable and exchangeable through the Trustee at its
Corporate Trust Department in ____________________. No service charge will be
made for any registration of transfer or exchange of Certificates, but a sum
sufficient to cover any tax or other governmental charge may be required to be
paid by the Certificateholder.
Payments on the Certificates are required to be made by the Trustee on
each Payment Date, to persons in whose names Certificates are registered as of
the last day of the immediately preceding the calendar month (the "Record
Date").
The First Payment Date for distributions to the Certicateholders will
be ____________, 199__. Payments are required to be made by the Trustee, by
check mailed or, if requested by the Certificateholder, by wire transfer of
immediately available funds, to Certificateholders entitled thereto at the
address appearing on the Certificate register on the Record Date.
30
<PAGE> 33
MANDATORY REDEMPTION
Each Class of Certificates will be redeemed in part on the Mandatory
Redemption Date in the event that any portion of the Pre-Funded Amount remains
on deposit in the Pre-Funding Account at the end of the Funding Period. The
aggregate principal amount of each Class of Certificates to be redeemed will be
an amount equal to such Class's pro rata share (based on the respective current
principal amount of each Class of Certificates) of the remaining Pre-Funded
Amount on such date (such Class's "Note Prepayment Amount"). Approximately
$_________ already been originated and identified for transfer to the Issuer by
the Seller.
OPTIONAL REDEMPTION
The Class A Certificates and the Class B Certificates, to the extent
still outstanding, may be redeemed in whole, but not in part, on any
Distribution Date on which the Servicer exercises its option to purchase the
Receivables (with the consent of the Insurer, if a claim has previously been
made under the Policy or if such purchase would result in a claim under the
Policy or if such purchase would result in any amount owing to the Insurer
remaining unpaid). The Servicer may purchase the Receivables when the Pool
Balance has declined to 10% or less of the Original Pool Balance. Such
redemption will affect early retirement of the Certificates of such Classes. The
redemption price will be equal to the unpaid principal amount of the
Certificates of each such Class, plus accrued and unpaid interest thereon (the
"Redemption Price").
EVENTS OF DEFAULT
Unless an Insurer Default shall have occurred and be continuing,
"Events of Default" under the Indenture will consist of those events defined in
the Insurance Agreement as Insurance Agreement Indenture Cross-Defaults, and
will constitute an Event of Default under the Indenture only if the Insurer
shall have delivered to the Indenture Trustee, and not rescinded, a written
notice specifying that any such Insurance Agreement Indenture Cross-Defaults
constitutes an Event of Default under the Indenture. "Insurance Agreement
Indenture Cross-Defaults" consist of: (i) a demand for payment being made under
the Policy; (ii) certain events of bankruptcy, insolvency, receivership or
liquidation of the Issuer; (iii) the Issuer becoming taxable as an association
(or publicly traded partnership) taxable as a corporation for federal or state
income tax purposes; (iv) on any Distribution Date, the sum of the Available
Funds with respect to such Distribution Date plus the amount (if any) available
from certain collateral accounts maintained for the benefit of the Insurer being
less than the sum of the amounts described in clauses (a)-(e) under "Description
of the Trust Documents -- Distributions" herein; and (v) any failure to observe
or perform in any material respect any other covenants or agreements in the
Indenture, or any representation or warranty of the Issuer made in the Indenture
or in any certificate or other writing delivered pursuant thereto or in
connection therewith proving to have been incorrect in any material respect when
made, and such failure continuing or not being cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was incorrect
not having been eliminated or otherwise cured, for 30 days after the giving of
written notice of such failure or incorrect representation or warranty to the
Issuer and the Indenture Trustee by the Insurer.
Upon the occurrence of an Event of Default, so long as an Insurer
Default shall not have occurred and be continuing, the Insurer will have the
right, but not the obligation, to cause the Trust Collateral Agent to liquidate
the Trust Property in whole or in part, on any date or dates following the
acceleration of the Class A Certificates due to such Event of Default as the
Insurer, in its sole discretion, shall elect, and to deliver the proceeds of
such liquidation to the Indenture Trustee for distribution in accordance with
the terms of the Indenture. The Insurer may not, however, cause the Trust
Collateral Agent to liquidate the Trust Property in whole or in part if the
proceeds of such liquidation would not be sufficient to pay all outstanding
principal of and accrued interest on the Class A Certificates, unless such Event
of Default arose from a claim being made on the Policy or from certain events of
bankruptcy, insolvency, receivership or liquidation of the Issuer. Following the
occurrence of any Event of Default, the Indenture Trustee and the Owner Trustee
will continue to submit claims as necessary under the Policy for any shortfalls
in the Scheduled Payments on the Class A Certificates. Following any Event of
Default under the Indenture, the Insurer in its sole discretion may elect to pay
all or any portion of the outstanding amount of the Class A Certificates, plus
accrued interest thereon. See "The Policy" herein.
31
<PAGE> 34
THE INSURER
The following information has been obtained from _________________ (the
"Insurer") and has not been verified by the Seller, the Servicer or ___________.
No representation or warranty is made by the Seller, the Servicer or _________
with respect thereto.
THE POLICY
Simultaneously with the issuance of the Certificates, the Insurer will
deliver the Policy to the Trustee for the benefit of each Class A
Certificateholder. Under the Policy, the Insurer will unconditionally and
irrevocably guarantee to the Trustee for the benefit of each Class A
Certificateholder the full and complete payment of (i) Scheduled Payments (as
defined below) on the Class A Certificates and (ii) the amount of any Scheduled
Payment which subsequently is avoided in whole or in part as a preference
payment under applicable law.
"Scheduled Payments" means payments which are scheduled to be made on
the Class A Certificates during the term of the Policy in accordance with the
original terms of the Class A Certificates when issued and without regard to any
subsequent amendment or modification of the Class A Certificates that has not
been consented to by the Insurer, which "Scheduled Payments" are (i) the Class A
Certificateholders' Interest Distributable Amount and (ii) the Class A
Certificateholders' Principal Distributable Amount with respect to a
Distribution Date; Scheduled Payments do not include payments which become due
on an accelerated basis as a result of (a) a default by the Issuer, (b) an
election by the Issuer to pay principal on an accelerated basis, (c) the
occurrence of an Event of Default under the Indenture or (d) any other cause,
unless the Insurer elects, in its sole discretion, to pay in whole or in part
such principal due upon acceleration, together with any accrued interest to the
date of acceleration. In the event the Insurer does not so elect, the Policy
will continue to guarantee Scheduled Payments due on the Class A Certificates in
accordance with their original terms. Scheduled Payments shall not include (x)
any portion of a Class A Certificateholders' Interest Distributable Amount due
to Class A Certificateholders because the appropriate notice and certificate for
payment in proper form was not timely Received (as defined below) by the
Insurer, (y) any portion of a Class A Certificateholders' Interest Distributable
Amount due to Class A Certificateholders representing interest on any Class A
Certificateholders' Interest Carryover Shortfall, or (z) any Class A Note
Prepayment Amounts unless, in each case, the Insurer elects, in its sole
discretion, to pay such amount in whole or in part. Scheduled Payments shall not
include, nor shall coverage be provided under the Policy in respect of, any
taxes, withholding or other charge imposed by any governmental authority due in
connection with the payment of any Scheduled Payment to a Class A
Certificateholder.
Payment of claims on the Policy made in respect of Scheduled Payments
will be made by the Insurer following Receipt by the Insurer of the appropriate
notice for payment on the later to occur of (i) 12:00 noon, New York City time,
on the third Business Day (as defined below) following Receipt of such notice
for payment, and (ii) 12:00 noon, New York City time, on the date on which such
payment was due on the Class A Certificates.
If payment of any amount avoided as a preference under applicable
bankruptcy, insolvency, receivership or similar law is required to be made under
the Policy, the Insurer shall cause such payment to be made on the later of (a)
the date when due to be paid pursuant to the Order referred to below or (b) the
first to occur of (i) the fourth Business Day following Receipt by the Insurer
from the Trustee of (A) a certified copy of the order (the "Order") of the court
or other governmental body which exercised jurisdiction to the effect that the
Class A Certificateholder is required to return principal or interest paid on
the Class A Certificates during the term of the Policy because such payments
were avoidable as preference payments under applicable bankruptcy law, (B) a
certificate of the Class A Certificateholder that the Order has been entered and
is not subject to any stay and (C) an assignment duly executed and delivered by
the Class A Certificateholder, in such form as is reasonably required by the
Insurer and provided to the Class A Certificateholder by the Insurer,
irrevocably assigning to the Insurer all rights and claims of the Class A
Certificateholder relating to or arising under the Class A Certificates against
the Issuer or otherwise with respect to such preference payment, or (ii) the
date of Receipt (as defined below) by the Insurer from the Trustee of the items
referred to in clauses (A), (B) and (C) above if, at least four Business Days
prior to such date of Receipt, the Insurer shall have received written notice
from the Trustee that such items were to be delivered on such date and such date
was specified in such notice. Such payment shall be disbursed
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<PAGE> 35
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order and not to the Trustee or any Class A Certificateholder
directly (unless a Class A Certificateholder has previously paid such amount to
the receiver, conservator, debtor-in-possession or trustee in bankruptcy named
in the Order, in which case such payment shall be disbursed to the Trustee for
distribution to such Class A Certificateholder upon proof of such payment
reasonably satisfactory to the Insurer). In connection with the foregoing, the
Insurer shall have the rights provided in the Indenture.
The terms "Receipt" and "Received" with respect to the Policy shall
mean actual delivery to the Insurer and to its fiscal agent, if any, prior to
12:00 noon, New York City time, on a Business Day; delivery either on a day that
is not a Business Day or after 12:00 noon, New York City time, shall be deemed
to be Receipt on the next succeeding Business Day. If any notice or certificate
given under the Policy by the Trustee is not in proper form or is not properly
completed, executed or delivered, it shall be deemed not to have been Received,
and the Insurer or its fiscal agent shall promptly so advise the Trustee, and
the Trustee may submit an amended notice.
Under the Policy, "Business Day" means any day other than (i) a
Saturday or Sunday or (ii) a day on which banking institutions in Wilmington,
Delaware, the City of New York or Minneapolis, Minnesota or any other location
of any successor Servicer or Trustee are authorized or obligated by law,
executive order or governmental decree to be closed.
The Insurer's obligations under the Policy in respect of Scheduled
Payments shall be discharged to the extent funds are transferred to the Trustee
as provided in the related Policy whether or not such funds are properly applied
by the Trustee.
The Insurer shall be subrogated to the rights of each Class A
Certificateholder to receive payments of principal and interest to the extent of
any payment by the Insurer under the Policy.
Claims under the Policy constitute direct, unsecured and unsubordinated
obligations of the Insurer ranking not less than pari passu with other unsecured
and unsubordinated indebtedness of the Insurer for borrowed money. Claims
against the Insurer under the Policy and claims against the Insurer under each
other financial guaranty insurance policy issued thereby constitute pari passu
claims against the general assets of the Insurer. The terms of the Policy cannot
be modified or altered by any other agreement or instrument, or by the merger,
consolidation or dissolution of the Issuer. The Policy may not be canceled or
revoked prior to distribution in full of all Scheduled Payments with respect to
the Class A Certificates. The Policy is not covered by the property/casualty
insurance security fund specified in Article 76 of the New York Insurance Law.
The Policy is governed by the laws of the State of New York.
DESCRIPTION OF THE TRUST DOCUMENTS
The following summary describes certain terms of the Receivables
Purchase Agreement and any Subsequent Receivables Purchase Agreement (together,
the "Receivables Purchase Agreements"), the Pooling and Servicing Agreement, any
Subsequent Transfer Agreement (together, the "Trust Documents"). Forms of the
Trust Documents have been filed as exhibits to the Registration Statement. The
summary does not purport to be complete and is subject to, and qualified in its
entirety by reference to, all the provisions of the Trust Documents. The
following summary supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the Trust
Documents set forth in the Prospectus.
SALE AND ASSIGNMENT OF RECEIVABLES.
On or prior to the Closing Date, or, with respect to Subsequent
Receivables, the related Subsequent Transfer Date, the Seller will enter into a
Pooling and Servicing Agreement with the Issuer pursuant to which the Seller
will, on or prior to such Closing Date, or, with respect to Subsequent
Receivables, the related Subsequent Transfer Date, sell and assign to the
Issuer, without recourse, its entire interest in and to the related Receivables,
including its security interest in the Financed Vehicles securing such
Receivables and its rights to receive all payments on, or proceeds with respect
to, such Receivables to the extent paid or payable after the applicable Cutoff
Date. Pursuant to the Pooling and Servicing Agreement, the Seller will agree
that, upon the occurrence of a breach of a representation or warranty under the
Trust
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Documents with respect to any of the Receivables, the Issuer and certain other
parties will be entitled to require the Seller to repurchase such Receivables
from the Issuer. Such rights of the Issuer under the Pooling and Servicing
Agreement will constitute part of the property of the Issuer and may be enforced
directly by the Owner Trustee and the Insurer. In addition, the Issuer will
pledge such rights to the Indenture Trustee as collateral for the Certificates,
and such rights may be enforced directly by the Indenture Trustee.
Each Receivable transferred by the Seller to the Issuer will be
identified in a schedule appearing as an exhibit to the Trust Documents (the
"Schedule of Receivables").
ACCOUNTS
Each Obligor will be instructed to make payments with respect to the
Receivables after the Cutoff Date directly to one or more post office boxes or
other mailing locations (each, a "Lockbox") maintained by the Lockbox Bank, and
a segregated account will be established and maintained with a bank or banks
acceptable to the Insurer, in the name of the Indenture Trustee for the benefit
of the Certificateholders, into which all payments made from Obligors to a
Lockbox on or with respect to the Receivables must be deposited within one
business day of receipt (the "Lockbox Account"). The Issuer will also establish
and maintain with the Indenture Trustee one or more accounts (the "Collection
Account"), in the name of the Indenture Trustee on behalf of the
Certificateholders and the Insurer, into which all amounts previously deposited
in the Lockbox Account in respect of the Receivables will be transferred within
two business days of deposit in the Lockbox Account. The Collection Account will
be maintained with the Indenture Trustee so long as the Indenture Trustee's
deposits have a rating acceptable to the Insurer and the Rating Agencies. If the
deposits of the Indenture Trustee or its corporate parent no longer have such
acceptable rating, the Servicer shall, with the Indenture Trustee's assistance
as necessary, cause such Accounts to be moved within 30 days to a bank whose
deposits have such rating.
The Trustee will also establish and maintain an account, in its own
name for the benefit of the Indenture Trustee, on behalf of the Class A
Certificateholders and the Insurer in which amounts released from the Collection
Account for distribution to Class A Certificateholders will be deposited and
from which all distributions to Class A Certificateholders will be made (the
"Class A Note Distribution Account"). The Trustee will also establish and
maintain an account, in its own name for the benefit of the Indenture Trustee,
on behalf of the Class B Certificateholders in which amounts released from the
Collection Account for distribution to Class B Certificateholders will be
deposited and from which all distributions to Class B Certificateholders will be
made (the "Class B Note Distribution Account"). The Trustee will also establish
and maintain an account, on behalf of the Certificateholders, in which amounts
released from the Collection Account for distribution to the Issuer will be
deposited and from which all distributions to Certificateholders will be made
(the "Certificate Distribution Account").
On the Closing Date, a cash amount funded from the proceeds of the sale
of the Certificates equal to approximately $_________ (the "Initial Pre-Funded
Amount") will be deposited in an account (the "Pre-Funding Account") which will
be established with the Trustee and used solely to pay the Seller the Purchase
Price for Subsequent Receivables. The "Funding Period" is the period from the
Closing Date until the earliest of(i) the date on which the amount on deposit in
the Pre-Funding Account is less than $100,000, (ii) the date on which an Event
of Default under the Indenture or a Servicer Termination Event occurs under the
Pooling and Servicing Agreement, or (iii) the Distribution Date in _________.
The Initial Pre-Funded Amount, as reduced from time to time during the Funding
Period by the amount thereof used to purchase Subsequent Receivables in
accordance with the Pooling and Servicing Agreement, is referred to herein as
the "Pre-Funded Amount." Monies on deposit in the Pre-Funding Account will not
be available to cover losses on or in respect of the Receivables.
The Seller expects that the Pre-Funded Amount will be reduced to less
than $100,000 on or before the end of the Funding Period, although no assurance
can be given in this regard. Approximately $_________ of the Subsequent
Receivables have already been originated and identified for transfer to the
Issuer by the Seller. There can be no assurance that the Insurer will consent to
the transfer of Subsequent Receivables during the Pre-Funding Period. Any
Pre-Funded Amount remaining at the end of the Funding Period will be payable to
the Certificateholders as described herein. The "Mandatory Redemption Date" is
the earlier of (i) the Distribution Date in _________ or (ii) if the last day of
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the Funding Period occurs on or prior to the Determination Date (as defined
herein) occurring in _________, the Distribution Date relating to such
Determination Date.
On the Closing Date, a cash amount shall be deposited in an account
(the "Capitalized Interest Account") which will be established with the Trustee.
The amount, if any deposited in the Capitalized Interest Account will be applied
on the Distribution Dates occurring in _________ to fund an amount (the "Monthly
Capitalized Interest Amount") equal to the amount of interest accrued for each
such Distribution Date at the weighted average Interest Rates on the portion of
the Certificates having a principal balance in excess of the principal balances
of the Receivables (which portion will equal the Pre-Funded Amount). Any amounts
remaining in the Capitalized Interest Account on the Mandatory Redemption Date
and not used for such purposes are required to be paid directly to the Issuer on
such date. See "Description of the Trust Documents -- Accounts."
All such Accounts shall be Eligible Deposit Accounts (as defined in the
Indenture) acceptable to the Insurer (so long as no Insurer Default has occurred
and is continuing).
SERVICING COMPENSATION AND INDENTURE TRUSTEES' FEES
Each month the Servicer will receive a fee for servicing the
Receivables (the "Servicer Fee") equal to (a) the product of one-twelfth of
3.00% (the "Servicing Fee Rate") and the Pool Balance outstanding at the
beginning of the calendar month immediately preceding such Distribution Date
(the "Servicing Fee") plus (b) a supplemental servicing fee (the "Supplemental
Servicing Fee") equal to (i) any late fees, prepayment fees, liquidation fees
and other administrative fees and expenses collected during such month, plus
(ii) the net realized earnings on all investments of funds deposited in the
Collection Account during such month. So long as ACC is the Servicer, a portion
of the Servicing Fee will be payable to the Backup Servicer for agreeing to
stand by as successor Servicer and for performing certain other functions.
Payments by or on behalf of Obligors will be allocated to scheduled payments,
late fees and other charges and principal and interest in accordance with the
Servicer's normal practices and procedures.
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of automotive receivables as an agent for
their beneficial owner, including collecting and posting all payments,
responding to inquiries of Obligors on the Receivables, investigating
delinquencies, reporting tax information to Obligors, paying costs related to
disposition of defaulted accounts, and policing the collateral. The Servicing
Fee also will compensate the Servicer for administering the Receivables,
including accounting for collections and furnishing monthly and annual
statements to the Issuer and the Insurer with respect to distributions and
generating federal income tax information. The Servicing Fee also will reimburse
the Servicer for certain taxes, accounting fees, outside auditor fees, data
processing costs and other costs incurred in connection with administering the
Receivables and for payment of the fees of the Backup Servicer.
On each Distribution Date, the Indenture Trustee is entitled to
receive a fee for its services as Indenture Trustee during the prior Monthly
Period in an amount agreed upon by the Indenture Trustee and the Servicer.
CERTAIN ALLOCATIONS
On each Determination Date, the Servicer will be required to deliver
the Servicer's Certificate to the Indenture Trustee and the Insurer specifying,
among other things, the amount of aggregate collections on the Receivables and
the aggregate Purchase Amount of Receivables to be purchased by the Seller, the
Servicer, all with respect to the preceding Monthly Period.
On each Determination Date the Indenture Trustee will (based solely on
the information contained in the Servicer's Certificate delivered on the related
Determination Date) deliver to the Trustee, the Insurer and the Servicer a
Deficiency Notice specifying the Deficiency Claim Amount, if any, for such
Distribution Date. Such Deficiency Notice will direct the Trustee to remit such
Deficiency Claim Amount from amounts on deposit in certain collateral accounts
maintained for the benefit of the Insurer for deposit in the Collection Account.
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DISTRIBUTIONS
On each Distribution Date, the Servicer is required to instruct the
Indenture Trustee to make the following distributions in the following order of
priority:
1. From the Distribution Amount, to the Servicer, the Servicing
Fee for the related Monthly Period, any Supplemental Servicing
Fees for such month and certain other amounts relating to
mistaken deposits, postings or checks returned for
insufficient funds to the extent the Servicer has not
reimbursed itself in respect of such amount or to the extent
not retained by the Servicer.
2. From the remaining Distribution Amount, to any Lockbox Bank or
other relevant local bank, the Indenture Trustee, Custodian
and Backup Servicer, (including the Indenture Trustee if
acting in any such additional capacity), any accrued and
unpaid trustees' fees and any accrued and unpaid fees (in each
case, to the extent such fees have not been previously paid by
the Servicer).
3. From the remaining Distribution Amount plus the related
portion of any Policy Claim Amount, if any, to the Class A
Note Distribution Account, the Class A Certificateholders'
Interest Distributable Amount.
4. From the remaining Distribution Amount plus the related
portion of any Policy Claim Amount, if any, to the Class A
Note Distribution Account, the Class A Certificateholders'
Principal Distributable Amount, to be distributed as described
under "Description of the Certificates -- Payments of
Principal."
5. From the remaining Distribution Amount, to the Insurer, the
Premium Amount then due it and any amounts owing under the
Insurance Agreement.
6. From the Available Funds plus amounts available to be
withdrawn from the Class B Reserve Fund, to the Class B Note
Distribution Account, the Class B Certificateholders' Interest
Distributable Amount.
7. From Available Funds to the Trustee for deposit in accordance
with the terms of the Spread Account Agreement to fund certain
reserve accounts maintained for the benefit of the Insurer,
until such reserve accounts are funded at their required
level.
8. From Available Funds, plus amounts available to be withdrawn
from the Class B Reserve Fund in excess of the Floor Amount,
to the Class B Note Distribution Account, the Class B
Certificateholders' Principal Distributable Amount.
9. From Available Funds, together with any amounts released from
the Class B Reserve Fund or the Spread Account, all remaining
funds to the Class B Certificateholders to reduce the
principal balance of the Class B Certificates until the
principal balance of the Class B Certificates is reduced to
zero.
10. From Available Funds, to the Certificate Distribution Account,
or as otherwise specified in the Trust Documents, any
remaining funds.
11. From the Certificate Distribution Account to the
Certificateholders.
In the event that the Servicer's Certificate indicates that the
Distribution Amount will be insufficient on any Distribution Date to cover the
distributions required pursuant to clauses (a) through (e) above on such
Distribution Date, the Indenture Trustee shall furnish to the Insurer no later
than 12:00 noon New York City time on the related Draw Date a completed notice
of claim in the amount of the Policy Claim Amount. Amounts paid by the Insurer
pursuant to any such notice of claim shall be deposited by the Insurer into the
Class A Note Distribution Account for payment to Class A Certificateholders on
the related Distribution Date.
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STATEMENTS TO CERTIFICATEHOLDERS
On or prior to each Distribution Date, the Indenture Trustee will be
required to forward a statement to the Certificateholders on such Distribution
Date. Such statements will be based on the information in the related Servicer's
Certificate setting forth certain information required under the Trust
Documents. Each such statement to be delivered to Certificateholders will
include the following information as to the Certificates with respect to such
Distribution Date or the period since the previous Distribution Date, as
applicable:
(i) the amount of the distribution allocable to interest on
or with respect to each Class of the Certificates:
(ii) the amount of the distribution allocable to principal
with respect to each Class of the Certificates;
(iii) the amount of the distribution on the Class A
Certificates payable pursuant to a claim on the Policy;
(iv) the aggregate outstanding principal amount for each
Class of Certificates, in each case, after giving effect to all
payments reported under (ii) above on such date;
(v) the Class A Certificateholders' Interest Carryover
Shortfall, the Class B Certificateholders' Interest Carryover
Shortfall, the Class A Certificateholders' Principal Carryover
Shortfall, the Class B Certificateholders' Principal Carryover
Shortfall, if any, and the change in such amounts from the preceding
statement;
(vi) the amount of the Servicing Fee paid to the Servicer
with respect to the related Monthly Period;
(vii) for each such date during the Funding Period, the
remaining Pre-Funded Amount, the amount in the Pre-Funding Account and
the amount remaining in the Capitalized Interest Account; and
(viii) for the final Subsequent Transfer Date, the amount of
any remaining Pre-Funded Amount that has not been used to fund the
purchase of Subsequent Receivables and is being passed through as
payments of principal of the Certificates.
Each amount set forth pursuant to subclauses (i) through (vi) with
respect to Certificates will be expressed as a dollar amount per $1,000 of the
initial principal amount of the Certificates, as applicable.
Unless and until Definitive Certificates or Definitive Certificates are
issued, such reports will be sent on behalf of the Trust to Cede & Co., as
registered holder of the Certificates and the nominee of DTC.
Within the required period of time after the end of each calendar year,
the Indenture Trustee will furnish to each person who at any time during such
calendar year was a Certificateholder or Certificateholder, a statement as to
the aggregate amounts of interest and principal paid to such Certificateholder
or Certificateholder, information regarding the amount of servicing compensation
received by the Servicer and such other information as ACC deems necessary to
enable such Certificateholder or Certificateholder to prepare its tax returns.
SPREAD ACCOUNT
On the Closing Date, the Spread Account will be established
with________________________________ as Trustee for the benefit of the Class A
Certificateholders, and the Insurer pursuant to a certain Spread Account
Agreement Supplement dated as of the Closing Date (the "Spread Account
Agreement"). The Spread Account will not be subject to the lien created by the
Pooling and Servicing Agreement. On each Distribution Date, the Trustee will be
required to deposit additional amounts into the Spread Account from payments on
the Receivables as described under "Description of the Certificates
- -Distributions" above. Amounts, if any, on deposit in the Spread Account will be
available to the extent provided in the Spread Account Agreement to fund any
Deficiency Claim Amount otherwise required to be made on a Distribution Date.
The aggregate amount required to be on deposit at any time in the Spread Account
(the "Specified Spread Account Requirement") will be determined in accordance
with the Insurance Agreement and the Spread Account
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Agreement. The Specified Spread Account Requirement may increase or decrease
over time as a result of floors, caps and triggers set forth in the Insurance
Agreement or the Spread Account Agreement, even if no withdrawals are made from
the Spread Account. Amounts on deposit in the Spread Account on any Distribution
Date (after giving effect to all distributions made on such Distribution Date)
in excess of the Specified Spread Account Requirement for such Distribution Date
will be distributed as additional payments in reduction of the principal balance
of the Class B Certificates and after such principal balance has been reduced to
zero will be released to the Issuer. Amounts on deposit or to be deposited in
the Spread Account may be distributed to persons other than the Insurer or the
Certificateholders without the consent of the Certificateholders.
Amounts held from time to time in the Spread Account will continue to
be held for the benefit of holders of the Class A Certificates and the Insurer.
Funds in the Spread Account will be invested in Eligible Investments.
In addition, the Issuer, the Insurer and the Trustee may amend the
Spread Account Agreement (and any provisions in the Insurance Agreement relating
to the Spread Account) in any respect (including, without limitation, reducing
or eliminating the Specified Spread Account Requirement and/or reducing or
eliminating the funding requirements of the Spread Account or permitting such
funds to be used for the benefit of persons other than Certificateholders)
without the consent of, or notice to, the Indenture Trustee or the
Certificateholders. The Trustee shall not withhold or delay its consent with
respect to any amendment that does not adversely affect the Trustee in its
individual capacity. Notwithstanding any reduction in or elimination of the
funding requirements of the Spread Account or the depletion thereof, the Insurer
will be obligated on each Distribution Date to fund for the benefit of the Class
A Certificateholders the full amount of each Scheduled Payment otherwise
required to be made on such Distribution Date in accordance with the terms of
the Policy. If the Insurer breaches its obligations, any losses on the
Receivables will be borne by such Class A Certificateholders.
The amount required to be on deposit in the Spread Account may increase
or decrease without Certificateholder consent and there can be no assurance that
the amounts on deposit in the Spread Account will reach the Specified Spread
Account Requirement since the existence of the Spread Account and any other term
or provision in the Spread Account Agreement regarding the Spread Account may be
amended by the Insurer without Certificateholder consent. Consequently, the
Class A Certificateholders should not rely on amounts on deposit in or to be
deposited to the Spread Account in evaluating the likelihood of receiving
repayment of the Certificates. Since amounts will be deposited to the Spread
Account from Available Funds prior and releases of amounts from the Spread
Account will be distributed as principal in addition to distributions of Class B
Certificateholders' Principal Distributable Amount, modifications of the
Specified Spread Account Requirement may cause unexpected interruption or
acceleration of payments of principal on the Class B Certificates.
SERVICER TERMINATION EVENT
"Servicer Termination Event" under the Pooling and Servicing Agreement
will consist of the occurrence and continuance of any of the following: (i) any
failure by the Servicer to deliver to the Trustee for distribution to the
Certificateholders any required payment, which failure continues unremedied for
two Business Days (one Business Day with respect to payment of Purchase Amounts)
after written notice is received by the Servicer from the Indenture Trustee or
(unless a Insurer Default shall be continuing) the Insurer or after discovery of
such failure by a responsible officer of the Servicer, or any failure to deliver
the Servicer's Certificate (as defined in the Pooling and Servicing Agreement)
by the fifth Business Day prior to the Distribution Date, and which shall comply
with the requirements therefor; (ii) any failure by the Servicer duly to observe
or perform in any material respect certain of its covenants and agreements under
the Pooling and Servicing Agreement; (iii) failure to satisfy certain other
material covenants and agreements set forth in the Pooling and Servicing
Agreement which failure continues unremedied for 30 days after the giving of
written notice of such failure (1) to the Servicer by the Insurer, the Trustee
or the Issuer, or (2) if a Insurer Default has occurred and is continuing, to
the Servicer by any holder of a Note or a Certificate; (iv) certain events of
insolvency, readjustment of debt, marshalling of assets and liabilities, or
similar proceedings with respect to the Servicer or the Issuer and certain
actions by the Servicer, or, so long as ACC is Servicer, of its affiliates,
indicating its insolvency, reorganization pursuant to bankruptcy proceedings, or
inability to pay its obligations; (v) the material breach of certain of the
Servicer's representations or warranties and the Servicer's failure to cure
within 30 days after notice thereof; (vi) so long as a Insurer Default shall not
have occurred and be continuing, the Insurer shall not have delivered an
extension notice; (vii) so long as a Insurer Default shall not have
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occurred and be continuing, an Insurance Agreement Event of Default or an event
of default under any other Insurance and Indemnity Agreement relating to any
series of securities shall have occurred; or (viii) a claim is made under the
Policy.
"Insurer Default" shall mean the occurrence and continuance of any of
the following events:
(a) the Insurer shall have failed to make a payment required
under the Policy in accordance with its terms;
(b) the Insurer shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United
States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (ii) made a general assignment for the benefit of its
creditors, or (iii) had an order for relief entered against it under
the United States Bankruptcy Code or any other similar federal or state
law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department
of Insurance or other competent regulatory authority shall have entered
a final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent or receiver for the Insurer or for all or any
material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Insurer
(or the taking of possession of all or any material portion of the
property of the Insurer).
RIGHTS UPON SERVICER TERMINATION EVENT
As long as a Servicer Termination Event under the Pooling and Servicing
Agreement remains unremedied, (x) provided no Insurer Default shall have
occurred and be continuing, the Insurer in its sole and absolute discretion or
(y) if a Insurer Default shall have occurred and be continuing, then the Trustee
or a Security Majority, may terminate all the rights and obligations of the
Servicer under such Agreement, whereupon (i) if ACC is terminated under the
Agreement, the Backup Servicer, or such other successor servicer as shall have
been appointed by the Insurer (so long as no Insurer Default shall have occurred
and be continuing) will succeed to all the responsibilities, duties, and
liabilities of the Servicer under such Agreement or (ii) if a Servicer other
than ACC is terminated under the Agreement, a successor servicer will be
appointed by the Insurer (or, if a Insurer Default shall have occurred and be
continuing, by the Trustee). Any such successor Servicer will succeed to all the
responsibilities, duties, and liabilities of the Servicer under the Pooling and
Servicing Agreement and will be entitled to similar compensation arrangements.
There is no assurance that the succession of a successor servicer will not
result in a material disruption in the performance of the duties of the
servicer.
WAIVER OF PAST DEFAULTS
The Insurer may, on behalf of the Issuer and all holders of the
Certificates, waive any default by the Servicer in the performance of its
obligations under the Pooling and Servicing Agreement and its consequences. No
such waiver will impair the Certificateholders' rights with respect to
subsequent defaults.
AMENDMENT
The Pooling and Servicing Agreement may be amended by the Seller, the
Servicer and the Trustee, and with the prior written consent of the Insurer (so
long as no Insurer Default has occurred and is continuing), but without the
consent of the Certificateholders, to cure any ambiguity, or to correct or
supplement any provision therein which may be inconsistent with any other
provision therein; provided that such action shall not adversely affect in any
material respect the interests of any Certificateholder; provided, further, that
if an Insurer Default has occurred and is continuing, such action shall not
materially adversely affect the interests of the Insurer. The Seller, the
Servicer and the Trustee may also amend the Pooling and Servicing Agreement with
the prior written consent of the Insurer, the consent of Certificateholders
holding a majority of the principal amount of the Certificates outstanding to
add, change or eliminate any other provisions with respect to matters or
questions arising under such Agreement or affecting the rights of the
Certificateholders; provided that such action will not (i) increase or reduce in
any manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that are required to be made for the
benefit of the Certificateholders or
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(ii) reduce the aforesaid percentage of the Certificateholders required to
consent to any such amendment, without, in either case, the consent of the
holders of all Certificates outstanding; provided, further, that if an Insurer
Default has occurred and is continuing, such action shall not materially
adversely affect the interest of the Insurer. The Seller and Servicer must
deliver to the Trustee and the Insurer upon the execution and delivery of the
Pooling and Servicing Agreement and any amendment thereto an opinion of counsel,
satisfactory to the Indenture Trustee and Insurer, that all financing statements
and continuation statements have been filed that are necessary to fully protect
and preserve the Indenture Trustee's interest in the Receivables.
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including Insolvency Laws, may interfere
with or affect the ability of a lender to realize upon collateral or enforce a
deficiency judgment. For example, in a Chapter 13 proceeding under the federal
bankruptcy law, a court may prevent a lender from repossessing a motor vehicle,
and, as part of the rehabilitation plan, reduce the amount of the secured
indebtedness to the market value of the motor vehicle at the time of bankruptcy
(as determined by the court), leaving the party providing financing as a general
unsecured creditor for the remainder of the indebtedness. A bankruptcy court may
also reduce the monthly payments due under a contract or change the rate of
interest and time of repayment of the indebtedness.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following general discussion, when read in conjunction
with the discussion of "Federal Income Tax Consequences" in the Prospectus,
describes certain federal income tax consequences to the original purchasers of
the Certificates of the purchase, ownership and disposition of the Certificates.
It does not purport to discuss all federal income tax consequences that may be
applicable to investment in the Certificates or to particular categories of
investors, some of which may be subject to special rules.
The discussion that follows, and the opinions set forth below
of Dewey Ballantine, special tax counsel to the Issuer ("Tax Counsel"), are
based on the provisions of the Internal Revenue Code of 1986, as amended (the
"Code") and Treasury regulations promulgated thereunder as in effect on the date
hereof and on existing judicial and administrative interpretations thereof.
These authorities are subject to change and to differing interpretations, which
could apply retroactively. The opinions of Tax Counsel are not binding on the
courts or the Internal Revenue Service (the "IRS"). Potential investors should
consult their own tax advisors in determining the federal, state, local, foreign
and any other tax consequences to them of the purchase, ownership and
disposition of the Certificates.
CHARACTERIZATION OF THE CERTIFICATES AS INDEBTEDNESS. In the
opinion of Tax Counsel, although no transaction closely comparable to that
contemplated herein has been the subject of any Treasury regulation, revenue
ruling or judicial decision, based on the application of existing law to the
facts as set forth in the applicable agreements, the proper treatment of the
Certificates is as indebtedness for federal income tax purposes.
Except as described below, interest paid or accrued on a Note
will be treated as ordinary income to the Certificateholders and principal
payments on a Note will be treated as a return of capital to the extent of the
Certificateholder's basis in the Note allocable thereto. An accrual method
taxpayer will be required to include in income interest on the Certificates when
earned, even if not paid, unless it is determined to be uncollectible. It is not
anticipated that the Certificates will be issued with original issue discount.
See "Federal Income Tax Consequences -- Treatment of the Certificates as
Indebtedness -- Interest Income on the Certificates" in the Prospectus.
ALTERNATIVE CHARACTERIZATIONS OF THE CERTIFICATES. Although it
is the opinion of Tax Counsel that the Certificates are properly characterized
as indebtedness for federal income tax purposes, no assurance can be given that
such characterization of the Certificates will prevail. If the Certificates were
treated as an ownership interest in the Receivables, all income on such
Receivables would be income to the holders of the Certificates, and related fees
and expenses would generally be deductible (subject to certain limitations on
the deductibility of miscellaneous itemized
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deductions by individuals) and certain market discount and premium provisions of
the Code might apply to a purchase of the Certificates.
If, alternatively, the Certificates were treated as an equity
interest in the Trust, the Trust would be treated as a partnership for federal
income tax purposes. As a partnership, the Trust will not be subject to federal
income tax unless treated as a publicly traded partnership taxable as a
corporation. Any such corporate income tax could materially reduce cash
available to make payments on the Certificates. Tax Counsel is of the opinion
that, although no transaction closely comparable to that contemplated herein has
been the subject of any Treasury regulation, revenue ruling or judicial decision
and, therefore, is subject to interpretation, the Trust, if treated as a
partnership, will not be treated as a publicly traded partnership taxable as a
corporation. This opinion is based on Tax Counsel's conclusion that the nature
of the income of the Trust exempts it from the rules that certain publicly
traded partnerships are taxable as corporations.
STATE AND LOCAL TAX CONSIDERATIONS
Potential Certificateholders should consider the state and local income
tax consequences of the purchase, ownership and disposition of the Certificates.
State and local income tax laws may differ substantially from the corresponding
federal law, and this discussion does not purport to describe any aspect of the
income tax laws of any state or locality. Therefore, potential
Certificateholders should consult their own tax advisors with respect to the
various state and local tax consequences of an investment in the Certificates.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit sharing, or other employee benefit plan from engaging in certain
transactions involving "plan assets" with persons that are "parties in interest"
under ERISA or "disqualified persons" under the Code with respect to the plan.
ERISA also imposes certain duties on persons who are fiduciaries of plans
subject to ERISA and prohibits certain transactions between a plan and parties
in interest with respect to such plans. Under ERISA, any person who exercises
any authority or control respecting the management or disposition of the assets
of a plan is considered to be a fiduciary of such plan (subject to certain
exceptions not here relevant). A violation of these "prohibited transaction"
rules may generate excise tax and other liabilities under ERISA and the Code for
such persons.
In addition to the matters described below, purchasers of Class A
Certificates that are insurance companies should consult with their counsel with
respect to the United States Supreme Court case interpreting the fiduciary
responsibility rules of ERISA, John Hancock Mutual Life Insurance Co. v. Harris
Trust and Savings Bank, 114 S.Ct. 517 (1993). In John Hancock, the Supreme Court
ruled that assets held in an insurance company's general account may be deemed
to be "plan assets" for ERISA purposes under certain circumstances. Prospective
purchasers should determine whether the decision affects their ability to make
purchases of the Class A Certificates.
Certain transactions involving the Issuer might be deemed to constitute
prohibited transactions under ERISA and the Code if assets of the Issuer were
deemed to be "plan assets" of an employee benefit plan subject to ERISA or the
Code, or an individual retirement account (an "IRA"), or any entity whose
underlying assets are deemed to be assets of an employee benefit plan or an IRA
by reason of such employee benefit plan's or such IRA's investment in such
entity (each a "Benefit Plan"). Under a regulation issued by the United States
Department of Labor (the "Plan Assets Regulation"), the assets of the Issuer
would be treated as plan assets of a Benefit Plan for the purposes of ERISA and
the Code only if the Benefit Plan acquires an "equity interest" in the Issuer
and none of the exceptions contained in the Plan Assets Regulation is
applicable. An equity interest is defined under the Plan Assets Regulation as an
interest other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features. The Seller
believes that the Class A Certificates should be treated as indebtedness without
substantial equity features for purposes of the Plan Assets Regulation. This
determination is based in part upon the traditional debt features of the
Certificates, including the reasonable expectation of purchasers of Certificates
that the Certificates will be repaid when due, as well as the absence of
conversion rights, warrants and other typical equity features. The debt
treatment of
41
<PAGE> 44
the Certificates for ERISA purposes could change if the Issuer incurred losses.
However, without regard to whether the Class A Certificates are treated as an
equity interest for such purposes, the acquisition or holding of Class A
Certificates by or on behalf of a Benefit Plan could be considered to give rise
to a prohibited transaction if certain parties to the transaction are or become,
or any of their respective affiliates is or becomes, a party in interest or a
disqualified person with respect to such Benefit Plan. In such case, certain
exemptions from the prohibited transaction rules could be applicable depending
on the type and circumstances of the plan fiduciary making the decision to
acquire a Class A Note. Included among these exemptions are: Prohibited
Transaction Class Exemption ("PTCE") 90-1, regarding investments by insurance
company pooled separate accounts; PTCE 95-60, regarding investments by insurance
company general accounts; PTCE 91-38, regarding investments by bank collective
investment funds; PTCE 96-23, regarding transactions by in-house asset managers;
and PTCE 84-14, regarding transactions by "qualified professional asset
managers." Each investor using the assets of a Benefit Plan which acquires the
Class A Certificates, or to whom the Class A Certificates are transferred, will
be required to represent that the acquisition and continued holding of the Class
A Certificates will be covered by a Department of Labor class exemption.
Employee plans that are government plans (as defined in Section 3(32)
of ERISA) and certain church plans (as defined in Section 3(53) of ERISA are not
subject to ERISA; however, such plans may be subject to comparable state law
restrictions.
Any Benefit Plan fiduciary considering the purchase of a Class A Note
should consult with its counsel with respect to the potential applicability of
ERISA and the Code to such investment. Moreover, each Benefit Plan fiduciary
should determine whether, under the general fiduciary standards of investment
prudence and diversification, an investment in the Class A Certificates is
appropriate for the Benefit Plan, taking into account the overall investment
policy of the Benefit Plan and the composition of the Benefit Plan's investment
portfolio.
42
<PAGE> 45
UNDERWRITING
Subject to the terms and conditions contained in the Underwriting
Agreement, the Seller has agreed to cause the Trust to sell the Certificates to
_________ (the "Underwriter"), and the Underwriter has agreed to purchase the
Certificates.
The Underwriting Agreement provides that the obligations of the
Underwriter is subject to certain conditions precedent and that the Underwriter
will be obligated to purchase all the Certificates, if any are purchased.
Distribution of the Certificates may be made by the Underwriter from
time to time in one or more negotiated transactions, or otherwise, at varying
prices to be determined at the time of sale. The Underwriter may effect such
transactions by selling the Certificates to or through dealers, and such dealers
may receive compensation in the form of underwriting discounts, concessions or
commissions from the Underwriter. In connection with the sale of the
Certificates, the Underwriter may be deemed to have received compensation from
the Seller in the form of underwriting compensation. The Underwriter and any
dealers that participate with the Underwriter in the distribution of the
Certificates may be deemed to be underwriters and any commissions received by
them and any profit on the resale of the Certificates positioned by them may be
deemed to be underwriting discounts and commissions under the Securities Act of
1933, as amended (the "Securities Act").
If the Underwriter creates a short position in the Certificates in
connection with the offering, i.e., if the Underwriter sells more Certificates
than are set forth on the cover page of this Prospectus Supplement, the
Underwriter may reduce that short position by purchasing Certificates in the
open market.
In general, purchases of a security to reduce a short position could
cause the price of the security to be higher than it might be in the absence of
such purchases.
Neither the Seller nor the Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above, if engaged in, may have on the prices of the Certificates. In
addition, neither the Seller not the Underwriter makes any representation that
the Underwriter will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The Certificates are a new issue of securities with no established
trading market. The Underwriter has advised the Seller that it intends to act as
market makers for the Certificates. However, the Underwriter is not obligated to
do so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of any trading market for the
Certificates.
The Seller has agreed to indemnify the Underwriter against certain
liabilities, including civil liabilities under the Securities Act, or contribute
to payments which the Underwriter may be required to make in respect thereof.
The Commission is of the opinion that indemnification for any securities law
violation is contrary to the public policy expressed in the federal securities
laws, and consequently, that such indemnification provisions are unenforceable.
The Underwriter has represented and agreed that (i) it has not offered
or sold and, prior to the expiration of the period of six months from the
Closing Date, will not offer or sell any Certificates to persons in the United
Kingdom, except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulation 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
Certificates in, from or otherwise involving the United Kingdom; and (iii) it
has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the Issue of the
Certificates to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995,
or is a person to whom such document may otherwise lawfully be issued or passed
on.
43
<PAGE> 46
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Certificates in Canada is being made only on a
private placement basis exempt from the requirement that the Seller prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of the Certificates are effected. Accordingly, any resale of the
Certificates in Canada must be made in accordance with applicable securities
laws which will vary depending on the relevant jurisdiction, and which may
require resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the Certificates.
REPRESENTATIONS OF PURCHASERS
Each purchaser of a Note in Canada who receives a purchase confirmation
will be deemed to represent to the Seller and the dealer from whom such purchase
confirmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Note without the benefit of a
prospectus qualified under such securities laws, (ii) where required by law,
that such purchaser is purchasing as principal and not as agent and (iii) such
purchaser has reviewed the text above under "Resale Restrictions".
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of a Note to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Certificates acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR # 88/5, a copy of which may be obtained from the Seller. Only one such
report must be filed in respect of the Certificates acquired on the same date
and under the same prospectus exemption.
LEGAL OPINIONS
Certain legal matters relating to the Certificates will be passed upon
for ACC, the Servicer and _________ by Dewey Ballantine, New York, New York.
Certain bankruptcy, federal income tax and other matters will be passed upon for
ACC and the Servicer by Dewey Ballantine. Certain legal matters under Minnesota
law relating to the Certificates will be passed upon for the Issuer by Faegre &
Benson. Certain legal matters under Texas law relating to the Certificates will
be passed upon for ACC and the Servicer by Liddell, Sapp, Zivley, Hill & LaBoon,
L.L.P. Certain legal matters under Florida law relating to the Certificates will
be passed upon for ACC and the Servicer by Foley & Lardner. Certain legal
matters under California law relating to the Certificates will be passed upon
for ACC and the Servicer by Dewey Ballantine.
44
<PAGE> 47
GLOSSARY
For the purposes hereof, the following terms shall have the following
meanings:
"Aggregate Principal Balance" means, with respect to any
Determination Date, the sum of the Principal Balances for all Receivables (other
than (i) any Receivable that became a Liquidated Receivable prior to the end of
the related Monthly Period and (ii) any Receivable that became a Purchased
Receivable prior to the end of the related Monthly Period) as of the
Determination Date.
"Amount Financed" means, with respect to a Receivable, the
aggregate amount advanced under such Receivable toward the purchase price of the
Financed Vehicle and related costs, including amounts advanced in respect of
accessories, insurance premiums, service, car club and warranty contracts, other
items customarily financed as part of retail automobile installment sale
contracts or promissory notes, and related costs.
"Available Funds" means, with respect to any Determination
Date, the sum of (i) the Collected Funds for such Determination Date, plus (ii)
all Purchase Amounts deposited in the Collection Account during the related
Monthly Period, plus income on investments held in the Collection Account, plus
(iii) the Monthly Capitalized Interest Amount with respect to the related
Distribution Date.
"Class A Certificateholders' Distributable Amount" means, with
respect to any Distribution Date, the sum of the Class A Certificateholders'
Principal Distributable Amount and the Class A Certificateholders' Interest
Distributable Amount.
"Class A Certificateholders' Interest Carryover Shortfall"
means, with respect to any Distribution Date and the Class A Certificates, the
excess of the Class A Certificateholders' Interest Distributable Amount for the
preceding Distribution Date, over the amount in respect of interest that was
actually deposited in the Class A Note Distribution Account on such preceding
Distribution Date, plus interest on the amount of interest due but not paid to
Class A Certificateholders on the preceding Distribution Date, to the extent
permitted by law, at the Interest Rate borne by the Class A Certificates from
such preceding Distribution Date to but excluding the current Distribution Date.
"Class A Certificateholders' Interest Distributable Amount"
means, with respect to any Distribution Date, the sum of the Class A
Certificateholders' Monthly Interest Distributable Amount for the Class A
Certificates for such Distribution Date and the Class A Certificateholders'
Interest Carryover Shortfall for Class A Certificates for such Distribution
Date.
"Class A Certificateholders' Monthly Interest Distributable
Amount" means, with respect to any Distribution Date and Class A Certificates,
interest accrued during the applicable Interest Period at the Interest Rate
borne by such Class of Class A Certificates on the outstanding principal amount
of such Class immediately prior to such Distribution Date, calculated on the
basis of a 360-day year and twelve 30-day months.
"Class A Certificateholders' Monthly Principal Distributable
Amount" means, with respect to any Distribution Date, the Class A
Certificateholders' Percentage of the Principal Distributable Amount.
"Class A Certificateholders' Percentage" means (i) for each
Distribution Date other than a Distribution Date on which the Class A
Certificates are paid in full, 94%, or (ii) for any Distribution Date after the
Distribution Date on which the Class A Certificates are paid in full, zero.
"Class A Certificateholders' Principal Carryover Shortfall"
means, as of the close of any Distribution Date, the excess of the Class A
Certificateholders' Principal Distributable Amount for the preceding
Distribution Date over the amount in respect of principal that was actually
deposited in the Class A Note Distribution Account on such Distribution Date.
45
<PAGE> 48
"Class A Certificateholders' Principal Distributable Amount"
means, with respect to any Distribution Date (other than the Final Scheduled
Distribution Date), the sum of the Class A Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and the Class A
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date. The Class A Certificateholders' Principal
Distributable Amount on the Final Scheduled Distribution Date for the Class A
Certificates will equal the outstanding principal amount, if any, of such Class
A Certificates.
"Insurer Optional Deposit" means, with respect to any
Distribution Date, an amount delivered by the Insurer, at its sole option, other
than pursuant to the Policy for deposit into the Collection Account for any of
the following purposes: (i) to provide funds in respect of the payment of fees
or expenses of any provider of services to the Trust with respect to such
Distribution Date; or (ii) to include such amount as part of the Distribution
Amount for such Distribution Date to the extent that without such amount a draw
would be required to be made on the Policy.
"Class B Certificateholders' Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders' Principal
Distributable Amount and the Class B Certificateholders' Interest Distributable
Amount.
"Class B Certificateholders' Interest Carryover Shortfall"
means, with respect to any Distribution Date and the Class B Certificates, the
excess of the Class B Certificateholders' Interest Distributable Amount for the
preceding Distribution Date, over the amount in respect of interest that was
actually deposited in the Class B Note Distribution Account on such preceding
Distribution Date, plus interest on the amount of interest due but not paid to
Class B Certificateholders on the preceding Distribution Date, to the extent
permitted by law, at the Interest Rate borne by the Class B Certificates from
such preceding Distribution Date to but excluding the current Distribution Date.
"Class B Certificateholders' Interest Distributable Amount"
means, with respect to any Distribution Date, the sum of the Class B
Certificateholders' Monthly Interest Distributable Amount for the Class B
Certificates for such Distribution Date and the Class B Certificateholders'
Interest Carryover Shortfall for Class B Certificates for such Distribution
Date.
"Class B Certificateholders' Monthly Interest Distributable
Amount" means, with respect to any Distribution Date and Class B Certificates,
interest accrued during the applicable Interest Period at the Interest Rate
borne by such Class of Class B Certificates on the outstanding principal amount
of such Class immediately prior to such Distribution Date, calculated on the
basis of a 360-day year and twelve 30-day months.
"Class B Certificateholders' Monthly Principal Distributable
Amount" means, with respect to any Distribution Date, the Class B
Certificateholders' Percentage of the Principal Distributable Amount.
"Class B Certificateholders' Percentage" means (i) for each
Distribution Date other than a Distribution Date on which the Class A
Certificates have been paid in full, 6% or (ii) for any Distribution Date after
the Class A Certificates are paid in full, 100 %; provided, however, that the
Class B Certificateholders' Percentage will be zero percent when the principal
balance of the Class B Certificates has been reduced to zero.
"Class B Certificateholders' Principal Carryover Shortfall"
means, as of the close of any Distribution Date, the excess of the Class B
Certificateholders' Principal Distributable Amount for the preceding
Distribution Date over the amount in respect of principal that was actually
deposited in the Class B Note Distribution Account on such Distribution Date.
"Class B Certificateholders' Principal Distributable Amount"
means, with respect to any Distribution Date (other than the Final Scheduled
Distribution Date for any Class B Certificates), the sum of the Class B
Certificateholders' Monthly Principal Distributable Amount for such Distribution
Date and the Class B Certificateholders' Principal Carryover Shortfall as of the
close of the preceding Distribution Date. The Class B Certificateholders'
Principal Distributable Amount on the Final Scheduled Distribution Date for the
Class B Certificates will equal the outstanding principal amount, if any, of
such Class B Certificates.
46
<PAGE> 49
"Collected Funds" means, with respect to any Determination
Date, the amount of funds in the Collection Account representing collections on
the Receivables during the related Monthly Period, including all Net Liquidation
Proceeds collected during the related Monthly Period (but excluding any Purchase
Amounts).
"Cram Down Loss" means, with respect to a Receivable if a
court of appropriate jurisdiction in an insolvency proceeding shall have issued
an order reducing the amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments to be made on such Receivable, an amount
equal to (i) the excess of the principal balance of such Receivable immediately
prior to such order over the principal balance of such Receivable as so reduced
and/or (ii) if such court shall have issued an order reducing the effective rate
of interest on such Receivable, the net present value (using as the discount
rate the higher of the APR on such Receivable or the rate of interest, if any,
specified by the court in such order) of the scheduled payments as so modified
or restructured. A "Cram Down Loss" shall be deemed to have occurred on the date
of issuance of such order.
"Deficiency Claim Amount" means, with respect to any
Determination Date, the excess, if any, of the sum of the amounts payable on the
related Distribution Date pursuant to clauses (a) through (e) under "Description
of Certificates - Distributions" over the amount of Available Funds.
"Deficiency Notice" means a written notice delivered by the
Indenture Trustee to the Insurer, the fiscal agent, if necessary, and the
Servicer and any other person required under the Insurance Agreement, specifying
the Deficiency Claim Amount for such Distribution Date.
"Determination Date" means, with respect to any Collection
Period, the 5th Business Day prior to the related Distribution Date.
"Distribution Amount" means, with respect to any Distribution
Date the sum of (i) the Available Funds for the immediately preceding
Determination Date plus (ii) the Deficiency Claim Amount, if any, received by
the Indenture Trustee with respect to such Distribution Date.
"Floor Amount" means with respect to the Class B Reserve Fund
and any Distribution Date, an amount equal to the product of the Interest Rate
for the Class B Certificates and the principal balance of the Class B
Certificates as of such Distribution Date.
"Liquidated Receivable" means, with respect to any Monthly
Period, a Receivable as to which (i) 60 days have elapsed since the Servicer
repossessed the Financed Vehicle, (ii) the Servicer has determined in good faith
that all amounts it expects to recover have been received, (iii) ninety percent
or more of a scheduled payment shall have become 120 or more days delinquent, or
in the case of an Obligor who is subject to bankruptcy proceedings, 210 or more
days delinquent or (iv) the Financed Vehicle has been sold and the proceeds
received. Any Receivable that becomes a Purchased Receivable on or before the
related Business Day immediately preceding the related Determination Date shall
not be a Liquidated Receivable.
"Net Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable (other than
amounts withdrawn from certain collateral accounts and drawings under the
Policy) net of the Servicer's reasonable out-of-pocket costs, including
repossession and resale expenses not already deducted from such proceeds, and
any amounts that are required to be refunded to the Obligor on such Receivable;
provided, however, that Net Liquidation Proceeds with respect to any Receivables
shall in no event be less than zero.
"Policy Claim Amount" means, with respect to any Determination
Date on which the Indenture Trustee has delivered a Deficiency Notice, the
shortfall of (y) the Distribution Amount with respect to the related
Distribution Date (after giving effect to the amounts payable on such
Distribution Date pursuant to clauses (a) and (b) under "Distributions") over
(2) the amount necessary to pay the Scheduled Payments on the Class A
Certificates with respect to such Distribution Date.
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<PAGE> 50
"Principal Balance" means, with respect to any Receivable, as
of any date, the Amount Financed minus (i) that portion of all amounts received
on or prior to such date and allocable to principal in accordance with the terms
of the Receivable, and (ii) any Cram Down Loss in respect of such Receivable.
"Principal Distributable Amount" means, with respect to any
Distribution Date, an amount equal to the sum of the following amounts with
respect to the related Monthly Period, computed in accordance with the simple
interest method in the case of a Simple Interest Receivable and the actuarial
method in the case of an Actuarial Method Receivable: (i) that portion of all
collections on Receivables (other than Liquidated Receivables and Purchased
Receivables) allocable to principal, including full and partial principal
prepayments, received during such Monthly Period (ii) the principal balance of
each Receivable that became a Liquidated Receivable during the related Monthly
Period (other than Purchased Receivables), (iii) the principal balance of each
Receivable that was repurchased by the Issuer, the Servicer or the Seller as of
the last day of such Monthly Period, (iv) the aggregate amount of any Cram Down
Loss during such Monthly Period, and (v) any unpaid portion of the amounts
included in clauses (i), (ii), (iii) and (iv) above with respect to a prior
Distribution Date. Principal payments on the Class A Certificates will be made
from the Distribution Amount after payment of accrued and unpaid trustees' fees
and other administrative fees of the Issuer, payment of the Servicing Fee and
after distribution of the Class Certificateholders' Interest Distributable
Amount. See "Description of the Pooling and Servicing Agreement and the Trust
Documents -- Distributions" herein.
"Purchase Amount" means, with respect to a Receivable, the
principal balance and all accrued and unpaid interest on the Receivable as of
the date of purchase.
"Purchased Receivable" means, a Receivable purchased as of the
close of business on the last day of the related Monthly Period by the Servicer
or by the Seller pursuant to the repurchase obligations of the Pooling and
Servicing Agreement.
48
<PAGE> 1
Exhibit 99.4
SUBJECT TO COMPLETION DATED __________, 1997
[Exhibit 99.4 Form of Prospectus Supplement. This form of Prospectus Supplement
is for illustrative purposes only. A Prospectus Supplement in definitive form
reflecting the terms of each Series of Certificates will be filed with the
Commission under the Securities Act of 1933, as amended, pursuant to Rule 424(b)
promulgated thereunder.]
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED ___________, 1996)
- --------------------------------------------------------------------------------
[ACC AUTOMOBILE RECEIVABLES MASTER TRUST 199__-__]
$---------------
_____% CLASS [A] AUTO RECEIVABLES BACKED CERTIFICATES, SERIES 199__-__
ACC CONSUMER FINANCE CORPORATION
SPONSOR
----------------
ORIGINATOR/SERVICER
- --------------------------------------------------------------------------------
The _____% Class [A] Auto Receivables Backed Certificates, Series
199__-__ (the "[Class A] Certificates") hereby offered by ACC Consumer Finance
Corporation represent the right to receive repayment of the Initial Certificate
Principal Amount ($____________) of the [Class A] Certificates and monthly
interest at a rate of _____% per annum on the unpaid portion of such principal
amount. The rights to receive such payments are based solely upon the interests
represented by the [Class A] Certificates in the [ACC Automobile Receivables
Master Trust 199__-__] (the "Trust") formed pursuant to a Pooling Agreement (the
"Pooling Agreement"), dated as of ____________, 199__, among
______________________, as originator and as servicer of the Receivables (the
"Originator" and the "Servicer," respectively) ACC Consumer Finance Corporation
(the "Sponsor") and ____________, as trustee (the "Trustee"). The assets of the
Trust will consist of any combination of retail installment sales contracts
between manufacturers, dealers or certain other originators and retail
purchasers secured by new and used automobiles and light duty trucks financed
thereby, together with all monies received relating thereto (the "Contracts"),
[the underlying new and used automobiles and light duty trucks (the "Vehicles,"
together with the Contracts], the "Receivables") and the proceeds thereof
received by the Trust from the Sponsor on or prior to the date of the issuance
of the [Class A] Certificates. The Trustee will also have access to the Reserve
Account to be established for the benefit of the holders of the [Class A]
Certificates (the "[Class A] Certificateholders") and the Certificate Insurer.
Concurrently with issuance of the [Class A] Certificates, the Trust will issue
from the same Series another Class of Certificates (the "[Class B]
Certificates"; collectively with the [Class A] Certificates, the "Series 199__-1
Certificates") described herein under "Description of the Certificates", which
initially will be retained by the Sponsor and will be subordinated to the [Class
A] Certificates in the right to payments of principal and interest. Only the
[Class A] Certificates are offered hereby. In addition, from time to time, the
Sponsor may offer other Series of Certificates that evidence undivided interests
in the Trust which may have terms significantly different from the [Class A]
Certificates.
Capitalized terms used herein are defined terms having specific
meanings. An "Index of Defined Terms" is set forth as page S-34 hereof, which
indicates the page on which such defined terms are defined.
THE RIGHTS OF THE HOLDERS OF THE CLASS A CERTIFICATES OFFERED HEREBY
ARE NOT SUBORDINATED, BUT ARE OF AN EQUAL PRIORITY WITH CERTAIN OUTSTANDING
SERIES. SEE "SERIES PROVISIONS" HEREIN.
[FORM OF CREDIT ENHANCEMENT]
---------------------------
THE [CLASS A] CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND
DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE ORIGINATOR, THE SPONSOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE [CLASS A] CERTIFICATES NOR THE
UNDERLYING RECEIVABLES WILL BE GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY
OR INSTRUMENTALITY OR BY THE ORIGINATOR OR THE SPONSOR. SEE ALSO "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATIONS TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------------------------
<PAGE> 2
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK FACTORS"
AT PAGE ___ HEREIN AND AT PAGE ___ IN THE PROSPECTUS.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
PRICE TO Underwriting Proceeds to the
PUBLIC(1) Discount(2) Sponsor(1)(3)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per [Class A] Certificate............... % % %
Total................................... $ $ $
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from ____________, 199__.
(2) The Sponsor has agreed to indemnify the Underwriter(s) against certain
liabilities, including liabilities under the Securities Act of 1933,
as amended. See "Underwriting."
(3) Before deducting estimated expenses of $____________ payable by the
Sponsor.
[The [Class A] Certificates are offered subject to prior sale,
when, as, and if accepted by the Underwriter(s) and subject to the approval of
certain legal matters by Dewey Ballantine, counsel for the Underwriter(s).]
[Name(s) of the Underwriter(s)]
S-2
<PAGE> 3
The Contracts are contracts for the sale of the Vehicles, entitling the
originator thereunder to payments of principal and interest (hereinafter,
"Contract Principal" and "Contract Interest," respectively).
Interest will accrue on the [Class A] Certificates at the rate of ___%
per annum (the "Certificate Rate"). Interest and Principal will be distributed
on _________, 19__, and on the __ day of each month thereafter (or, of any such
___ day is not a business day, the next succeeding business day) (each a
"Distribution Date"). Principal is scheduled to be distributed as described
herein under "Series Provisions--Principal," and its distribution may be
accelerated under certain circumstances described under "Series Provisions--Pay
Out Events" herein. If not previously paid, a principal payment equal to the
then outstanding Invested Amount of the [Class A] Certificates will be due on
the __________________ Distribution Date (the "Final Payment Date").
The Trust will have the benefit of funds on deposit in a reserve
account (the "Reserve Account") which will be funded by an initial deposit of
$10,000,000. Amounts available to be withdrawn from the Reserve Account will be
applied as described herein under "Summary of Series Terms--Reserve Account" and
"Series Provisions--Reserve Account".
The [Class A] Certificates initially will be represented by
certificates which will be registered in the name of Cede & Co., the nominee of
The Depository Trust Company. [Class A] Certificateholders will be represented
by book entries on the records of The Depository Trust Company and participating
members thereof. Definitive Certificates will be available to [Class A]
Certificateholders only under the limited circumstances described under
"Description of the Securities--Definitive Notes" in the Prospectus.
There currently is no secondary market for the [Class A] Certificates,
and there is no assurance that one will develop or, if one does develop, that it
will continue until the [Class A] Certificates are paid in full.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE [CLASS A] CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED
IN THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE [CLASS A]
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE [CLASS
A] CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
REPORTS TO CERTIFICATEHOLDERS
Periodic and annual unaudited reports containing information concerning
the Receivables will be prepared by the Servicer and sent on behalf of the Trust
to the registered holders of the [Class A] Certificates. See "Description of the
Securities--Reports to Securityholders" in the accompanying Prospectus (the
"Prospectus"). Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. The Trust will file
with the Securities and Exchange Commission (the "Commission") such periodic
reports as are required under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations thereunder and as are
otherwise agreed to by the Commission. Copies of such periodic reports may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
S-3
<PAGE> 4
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms", which appears on page
S-34 hereof, or, to the extent not defined herein, have the meanings assigned to
such terms in the Prospectus.
Issuer:........................ ACC Automobile Receivables Trust 199__-__ (the
"Trust" or the "Issuer").
Sponsor:....................... ACC Consumer Finance Corporation (the
"Sponsor"), a Delaware corporation. The Sponsor
will acquire the Receivables from the
Originator and will simultaneously transfer the
Receivables (including from time to time the
Additional Receivables) to the Trust. The
principal executive offices of the Sponsor are
located at 1275 High Bluff Drive, Suite 320,
San Diego, California 92130 and its telephone
number is (619) 793-6300.
Servicer....................... ACC Consumer Finance Corporation, a ___________
corporation (the "Servicer"). The principal
executive offices of the Servicer are located
at _______________________, and its telephone
number is __________________.
Originator..................... _________________, a _____________ corporation
(the "Servicer"). The principal executive
offices of the Servicer are located at
_______________________, and its telephone
number is __________________.
Trustee:....................... ________________________ (the "Trustee"), a
____________ association. The corporate trust
offices of the Trustee are located at
_______________ and its telephone number is
(___) ______.
Cut-Off Date:.................. ____________, 199__.
Closing Date:.................. ____________, 199__.
[CLASS A] CERTIFICATES
Initial [Class A] Invested
Amount.................... $_____________________
Certificate Rate............ _____% per annum.
Distribution Date........... The ____ day of each month (or, if any such
____ day is not a business day, the next
succeeding business day), commencing
__________, 19__.
S-4
<PAGE> 5
Record Date................. The business day preceding the related
Distribution Date (or, if Definitive
Certificates are issued, the last day of the
month preceding the month in which the related
Distribution Date occurs).
Principal Commencement Date.. The __________________, 199__ Distribution
Date.
Final Payment Date........... The _________________________ Distribution
Date.
[Class A] Controlled
Amortization Amount........ For each Distribution Date with respect to the
Scheduled Amortization Period, the amount shown
for such date on the "Schedule of [Class A]
Controlled Amortization Amounts." See "Series
Provisions--Applications of
Collections--Payments of Principal" in this
Prospectus Supplement.
Scheduled Amortization
Period.................... The Scheduled Amortization Period with respect
to the Series 199__-_ Certificates will
commence on the Series Cut-Off Date and will
end at the close of business on _____________,
199__, unless terminated earlier upon the
occurrence of a Pay Out Event. Available
Principal Collections will be distributed to
the [Class A] Certificateholders up to the
[Class A] Controlled Distribution Amount on
each Distribution Date with respect to the
Scheduled Amortization Period.
Full Amortization Period.... At the close of business on the last day of the
Scheduled Amortization Period, the Full
Amortization Period with respect to the Series
199__-_ Certificates will commence. The [Class
A] Controlled Amortization Amount will not
apply to any distributions to [Class A]
Certificateholders on any Distribution Date
with respect to the Full Amortization Period.
Principal will be distributed to [Class A]
Certificateholders on each Distribution Date
with respect to the Full Amortization Period in
an amount equal to the lesser of (i) all
Available Principal Collections with respect to
the related Collection Period, (ii) all
Principal Payments allocated to the [Class A]
Certificateholders' Interest and (iii) the
remaining Invested Amount of [Class A]
Certificates on such Distribution Date. The
Full Amortization Period will continue until
the Invested Amount of the Series 199__-_
Certificates is paid in full or the Full
Amortization Pool Balance is zero, whichever
first occurs.
Upon the commencement of the Full Amortization
Period, the Trustee will include all the
Receivables then included in the Trust's
Floating Receivable Pool in the Full
Amortization Pool for the Series 199__-_
S-5
<PAGE> 6
Certificates. Following commencement of the
Full Amortization Period, the Series 199__-_
Certificateholders will have an interest only
in the Full Amortization Pool and will not have
any interest in Receivables subsequently
transferred to the Trust, in the Floating
Receivable Pool or in Full Amortization Pools
subsequently segregated with respect to other
Series.
The Full Amortization Pool, and Contract
Payments and the Defaulted Amount with respect
to Contracts therein, will be allocated to the
Series 199__-_ Certificateholders' Interest on
the basis of the Fixed Allocation Percentage
for the Series 199__-_ Certificates. The Full
Amortization Pool and such Contract Payments
and Defaulted Amount will be further allocated
to the [Class A] Certificates on the basis of
its Floating Allocation Percentage. The portion
of the Contract Payments and the Defaulted
Amount with respect to Contracts in the Full
Amortization Pool not allocated to the Series
199__-_ Certificateholders' Interest (the
"Non-Allocated Interest") initially will be
included in the Floating Receivable Pool and
subsequently included in the next Full
Amortization Pool created for another Series,
if any.
[Class B] Certificates...... Concurrently with the issuance of the [Class A]
Certificates, the Trust will issue another
Class of Certificates of the same Series, the
[Class B] Certificates, which initially will be
retained by the Sponsor. The [Class A]
Certificates and the [Class B] Certificates
collectively comprise the first Series to be
issued by the Trust. Only the [Class A]
Certificates are offered hereby.
Payments of interest and principal on the
[Class B] Certificates will be subordinated to
payments of interest and certain other amounts
due with respect to the [Class A] Certificates
as described under "Series
Provisions--Application of
Collections--Subordination."
[Reserve] Account........... The Reserve Account will be established in the
name of the Trustee for the benefit of the
[Class A] Certificateholders. The Reserve
Account will be funded on the Series Issuance
Date from the proceeds of the [Class A]
Certificates in the amount of $________________
(the "Initial Reserve Amount"). On each
Distribution Date, the Available Reserve Amount
will be applied to fund the Required Amount, if
any, with respect to such Distribution Date.
S-6
<PAGE> 7
On each Distribution Date, Available Finance
Charge Collections and Available Principal
Collections allocated and available for that
purpose (as described under "Series
Provisions--Application of
Collections--Payments of Interest, Fees and
Other Items" and "--Payments of Principal")
will be applied to increase the amount on
deposit in the Reserve Account (to the extent
such amount is less than the Required Reserve
Amount). In addition, if on any Distribution
Date the amount on deposit in the Reserve
Account exceeds the Required Reserve Amount,
such excess will be withdrawn and paid to the
Sponsor (the "Reserve Sponsor"). See "Series
Provisions--Reserve Account."]
Series Servicing Fee
Percentage................ For so long as the Originator is the Servicer,
the Servicing Fee will be calculated at a rate
of ___% per annum. In the event a successor
Servicer has been appointed, the Servicing Fee
shall be calculated using an annual percentage
rate determined by the Trustee which shall not
exceed ___%. See "Description of the Trust
Agreements--Servicing Compensation" in the
Prospectus.
Registration................ The [Class A] Certificates initially will be
represented by certificates registered in the
name of Cede, as nominee of DTC, and no
purchaser of [Class A] Certificates will be
entitled to receive a definitive certificate
except under certain limited circumstances.
[Class A] Certificateholders may elect to hold
their [Class A] Certificates through DTC (in
the United States) or CEDEL or Euroclear (in
Europe). See "Description of the
Securities--Book-Entry Registration" and
"--Definitive Notes" in the Prospectus.
Optional Repurchase......... On any Distribution Date occurring on or after
the day on which the Series 199__-1 Invested
Amount is reduced to 5% or less of the Series
199__-1 Initial Invested Amount, the Sponsor
will have the option to repurchase all, but not
less than all, the Series 199__-1
Certificateholders' Interest. The purchase
price will be equal to the sum of the Series
199__-1 Invested Amount plus accrued and unpaid
interest on the Series 199__-1 Certificates
through the day preceding such Distribution
Date. See "Description of the Trust
Agreements--Termination" in the Prospectus.
ERISA Eligibility........... [Class A] Certificates may be eligible for
purchase by Benefit Plans. See "ERISA
Considerations" herein.
Ratings..................... It is a condition to the issuance of the [Class
A] Certificates that they be rated in the
highest rating
S-7
<PAGE> 8
category by at least one nationally recognized
rating agency.
[CLASS B] CERTIFICATES
Initial [Class B]
Invested Amount........... $____________________.
[Class B] Certificateholder. The [Class B] Certificates initially will be
retained by the Sponsor. The Sponsor must
retain ____% of the [Class B] Certificates,
which are nontransferable, but, subject to
certain conditions and limitations, the Sponsor
may sell up to _____% of the [Class B]
Certificates after the Series Issuance Date. In
connection with such a transfer, the Trustee
and the Sponsor may agree to amend the
Supplement and the Pooling Agreement with
respect to the [Class B] Certificates,
including changing the Series Enhancement
provided for Series 199__-_ Certificates to add
Series Enhancement for the [Class B]
Certificates, so long as no Rating Effect or
Pay Out Event results from such amendment. The
[Class B] Certificates are not offered hereby.
[Class B] Certificate Rate.. _____% per annum.
[Class B] Controlled
Amortization Amount....... For each Distribution Date during the Scheduled
Amortization Period, the amount provided in the
Series 199__-_ Supplement.
Subordination of Distributions
to [Class B]
Certificateholders........ Collections of Principal Payments and
collections of Finance Charge Payments
otherwise allocable to the [Class B]
Certificateholders will be subordinated to the
payment of interest and certain other amounts
due with respect to the [Class A] Certificates.
No principal or interest will be payable on the
[Class B] Certificates with respect to a
Distribution Date until all interest payments,
the Investor Default Amount and aggregate
unreimbursed Investor Charge-Offs have been
covered with respect to the [Class A]
Certificates with respect to such Distribution
Date and the Available Reserve Amount equals
the Required Reserve Amount on such
Distribution Date. The [Class B] Certificates
will receive distributions of interest on each
Distribution Date equal to the lesser of
Available [Class B] Finance Charge Collections
and interest accrued and unpaid on the [Class
B] Invested Amount at the [Class B] Certificate
Rate. The [Class B] Certificates will receive
distributions of principal on each Distribution
Date during the Scheduled Amortization Period
equal to the
S-8
<PAGE> 9
lesser of the Available [Class B] Principal
Collections and the [Class B] Controlled
Amortization Amount. During the Full
Amortization Period, the [Class B] Certificates
will receive distributions of principal on each
Distribution Date equal to Available [Class B]
Principal Collections. Payments of principal to
the [Class B] Certificates will reduce the
[Class B] Invested Amount available for
subordination. See "Series
Provisions--Application of
Collections--Subordination" herein.
Federal Income Tax
Consequences................... In the opinion of Dewey Ballantine, counsel for
the Trust, the Certificates will be
characterized as debt for federal income tax
purposes and the Trust will not be
characterized as an association (or a publicly
traded partnership) taxable as a corporation.
Alternative characterizations of the Trust and
the Certificates are possible, as more fully
described herein. See "Federal Income Tax
Consequences" and "State Tax Consequences"
herein for information regarding the
application of federal and [Delaware] tax laws
to the Securities and the Trust.
Risk Factors................... For a discussion of certain factors that should
be considered by prospective investors in the
Certificates, see "Risk Factors" herein and in
the Prospectus.
Certain Legal Matters.......... Certain legal matters relating to the validity
of the issuance of the Certificates will be
passed upon for the Issuer and the Underwriter
by Dewey Ballantine, New York, NY.
S-9
<PAGE> 10
RISK FACTORS
Prospective Certificateholders should consider, among other things,
the following factors in connection with the purchase of the Certificates:
Risk of Losses on Investment Associated with Limited Obligations of the
Trust. Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the
Certificates. The Certificateholders will not receive any distributions with
respect to a Payment Date until the full amount of interest on and principal of
the Certificates on such Payment Date has been deposited in the Certificate
Distribution Account. The Trust does not have, nor is it permitted or expected
to have, any significant assets or sources of funds other than the Receivables
and the Trust Accounts. The Securities represent solely obligations of, or
interests in, the Trust and the Securities will not be insured or guaranteed by
the Sponsor, the Originator, the Servicer, the [Owner] Trustee or any other
person or entity. Consequently, holders of the Securities must rely for
repayment upon payments on the Receivables and, if and to the extent available,
amounts on deposit in the Reserve Account. Amounts to be deposited in the
Reserve Account are limited in amount, and the amount required to be on deposit
in the Reserve Account will be reduced as the Pool Balance is reduced. In
addition, funds in the Reserve Account will be available on each Payment Date to
cover shortfalls in distributions of interest and principal on the Certificates
prior to the application thereof to cover shortfalls on the Certificates. If the
Reserve Account is exhausted, the Trust will depend solely on current payments
on the Receivables to make payments on the Securities. Although the Trust will
covenant to sell the Receivables if directed to do so by the Indenture Trustee
in accordance with the Indenture following an acceleration of the Certificates
upon an Event of Default, there is no assurance that the market value of the
Receivables will at any time be equal to or greater than the aggregate principal
amount of outstanding Certificates. Therefore, upon an Event of Default with
respect to the Certificates there can be no assurance that sufficient funds will
be available to repay Certificateholders in full and consequently the
Certificateholders run the risk of loss on their investment. In addition, the
amount of principal required to be distributed to Certificateholders under the
Indenture is generally limited to amounts available therefor in the Certificate
Distribution Account. Therefore, the failure to pay principal on the
Certificates may not result in the occurrence of an Event of Default until the
Final Scheduled Payment Date.
Risk of Limited Liquidity and Lower Market Price Associated with a Reduction
or Withdrawal of Ratings of the Securities. It is a condition to the issuance of
the Certificates that the Certificates be rated in the [_____] rating category
or its equivalent, by at least two nationally recognized rating agencies (the
"Rating Agencies"). A rating is not a recommendation to purchase, hold or sell
securities, inasmuch as such rating does not comment as to market price or
suitability for a particular investor. The rating of the Certificates addresses
the likelihood of the timely payment of interest on and the ultimate repayment
of principal of the Certificates pursuant to their terms. There is no assurance
that a rating will remain for any given period of time or that a rating will not
be lowered or withdrawn entirely by a Rating Agency if in its judgment
circumstances in the future so warrant. The rating of the Certificates is based
primarily on the creditworthiness of the Receivables, the subordination provided
by the Certificates and the availability of funds in the Reserve Account. The
ratings of the Certificates are also based on the rating of the security
insurer. Upon a security insurer default, the rating on the Certificates may be
lowered or withdrawn entirely. In the event that any rating initially assigned
to the Certificates were subsequently lowered or withdrawn for any reason,
including by reason of a downgrading of the security insurer's claims-paying
ability, no person or entity will be obligated to provide any additional credit
enhancement with respect to the Certificates. Any reduction or withdrawal of a
rating will have an adverse effect on the liquidity and market price of the
Certificates. See "Ratings."
[Risk of Reduced Rate of Return Associated with Relationship Between Base
Rate and LIBOR. Allocations of payments on the variable rate Receivables to
principal and interest depend upon the applicable Base Rate. Interest on the
Certificates accrues at a rate generally based upon LIBOR. These two rates can
and will vary with respect to each other. Historically, they have increased or
decreased roughly in tandem and, during the last ten years, LIBOR always has
remained below the Base Rate.
S-10
<PAGE> 11
However, no assurance can be given that these historical trends will continue.
There is a risk that if LIBOR were to more above the Base Rate, the spread used
to pay interest to the Securityholders would disappear and the rate of return to
investors would be reduced.]
[The variable rate Receivables bear interest at the Base Rate plus a Base
Rate Additive ranging from _____% to _____%. The Certificate Interest is based
upon LIBOR. If, in respect of any Payment Date, there does not exist a positive
spread between the weighted average of the Receivables Rate, Certificate
Interest Rate less the Servicing Fee Rate (such difference between the
Receivables Rate and the Servicing Fee Rate being the "Net Receivables Rate")
for the Collection Period preceding such Payment Date, on the one hand, and the
Certificate Interest Rate for such Payment Date (calculated before giving effect
to this sentence), on the other hand, then the [Pass-Through Rate] for such
Payment Date shall not exceed the Net Receivables Rate.]
[Risk of Reduced Rate of Return Associated with Yield Considerations. The
Certificateholders will bear the risk associated with the possible narrowing of
the spread between the Certificate Interest Rate, on the one hand, and the Net
Receivables Rate, on the other hand. If this spread disappears (i.e., if the
Certificate Interest Rate exceeds or equals the Net Receivables Rate), the
interest payable on the Certificates for the related Payment Date will not
exceed such Net Receivables Rate. A substantial change in LIBOR at a time when
the Net Receivables Rate does not experience a similar change could result in
limiting the Certificate Interest Rate and consequently could reduce the rate of
return to investors as described above.]
Risk of Lower Yield Associated with Prepayment Considerations. If purchased
at other than par, the yield to maturity on the Securities will be affected by
the rate of the payment of principal of the Contracts. If the actual rate of
payments on the Contracts is slower than the rate anticipated by an investor who
purchases the Securities at a discount, the actual yield to such investor will
be lower than such investor's anticipate yield. If the actual rate of payments
on the Contracts is faster than the rate anticipated by an investor who
purchases the Securities at a premium, the actual yield to such investor will be
lower than such investor's anticipated yield.
[All of the Contracts are fixed-rate contracts. The rate of prepayments with
respect to conventional fixed contracts has fluctuated significantly in recent
years. In general, if prevailing interest rates fall significantly below the
interest rates on fixed rate contracts, such contracts are likely to be subject
to higher prepayment rates than if prevailing rates remain at or above the
interest rate on such contracts. However, the monthly payment on contracts
similar to the Contracts is often smaller than the monthly payment on other
types of consumer debt, for example, a typical mortgage loan. Consequently, a
decrease in the interest rate payable as a result of a refinancing would result
in a relatively small reduction in the amount of the contracts monthly payment,
as a result of the relatively small loan balance. Conversely, if prevailing
interest rates rise appreciably above the interest rates on fixed rate
contracts, such contracts are likely to experience a lower prepayment rate than
if prevailing rates remain at or below the interest rates on such contracts. As
of the Cut-off Date, ____% of the aggregate principal balance of the Contracts
had prepayment penalties.]
[All of the Contracts are adjustable rate contracts. As is the case with
conventional fixed rate contracts, adjustable rate contracts may be subject to a
greater rate of principal prepayments in a declining interest rate environment.
For example, if prevailing interest rates fall significantly, adjustable rate
contracts could be subject to higher prepayment rates than if prevailing
interest rates remain constant because the availability of fixed-rate contracts
at competitive interest rates may encourage obligors to refinance their
adjustable rate contracts to "lock in" a lower fixed interest rate. However, no
assurance can be given as to the level of prepayments that the contracts will
experience. As of the Cut-off Date, ____% of the aggregate principal balance of
the Contracts had prepayment penalties.]
S-11
<PAGE> 12
THE RECEIVABLES
CONTRACTS
[Description of collateral is transaction dependent -- an example of disclosure
language is set forth below.]
[All of the Contracts were purchased by the Sponsor from the Originator in
the ordinary course of business and the Contracts constitute substantially all
of the automobile and light duty truck retail installment sale contracts
included in the Originator's portfolio meeting the selection criteria described
below. Such selection criteria included that: (i) each Contract is secured by a
new or used automobile or light duty truck; (ii) each Contract was originated in
the United States; (iii) each Contract provides for level monthly payments that
fully amortize the amount financed over its original term except that the
payment in the first or last month in the life of the Contract may be minimally
different from the level payment, and a minimal number of the Contracts provide
for monthly payments for a period of time not exceeding one year after
origination in an amount less than such level payment, provided that as of the
Cutoff Date the monthly payment currently due under each such Contract is equal
to such level payment; (iv) each Contract was originated on or prior to
__________, 199_; (v) each Contract has an original term of to _______ months
and, as of the Cutoff Date, had a remaining term to maturity of not less than
three months nor more than _____ month; (vi) each Contract provides for the
payment of a finance charge at an APR ranging from ___% to ___%; (vii) each
Contract shall not have a Scheduled Payment that is more than 30 days past due
as of the Cutoff Date; (viii) no Contract shall be due, to the best knowledge of
the Originator, from any Obligor who is presently the subject of a bankruptcy
proceeding or is bankrupt or insolvent; (ix) no Vehicle has been repossessed
without reinstatement as of the Cutoff Date; and (x) as of the Cutoff Date,
physical damage insurance relating to each Vehicle is not being force-placed by
the Servicer.
Certain information with respect to the Receivables expected to be sold by
the Originator to the Sponsor pursuant to the Receivables Acquisition Agreement
and in turn sold by the Sponsor to the Trust pursuant to the Pooling Agreement
is set forth below. The description of the Receivables presented in this
Prospectus Supplement is based upon the pool of Receivables as it is expected to
be constituted on the Cutoff Date. While information as of the Closing Date for
the Receivables that actually will be sold to the Trust may differ somewhat from
the information presented herein, the Sponsor does not expect that the
characteristics of the Receivables that are sold to the Trust will vary
materially from the information presented in this Prospectus Supplement
concerning the Receivables.
As of the Cutoff Date, approximately ___% and approximately ___% of the
Aggregate Discounted Contract Balance are expected to represent Contracts
secured by automobiles and light duty trucks, respectively. Based on the
Aggregate Discounted Contract Balance, approximately ___% and approximately ___%
of the Contracts are expected to represent financing of new vehicles and used
vehicles, respectively, and no more than ___% of the Contracts are expected to
be due from employees of the Originator or any of its respective affiliates. As
of the Cutoff Date, the average Principal Balance of Contracts secured by
automobiles and light duty trucks is expected to be approximately $_______ and
approximately $_______ , respectively. The majority of the Vehicles are expected
to be foreign and domestic automobiles and light duty trucks. Except in the case
of any breach of representations and warranties by the Originator, it is
expected that none of the Contracts provide for recourse to the Originator who
originated the related Contract.
Each Contract provides for fixed level monthly payments which will amortize
the full amount of the Contract over its term. The Contracts provide for
allocation of payments according to the "sum of periodic balances" or "sum of
monthly payments" method (the "Rule of 78s"). Each Contract provides for the
payment by the Obligor of a specified total amount of payments, payable in
monthly installments on the related due date, which total represents the
principal amount financed and finance charges in an amount calculated on the
basis of a stated annual percentage rate ("APR") for the term of such Contract.
The rate at which such amount of finance charges is earned and, correspondingly,
the amount of each fixed
S-12
<PAGE> 13
monthly payment allocated to reduction of the outstanding principal balance of
the related Contract are calculated in accordance with the Rule of 78s. Under
the Rule of 78s, the portion of each payment allocable to interest is higher
during the early months of the term of a Contract and lower during later months
than that under a constant yield method for allocating payments between interest
and principal. Notwithstanding the foregoing, all payments received by the
Servicer on or in respect of the Contract will be allocated pursuant to the
Pooling Agreement on an actuarial basis.
If an Obligor elects to prepay a Contract in full, it is entitled to a
rebate of the portion of the outstanding balance then due and payable
attributable to unearned finance charges, calculated in accordance with the Rule
of 78s. The amount of a rebate under a Contract calculated in this manner will
always be less than had such rebate been calculated on an actuarial basis.
Distributions to Certificateholders will not be affected by Rule of 78s rebates
under the Contract because pursuant to the Pooling Agreement such distributions
will be determined using the actuarial method.]
The expected composition, distribution by APR and geographical distribution
of the Contracts are as set forth in the following tables.
EXPECTED COMPOSITION OF THE CONTRACTS
<TABLE>
<CAPTION>
NEW USED
--------------------- -----------
<S> <C> <C>
Aggregate Discounted Contract Balance ....................... $
Number of Contracts .........................................
Average Original Principal Balance .......................... $
Range of Original Principal Balances ...................... $_____ to $
Weighted Average APR(1)...................................... ____%
Range of APRs ............................................. ____% to ____%
Weighted Average Original Maturity(1) ....................... ______ months
Range of Original Maturities .............................. __ months to __ months
Weighted Average Remaining Maturity(1) ...................... __ months
Range of Remaining Maturities ............................. __ months to __ months
</TABLE>
- ----------
(1) Weighted by Aggregate Discounted Contract Balance as of the Cutoff Date.
S-13
<PAGE> 14
EXPECTED DISTRIBUTION OF THE CONTRACTS BY APR
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
AGGREGATE DISCOUNTED AGGREGATE
NUMBER OF NUMBER CONTRACT DISCOUNTED
RANGE OF APRS CONTRACTS OF CONTRACTS BALANCE CONTRACT BALANCE
- ------------- --------- ------------- --------- ----------------
<S> <C> <C> <C> <C>
% to % ............ % $ %
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
Total ................ % $ %
======== ===== ========= =====
</TABLE>
EXPECTED DISTRIBUTION OF THE CONTRACTS BY STATE
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF AGGREGATE AGGREGATE
AGGREGATE DISCOUNTED DISCOUNTED
Number of NUMBER CONTRACT CONTRACT
STATE(1) Contracts OF CONTRACTS BALANCE BALANCE
- -------- ---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
% $ %
Total.......... % $ %
======== ===== ========== =====
</TABLE>
- ----------
(1) Based on the addresses of the Obligors.
SUBSTITUTION
Pursuant to the Receivables Acquisition Agreement, the Servicer will have
the right (but not the obligation) at any time to substitute one or more
Eligible Receivables (each a "Substitute Receivable") [and the Vehicles subject
thereto (or a perfected security interest therein)] for a Receivable
("Predecessor Receivable") [and the Vehicles subject thereto (or a perfected
security interest therein)] if:
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<PAGE> 15
(i) the Predecessor Receivable is then in default and, as of
the most recent Cut-Off Date, has been in default for at least ________
[(___)] consecutive days or a bankruptcy petition has been filed by or
against the Obligor;
[(ii) the Vehicles subject to the Substitute Receivable or
Receivables has a current estimated fair market value and a projected
residual value, respectively, equal to or greater than the current fair
market value and projected residual value of the Vehicles subject to
the Predecessor Receivable;] and
(iii) the Substitute Receivable or Receivables require the
obligor or obligors thereunder to make Contract Payments during each
month ending on or prior to the final payment date of the Certificate
in an amount which is at least as great as the Contract Payment
required under the Predecessor Receivable during each such month.
[provided, however, that the Aggregate Discounted Contract Balance of all
Contracts substituted shall not exceed [10%] of the Aggregate Discounted
Contract Balance of the Initial Receivables and the Additional Receivables.]
[Upon repossession and disposition of any Vehicles subject to a
Defaulted Contract, any deficiency remaining will be pursued to the extent
deemed practicable by the Servicer. [The Servicer on behalf of the Issuer is
directed to maximize the Net Residual Value of the Vehicles relating to any
Defaulted Contract, and, in such regard, the Servicer may sell such Vehicles at
the best available price, refurbish such Vehicles and re-lease such Vehicles to
third parties, or take any other commercially reasonable steps to maximize such
Vehicles's Net Residual Value. Liquidation proceeds with respect to any such
Defaulted Contract, including any future payments received with respect to such
Defaulted Contracts, shall be paid to the Collection Account. If the Servicer
reasonably believes that the Net Residual Value of any Vehicles is zero or de
minimis, it will dispose of such Vehicles in accordance with its standard
procedures.]]
The original counterpart of each Contract constituting chattel paper
and the Contract Files will be held by _________________, as Trustee on behalf
of the Certificateholders. The Trustee will be required to indicate that the
Contracts have been transferred by the Originator to the Trust.
[THE ADDITIONAL RECEIVABLES
Subject to the conditions set forth below, in consideration of the
Trustee's delivery on the related Additional Receivable Transfer Date upon the
order of the Sponsor of all or a portion of the balance of funds in the
Pre-Funding Account, the Originator shall on any Additional Receivable Transfer
Date sell, transfer, assign, set over and otherwise convey without recourse, to
the Sponsor, all right, title and interest of the Originator in and to (i) each
Additional Receivable listed on the schedule delivered by the Originator to the
Sponsor and the Trustee (including all Contract Payments due thereunder); and
[(ii) the related Vehicles; provided, however, that the Originator reserves and
retains all of its right, title and interest in and to all Contract Payments
collected and interest accruing on each such Additional Receivable prior to the
related Additional Receivable Transfer Date.]
The amount released from the Pre-Funding Account shall be ___________
percent (___%) of the Discounted Contract Balances of the Additional Receivables
so transferred.
The Originator shall transfer to the Issuer the Additional Receivables
and the other property and rights related thereto only upon the satisfaction of
each of the following conditions on or prior to the related Additional
Receivable Transfer Date:
(i) the Originator shall have provided the Trustee with a
timely Addition Notice and shall have provided any information
reasonably requested by the Sponsor or the Trustee with respect to the
Additional Receivables;
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(ii) the Originator shall have delivered to the Sponsor and the
Trustee a duly executed written assignment (including an acceptance by
the Trustee) (the "Additional Receivable Transfer Agreement"), which
shall include schedules listing the Additional Receivables and any
other exhibits listed thereon;
(iii) the Originator shall have deposited in the Remittance
Account all collections in respect of the Additional Receivables
received on or after the related Additional Receivable Transfer Date;
(iv) as of each Additional Receivable Transfer Date, the
Originator was not insolvent, will not be made insolvent by such
transfer nor is it aware of any pending insolvency;
(v) such addition will not result in a material adverse tax
consequence to the Sponsor or the Certificateholders;
(vi) the Originator shall have delivered to the Trustee an
Officers' Certificate confirming the satisfaction of each condition
precedent specified in this paragraph and in the related Additional
Receivable Transfer Agreement;
(vii) the obligation of the Sponsor to purchase an Additional
Receivable on any Additional Receivable Transfer Date is subject to the
requirement that such Additional Receivable comply in all material
respects with the representations and warranties made by the Originator
on the Initial Receivables in the Pooling Agreement.]
THE ORIGINATOR AND THE SERVICER
GENERAL
The Originator is a company engaged in the business of originating and
acquiring retail installment sale contract financing to retail customers of
automotive dealers. The Originator provides full-service financing, primarily
through installment sales contracts, to retail purchasers of new and used
automobiles and light duty trucks through dealer programs.
The Originator has financed over $___ million of vehicles, representing
over _________ vehicles. The Originator currently services over ___ customers
through its direct servicing activities and an additional __________ customers
in connection with its subsidiaries activities. As of _________________, the
Originator had __ employees.
DELINQUENCY AND DEFAULT EXPERIENCE
There can be no assurance that the levels of delinquency and loss
experience reflected in Table 1 and Table 2, below, are indicative of the
performance of the Receivables included in the Collateral for the Notes.
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<PAGE> 17
TABLE 1
DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
=========================================================================================================================
Year Ended December 31,
-----------------------------------------------------------------------------------------------
1991 1992 1993
===============================================================================================
Dollar Percentage Dollar Percentage Dollar Percentage
Amount of Total Amount of Total Amount of Total
(000) Portfolio (000) Portfolio (000) Portfolio
----- --------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Originator Portfolio
at Year End
Delinquencies:
31-59 Days
60-89 Days
90 Days or more
Total Delinquencies
Total Delinquencies as a
% of Total Portfolio
=========================================================================================================================
</TABLE>
(1) The indicated periods of delinquency (31-59, 60-89, and 90 or more) are
based on the number of days past due on a contractual basis, based on a
30-day month. No Contract is considered delinquent for these purposes
until the monthly anniversary of its contractual due date (e.g., a
Contract with a payment due on January 1 would be considered 31-59 days
delinquent if the January 1 payment has not been received on or prior
to February 1).
TABLE 2
LOSS EXPERIENCE
<TABLE>
<CAPTION>
=========================================================================================================================
Year Ended December 31,
-----------------------------------------------------------------------------------------------
1991 1992 1993
===============================================================================================
Dollar Percentage Dollar Percentage Dollar Percentage
Amount of Total Amount of Total Amount of Total
(000) Portfolio (000) Portfolio (000) Portfolio
----- --------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Acquisitions (1)
($000's)
Gross Defaults ($000's)
Gross Recoveries
($000's)
Net Losses ($000's)
=========================================================================================================================
</TABLE>
(1) Total Acquisition = total cost (aggregate purchase price of the
Vehicles) to the Originator since inception in ____ through and
including the year end set forth above.
LITIGATION
The Originator is not involved in any legal proceedings, and is not
aware of any pending or threatened legal proceedings that would have a material
adverse effect upon its financial condition or results of operations.
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<PAGE> 18
SERVICING
The Contracts will be serviced by the Originator, as Servicer, pursuant
to the Pooling Agreement.
The Pooling Agreement requires that servicing of the Contracts by the
Originator shall be carried out in the same manner in which it services
contracts and vehicles held for its own account and consistent with customary
practices of servicers in the retail automobile industry, but in performing its
duties hereunder, the Originator will act on behalf and for the benefit of the
Sponsor, the Trustee and the holders of the Certificates, subject at all times
to the provisions of the Pooling Agreement, without regard to any relationship
which the Originator or any Affiliate of the Originator may otherwise have with
a Obligor. Except as permitted by the terms of any Contract following a default
thereunder, the Originator shall not take any action which would result in the
interference with the Obligor's right to quiet enjoyment of the Vehicles subject
to the Contract during the term thereof.
Following each Determination Date, the Originator shall advance and
remit to the Trustee, in such manner as will ensure that the Trustee will have
immediately available funds on account thereof by 11:00 a.m. New York time on
the [______] Business Day prior to the next succeeding Payment Date, a Servicer
Advance equal to the Contract Payment due during the preceding Contract Payment
Period with respect to each Contract (other than a Contract which became a
Defaulted Contract on or prior to such Determination Date) under which the
Obligor has not made such payment by such Determination Date; provided, however,
that the Originator will not be obligated to make a Servicer Advance with
respect to any Contract if the Originator, in its good faith judgment, believes
that such Servicer Advance would be a Nonrecoverable Advance. If the Originator
determines that any Contract Payment it has made, or is contemplating making,
would be a Nonrecoverable Advance, the Originator shall deliver to the Trustee
an Officers' Certificate stating the basis for such determination.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
For its servicing of the Receivables, the Originator will be entitled
to receive a Servicing Fee equal to the product of (i) one-twelfth, (ii) ___%
and (iii) the Aggregate Discounted Contract Balance of all Contracts as of the
preceding Determination Date, payable out of the Remittance Account, plus
Servicing Charges and Investment Earnings.
All costs of servicing each Contract in the manner required by the
Pooling Agreement shall be borne by the Originator, but the Originator shall be
entitled to retain, out of any amounts actually recovered with respect to any
Defaulted Contract [or the Vehicles subject thereto,] the Originator's actual
out-of-pocket expenses reasonably incurred with respect to such Defaulted
Contract [or Vehicles]. In addition, the Originator shall be entitled to receive
on each Payment Date any unreimbursed Nonrecoverable Advances or Servicer
Advances with respect to any Defaulted Contract and the Servicing Fee.
The servicing compensation will compensate the Originator for customary
contract servicing activities to be performed for the Sponsor and the
Originator, as well as additional administrative services to be performed by the
Originator.
EVIDENCE AS TO COMPLIANCE
The Pooling Agreement requires that with each set of financial
statements delivered pursuant to the Pooling Agreement, the Originator will
deliver an Officers' Certificate stating (i) that the officers signing such
Certificate have reviewed the relevant terms of the Pooling Agreement and have
made, or caused to be made under such officers' supervision, a review of the
activities of the Originator during the period covered by the statements then
being furnished, (ii) that the review has not disclosed the existence of any
Servicer Event of Default or, if a Servicer Event of Default exists, describing
its nature and what action the Originator has taken and is taking with respect
thereto, and (iii) that on the basis of such review the
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<PAGE> 19
officers signing such certificate are of the opinion that during such period the
Originator has serviced the Receivables in compliance with the required
procedures except as described in such certificate.
The Originator shall cause a firm of independent certified public
accountants (who may also render other services to the Originator) to deliver to
the Trustee, with a copy to the Rating Agency and each holder of the
Certificates, within [90] days following the end of each fiscal year of the
Originator, beginning with the Originator's fiscal year ending ____________,
199__, a written statement to the effect that such firm has examined in
accordance with generally accepted practices samples of the accounts, records,
and computer systems of the Originator for the fiscal year ended on the previous
_______ relating to the Receivables (which accounts, records, and computer
systems shall be described in one or more schedules to such statement), that
such firm has compared the information contained in the Originator's reports
delivered in the relevant period with information contained in the accounts,
records, and computer systems for such period, and that, on the basis of such
examination and comparison, such firm is of the opinion that the Originator has,
during the relevant period, serviced the Receivables in compliance with such
servicing procedures, manuals, and guides and in the same manner as it services
comparable contracts for itself or others, that such accounts, records, and
computer systems have been maintained, and that such certificates, accounts,
records, and computer systems have been properly prepared and maintained in all
material respects, except in each case for (a) such exceptions as such firm
shall believe to be immaterial and (b) such other exceptions as shall be set
forth in such statement.
OTHER SERVICING PROCEDURES
At least [___] days prior to each Payment Date, the Originator shall
deliver a report in writing (the "[Monthly] Servicer Report") to each holder of
the Certificates, the Trustee and the Rating Agency.
If an Obligor has [____] Contract Payments which are due and unpaid as
of any Calculation Date, such Obligor's Contract shall become a Defaulted
Contract. Where no satisfactory arrangements can be made for collection of
delinquent payments within [___] days of a Contract becoming a Defaulted
Contract, the Originator shall foreclose or otherwise liquidate any such
Defaulted Contract [(together with the related Vehicles)] within [60] days of
such Contract becoming a Defaulted Contract. In connection with any foreclosure
or other liquidation, the Originator will take such action as is appropriate,
consistent with the Originator's administration of contracts in its own
portfolio, including such action as may be necessary to cause, or attempt to
cause, the Obligor thereunder to cure such default (if the same may be cured) or
to terminate or attempt to terminate such Contract and to recover, or attempt to
recover, all damages resulting from such default.
[The Originator will use its best efforts (i) to sell or re-lease any
Vehicles subject to a Defaulted Contract in a timely manner and upon reasonable
terms and conditions so as to reduce as expeditiously as is consistent with
sound commercial practice any unreimbursed amounts drawn by the Trustee on the
Reserve Account and (ii) to sell or re-lease any Vehicles remaining subject to
the lien of the Trustee upon the expiration of the Contract to which such
Vehicles is subject, in a timely manner and in a manner consistent with that
utilized by the Originator with respect to vehicles owned by it so as to
realize, to the extent possible under then prevailing market conditions, the Net
Residual Value of such Vehicles.]
[All Residual Payments realized by the Originator in the performance of
its duties with respect to any item of Vehicles remaining subject to the Lien of
the Trustee (net of the Originator's actual out-of-pocket expenses reasonably
incurred in such realization) shall be held in trust by the Originator, as agent
for the Trustee, and turned over to the Trustee within [___] Business Days for
application in accordance with the provisions of the Pooling Agreement, provided
that, to the extent that (i) the Originator has made any advances with respect
to any Contract which thereafter became a Defaulted Contract and (ii) the
Originator has not otherwise been fully reimbursed for such advances, the
Originator shall reimburse itself for such advances from any Residual Payments
recovered with respect to such Defaulted Contract before remitting to the
Trustee any such amounts for deposit in the Remittance Account.]
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<PAGE> 20
REMOVAL OF THE SERVICER
The Pooling Agreement will provide that the Originator may not resign
from its obligations and duties as Servicer thereunder, except upon a
determination that the Originator's performance of such duties is no longer
permissible under applicable law. the Originator can only be removed pursuant to
a Servicer Event of Default. If a Servicer Event of Default shall have occurred
and be continuing, the Trustee shall give written notice to the Originator of
the termination of all of the rights and obligations of the Originator (but none
of the Originator's obligations thereunder, which shall survive any such
termination) under the Pooling Agreement. On and after the time the Originator
receives a notice of termination, the Trustee shall be the successor in all
respects to the Originator in its capacity as servicer under the Pooling
Agreement of the Receivables. The Trustee may, if it shall be unwilling to so
act, or shall, if it is unable to so act, give notice of such fact to each
holder of the Certificates and (i) appoint an established institution,
satisfactory to the holders of Certificates evidencing not less than [______%]
of the Voting Rights, as the successor to the Originator to assume all of the
rights and obligations of the Originator, including, without limitation, the
Originator's right to receive the Servicing Fee (but not the obligations of the
Originator contained in the Pooling Agreement) or, (ii) if no such institution
is so appointed, petition a court of competent jurisdiction to appoint an
institution meeting such criteria as the Originator.
THE TRUSTEE
The Trustee, ____________, has an office at ________________________.
The Trustee may resign, subject to the conditions set forth below, at
any time upon written notice to the Sponsor, the Servicer and the Certificate
Insurer, in which event the Servicer, with the consent of the Certificate
Insurer, will be obligated to appoint a successor Trustee. If no successor
Trustee shall have been so appointed and have accepted such appointment within
[30] days after the giving of such notice of resignation, the resigning Trustee
may petition a court of competent jurisdiction for the appointment of a
successor Trustee. Any successor Trustee shall meet the financial and other
standards for qualifying as a successor Trustee under the Pooling Agreement. The
Servicer, the Certificate Insurer or Certificateholders evidencing more than
[___%] of the Percentage Interests of the Trust may also remove the Trustee if
the Trustee ceases to be eligible to continue as such under the Pooling
Agreement and fails to resign after written request therefor, or is legally
unable to act, or if the Trustee is adjudicated to be insolvent. In such
circumstances, the Servicer, the Certificate Insurer or such Certificateholders
will also be obligated to appoint a successor Trustee. Any resignation or
removal of the Trustee and appointment of a successor Trustee will not become
effective until acceptance of the appointment by the successor Trustee.
THE TRUST
The Trust, as a master trust, is expected to issue additional Series
from time to time. The Trust has not engaged and will not engage in any business
activity other than acquiring and holding Trust Assets and proceeds therefrom,
issuing Series of Certificates and the Sponsor's Certificate and making payments
thereon and related activities. As a consequence, the Trust does not and is not
expected to have any source of capital resources other than the Trust Assets.
The Trust will be administered in accordance with the laws of the State of
Delaware.
The Sponsor will convey to the Trust, without recourse, its interest in
all the Receivables listed in the Series 199__-1 Supplement. The Trust Fund will
consist of the Contracts, [any related Vehicles or a security interest in such
Vehicles,] all monies due or to become due thereunder, the proceeds of the
Contracts, all monies on deposit in the Collection Account and in certain other
accounts maintained for the benefit of the Certificateholders and any Series
Enhancements. The Trust Fund is expected to change over the life of the Trust as
Additional Receivables become subject to the Trust and as Contracts
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<PAGE> 21
terminate, are charged off or removed and are no longer subject to the Trust.
Pursuant to the Pooling Agreement, the Sponsor will have the right (subject to
certain limitations and conditions), and in some circumstances will be
obligated, to designate Additional Receivables to the Trust Fund.
USE OF PROCEEDS
The net proceeds from the sale of the [Class A] Certificates will be
paid to the Sponsor and distributed to the Originator in payment for the
Receivables.
SERIES PROVISIONS
The Series 199__-1 Certificates will consist of two Classes, the [Class
A] Certificates and the [Class B] Certificates. The [Class A] Certificates and
[Class B] Certificates will be issued pursuant to the Pooling Agreement and a
Supplement thereto relating to the [Class A] Certificates and [Class B]
Certificates (the "Series 199__-1 Supplement"). The following summary describes
the material terms generally applicable to Series 199__-1 and is qualified in
its entirety by reference to the Series 199__-1 Supplement. The Servicer will
provide, without charge, to any prospective purchaser of the [Class A]
Certificates a copy of the Pooling Agreement and the Series 199__-1 Supplement.
Reference should be made to "Description of the Securities" and "Description of
the Trust Agreements" in the Prospectus for additional information concerning
the Series 199__-1 Certificates and the Pooling Agreement.
Payments with respect to [Class B] Certificates will be subordinated to
the payment of interest and certain other amounts due with respect to the [Class
A] Certificates. The [Class B] Certificates initially will be retained by the
Sponsor; however, subject to certain restrictions, the Sponsor may sell a
portion of the Class B Certificates subsequent to the Series Issuance Date, and
in connection with such transfer, the Trustee and the Sponsor may agree to amend
the Series 199__-1 Supplement and the Pooling Agreement, including changing the
Series Enhancement provided for the Series 199__-1 Certificates to add Series
Enhancement for the [Class B] Certificates, so long as no Ratings Effect or Pay
Out Event results from such amendment. The [Class B] Certificates are not
offered hereby.
INTEREST
Interest will accrue on the [Class A] Invested Amount at the
Certificate Rate. Interest will be distributed to the [Class A]
Certificateholders on ____________, 199__, and on each Distribution Date
thereafter in an amount equal to one-twelfth of the product of the Certificate
Rate and the [Class A] Invested Amount as of the preceding Record Date, except
that interest for the first Distribution Date will be equal to the interest
accrued at the Certificate Rate for the period from and including ___________,
199__ to but excluding such first Distribution Date. Interest will be calculated
on the basis of a 360-day year of twelve 30-day months. Interest with respect to
the [Class A] Certificates due but not paid on any Distribution Date will be due
on the next succeeding Distribution Date with additional interest on such amount
at the Certificate Rate to the extent permitted by law. Interest payments on the
[Class A] Certificates on any Distribution Date will be funded from (a)
Available Finance Charge Collections for the related Collection Period as
described herein under "--Application of Collections--Payments of Interest, Fees
and Other Items" and (b) to the extent necessary, withdrawals from the Reserve
Account as described under "--Reserve Account."
PRINCIPAL
During the Scheduled Amortization Period principal will be paid to the
[Class A] Certificateholders monthly on each Distribution Date in an amount up
to the Controlled Distribution Amount with respect to such Distribution Date.
The Scheduled Amortization Period will commence on the Series Cut-Off Date and
will end at the close of business on _____________, 199__, unless terminated
earlier upon the occurrence
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<PAGE> 22
of a Pay Out Event, in which case it will end at the close of business on the
last day of the Collection Period during which the Pay Out Event occurs. Upon
the completion or termination of the Scheduled Amortization Period, the Full
Amortization Period will begin, and principal equal to the Available Principal
Collections for each Collection Period will be paid to the [Class A]
Certificateholders monthly on each Distribution Date until the Invested Amount
of the [Class A] Certificates is paid in full.
ALLOCATION PERCENTAGES
Pursuant to the Pooling Agreement, for each Collection Period during
the Scheduled Amortization Period, the Servicer will allocate among the [Class
A] Certificateholders' Interest, the [Class B] Certificateholders' Interest, the
Sponsor's Interest and the Certificateholders' Interest of the other Series
issued and outstanding from time to time that are in their Scheduled
Amortization Periods, all Finance Charge Payments and Principal Payments and the
Defaulted Amount with respect to Receivables allocated to the Trust's Floating
Receivable Pool. Because Series 199__-1 is the first Series to be issued by the
Trust, the Floating Receivable Pool is not expected to contain any Non-Allocated
Interests created in connection with the formation of Full Amortization Pools
with respect to other Series while Series 199__-1 is in its Scheduled
Amortization Period. Collections of Finance Charge Payments, Principal Payments
and the Defaulted Amount with respect to Receivables (and Non-Allocated
Interests, if any) in the Floating Receivable Pool will be allocated during the
Scheduled Amortization Period to the [Class A] Certificateholders' Interest
based on the Floating Allocation Percentage with respect to the [Class A]
Certificates and to the [Class B] Certificateholders' Interest based on the
Floating Allocation Percentage with respect to the [Class B] Certificates.
The "[Class A] Invested Amount" for any day means an amount equal to
(i) the initial principal amount of the [Class A] Certificates, minus (ii) the
amount of principal payments made to [Class A] Certificateholders prior to such
day, and minus (iii) the excess, if any, of the aggregate amount of Investor
Charge-Offs for all Distribution Dates preceding such day over the aggregate
amount of Investor Charge-Offs reimbursed prior to such day.
The "[Class B] Invested Amount" for any day means an amount determined
with respect to the [Class B Certificates] in the same manner as the [Class A]
Invested Amount.
"Series 199__-1 Invested Amount" for any day means the sum of the
[Class A] Invested Amount and the [Class B] Invested Amount.
"Floating Allocation Percentage" means, for the [Class A] Certificates
and the [Class B] Certificates, as applicable, with respect to any Collection
Period, the percent equivalent of a fraction, the numerator of which equals the
Invested Amount of such Class as of the day before the last day of the
Collection Period and the denominator of which equals (i) during the Scheduled
Amortization Period, the Floating Contract Pool Balance or (ii) during the Full
Amortization Period, the Full Amortization Pool Balance allocated to Series
199__-1, as applicable, as of such day.
Upon the commencement of the Full Amortization Period, the Trustee will
segregate all the Receivables (and Non-Allocated Interests, if any) included in
the Trust's Floating Receivable Pool as of such date into a Full Amortization
Pool. Contract Payments and the Defaulted Amount with respect to the Receivables
allocated to the Full Amortization Pool will be the only Contract Payments and
Defaulted Amounts allocated to the Full Amortization Pool and Series 199__-1
Certificateholders will thereafter have an interest in only such Contract
Payments and Defaulted Amount. The interest in such Contract Payments and
Defaulted Amount not allocated to the Series 199__-1 Certificateholders'
Interest will represent the Non-Allocated Interest and will be allocated
initially to the Floating Receivable Pool. The Full Amortization Pool for Series
199__-1 is expected to be the first Full Amortization Pool created for the
Trust. Consequently, the Floating Pool is not expected to contain any
Non-Allocated Interest at the time the Series 199__-1 Full Amortization Pool is
segregated, and the Series 199__-1 Full Amortization Pool is not expected to
have a Non-Allocated Interest allocated to it.
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<PAGE> 23
Contract Payments and the Defaulted Amount allocated to the Full
Amortization Pool will be allocated to the Series 199__-1 Certificateholders'
Interest on the basis of the applicable Fixed Allocation Percentage. Contract
Payments and the Defaulted Amount initially allocated to the Series 199__-1
Certificateholders' Interest will be allocated further between the [Class A]
Certificateholders' Interest and the [Class B] Certificateholders' Interest on
the basis of the Floating Allocation Percentage applicable to each such Class.
The Full Amortization Period will continue until the Invested Amount of the
Series 199__-1 Certificates is paid in full or the Full Amortization Pool
Balance is zero, whichever first occurs.
"Fixed Allocation Percentage" for Series 199__-1 shall equal the
percentage equivalent of a fraction, the numerator of which is the Invested
Amount of Series 199__-1 on the day before the last day of the first Collection
Period in the Full Amortization Period and the denominator of which is the Full
Amortization Pool Balance on such day.
APPLICATION OF COLLECTIONS
Payments of Interest, Fees and Other Items. On each Distribution Date,
the Trustee, acting pursuant to the Servicer's instructions, will apply all
amounts allocated to the [Class A] Certificateholders' Interest with respect to
collections of Finance Charge Payments for the preceding Collection Period (as
described above under "--Allocation Percentages"), all amounts allocated to the
[Class B] Certificateholders' Interest with respect to collections of Finance
Charge Payments and Principal Payments for the preceding Collection Period (as
described under "--Subordination") and any Additional Finance Charges with
respect to other Series that are allocated to Series 199__-1 in accordance with
the Pooling Agreement (collectively, "Available Finance Charge Collections"), to
make the following payments and deposits in the following order of priority:
[(i) an amount equal to the Monthly Investor Servicing Fee with
respect to the Series 199__-1 Certificates for such Distribution Date,
plus the amount of any Monthly Investor Servicing Fee with respect to
the Series 199__-1 Certificates previously due but not distributed to
the Servicer on a prior Distribution Date, plus the amount of any
outstanding Servicer Advances allocable to the Series 199__-1
Certificates that the Servicer has determined will not be recovered
from the Receivables to which the Servicer Advances were related as
described under "Description of the Trust Agreements--Servicing
Procedures" in the Prospectus, will be distributed to the Servicer;
(ii) an amount equal to Monthly Interest for such Distribution
Date due on the [Class A] Certificates, plus the amount of any Monthly
Interest previously due but not distributed to the [Class A]
Certificateholders on a prior Distribution Date, plus any additional
interest at the Certificate Rate with respect to interest amounts that
were due but not paid to [Class A] Certificateholders on a prior
Distribution Date, will be distributed to the [Class A]
Certificateholders;
(iii) an amount equal to the Investor Default Amount for such
Distribution Date will be treated as a portion of Available Principal
Collections for such Distribution Date;
(iv) an amount equal to the aggregate amount of Investor
Charge-Offs which have not been previously reimbursed will be treated
as a portion of Available Principal Collections for such Distribution
Date;
(v) an amount up to the deficiency, if any, between the
Required Reserve Amount and the remaining Available Reserve Amount will
be used to increase the amount on deposit in the Reserve Account up to
the Required Reserve Amount;
(vi) an amount equal to any unreimbursed draws under any letter
of credit or surety bond obtained by the Servicer will be paid to the
provider of such letter of credit or surety bond;
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<PAGE> 24
(vii) an amount equal to the amount of Finance Charge Payments
with respect to the [Class B] Certificates included in Available
Finance Charge Collections will be reallocated to the [Class B]
Certificates for the payment of interest on the [Class B] Certificates
pursuant to the terms of the Series 199__-1 Supplement ("Class B
Reallocated Finance Charge Collections");
(viii) an amount equal to the amount of Principal Payments with
respect to the [Class B] Certificates included in Available Finance
Charge Collections will be reallocated to the [Class B] Certificates
for the payment of principal on the [Class B] Certificates pursuant to
the Series 199__-1 Supplement ("[Class B] Reallocated Principal
Collections"); and
(ix) the balance, if any, will constitute a portion of
Additional Finance Charges for such Distribution Date and will be
available for allocation to other Series in the Trust or to the
Sponsor.]
"Monthly Interest" means, with respect to any Distribution Date,
one-twelfth of the product of (i) the Certificate Rate and (ii) the [Class A]
Invested Amount as of the preceding Record Date; provided, however, that Monthly
Interest with respect to the first Distribution Date will be equal to the
interest accrued on the initial principal amount of the [Class A] Certificates
at the Certificate Rate for the period from the Series Issuance Date to but
excluding the first Distribution Date.
"Required Amount" means, with respect to any Distribution Date, the
excess, if any, of the full amount required to be allocated pursuant to
paragraphs (i), (ii) and (iii) of the second preceding paragraph for such
Distribution Date over the amount of Available Finance Charge Collections for
such Distribution Date.
"Investor Default Amount" means, (x) with respect to any Distribution
Date in the Scheduled Amortization Period, the product of (i) the Floating
Allocation Percentage with respect to the [Class A] Certificates for the related
Collection Period and (ii) the Defaulted Amount with respect to the Floating
Contract Pool for such Collection Period and (y) with respect to any
Distribution Date in the Full Amortization Period, the product of (i) the Fixed
Allocation Percentage with respect to Series 199__-1, (ii) the Floating
Allocation Percentage with respect to the [Class A] Certificates for the related
Collection Period and (iii) the Defaulted Amount with respect to the Full
Amortization Pool for such Collection Period.
Payments of Principal. On each Distribution Date, the Trustee, acting
pursuant to the Servicer's instructions, will apply all amounts allocated to the
[Class A] Certificateholders' Interest with respect to collections of Principal
Payments for the preceding Collection Period (as described above under
"--Allocation Percentages"), any Shared Principal Collections with respect to
other Series that are allocable to the [Class A] Certificates and any other
amounts which are to be allocated in the same manner as Available Principal
Collections (as described above under "--Payment of Interest, Fees and Other
Items") (collectively, "Available Principal Collections") and will distribute
such amounts on each Distribution Date with respect to the Scheduled
Amortization Period or the Full Amortization Period in the following order of
priority:
[(i) an amount equal to Monthly Principal for such Distribution
Date will be distributed to the [Class A] Certificates;
(ii) an amount up to the deficiency, if any, between the
Required Reserve Amount and the remaining Available Reserve Amount
(after giving effect to any deposit made from Available Finance Charge
Collections as described above) will be used to increase the amount on
deposit in the Reserve Account up to the Required Reserve Amount;
(iii) the amount necessary to be paid to the Sponsor in exchange
for any related Additional Receivables;
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<PAGE> 25
(iv) an amount equal to any unreimbursed draws under any letter
of credit or surety bond obtained by the Servicer will be paid to the
provider of such letter of credit or surety bond;
(v) the balance, if any, will be allocated to Shared Principal
Collections.]
"Monthly Principal" with respect to any Distribution Date relating to
the Scheduled Amortization Period or the Full Amortization Period will equal the
least of (i) the Available Principal Collections for such Distribution Date,
(ii) for each Distribution Date with respect to the Scheduled Amortization
Period, the Controlled Deposit Amount for such Distribution Date and (iii) the
[Class A] Invested Amount.
"Controlled Distribution Amount" means, for any Distribution Date with
respect to the Scheduled Amortization Period, an amount equal to the sum of the
Controlled Amortization Amount for such Distribution Date and any Deficit
Controlled Amortization Amount for the preceding Distribution Date.
"Controlled Amortization Amount" means, for any Distribution Date with
respect to the Scheduled Amortization Period, the amount set forth for such
Distribution Date on the "Schedule of Class A Controlled Amortization Amounts."
"Deficit Controlled Amortization Amount" means, (x) on the first
Distribution Date with respect to the Scheduled Amortization Period, the excess,
if any, of the Controlled Amortization Amount for such Distribution Date over
the amount distributed as Monthly Principal for such Distribution Date and (y)
on each subsequent Distribution Date with respect to the Scheduled Amortization
Period, the excess, if any, of the sum of the Controlled Amortization Amount for
such subsequent Distribution Date and any Deficit Controlled Amortization Amount
for the prior Distribution Date over the amount distributed as Monthly Principal
on such subsequent Distribution Date.
The schedule below shows the [Class A] Invested Amount and the [Class
A] Controlled Amortization Amount for each Distribution Date with respect to the
Scheduled Amortization Period for the [Class A] Certificates, assuming each
[Class A] Controlled Amortization Amount is paid in full on the date indicated,
no Payout Event occurs and losses allocable to the [Class A] Certificates do not
exceed the amounts available to cover such losses. The [Class A] Controlled
Amortization Amount is equal to the [Class A] Certificateholders' allocable
share of Scheduled Principal Payments due with respect to the Original
Receivables for each of the Distribution Dates shown.
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SCHEDULE OF CLASS A
CONTROLLED AMORTIZATION AMOUNTS
<TABLE>
<CAPTION>
CLASS A
CLASS A CONTROLLED
INVESTED AMORTIZATION
DISTRIBUTION DATE AMOUNT AMOUNT
----------------- -------- ------------
<S> <C> <C>
Original Invested Amount............................................. $ $
December 199_........................................................
January 199_.........................................................
February 199_........................................................
March 199_...........................................................
April 199_...........................................................
May 199_.............................................................
June 199_............................................................
July 199_............................................................
August 199_..........................................................
September 199_.......................................................
October 199_.........................................................
November 199_........................................................
</TABLE>
Subordination. The fractional undivided interest in the Trust
represented by the [Class B] Certificates will be subordinated to the extent
described herein to fund payments with respect to the [Class A] Certificates.
The [Class B] Invested Amount represents the [Class B] Certificateholders'
Interest in the Trust Assets and represents the subordinated amount which, in
addition to the Reserve Account, any Additional Finance Charges and any Shared
Principal Collections, is available to fund payments of interest and certain
other amounts due with respect to the [Class A] Certificates as described under
"Series Provision--Application of Collections--Payments of Interest, Fees and
Other Items." No principal or interest will be distributed on the [Class B]
Certificates with respect to a Distribution Date unless all interest payments,
the Investor Default Amount and aggregate unreimbursed Investor Charge-Offs have
been covered with respect to the [Class A] Certificates with respect to such
Distribution Date and the Available Reserve Amount equals the Required Reserve
Amount on such Distribution Date. See "--Payments of Interest, Fees and Other
Items" and "--Payments of Principal." To the extent the [Class B] Invested
Amount is reduced to zero, withdrawals will then be made from the Reserve
Account. If the Reserve Account is reduced to zero as described under "--Reserve
Account," the [Class A] Invested Amount may be reduced as described under
"--Investor Charge-Offs" and the [Class A] Certificateholders will bear directly
the credit and other risks associated with their interest in the Trust.
The [Class B] Certificates will receive distributions of interest on
each Distribution Date equal to the lesser of (x) [Class B] Available Finance
Charge Collections and (y) interest accrued and unpaid on the [Class B] Invested
Amount at the [Class B] Certificate Rate ("[Class B] Monthly Interest"). Any
remaining [Class B] Available Finance Charge Collections will be allocated in
the following priority: (a) an amount equal to the [Class B] Investor Default
Amount for the Collection Period will be treated as a portion of [Class B]
Available Principal Collections for such Distribution Date, (b) an amount equal
to the aggregate amount of [Class B] Investor Charge-Offs which have not
previously been reimbursed will be treated as a portion of [Class B] Available
Principal Collections for such Distribution Date and (c) the balance will be
available for allocation to the Sponsor. The [Class B] Certificates will receive
distributions of principal on each Distribution Date equal to the lesser of the
[Class B] Available Principal Collections and the principal payable to the
[Class B] Certificates pursuant to the Series 199__-1 Supplement. Any remaining
[Class B] Available Principal Collections will be allocated in the following
priority: (x) the amount necessary to be paid to the Sponsor in exchange for any
related Additional Receivables and (y) the balance, if any, will be remitted to
the Seller.
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<PAGE> 27
"[Class B] Required Amount" means, with respect to any Distribution
Date, the excess, if any, of the full amount required to be allocated pursuant
to clause (a) in the preceding paragraph for such Distribution Date over the
remaining [Class B] Available Finance Charge Collections for such Distribution
Date.
"[Class B] Available Finance Charge Collections" for any Distribution
Date means [Class B] Reallocated Finance Charge Collections as described above
under "--Payments of Interest, Fees and Other Items."
"[Class B] Available Principal Collections" for any Distribution Date
means the sum of [Class B] Reallocated Principal Collections and any other
amounts treated as a portion of [Class B] Available Principal Collections as
described above.
"[Class B] Investor Default Amount" will be calculated with respect to
the [Class B] Certificates for any Distribution Date in the same manner as
Investor Default Amount is calculated with respect to the [Class A]
Certificates.
RESERVE ACCOUNT
The Trustee will hold the Reserve Account for the benefit of the [Class
A] Certificateholders and the Reserve Sponsor, as their interests may appear.
The interest of the Reserve Sponsor will be subordinated to the interests of the
[Class A] Certificateholders as provided in the Series 199__-1 Supplement. The
Reserve Account will be one or more Eligible Deposit Accounts and funds on
deposit in the Reserve Account will be invested in Eligible Investments. A
portion of such funds may be invested in debt obligations of the Reserve Sponsor
or its affiliates to the extent such obligations qualify as Eligible
Investments.
The Reserve Account will be funded on the Series Issuance Date by the
Sponsor from the proceeds of the issuance of the [Class A] Certificates in an
amount equal to the Initial Reserve Amount (with respect to the Reserve Account,
the Sponsor shall be referred to as the "Reserve Sponsor"). The Reserve Account
will be terminated following the earlier to occur of (a) the date on which the
[Class A] Certificates are paid in full and (b) the termination of the Trust.
Any amounts then remaining on deposit in the Reserve Account will be distributed
to the Reserve Sponsor.
On each Distribution Date, the amount available to be withdrawn from
the Reserve Account (the "Available Reserve Amount") will be equal to the lesser
of the amount on deposit in the Reserve Account (before giving effect to any
deposit to be made to the Reserve Account on such Distribution Date) and the
Required Reserve Amount. The "Required Reserve Amount" shall mean, with respect
to any Distribution Date, $______________ plus, if as of any Determination Date
an Additional Reserve Event shall have occurred and be continuing, the excess,
if any, of (i) __% of the [Class A] Invested Amount as of the last day of the
previous Collection Period over (ii) $____________. An "Additional Reserve
Event" shall occur with respect to Series 199__-1 if the average ratio on the
three preceding Determination Dates (as determined by the Servicer on any
Determination Date) of (x) the product of 12 and the aggregate Contract
Discounted Balances as of the last day of the previous Collection Period of all
Defaulted Contracts which became Defaulted Contracts during the previous
Collection Period to (y) the Discounted Contract Balance of the Receivables Pool
as of the last day of the previous Collection Period, exceeds ___%.
On each Distribution Date, a withdrawal will be made from the Reserve
Account in an amount equal to the Required Amount, if any, with respect to such
Distribution Date (but not in excess of the Available Reserve Amount on such
Distribution Date). Any such funds withdrawn from the Reserve Account will be
applied in accordance with, and subject to the priorities set forth in,
paragraphs (i), (ii) and (iii) under "--Application of Collections--Payment of
Interest, Fees and Other Items" above.
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<PAGE> 28
On each Distribution Date, the Trustee, acting pursuant to the
Servicer's instructions, will apply Available Finance Charge Collections and
Available Principal Collections (to the extent described above under
"--Application of Collections--Payment of Interest, Fees and Other Items" and
"--Application of Collections--Payments of Principal") to increase the amount on
deposit in the Reserve Account (to the extent such amount is less than the
Required Reserve Amount). On each Distribution Date, after giving effect to any
deposit to be made to, and any withdrawal to be made from, the Reserve Account
on such Distribution Date, the Trustee will withdraw from the Reserve Account an
amount equal to the excess, if any, of the amount on deposit in the Reserve
Account over the Required Reserve Amount and shall distribute such excess to (a)
the provider of any letter of credit or surety bond described in clause (vi)
under "--Application of Collections--Payments of Interest, Fees and Other Items"
to the extent of any unreimbursed draws under the letter of credit or surety
bond and (b) the balance, if any, will be treated as [Class B] Available
Principal Collections and distributed as provided under "--Application of
Collections--Subordination." Any amounts withdrawn from the Reserve Account and
distributed as described above will not be available for distribution to the
[Class A] Certificateholders.
INVESTOR CHARGE-OFFS
On each Distribution Date, if the Required Amount for such Distribution
Date exceeds the Available Reserve Amount with respect to such Distribution
Date, the [Class B] Invested Amount will be reduced by the amount of such
excess, but not by more than the Investor Default Amount for such Distribution
Date (a "[Class B] Investor Charge-Off"). If such reduction would cause the
[Class B] Invested Amount to be a negative number (or if the [Class B] Invested
Amount is already zero), the [Class B] Invested Amount will be reduced to or
remain at zero, and the [Class A] Invested Amount will be reduced by the amount
by which the [Class B] Invested Amount would have been reduced below zero, but
not more than the excess, if any, of the Investor Default Amount for such
Distribution Date over the amount of such reduction, if any, of the [Class B]
Invested Amount with respect to such Distribution Date (an "Investor
Charge-Off").
If the [Class A] Invested Amount has been reduced by the amount of any
Investor Charge-Offs, it will thereafter be increased on any Distribution Date
(but not by an amount in excess of the aggregate Investor Charge-Offs) by the
amount of Available Finance Charge Collections allocated and available for such
purpose as described under "--Application of Collections--Payments of Interest,
Fees and Other Items." If an Investor Charge-Off is not subsequently reimbursed,
it will have the effect of slowing or reducing the return of principal to the
[Class A] Certificateholders.
On each Distribution Date, if the [Class B] Required Amount for such
Distribution Date is greater than zero, the [Class B] Invested Amount will be
reduced by the amount of such excess, but not below zero, and such reduction
will be a [Class B] Investor Charge-Off.
If the [Class B] Invested Amount has been reduced by the amount of any
[Class B] Investor Charge-Offs, it will thereafter be increased on any
Distribution Date (but not by an amount in excess of the aggregate [Class B]
Investor Charge-Offs) by the amount of Available [Class B] Finance Charge
Collections allocated and available for such purpose as described under
"--Application of Collections--Subordination."
PAY OUT EVENTS
A Pay Out Event will occur with respect to Series 199__-1 if the
average ratio on the three preceding Determination Dates (as determined by the
Servicer on any Determination Date) of (i) the product of 12 and the aggregate
Discounted Contract Balances as of the last day of the previous Collection
Period of all Defaulted Contracts which became Defaulted Contracts during the
previous Collection Period to (ii) the Discounted Contract Balance of the
Receivables Pool as of the last day of the previous Collection Period, exceeds
___%. Such Pay Out Event shall occur immediately on such
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<PAGE> 29
Determination Date without notice or other action on the part of the Trustee or
the Series 199__-1 Certificateholders.
DISTRIBUTIONS
Payments to [Class A] Certificateholders will be made from the
Collection Account. The Servicer shall instruct the Trustee to apply, or have
the Paying Agent apply, the funds on deposit in such account to make the
following distributions:
(a) on each Distribution Date with respect to the [Class A]
Certificates, all amounts on deposit in the Collection Account which
are allocated and available to pay interest on the [Class A]
Certificates will be distributed to the [Class A] Certificateholders or
applied as described under "--Application of Collections--Payments of
Interest, Fees and Other Items"; and
(b) on each Distribution Date all amounts on deposit in the
Collection Account which are allocated and available to pay principal
of the [Class A] Certificates (as described under "--Application of
Collections--Payments of Principal") will be distributed to [Class A]
Certificateholders up to a maximum amount on any such date equal to (i)
during the Scheduled Amortization Period, the Controlled Distribution
Amount, and (ii) during the Full Amortization Period, the [Class A]
Invested Amount on such date (unless there has been an optional
repurchase of the [Class A] Certificateholders' Interest due to the
failure to find a successor Servicer upon a Servicer Default (as
described in the Prospectus under "Description of Trust
Agreements--Servicer Default") in which event the foregoing limitation
shall not apply).
FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax
consequences to the original purchasers of the [Class A] Certificates of the
purchase, ownership and disposition of the [Class A] Certificates. It does not
purport to discuss all federal income tax consequences that may be applicable to
investment in the [Class A] Certificates or to particular categories of
investors, some of which may be subject to special rules. In particular, this
discussion applies only to institutional investors that purchase Series 199__-__
Certificates directly from the Sponsor and hold the Series 199__-__ Certificates
as capital assets.
The Trust will, prior to the issuance of the Notes and Certificates, be
provided with an opinion of Tax Counsel regarding certain federal income tax
matters discussed below. An opinion of counsel, however, is not binding on the
IRS or the courts. The Trust has not sought, nor does it intend to seek, a
ruling from the IRS that its position as reflected in the discussion below will
be accepted by the IRS. [Moreover, there are no cases or IRS rulings on similar
transactions involving both debt and equity interests issued by a trust similar
to those of the Notes and the Certificates and, as a result, there can be no
assurance that the IRS will agree with the conclusions and discussion below.
The discussion that follows, and the opinion set forth below of Dewey
Ballantine, special tax counsel to Trust ("Tax Counsel"), are based on the
provisions of the Internal Revenue Code of 1986, as amended (the "Code") and the
Treasury regulations promulgated thereunder as in effect on the date hereof and
on existing judicial and administrative interpretations thereof. These
authorities are subject to change and to differing interpretations, which could
apply retroactively. The opinion of Tax Counsel is not binding on the courts or
the Internal Revenue Service (the "IRS"). Potential investors should consult
their own tax advisors in determining the federal, state, local, foreign and any
other tax consequences to them of the purchase, ownership and disposition of the
[Class A] Certificates.
S-29
<PAGE> 30
CHARACTERIZATION OF THE [CLASS A] CERTIFICATES AS INDEBTEDNESS
In the opinion of Tax Counsel, based on the application of existing law
to the facts as set forth in the Contribution Agreement, Pooling Agreement,
Insurance Agreement and other relevant documents and such investigations as it
deemed appropriate, the [Class A] Certificates will be treated as indebtedness
for federal income tax purposes.
In general, whether instruments such as the [Class A] Certificates
constitute indebtedness for federal income tax purposes is a question of fact,
the resolution of which is based primarily upon the economic substance of the
instruments and the transaction pursuant to which they are issued rather than
the form of the transaction or the manner in which the instruments are labeled.
The IRS and the courts have set forth various factors to be taken into account
in determining whether or not an instrument constitutes indebtedness for federal
income tax purposes. On the basis of a review of such factors as applied to the
facts of the contemplated transaction, Tax Counsel has concluded, as stated
above, that the [Class A] Certificates constitute indebtedness for federal
income tax purposes.
In Article ____ of the Pooling Agreement, the parties thereto and all
successors and assigns thereof, including, upon acquisition of the [Class A]
Certificates, the Certificateholders, express their mutual intent that the
[Class A] Certificates shall constitute indebtedness for all applicable tax
purposes and, further, covenant and agree to treat the [Class A] Certificates as
indebtedness for all applicable tax purposes in all tax filings, reports and
returns and otherwise. Notwithstanding such agreement, because different
criteria are used to determine the non-tax accounting characterization of the
issuance and sale of the [Class A] Certificates, the Originator and the Sponsor
intend to treat the transaction as a sale by the Sponsor of interests in the
Receivables for financial accounting purposes.
Although the economic substance of a transaction is generally of
primary importance in determining its proper treatment for federal income tax
purposes, nevertheless, a party to a transaction will be held to a high standard
of proof in establishing that the form of the transaction, if at variance with
the economic substance of the transaction, should not be treated as controlling.
In some instances, courts have indicated that a taxpayer should be bound by the
particular form it has chosen for a transaction, even if the substance of the
transaction does not accord with its form. Tax Counsel is nonetheless of the
opinion that the [Class A] Certificates will be treated as indebtedness for
federal income tax purposes because (i) in many respects the form of the
transaction as reflected in the operative provisions of the documents accords
with the characterization of the [Class A] Certificates as indebtedness, (ii)
the parties have stated unambiguously their intention to treat the [Class A]
Certificates as indebtedness for tax purposes and (iii) the characteristics of
the [Class A] Certificates strongly indicate that in economic substance the
[Class A] Certificates are a form of indebtedness.
POSSIBLE CLASSIFICATION OF THE TRANSACTION AS A PARTNERSHIP OR ASSOCIATION
TAXABLE AS A CORPORATION
Notwithstanding Tax Counsel's opinion, potential investors should
recognize that there is some uncertainty as to the correct characterization of
the [Class A] Certificates. It is possible that the IRS could assert that, for
federal income tax purposes, the transaction contemplated by this Prospectus
Supplement constitutes the sale of a direct or indirect interest in [the
Vehicles and] the Receivables to the Certificateholders and that the proper
classification of the legal relationship between the Servicer, the Sponsor and
the [Class A] Certificateholders resulting from this transaction is that of a
partnership or an association taxable as a corporation. Since Tax Counsel is of
the opinion that the [Class A] Certificates will be treated as indebtedness in
the hands of the Certificateholders for federal income tax purposes, the
Servicer and the Sponsor will not attempt to comply with the federal income tax
reporting requirements applicable to either partnerships or corporations.
If the transaction were treated as creating a partnership between the
Certificateholders, the Servicer and the Sponsor, the partnership itself would
not be subject to federal income tax (unless characterized as a publicly traded
partnership taxable as a corporation); rather, the Servicer, the Sponsor
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<PAGE> 31
and each Certificateholder would be taxed individually on their respective
distributive shares of the partnership's income, gain, loss, deductions and
credits. The amount, timing and characterization of items of income and
deductions for a Certificateholder would differ if the [Class A] Certificates
were held to constitute partnership interests, rather than indebtedness.
If it were determined that this transaction created an entity
classified as a corporation (including a publicly traded partnership taxable as
a corporation), the Trust would be subject to federal income tax at corporate
income tax rates on the income it derives from the Receivables, which would
reduce the amounts available for distribution to the Certificateholders. Cash
distributions to the Certificateholders generally would be treated as dividends
for tax purposes to the extent of such corporation's earnings and profits.
TAXATION OF INTEREST INCOME OF CERTIFICATEHOLDERS
Assuming, in accordance with the opinion of Tax Counsel, that the
[Class A] Certificates will constitute indebtedness for federal income tax
purposes, interest thereon will be includable as ordinary income when received
or accrued by the Certificateholders in accordance with their respective methods
of tax accounting.
SALES OF [CLASS A] CERTIFICATES
Upon the sale or exchange of a [Class A] Certificate, the
Certificateholder will realize a gain or loss equal to the difference between
the amount realized on the sale and the adjusted basis of such [Class A]
Certificate.
BACKUP WITHHOLDING WITH RESPECT TO CERTIFICATES
Payments of interest and principal, together with payments of proceeds
from the sale of [Class A] Certificates, may be subject to the "backup
withholding tax" under Section 3406 of the Code at a rate of 31% if recipients
of such payments fail to furnish to the payor certain information, including
their taxpayer identification numbers, or otherwise fail to establish an
exemption from such tax. Any amounts deducted and withheld from a payment to a
recipient would be allowed as a credit against such recipient's federal income
tax. Furthermore, certain penalties may be imposed by the IRS on a recipient of
payments that is required to supply information but that does not do so in the
proper manner.
FOREIGN INVESTORS IN [CLASS A] CERTIFICATES
A Certificateholder that is not a "United States person" may be subject
to United States federal withholding tax in respect of distributions on a [Class
A] Certificate. Whether withholding of tax would be required, and, if so, the
rate at which such withholding would be imposed, would depend upon a number of
factors, including the characterization of the [Class A] Certificates and the
Trust for federal income tax purposes, and, under current law, the withholding
rate could be as high as 35 percent. For these purposes, "United States person"
means a citizen or resident of the United States, a corporation, partnership
organized in or under the laws of the United States or any political subdivision
thereof or an estate or trust the income of which from sources without the
United States is includable in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States.
[PROPOSED TAX LEGISLATION
Legislation pending before Congress would apply special rules to "large
partnerships," generally defined as partnerships with at least 250 partners
during a taxable year (counting towards such total each owner during the year of
a partnership interest that is transferred during the year). Under the
legislation, certain computations are made at the partnership level rather than
the partner level. In particular, taxable
S-31
<PAGE> 32
income is calculated at the partnership level, and is calculated generally in
the same manner as for an individual, except that 70% of miscellaneous itemized
deductions (such as expenses for the production of nonbusiness income) are
disallowed. As a result, all partners (including corporations) might have a
portion of their share of partnership deductions (other than interest expense)
disallowed. Moreover, large partnerships would become subject to new audit
procedures; among other things, an adjustment to taxable income of the
partnership for a prior year would flow through to current partners in the year
the audit was settled, and the partnership itself (rather than the partners)
would be subject to any applicable interest or penalties. As proposed, these
rules would apply to partnership taxable years ending on or after December 31,
1993.
The proposed tax legislation dealing with large partnerships discussed
above was not adopted in the Revenue Reconciliation Act of 1993, which was
enacted into law in August 1993. No prediction can be made whether that proposal
or similar legislation might be enacted in the future, or the ultimate effective
date of such legislation or whether the number of Certificateholders would cause
the Trust to be considered a "large partnership."]
THE FEDERAL INCOME TAX DISCUSSIONS SET FORTH ABOVE MAY NOT BE
APPLICABLE TO ANY INDIVIDUAL INVESTOR DEPENDING UPON A CERTIFICATEHOLDER'S
PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP
AND DISPOSITION OF THE CERTIFICATES, INCLUDING THE POSSIBLE EFFECTS OF CHANGES
IN FEDERAL TAX LAWS.
STATE AND LOCAL TAXATION
Investors should consult their own tax advisors regarding whether the
purchase of the [Class A] Certificates, either alone or in conjunction with an
investor's other activities, may subject an investor to any state or local taxes
based on an assertion that the investor is either "doing business" in, or
deriving income from a source located in, any state or local jurisdiction.
Additionally, potential investors should consider the state, local and other tax
consequences of purchasing, owning or disposing of a [Class A] Certificate.
State and local tax laws may differ substantially from the corresponding federal
tax law, and the foregoing discussion does not purport to describe any aspect of
the tax laws of any state or other jurisdiction. Accordingly, potential
investors should consult their own tax advisors with regard to such matters.
ERISA CONSIDERATIONS
The [Class A] Certificates may be purchased by an employee benefit plan
or an individual retirement account (a "Plan") subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of
the Code. A fiduciary of a Plan must determine that the purchase of a [Class A]
Certificate is consistent with its fiduciary duties under ERISA and does not
result in a nonexempt prohibited transaction as defined in Section 406 of ERISA
or Section 4975 of the Code. Employee benefit plans which are governmental plans
(as defined in Section 3(32) of ERISA) and certain church plans (as defined in
Section 3(33) of ERISA) are not subject to the fiduciary responsibility or
prohibited transaction provisions of ERISA or the Code. For additional
information regarding treatment of the [Class A] Certificates under ERISA, see
"ERISA Considerations" in the Prospectus.
If the [Class A] Certificates constitute equity interests, there can be
no assurance that any of the exceptions set forth in the Regulations will apply
to the purchase of [Class A] Certificates offered hereby. Under the terms of the
Regulations, if the Trust were deemed to hold Plan assets by reason of a Plan's
investment in [Class A] Certificates, such Plan assets would include an
undivided interest in the Receivables, and any other assets held by the Trust.
In such an event, the Originator, the Sponsor, the Trust, the Trustee and other
persons providing services with respect to the Receivables, may be subject
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to the fiduciary responsibility provisions of Title Originator of ERISA and be
subject to the prohibited transaction provisions of Section 4975 of the Code
with respect to transactions involving the Receivables unless such transactions
are subject to a statutory or administrative exemption. Additionally, if the
Trust were deemed to hold Plan assets, each Certificateholder may be subject to
the fiduciary responsibility provisions of Title Originator of ERISA with
respect to its right to consent or withhold consent to amendments to the
Indenture and with respect to its right to vote on action to be taken or not
taken if an Indenture Event of Default occurs.
In addition, certain affiliates of the Originator, the Sponsor, the
Trust and the Trustee may be considered to be parties in interest or fiduciaries
with respect to many Plans. An investment by such a Plan in [Class A]
Certificates may be a prohibited transaction under ERISA and the Code unless
such investment is subject to a statutory or administrative exemption.
Any Plan fiduciary that proposes to cause a Plan to purchase Notes
should consider whether such purchase would be appropriate under the general
fiduciary standards of prudence and diversification, taking into account the
overall investment policy of the Plan and its existing portfolio and should
consult with its counsel with respect to the potential applicability of ERISA
and the Code.
RATINGS
It is a condition to the issuance of the [Class A] Certificates that
they be rated "_____" by ____________. A security rating is not a recommendation
to buy, sell or hold securities and may be subject to revision or withdrawal at
any time. The ratings of ____________ assigned to [Class A] Certificates
addresses the likelihood of the receipt by Certificateholders of all
distributions to which such Certificateholders are entitled. The ratings do not
address the timely or ultimate payment of any withholding tax imposed. The
ratings assigned to [Class A] Certificates do not represent any assessment of
the likelihood that principal prepayments might differ from those originally
anticipated or address the possibility that Certificateholders might suffer a
lower than anticipated yield.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement (the "Underwriting Agreement"), the Sponsor has agreed to cause the
Trust to sell to [each of] the underwriter(s) named below (the
"Underwriter(s)"), and each of the Underwriter(s) has severally, and not
jointly, agreed to purchase, the principal amount of [Class A] Certificates set
forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER(S) CERTIFICATES
<S> <C>
------------------ .................... $_______
------------------ ....................
_______
_______
TOTAL............................ $
=======
</TABLE>
In the Underwriting Agreement, the Underwriter(s) have agreed, subject
to the terms and conditions therein, to purchase all the [Class A] Certificates
offered hereby if any of such [Class A] Certificates are purchased. The Sponsor
has been advised by the Underwriter(s) that they propose initially to offer the
[Class A] Certificates to the public at the respective prices set forth on the
cover hereof, and to certain dealers at such prices less a concession not in
excess of _____% per [Class A] Certificate. The Underwriter(s) may allow and
such dealers may reallow a concession not in excess of 0.__% per [Class A]
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<PAGE> 34
Certificate to certain other dealers. After the initial public offering, such
prices and such concessions may be changed.
The Underwriting Agreement provides that the Sponsor and the Originator
will indemnify the Underwriter(s) against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the
Underwriter(s) may be required to make in respect thereof. The Commission is of
the opinion that indemnification for securities law violations is contrary to
the public policy expressed in the federal securities laws, and, consequently,
that such indemnification provisions are unenforceable.
The Trustee (on behalf of the Trust) may, from time to time, invest the
funds in the Trust Accounts in Eligible Investments acquired from the
Underwriter(s).
LEGAL MATTERS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the issuance of the Series 199__-__ Certificates,
including federal and state income tax consequences with respect thereto, as
well as other matters, will be passed upon for the Trust, the Sponsor and the
Underwriter(s) by Dewey Ballantine, New York, New York.
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<PAGE> 35
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Additional Contract Transfer Agreement........................... 16
APR.............................................................. 12
Code............................................................. 29
Contributor...................................................... 1
Controlled Amortization Amount................................... 25
Controlled Distribution Amount................................... 25
Deficit Controlled Amortization Amount........................... 25
Equipment........................................................ 1
ERISA............................................................ 32
Floating Allocation Percentage................................... 22
Investor Default Amount.......................................... 24
IRS.............................................................. 29
Lease Interest................................................... 3
Lease Principal.................................................. 3
Leases........................................................... 1
Monthly Interest................................................. 24
Net Receivables Rate............................................. 11
Plan............................................................. 32
Pooling Agreement ............................................... 1
Predecessor Contract............................................. 14
Rating Agencies.................................................. 10
Receivables...................................................... 1
Required Amount.................................................. 24
Required Reserve Amount.......................................... 27
Reserve Account.................................................. 3
Rule of 78s...................................................... 12
Series 199__-1 Invested Amount................................... 22
Servicer......................................................... 1
Tax Counsel...................................................... 29
Trust............................................................ 1
Trustee.......................................................... 1, 4
United States person............................................. 31
[Class A] Certificateholders..................................... 1
[Class A] Certificates........................................... 1
[Class A] Invested Amount........................................ 22
[Class B] Available Finance Charge Collections................... 27
[Class B] Available Principal Collections........................ 27
[Class B] Invested Amount........................................ 22
[Class B] Required Amount........................................ 27
</TABLE>
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